COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products
Date: 2018-05-28
Institutions: Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, European Commission
Subjects: administrative formalities, export (EU), market approval, medicinal product, pharmaceutical legislation, public health, single market

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.5.2018  SWD(2018) 240 final  COMMISSION STAFF WORKING DOCUMENT  IMPACT ASSESSMENT  Accompanying the document Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 469/2009 concerning the supplementary protection certificate for medicinal products {COM(2018) 317 final} - {SEC(2018) 246 final} - {SWD(2018) 241 final} - {SWD(2018) 242 final}  
 
 
Table of contents 

1. 

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................... 5 

1.1.  Political context ................................................................................................. 5 
1.2.  Scope of the impact assessment ........................................................................ 6 
1.3.  The EU Supplementary Protection Certificate regime ...................................... 7 
1.4.  Strong evolution of pharmaceutical markets in the EU and globally ................ 9 

2. 

PROBLEM DEFINITION .................................................................................................................. 13 

2.1.  Decreasing 

competitiveness  of  EU-based  generics/biosimilars 

manufacturers .................................................................................................. 13 
2.1.1.  Two specific problems ............................................................................... 14 

2.1.2.  Unintended side-effects of the EU SPC framework ................................... 15 

2.1.3.  Magnitude of the problem and urgency to act ............................................ 16 

2.2.  Two problem drivers ....................................................................................... 17 
2.2.1.  Asymmetry in SPC protection globally ...................................................... 17 

2.2.2.  The ‘first mover’ advantage ....................................................................... 18 

2.3.  Consequences: relocation and decreasing attractiveness of the EU as a 

pharmaceutical hub .......................................................................................... 19 

3.  WHY SHOULD THE EU ACT? ........................................................................................................ 23 

3.1.  Legal basis ....................................................................................................... 23 
3.2.  Necessity for action at EU level ...................................................................... 24 
3.3.  Added value of EU action ............................................................................... 24 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? ............................................................................... 24 

4.1.  General objectives ........................................................................................... 24 
4.2.  Specific objectives ........................................................................................... 25 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? .................................................................... 26 

5.1.  What is the baseline from which the options are assessed? ............................ 26 
5.2.  Options discarded at an early stage ................................................................. 26 
5.2.1.  Trying to persuade third countries to adopt SPC protection in line with that 
of the EU (i.e., reducing the existing global SPC protection asymmetry) ............... 26 

5.2.2.  Expanding the scope of the EU ‘Bolar patent/SPC exemption’ to allow for 
advance manufacturing for export purposes ............................................................. 27 

5.2.3.  New ad-hoc licensing measures ................................................................. 27 

5.2.4.  Cutting down the duration of the SPC ........................................................ 28 

5.3.  Description of the policy options .................................................................... 28 
5.3.1.  Option 0: status quo .................................................................................... 29 

5.3.2.  Option 1: voluntary industry-led agreements/‘soft-law’ approaches ......... 30 

5.3.3.  Option  2:  introducing  a  manufacturing  waiver  for  export  purposes  in 
Regulation 469/2009 ................................................................................................ 30 

5.3.4.  Option 2-bis: implementing Option 2 with anti-diversion measures ......... 30 

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5.3.5.  Option  3:  introducing  a  manufacturing  waiver  for  stockpiling  purposes  in 
Regulation 469/2009 ................................................................................................ 31 

5.3.6.  Option  3-bis:  similarly  to  option  2-bis  above,  option  3  could  be 
implemented with anti-diversion measures .............................................................. 31 

5.3.7.  Option  4:  introducing  a  manufacturing  waiver  for  export  and  stockpiling 
purposes under Regulation 469/2009 ....................................................................... 31 

5.3.8.  Option  4-bis:  similar  to  options  2-bis  and  3-bis,  option  4  could  be 
implemented with anti-diversion measures .............................................................. 31 

5.4.  Timing scenarios for applicability of options 2 to 4bis ................................... 31 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ........................................................... 32 

6.1. 
6.2. 
6.3. 

Impact of option 0 ........................................................................................... 32 
Impact of option 1: voluntary industry-led agreements .................................. 32 
Impact  of  option  2:  SPC  manufacturing  waiver  for  export-only 
purpose ............................................................................................................ 33 
6.3.1.  Findings of studies ...................................................................................... 33 

6.3.2.  Feedback from public consultation ............................................................ 34 

6.4. 

Impact of option 2-bis: SPC manufacturing waiver for export purpose 
with anti-diversion measures ........................................................................... 37 
6.4.1.  The risk of diversion ................................................................................... 37 

6.4.2.  Possible anti-diversion measures ................................................................ 38 

6.4.3.  Retained anti-diversion measure for option 2-bis ...................................... 40 

6.5. 

6.6. 

6.7. 

6.8. 

Impact  of  Option  3:  SPC  manufacturing  waiver  for  stockpiling 
purposes ........................................................................................................... 40 
Impact  of  Option  3-bis:  SPC  manufacturing  waiver  stockpiling 
purposes with anti-diversion measures ............................................................ 41 
Impact of Options 4 and 4-bis: SPC manufacturing waiver for export 
and stockpiling purposes (with anti-diversion measures) ............................... 42 
Impact  of  the  options  for  the  timing  of  the  introduction  of  the 
manufacturing waiver ...................................................................................... 42 

7.  HOW DO THE OPTIONS COMPARE? ............................................................................................ 43 

8. 

