With revenues projected to reach USD 27.01 billion in 2024, France’s pharma market is ranked fifth globally. Home to a number of well-established local pharma players and a sought-after destination for international investments, France is looking to boost innovation, attracting the largest number of R&D centres in Europe in 2022, and support medicine sovereignty, yet frailties in the healthcare system have been underlined by an ongoing turnover in the country’s health ministry.
Strong Base of Home-Grown Players
The French pharma ecosystem is solidly rooted in a long tradition of domestic innovators, renowned medical institutions and highly skilled healthcare professionals and boasts a long roster of well-established native pharma companies. From big pharma Sanofi to the country’s second largest Servier, its dermatology specialist Pierre Fabre, and a string of flourishing midcaps, such as eye care specialist Thea, the life sciences hold a strong position in France and the pharma industry plays an important economic role. Employing some 106,000 people and eight of its homegrown players alone, all members of the G5 Santé thinktank, – Thea, Sanofi, Ipsen, LFB, BioMerieux, Servier, Guerbet and Pierre Fabre – spend EUR 3.8 billion on R&D, employ 40,600 people and operate more than 53 industrial and 31 research sites.
Government Support for Innovation
France is currently looking to strengthen its position as an attractive life sciences investment destination, embarking on ambitious innovation friendly initiatives such as the Innovation Health 2030 plan, a government health investment scheme of EUR 7,5 billion aimed at incentivising innovation aligned with the broader France 2030 global investment plan.
Within the plan funds have been dedicated to strengthening the country’s research capacity and to bringing forward innovative therapies with the specific five-year objective of producing at least five new biomedical products, doubling the number of jobs in the sector, and enabling the emergence of at least one new unicorn company and five new biotechs by 2030.
Moreover, the plan looks to make France a leading country for clinical trials as well as accelerate market access and reinforce health and industrial sovereignty. Its ambitions include the construction of 12 new teaching hospitals and four bio clusters. One such hub, the Paris Saclay cluster is currently under construction in the Paris area.
France’s healthcare system and life sciences tradition have long made it attractive to international pharma. Global companies including Pfizer, which is doubling to EUR 1.2 billion its investment in the country over the next four years and Novo Nordisk, which has invested EUR 130 million, have an enduring presence. The government now intends to further incentivise these investments through advantageous tax schemes such as the credit impôt recherche, or research tax credit.
Medicine Shortages and Sovereignty
Despite its thriving industry and innovation friendly policies, France, like a number of other countries in Europe, has been faced with ongoing medicine shortages, which have raised concerns about its dependency on China and India. Over the past 10 years, the country has lost pharmaceutical manufacturing ground and fallen from first to fifth place among European drug producers, according to the French pharmaceutical industry association Leem. And, only 48 of the new medicines granted authorisation between 2017 and 2022 are currently produced in France compared to 122 in Germany.
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The French pharmaceutical industry relocated its production extensively in the 2000s particularly for older off-patent drugs that had become unprofitable and has increasingly sourced its active pharmaceutical ingredients (APIs) from abroad. A 2021 report from the parliamentary information mission on medicines concluded that “France is in a situation of heavy dependence on foreign countries.” In fact, 70 percent of its active pharmaceutical ingredients (APIs) are produced abroad, with only 6 percent of them produced in France.
More than 3,000 drugs are in short supply
Sonia de La Provôté, president of the Senate commission on drug shortages
Laid bare by the COVID-19 pandemic, the lack of medicine sovereignty has been further exposed by drug shortages in France and across Europe. “More than 3,000 drugs are in short supply,” claimed Sonia de La Provôté, the president of the Senate commission in charge of investigating drug shortages.
As a result, France is looking to relocate its pharmaceutical production and in June 2023, President Macron presented a roadmap to restore France’s medicine sovereignty, boosting the domestic production of medicines, including morphine, amoxicillin and six anticancer drugs with a total investment of EUR 160 million. The government, as reported by Franceinfo, is already supporting 19 companies, including the CDMO Diverchim and its “emergency medicines” project that has brought the production of the anaesthetic curare back to France.
Pricing Burden
The pharmaceutical industry, however, remains sceptical as the objective of relocation and medicine sovereignty uncovers the deeper-rooted difficulties for pharmaceutical production in France.
The annual price cuts imposed to limit national health insurance spending put increasing pressure on manufacturing costs and constant efforts to reduce the deficit in healthcare spending have eroded the share of the budget dedicated to reimbursable drugs. “It has fallen from 14 percent to 10 percent in the space of ten years, representing a decapitalisation of nearly 6 billion euros”, says Audrey Derveloy, president of Sanofi France.
[The budget dedicated to reimbursable drugs] has fallen from 14 percent to 10 percent in the space of ten years
Audrey Derveloy, president of Sanofi France
While the sector has benefited from production tax cuts, as Vincent Huraux, Pierre Fabre’s Director of Operations notes “what has been given on the one hand is largely taken back on the other.” Energy prices and inflation have also taken a toll and according to Leem these factors had an impact of 15 percent on production costs in 2022.
In France, if the sales of reimbursable drugs exceeds the amount set in the government budget, a safeguard clause is triggered, resulting in a deduction of 70 percent of the reimbursable envelope from these sales. “Over fifteen years, growth in the reimbursable drug envelope has been 0.5 percent a year. It’s difficult enough with natural market growth of 2-3 percent,, but now, at close to 10 percent, the system is becoming explosive,” Philippe Lamoureux, the CEO of Leem asserted. “You can’t have ambitious industrial policies if you destroy your market.”
Lack of Continuity
France benefits from a statutory health insurance (SHI) system that provides universal coverage for its residents. The system that with 3.2 doctors per 1,000 inhabitants in 2022 counts a density of doctors far lower than the EU average, has been under considerable strain for some time. And while there have been repeated calls for reform from among healthcare professionals, under Emmanuel Macron’s two governments, France has been through no less than seven health ministers, making progress towards reform slow if no non-existent.
New appointee Catherine Vautrin, who took office this month after Aurélien Rousseau resigned from his role as health minister in protest against France’s recently adopted immigration law, is a veteran ring-wing politician. She is taking over a brand-new ministry that unites health, labour and solidarity, putting her in charge of a budget of more than 40 billion euros.
In the healthcare realm, Vautrin has her work cut out for her. Not only will she face issues such as a widespread lack of staffing and disputes over doctors’ consultation fees, the new minister will also have to deal with the reform of state medical aid (AME). A scheme that provides healthcare to illegal immigrants, the AME was originally eliminated as a part of the new immigration law and re-adopted for later revision.
Vautrin will also have to tackle the so-called end-of-life bill which was advanced by former health minister Agnès Firmin Le Bodo and has remained stagnant ever since. With the arrival of the very conservative new minister, who has been known to hold anti-abortion views, many fear that the project will be definitively forgotten.
Worse still is the feeling that health and the problems linked to hospitals and the healthcare system, buried within this huge ministry, will not be a priority for the government going forward. “At a time of unprecedented crisis in the health sector, this decision [to group health into a larger ministry] appears to be a real slap in the face to professionals, but above all to patients, desperately waiting for better access to care,” read a statement from the French national union of nurses.
