3 March 2014 Aussie pharmacos abandoning manufacturing, industry report finds While Australia reeled from news car manufacturer Holden would cease local manufacturing in 2017, high-tech pharmaceutical manufacturers were quietly closing down plants in 2013, potentially threatening a $4 billion medicines export industry and 40,000 jobs*.

Analysis of the Australian pharmaceutical industry found the proportion of companies identifying as medicines manufacturers fell from 53% in December 2012 to 21% in December 2013. The report, Industry Trends Review: 2013, provides comprehensive analysis of all aspects of Australia’s medicines industry.

Pharma manufacturing companies were found to have suffered more than nonmanufacturers at the end of 2012, being twice as likely to have experienced a fall in sales revenue and more likely to have a cut in their pre-tax profits when compared with 2011. In 2013, the same survey found the proportion of manufacturers dropped markedly. Of those that continued to manufacture, three-quarters said business conditions for pharmaceutical companies were worse than they expected in 2013, however all reported a rise in exports.

Industry Trends Review: 2013 also found Australia to be increasingly reliant on imports to feed its growing hunger for medicines. The majority of pharma companies (77%) reported a rise in imports in 2013, with a third of the industry reporting increases in excess of 10%. While industry bodies Medicines Australia and AusBiotech persist in efforts to convince government to provide manufacturing incentives, pharmacos appear to have lost interest.

More than half of the non-manufacturing pharma sector listed the issue of incentives as important at the end of 2012; a year later most downgraded it to “somewhat important”. Industry Trends Review: 2013 found government price pressure on medicines to be the primary reason for business conditions deteriorating in 2013.

The Pharmaceutical Benefits Advisory Committee – gatekeeper for the PBS – drew the greatest criticism, with 93% of companies reporting it as having a negative impact on their business. Government pressure on medicines pricing and reimbursement, which saved taxpayers $800 million in 2013, was considered a negative by 88% of pharma companies. While the pipeline bringing new medicines to market was rated as a positive by four in five companies in 2012, this fell to just over half in 2013 with a third rating their pipeline as a business negative – a bad sign for Australian health consumers waiting on new medicines.

Industry Trends Review: 2013 is based on a comprehensive industry survey completed in late 2013 by CEOs, MDs and senior managers of pharmacos in Australia. The report is produced annually by Pharma in Focus Research Insights.

The report is available free here. Industry Trends Forecast: 2014 provides the industry’s predictions for the year ahead. It is available from sales@pharmainfocus.com.au.

* http://www.manmonthly.com.au/news/pharmaceuticals-are-the-future