PREFERRED OPTION ...................................................................................................................... 47 

8.1.  Preferred option ............................................................................................... 47 
8.2.  REFIT (simplification and improved efficiency) ............................................ 50 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? .................................. 50 

ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 52 

ANNEX 2: STAKEHOLDERS’ VIEWS ..................................................................................................... 56 

ANNEX 3: WHO IS AFFECTED AND HOW? .......................................................................................... 59 

ANNEX  4:  DIFFERENCES  BETWEEN  GENERIC  AND  BIOSIMILAR  MEDICINAL 

PRODUCTS ........................................................................................................................................ 62 

ANNEX 5: BIOSIMILARS APPROVED IN THE EU AS OF DECEMBER 2017 .................................... 63 

ANNEX 6: ANALYTICAL METHODS ..................................................................................................... 66 

ANNEX 7: GENERIC AND BIOSIMILAR MARKET IS EXPANDING .................................................. 67 

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ANNEX 8: IMPACTS OF THE CURRENT SPC REGIME (BASELINE SCENARIO) ............................ 71 

ANNEX 9: COMPARISON OF SPC PROTECTION EXPIRY DATES .................................................... 72 

ANNEX 10: ASSESSMENT OF WAIVER TIMING SCENARIOS .......................................................... 76 

ANNEX 11: BIOPHARMACEUTICALS R&D AND MANUFACTURING ACTIVITIES ...................... 78 

ANNEX 12: STUDIES ON THE MANUFACTURING WAIVER ............................................................. 87 

ANNEX  13:  NUMBER  OF  MARKETING  AUTHORIZATION  REFERRED  TO  IN  SPC 

APPLICATIONS ................................................................................................................................ 96 

ANNEX 14: PATENT CLIFF AND GEOGRAPHICAL SCOPE OF SPC PROTECTION ....................... 97 

ANNEX 15: IMPACT OF A POSSIBLE SPC MANUFACTURING WAIVER ON R&D IN THE 

EU ....................................................................................................................................................... 98 

ANNEX 16: SME TEST .............................................................................................................................. 99 

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Term/Acronym 

API 

Glossary 

Meaning/Definition 

Active pharmaceutical ingredient (the part of any medicine that produces its 
effects) 

Biosimilar medicines 
or biosimilars 
(also known as 
‘follow-on biologics’ 
or ‘subsequent entry 
biologics’) 

A  biosimilar  is  a  biological  medicine  highly  similar  to  another  already 
approved  biological  medicine  (the  ‘reference  medicine’).  Unlike  the  small 
molecules  of  classical  medicines,  which  are  ‘chemically’  synthesised,  the 
much more complex biosimilars are extracted or synthesised from biological 
sources such as blood or tissues, and for this reason cannot be fully identical 
to their reference products. EMA evaluates biosimilars in the EU 

Bolar exception 

The  Bolar  exception,  which  allows  small-scale  manufacturing  of 
generic/biosimilars medicines to take place during the patent/SPC protection 
period of the reference medicine in order to conduct the testing required to 
obtain regulatory approval for the generic/biosimilar 

Blockbuster 

A medicine with annual global sales of over USD 1 billion 

Day-1 

EMA 

FDA 

First day following expiry of intellectual property (IP) protection for a given 
medicine.  For  practical  reasons  (such  as  national-level  pricing  and 
reimbursement negotiations), generics/biosimilars rarely enter on the market 
on  the  very  first  day  following  SPC  expiry.  Therefore  throughout  this 
document ‘day-1’ entry shall be understood as referring to entry on the first 
practically possible day, or more generally to a ‘rapid’ or ‘timely’ entry 

European Medicines Agency 

U.S. Food and Drug Administration 

Follow-on product 

Generics and biosimilars are also called ‘follow-on’ products 

Generic medicines 
(‘generics’) 

Manufacturer of 
generics and 
biosimilars 

A generic medicinal product is a copy of an original non-biologic ‘reference 
medicine’  whose  IPR  and  market  protection  has  lapsed  or  expired.  The 
generic medicine is usually manufactured by a different company. Generics 
have the same qualitative and quantitative composition in active substances 
and the same pharmaceutical form as reference medicinal products 

This  term  includes  manufacturers  of  generics  and/or  biosimilars  as  well  as 
manufacturers of APIs corresponding to those generics/biosimilars 

Originators or 
innovators 

They are typically the SPC holders, but are increasingly becoming leaders in 
the production and commercialisation of biosimilars 

SPC 

A supplementary protection certificate is a sui generis IP right that extends 
by  up  to  5  years  the  effect  of  a  patent  in  Member  States  (with  an  extra  6 
months added if a paediatric investigation plan is conducted). SPCs apply to 
human  medicinal  (or  plant  protection)  products  subject  to  regulatory 
authorisation 

TRIPS 

Agreement  of  the  World  Trade  Organization  (WTO)  on  Trade-Related 
Aspects of Intellectual Property Rights 

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1.  INTRODUCTION: POLITICAL AND LEGAL CONTEXT 

1.1. Political context 

The  Single  Market  Strategy1  announced  a  targeted  recalibration  of  certain  aspects  of 
patent  and  Supplementary  Protection  Certificate  (SPC)  protection,  aiming  to  tackle  the 
following problems: 

(1) Loss of export markets (in unprotected third countries), and of timely day-1 entry 
onto  Member  State  markets,  for  EU-based  manufacturers  of  generics  and 
biosimilars, due to the unintended effects of the current EU SPC regime; in this 
regard,  it  was  suggested  to  introduce  in  the  EU  SPC  legislation  an  ‘SPC 
manufacturing  waiver’  allowing  manufacturing  of  generics  and  biosimilars, 
within the EU, during the SPC term. 

