Generic drugmakers in Europe say they may cut production due to energy bills

Generic drugmakers in Europe say they may cut production due to energy bills


by Ludwig Burger

FRANKFURT (Reuters) – Pharmaceutical companies in Europe have warned they may stop making some cheap generics due to rising electricity costs and called for overhauling their pricing, the latest industry to seek help as the energy crisis deepens.

Public Pharmaceutical Industry Lobbying Group for Europe, which represents companies including Teva, Novartis’ Sandoz unit and Fresenius SE’s Kapi (ETR :), has sent an open letter to the energy and health ministers of EU member states.

The bloc’s 27 energy ministers meet on Friday to seek agreement on measures to ease Europe’s energy crisis, with a tax on windfall profits for fossil fuel companies and a cap on gas prices on the table.

A spokesman for the Czech presidency of the European Union – which is responsible for preparing and chairing the meeting – confirmed receipt of the letter, but said Friday’s talks aimed to agree on the European Commission’s executive proposals for the bloc.

These solutions have not yet included solutions specifically targeting drug makers.

The letter was also directed to the commission, which did not immediately respond to a request for comment late Tuesday.

According to the letter, electricity prices have increased tenfold for some pharmaceutical factories in Europe, and raw material costs have increased by between 50% and 160%.

Genetic societies in member states are also calling on national health authorities for more flexibility on drug prices, Drugs Europe said.

“We may be discontinuing maybe three or five products due to the direct and indirect impact of increased energy costs,” said Elizabeth Stampa, CEO of Medichem, a drug and pharmaceutical ingredients maker based near Barcelona, โ€‹โ€‹Spain.

READ ALSO :   Japanese factories ramped up production in August, government eyes new stimulus

Adrian van den Hoeven, managing director for Europe, told Reuters that rising energy costs are hurting a sector that has been forced to consolidate due to price pressures, making the market more vulnerable to supply disruptions and shortages.

“Rising energy costs are just consuming all the margins of many of the essential drug makers in the fixed-price system we operate under in Europe,” he said.

The case focuses on the pricing system. Off-patent drugs are usually sold by low-cost drug companies at prices set by national health agencies or insurance company associations, which often also cut prices.

Genetic drugs account for about 70% of all drugs dispensed in Europe, many to treat serious conditions such as infections or cancer, but they make up only 29% of drug bills in the region, according to the lobby group.

The increase in energy costs threatens to undermine the recent push to boost drug production in Europe and make the region more self-sufficient after the COVID-19 pandemic exposed dependence on overseas suppliers and led to the collapse of certain supply routes.

The COVID lockdown measures in China and the war in Ukraine have made matters worse for logistics and raw materials.

Drug shortages, which sometimes disrupt patient care when alternative sources are not available, have a decade-long history in the European off-patent generic sector, where price pressure through distressed health systems does not allow financial only the most cost-efficient systems. suppliers to survive.

While makers of innovative, patented medicines are usually prevented from raising prices after a reimbursement rate is set, much higher margins make most of these products profitable.

READ ALSO :   Credit Agricole and CACEIS to buy RBC Investor Services in Europe

energy density

Standard hospital syringes are among the most energy-intensive drugs produced because they need to be heated and cooled for sterility. The same holds true for the fermentation process behind commonly used antibiotics and therapeutic hormones, van den Hoeven said.

Medichem’s Stampa said the costly energy impacts ranged from higher freight rates to waste disposal contractors charging 30% more.

She declined to name which drugs might be affected as part of an annual review this year, but said customers would be given about six to 12 months to find a new supplier if the product was phased out.

The privately-owned group generated 110 million euros ($106 million) in sales last year through off-patent products such as antibiotic eyedrops, blood thinners and schizophrenia drugs, and sold them to generic drug companies including Teva and Viatris.

Stampa said indexing drug prices to take production costs into account would be an affordable solution for health authorities in Europe as some non-patent eye drops are offset by the price of a pack of gum.

The head of the Italian Pharmaceutical Industry Association, Marcello Cattani, said energy costs are seven times higher than last year, while the US dollar, in which international components are usually paid, against the euro.

“The sector cannot afford higher costs…the risks of negative effects on the production and availability of medicines are very high,” he said.

(1 dollar = 1.0394 euros)

The Latest

To Top