(2) Fragmentation  resulting  from  the  uneven  implementation  of  the  current  SPC 
regime  in  the  Member  States  that  could  be  solved  in  connection  with  the 
upcoming  unitary  patent,  and  the  possible  creation  thereafter  of  a  unitary  SPC 
title. 

(3) Fragmented implementation of the Bolar research exemption2. 

The  European  Parliament  resolution  on  the  Single  Market  Strategy3  endorsed  the 
Commission’s  intentions  and  notably  ‘urge[d]  the  Commission  to  introduce  and 
implement  before  2019  an  SPC  manufacturing  waiver’,  so  as 
the 
competitiveness  of  the  generics  and  biosimilars  sector,  ‘while  not  undermining  the 
market exclusivity granted under the SPC regime in protected markets’. 

to  boost 

In June 2016, the Council of the European Union called upon the Commission to engage 
in a wider review of IP incentives in the pharmaceutical sector4. In particular, the Council 
invited  the  Commission  to  conduct,  before  2019,  an  evidence-based  analysis  of  the 
impact  of  EU  pharmaceutical  incentives  on  innovation,  availability  and  accessibility  of 
medicinal products, including on pricing strategies. Among those incentives, the Council 
considered  that  particular  attention  should  be  given  to  SPCs,  the  ‘Bolar’  patent 
exemption, data and market protection, market exclusivity for orphan medicinal products, 
and incentives and rewards for paediatrics5. 

1   Document COM(2015)550. See also the subsequent inception impact assessment on patents and SPCs. 
2   The  exception  is  defined  by  Article  10(6)  of  Directive  2001/83  on  the  Community  code  relating  to 
medicinal products for human use, stating that ‘Conducting the necessary studies and trials with a view to 
the  application  of  paragraphs  1,  2,  3  and  4  and  the  consequential  practical  requirements  shall  not  be 
regarded as contrary to patent rights or to supplementary protection certificates for medicinal products’. 
A similar provision can be found in Article 13(6) of Directive 2001/82/EC on the Community code relating 
to medicinal products for veterinary use. 
3   2015/2354(INI). 
4   Council  Conclusions  on  strengthening  the  balance  in  the  pharmaceutical  systems  in  the  EU  and  its 
Member States (17.6.2016). 
5   Medicinal  products  enjoy  data  and  market  protection,  or  market  exclusivity  for  orphan  medicines, 
following their authorisation, which run in parallel to patent and SPC protection, and may in some cases 
last longer than the SPC protection (the impact of these two types of protection on innovation, availability 
and accessibility of medicinal products is being analysed by the Copenhagen Economics study). 

5 

 
                                                 
As  regards  the  review  of  the  SPC  Regulation  and  following  a  series  of  studies  (see 
Annex 1 and section 4), an inception impact assessment6 was published in February 2017 
announcing  possible  legislative  and  non-legislative  proposals.  In  October  2017,  a  12-
week online public consultation was launched; its results are summarised in Annex 2. 

As  regards  the  wider  pharmaceutical  review,  the  Commission  contracted  an  economic 
study7.  The  Commission  also  intends  to  conduct  an  evaluation  of  the  orphan  and 
paediatric legislation, with further analysis in 2018-20198. 

1.2. Scope of the impact assessment 

This impact assessment focuses on two specific problems, (a) the loss of export markets 
due  to  delayed  entry  and  (b)  delayed  entry  onto  EU  markets,  that  decrease  the 
competitiveness of EU-based manufacturers of generics and biosimilars. It considers 
a targeted initiative in this  area. Other aspects related to the review of the SPC regime, 
and a wider pharmaceutical incentives review, will be dealt with via separate initiatives 
at a later stage. The reasons for this approach are the following: 

(1)  Even though the public consultation showed wide support for the introduction of a 
unitary SPC, it would be premature at this stage to table a proposal for the creation 
of a unitary SPC, as the unitary patent package is not yet in force. 

Secondly, whilst the public consultation and ongoing analysis show a need for more 
clarity as regards the way the SPC Regulation is applied in practice, it would be 
preferable to await the outcome of certain pending cases before the Court of Justice 
of the European Union (CJEU) before proceeding to offer practical guidance. 

Thirdly, as regards the Bolar exemption (which is enshrined in the pharmaceutical 
acquis),  the  public  consultation  and  ongoing  studies  point  to  the  need  for  more 
clarity, which could be offered through guidance. 

(2)  There  is  an  urgent  need  to  tackle  the  specific  problems  faced  by  EU-based 
generics  and  biosimilars  manufacturers.  As  discussed  below,  the  markets  for 
generics  and  biosimilars  are  highly  competitive  and  steadily  growing.  Under  the 
current SPC rules however, EU-based manufacturers of generics and biosimilars are 
put  at  a  competitive  disadvantage  vis-à-vis  manufacturers  capable  of  producing 
generics  and  biosimilars  outside  the  EU.  As  of  2020,  a  significant  number  of 
medicinal products will go off-patent and off-SPC9, opening a significant market for 
generics  –  and  biosimilars  in  particular  (expected  to  amount  to  EUR 95bn)  –  to 
competition.  For  example,  in  2015,  the  originator  firm  Pfizer  spent  USD  17bn  to 
purchase  Hospira  (a  leading  developer  of  biosimilars)  in  view  of  the  USD  100bn 
patent  cliff  faced  by  biologics  up  to  2025  (a  USD  20bn  biosimilars  market  is 
expected  by  2020)10.  This  upcoming  ‘patent  cliff’  will  come  in  a  context  of  SPC 
protection  now  mainstreamed  across  the  Union,  thus  forcing  companies  who  are 

6   http://ec.europa.eu/smart-
regulation/roadmaps/docs/2017_grow_051_supplementary_protection_certificates_en.pdf 
7   Copenhagen Economics study. 
8   See inception impact assessment. 
9   See Annex 14 for details. See also: World Preview 2017, Outlook to 2022, EvaluatePharma, 2017. 
10   https://www.sec.gov/Archives/edgar/data/78003/000007800315000038/x999315.htm 

6 

 
                                                 
willing to invest in the new opportunities to start – or relocate – their manufacturing 
outside the EU. 

The  EU  was  a  pioneer  in  the  development  of  regulatory  procedures  to  approve 
biosimilars:  the  EMA  authorised  the  first  biosimilar  in  2006  (to  Sanofi),  while  the 
FDA did so only in 2015. However, there are clear signs that Europe is now losing 
its  competitive  edge  as  a  hub  for  manufacturing  of  generics  and  biosimilars,  with 
trade partners now quickly catching up11. For example, South Korea invested 35% of 
its national medical R&D budget in biosimilars development in 2012 (see Deloitte’s 
Winning  with  biosimilars-Opportunities  in  global  markets12),  and  Canada,  while 
accepting to introduce SPC protection as a result of the negotiations with the Union 
on  the  Comprehensive  Economic  and  Trade  Agreement  (CETA),  nevertheless 
insisted on including an SPC manufacturing waiver in the Agreement, so as to allow 
its own firms to reap the benefits of the new generics and biosimilar markets. 

Therefore, and as testified both by the respondents to the public consultation and in 
various studies, there is an urgent need for the EU to restore the competitiveness of 
EU-based  manufacturers  of  generics  and  biosimilars.  Doing  nothing  or  postponing 
an  initiative  would  further  weaken  European  industry  and  unravel  the  EU’s 
pioneering-effect competitive advantage in the biosimilar sector in particular. 

(3)  The  competitiveness  issues  addressed  in  this  impact  assessment  can  be 
addressed in a stand-alone manner. In fact, the issues under discussion here, and 
the  measures  taken  to  address  them,  are  not  related  to  the  wider  debate  on  the 
optimal scope and duration of IP protection in the pharmaceutical sector in the EU. It 
should,  moreover,  be  noted  that  the  public  consultation  and  study  results  have  not 
pointed to the need for a broader re-opening of the SPC regime. 

1.3. The EU Supplementary Protection Certificate regime 

An SPC can extend by up to five years the protection conferred by the basic patent, but 
only with respect to the medicine(s) covered by the related marketing authorisation(s) to 
place  the  protected  reference  medicine(s)  on  the  market13.  An  SPC  is  therefore 
considered a sui generis intellectual property right. SPC protection was first introduced 
in the EU in 1992 and is currently governed by Regulation (EC) No 469/2009 concerning 
the supplementary protection certificate for medicinal products14. 

grow. 

build, 

11   The Asia-Pacific region has more biosimilars in development, led by China (269) and India (257), than 
anywhere  else  in  the  world  (The  USA  counts  with  187  under  development).  See  annex  7  and  Deloitte 
Report  2018  Global  life  sciences  outlook  Innovating  life  sciences  in  the  fourth  industrial  revolution: 
Embrace, 
at: 
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-Care/gx-lshc-ls-
outlook-2018.pdf 
12   https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-
biosimilars-whitepaper-final.pdf  
13   Therefore, the SPC is not formally an extension of the patent. The subject matter of protection of the 
SPC  needs  to  be  seen  in  the  context  of  the  protection  conferred  by  the  reference  patent  (the  latter  is 
generally  broader),  and  the  marketing  authorisation  granted  (which  is  purpose-bound,  and  thus  more 
limited). 
14   It should be recalled that two kinds of SPCs are available in the EU: the SPC for medicinal products, 
governed  by  Regulation  (EC)  No  469/2009,  and  the  SPC  for  plant  protection  products,  governed  by 
Regulation  (EC)  No  1610/96.  Only  the  former  is  addressed  by  the  current  initiative,  since  the  specific 

Available 

7 

 
                                                 
 
SPC protection aims to offsetting the loss of effective patent protection due to the length 
of  necessary  testing,  clinical  trials  and  marketing  authorisation  procedures,  thereby 
providing the pharmaceutical industry with appropriate incentives to innovate. 

An SPC takes effect at the end of the term of the basic patent, and can be granted for a 
period equal to the period which elapsed between the date on which the application for a 
basic  patent  was  filed  and  the  date  of  the  grant  of  the  first  authorisation  to  place  the 
product on the market in the EU, reduced by five years. This means that not all patented 
and  authorised  medicines  benefit  from  5  years  of  SPC  protection.  Some  may  not  be 
eligible  for  SPC  protection  at  all  (if  the  marketing  authorisation  was  granted  relatively 
quickly15); some may enjoy SPC protection having the full duration16; while others enjoy 
SPC  protection  but  on  the  basis  of  a  shorter  duration.  According  to  the  Copenhagen 
Economics study17, the average duration of SPCs granted in the EU amounts to 3.5 years. 

The benefits of an SPC for its holder18 are significant. Since an SPC ‘confer[s] the same 
rights  as  conferred  by  the  basic  patent’19,  the  monopoly  resulting  from  the  basic 
(reference)  patent  is  extended  and  enables  its  holder  to  prevent  competitors  from 
practicing  the  invention  (manufacturing  the  medicine,  offering  it  for  sale,  storing20  it, 
etc.) in those Member States in which an SPC has been granted21. 

problems described below in connection with medicinal products are not necessarily faced in connection 
with plant protection products, whose legal framework and market dynamics are different (just to take one 
example, no patent exemption similar to the ‘Bolar’ one is available for plant protection products in most 
of the Member States as confirmed by submissions to the Commission’s public consultation). 
15   No later than 5 years after the filing of the patent application (Art. 13(1) of Regulation 469/2009). 
16   In  certain  specific  cases,  as  set  out  in  Regulation  (EC)  No  1901/2006  on  medicinal  products  for 
paediatric use, the term can be extended by a further six months if a Paediatric Investigation Plan has been 
submitted to the EMA. 
17   See Annex I, overview of studies conducted. 
18   The  SPC  holder  usually  also  holds  the  reference  patent,  although  other  situations  are  possible  –  for 
instance that the patentee licenses the patent and that the licensee invests in the clinical trials and obtains 
the marketing authorisation and the SPC. 
19   Article 5 of Regulation 469/2009. Although the subject matter of protection is more limited (Article 4). 
20   Stockpiling waivers for patent rights (not for SPCs, which are out of the scope of TRIPS and are not 
global-harmonised rights) have been subject to dispute in the context of the TRIPS Agreement. In 1999, a 
Dispute Settlement Body (DS114) of the WTO was established to rule on the European Communities and 
their Member States’ complaint against Canada arguing, among other things, that the stock-piling provision 
stipulated in the Canadian Patent Act curtailed the rights conferred on a patent owner provided in Article 

8 

 
 
                                                                                                                                                 
 
Annex 8 includes a detailed table summarising the main impacts of the current EU SPC 
regime  for  medicines,  as  governed  by  Regulation  (EC)  No  469/2009,  on  various 
stakeholders during the SPC protection period. 

Reliance  on  SPC  protection  is  significant  and  increasing.  The  number  of  SPC 
applications filed in Member States has tripled from about 500 applications in 1993 (in 
then EU-12) to 1,518 in 2013 (in EU-28). A recent study (Kyle) shows that the share of 
new medicine introductions having an SPC in at least one Member State increased from 
75%  in  the  early  1990s to  86%  today22.  Biologics  account  for  about  16%  of  medicinal 
products subject to an SPC23. 

In addition to more medicines benefitting from SPC protection, SPCs are also protected 
in  an  increasing  number  of  Member  States.  States  that  acceded  to  the  EU  from  1986 
onwards were given transition periods during which they were not yet required to put in 
place SPC protection systems. The lapse of these transition periods has led to the gradual 
roll-out  of  SPC  protection  system  across  the  whole  EU.  The  effects  of  this  roll-out  are 
now  being  felt  in  particular  in  those  Member  States  that  joined  the  Union  as  and  from 
2004. 

1.4. Strong evolution of pharmaceutical markets in the EU and globally 

Since the introduction and codification of the SPC regime in 1992 and 2009 respectively, 
the  European  and  global  markets  for  pharmaceuticals  have  undergone  very  profound 
changes: 

(i) Global demand for medicines is increasing, with a significant switch towards generics 
and biosimilars  

The global pharmaceutical market has dramatically changed in the past 25 years. The fast 
growing  economies  of  Asia,  Central  and  South  America  –  the  so-called  ‘pharmerging’ 
regions – combined with ageing populations in the traditional industrialised regions, have 
driven massive global demand for medicines over these decades. This is confirmed by 
industry  data,  which  shows  that  total  global  spending  on  medicines  increased  from 
EUR 950 billion  in  2012  to  EUR 1.1 trillion  in  2017.  The  USA  represents  40%  of  this 
global market, while China (20%) has now displaced the EU into third place (with less 
than  15%).  Biologics  will  represent  25%  of  the  pharmaceutical  market  value  by  2022 
(Deloitte, 201724). 

Meanwhile, this growing global demand for pharmaceuticals is being accompanied by a 
shift  towards  ever-greater  market  share  by  generics  and  biosimilars,  which  could 
represent 80% of medicines by volume by 2020 and about 28% of global sales (Deloitte, 

28.1 of TRIPS, and were not within the limited exceptions provided by Article 30 TRIPS. The Panel ruled 
that stockpiling is indeed not justified under Article 30 for patent rights. The decision of the Panel was not 
appealed. 
21   According to the Mejer study, SPC protection for a single medicinal product is filed, on average, in 20 
Member States today. 
22   According to Kyle, there were the change in drug development (e.g. introduction of secondary clinical 
endpoints) has increased the relevance of SPCs over time. 
23   DG GROW calculations based on AdP database. 
24   https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-
biosimilars-whitepaper-final.pdf 

9 

 
                                                                                                                                                 
2018),  with  a  future  compound  annual  growth  rate  estimated  at  6.9%  (partly  due  to 
efforts by governments to contain overall healthcare costs). According to Medicines for 
Europe,  56%  of  medicines  by  volume  currently  supplied  in  the  EU  are  generics  or 
biosimilars25.  That  being  said,  penetration  rates  vary  considerably  from  one  Member 
State to another26. 

(ii)  Pharmaceutical  R&D  and  manufacturing  in  the  EU  is  significant  but  patterns  are 
changing  

The pharmaceutical sector in the EU is significant. According to Eurostat, there are about 
4 000  enterprises  active  in  this  sector  and  together  they  provide  about  570 000  jobs 
(figures  from  2015).  R&D  expenditure  in  the  EU  amounted  to  EUR  27bn  in  2015. 
Calculations by EFPIA show the following (these figures include Switzerland): 

The  leading  Member  States  in  pharmaceutical  R&D  investment  are  Germany,  UK  and 
France.  Belgium,  Denmark  and  Sweden  are  intensive  in  R&D  and  manufacturing. 
Germany and Italy are the leading manufacturers of pharmaceuticals in absolute terms; 
however,  while  the  trade  balance  in  Germany  is  very  high,  Italy  has  a  negative  trade 
balance. The leading Member States in employment in this sector (in absolute terms) are 
Germany  and  France.  Ireland,  Denmark,  Belgium  and  Sweden  are  highly  intensive  in 
manufacturing and have large trade balance. Member States that acceded to the EU as of 

25   According  to  IMS  Health,  there  have  been  a  number  of  successful  launches  of  non-biologics 
blockbusters medicines in the EU (e.g. fingolimod, rivaroxaban, palperidone, and abiraterone) that will be 
the  subject  of  generics  development  programmes  and  market  launches  over  the  longer  term.  In  the 
biosimilars  sector,  IMS  Health  also  signals  that  the  dominance  of  biological  therapies  in  the  top  10 
products in Europe anticipates the future importance of the biosimilar industry. 
26   Greece  and  Italy  only  have  18%  penetration  by  volume,  while  the  UK  and  Germany  have  over  80% 
penetration by volume representing over 35% in terms of value. (Source: OECD Health Statistics 2016). 

10 

 
 
                                                 
2004 (in particular Poland and Hungary) account for over 50 000 jobs combined, notably 
in the generics sector27. However, investment in R&D is low in these Member States. 
The  pharmaceuticals  manufacturing  sector  in  the  EU  is  composed  of  a  relatively  small 
number  of  large  capital-intensive  enterprises,  although  small  and  medium-sized 
enterprises (SMEs) are active in manufacturing as well, in particular as regards generics 
(details in annex 16)28. 60% of European production is generated by global firms who are 
active 
innovative  drugs, 
biological/biosimilars, as well as high-end APIs30 and value-added generic medicines. 

in  several  Member  States29.  Manufacturing 

includes 

Whilst the largest share of EU manufacturing is controlled by patent- and SPC-holding 
companies,  the  generics  and  biosimilar  sector  in  the  EU  comprises  350  manufacturing 
sites,  accounts  for  over  160 000  jobs  and  exports  to  over  100  countries.  According  to 
IMS  Health,  the  company  that  provides  information,  services  and  technology  for  the 
healthcare  industry,  the  generics  and  biosimilar  sector  accounts  in  volume  for  56  %  of 
prescribed  medicines  in  2016  and  accounted  for  22%  of  the  total  sales  of  medicines  in 
2014.  As  illustrated  in  the  map  provided  by  Medicines  for  Europe,  its  companies  are 
established in most Member States as indicated in the map below (originator firms also 
have biosimilars plants in other Member States, but these are not indicated): 

According  to  the  Eudra  Good  Manufacturing  Practice  (GMP)  database  which  is 
maintained and  operated by the EMA, 234 sites  in  19 Member States are authorised  to 
produce biologics and biosimilars (see annex 11 for details). 

Biosimilar  production  requires  costly  and  complex  development  and  manufacturing 
processes31, but is also highly lucrative. Given that approval of biosimilars started in the 
EU  much  earlier  than  elsewhere  (already  from  2006),  and  given  Europe’s  excellent 
ecosystem  (including  universities)  and  infrastructure  (including  clinical  and  contract 

27   See  annex  11  for  detailed  Member  State  statistics  on  industry  structure,  R&D,  trade,  FDI  and  EMA-
compliance manufacturing sites. 
28   According to Eurostat, since 2010, the number of enterprises in the EU-28 for which pharmaceuticals 
manufacturing is their principal activity has remained stable and amounts to around 4 000. 
29   That is, with the controlling company located outside the reporting country. 
30   Chemicals Producers Association (CPA) report (2015), Competition in the world APIs market. 
31   See annex 4. 

11 

 
 
                                                 
research organisations), the EU quickly became the world leader for the development and 
manufacturing  of  biosimilars  (with  31%  of  global  FDI  in  manufacturing  and  R&D  for 
biosimilars currently taking place in the EU)32. 
Today, 
the  classical  boundaries  between  originators  and  generics/biosimilars 
manufacturers  are  more  blurred.  Some  originators  have  branches  devoted  to  generics 
(e.g. Novartis/Sandoz, Pfizer and Merck KGaA are the top sellers of unbranded products 
in  the  EU33)  and  some  traditional  generic  manufacturers  are  developing  innovative  or 
high  value-  added  generics  and  biosimilars  (e.g.  Mylan,  Dr.  Reddy’s  or  Teva34).  This 
does  not,  however,  necessarily  translate  into  jobs  in  the  EU,  as  originators  tend  to 
increasingly  manufacture  biosimilars  and  generics  outside  the  Union,  and  notably  in 
Canada, the USA and Asia35 (e.g. Samsung Bioepis manufactures in Asia and registers 
biosimilars at the EMA and FDA, that are then commercialised  by the originator  firms 
Merck and Biogen36; Pfizer bought Hospira, a leading manufacturer of biosimilars with 
manufacturing  capacity  in  Asia  and  North  America;  and  Celltrion  manufactures 
biosimilars in Asia for Pfizer37). 

It should be noted that in the field of pharmaceutical innovation, start-ups and SMEs play 
an increasingly important role, in particular as regards the initial steps of innovation. In 
fact,  pharmaceutical  companies  are  increasingly  outsourcing  their  R&D.  Today, 
significant innovation comes from specialised SMEs focused on the initial steps of R&D 
and  development,  with  less  than  25%  of  the  new  medicines  being  developed  by 
originators (Deloitte, 2018). According to a report by Accenture (2016)38, over the past 
decade,  60%  of  innovator  small  molecules  and  82%  of  innovator  biologics  have  their 
roots  outside  big  pharmaceutical  companies  (see  for  more  details,  Annex  16  on  SME 
Test). 

(iii) Global developments of pharmaceutical R&D and manufacturing  

25  years  ago,  pharmaceutical  R&D  and  manufacturing  was  essentially  situated  in  the 
USA,  the  EU  and  Japan39;  today  pharmaceutical  R&D  and  manufacturing40  is  a  global 
phenomenon.  The  EU  has  traditionally  been  the  biggest  exporter  of  pharmaceuticals, 
representing  over  25%  of  the  Union’s  total  high-tech exports.  In  recent  years  however, 

32   Commission services calculations based on FT fDi database. 
33   Cf.  Table  5  in  Kyle  (2017).  The  ranking  is  based  on  the  number  of  product  launches  (of  a  unique 
chemical  combination)  per  firm  observed  in  2016  in  a  set  of  Member  States,  not  on  revenues  or  market 
share. 
34   http://www.tevapharm.com/research_development/rd_focus/pipeline/  
35   Manufacturing  biotechnology  sites  in  China,  Singapore  and  India  are  already  complying  with  Good 
Manufacturing Practice which is a standard required to produce medicines for the EU market. See Annex 
11 for details. 
36   www.samsungbioepis.com/en/pipeline/ 
37   https://dcatvci.org/5058-biosimilars-opportunities-and-challenges-in-the-us-and-eu 
38  https://www.accenture.com/t20150527T203922__w__/us-en/_acnmedia/Accenture/Conversion-
Assets/Microsites/Documents/Accenture-The-Future-of-Pharmaceutical-Innovation-Tackling-the-RD-
Productivity-Gap-Online.pdf 
39   Gambardella, A.,  Orsenigo L.,  &  Pammolli,  F.  (2000),  Global  competitiveness  in pharmaceuticals:  a 
European perspective, available at https://mpra.ub.uni-muenchen.de/15965/1/MPRA_paper_15965.pdf 
40   See  table  in  page  42  at:  https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-
Figures-2017.pdf 

12 

 
                                                 
India,  Singapore  and  Israel  have  also  managed  to  position  themselves  as  major 
pharmaceutical  exporters  (IFPMA  2017),  while  China  is  now  the  world  leader  for  the 
production of APIs (by volume), according to the World Health Organisation. 

Regarding  biosimilars  development,  according  to  Deloitte’s  2018  Global  Life  Sciences 
Outlook: 

‘Led by China, the Asia-Pacific region has more biosimilars in development than 
anywhere else in the world. China has the potential to become the frontier market 
for  biosimilar  drugs  (269  biosimilars  under  development).  The  growth  of 
biosimilars could push the industry into an innovative phase’. 

Indeed,  all  four  BRIC  countries  (Brazil,  Russia,  India  and  China)  have  updated  their 
regulatory rules and are becoming increasingly attractive for investments in biosimilars41 
(see  Annex  7  for  more  detailed  information).  Global  competition  is  therefore  fierce, 
requiring the EU to take the steps needed to remain competitive. 

2.  PROBLEM DEFINITION 

A problem tree is included at the end of this section. 

2.1. Decreasing 

competitiveness 

of  EU-based 

generics/biosimilars 

manufacturers 

the  EU  SPC  protection,  established  back 

In  the  current  international  context,  and  given  the  evolution  and  dynamics  of  the 
is 
pharmaceutical  market, 
unintentionally acting to the disadvantage of EU-based42 manufacturers of generics and 
biosimilars  vis-à-vis  non-EU-based  manufacturers,  and  this  detrimentally  affects  the 
whole EU pharmaceutical ecosystem. Responses to the public consultation confirm that 
EU-based  manufacturers  of  generics  and/or  biosimilars  are losing  competitiveness with 
respect to non-EU based ones. 

in  1992, 

As  identified  in  the  Single  Market  Strategy,  it  is  urgent  (see  section  1.2  and  2.1.3)  to 
tackle the difficulties faced by such manufacturers regarding export during the SPC term 
and entry onto the EU market immediately after SPC expiry. 

41   IMS Health identified in 2011 South Korea, India and Brazil as key macroeconomic drivers of growth, 
attracting  foreign  capital  by  creating  manufacturing  and  R&D  centres  of  excellence  for  biosimilars. 
According to the Financial Times fDi database, India and China are among six top countries in terms of the 
number of FDI announcements in biotechnology (life science) R&D and manufacturing. According to the 
EudraGMP  database,  sites  in  Brazil,  India  and  China  are  already  complying  with  EU  standards  for  the 
production of medicinal products. See Annex 7 for details. 
42   Evidently, no problem arises, for a given medicine, in respect of those Member States where no SPC 
has  been  granted,  and  where  manufacturing  may  freely  take  place  after  patent  expiry.  However,  as 
explained below, this situation has a minor impact, as the geographical coverage of SPC protection across 
the EU is usually very large. 

13 

 
                                                 
2.1.1.  Two specific problems 

Manufacturers43  of  generics  and/or  biosimilars  (based  in  Member  States  where  an  SPC 
has been granted for the reference medicine), face two problems: 

  Problem 1: during the period of protection covered by the certificate of the reference 
medicine  in  the  EU,  they  cannot  manufacture  for  any  purpose,  including  export 
outside  the  EU  to  countries  where  SPC  protection  for  the  reference  medicine  has 
expired or  never existed, while  manufacturers based in  those third  countries can  do 
so44; 

  Problem 2: immediately upon the expiry of the certificate: they are not ready to enter 
the EU market on day-145, since the EU SPC system does not allow manufacturing in 
the  EU  until  then.  By  contrast,  manufacturers  based  in  third  countries  where  SPC 
protection  for  the  reference  medicine  has  expired  earlier  or  never  existed46  can  be 
ready from day-1 to enter, via exports, the EU market, and thus gain a considerable 
competitive advantage. 

These  problems  put  EU-based  manufacturers  at  a  competitive  disadvantage  vis-à-vis 
manufacturers  located  outside  the  EU  in  both  global  market  and  in  the  (day-1)  EU 
market.  This  is  aggravated  by  the  dynamics  of  generics/biosimilars  markets  whereby, 
after  expiry  of  patent/SPC  protection  of  the  reference  medicine,  only  the  first 
generics/biosimilars  to  enter  the  market  capture  a  significant  market  share  and  are 
financially viable (see section 2.2.2 below). 

In the public consultation on SPCs, these two problems were  confirmed in submissions 
by the group of generics/biosimilars, as well as by the group of patients/doctors/insurers’, 
as follows: 

Table 2.1.1. 

Generics/biosimilars’ opinion 

Patients/doctors/insurers’ opinion 

Yes 
(The problem exists) 

No  Don’t 
know 

No 
answer 

Yes 
(The problem exists) 

No  Don’t 
know 

No 
answer 

Problem 1 

Problem 2 

56 

53 

1 

3 

2 

3 

4 

4 

10 

6 

1 

3 

4 

6 

- 

- 

43   Whether they have their headquarters in the EU or in a third country (this includes generics/biosimilars 
divisions of innovative pharma companies). 
44   At  least  if  they  are  based  in  a  country  having  no  SPC  protection  (e.g.  China,  India,  Brazil,  Mexico, 
Russia),  or  having  SPC  with  a  manufacturing  waiver  for  export  purposes  (e.g.  Canada–  which  is  very 
relevant  in  relation  with  the  highly  lucrative  US  market),  or  countries  such  as  Israel  with  shorter  SPC 
protection than the EU. 
45   Although SPCs are granted nationally, Article 13 of Regulation 469/2009 is designed to ensure that all 
SPCs granted by Member States for the same medicine expiry simultaneously (in a few cases there may be 
temporary distortion). 
46   While TRIPS provides for minimum standards of patent protection in WTO countries, it does not cover 
SPCs. 

14 

 
 
 
                                                 
2.1.2.  Unintended side-effects of the EU SPC framework 

Taking  a  step  back,  the  Bolar  exemption  (governed  by  Directive  2001/83/EC  and 
Directive  2001/82/EC  which  in  practice  can  be  considered  a  manufacturing  waiver  for 
testing and clinical trials47 purposes) was intended to ensure that a generic could enter the 
market  as  soon  as  possible  after  the  expiry  of  patent/SPC  protection.  Without  this 
exemption, necessary testing and clinical trials prior to the authorisation of a generic or 
biosimilar medicine could only start after such expiry, which practically speaking, would 
extend the patent/SPC protection period of the reference medicine by several months, if 
not  years  in  some  cases,  beyond  its  legal  duration  (considering  the  time  needed  to 
develop a generic or biosimilar and get it approved). The Bolar exemption has eliminated 
this untended side-effect of the strong patent/SPC protection, based on the basic rationale 
that free competition should be allowed as soon as protection expires. 

two  unintended  consequences 

Regarding the SPC manufacturing waiver, firms are facing a situation similar to the pre-
Bolar  one. While  the  legitimate  purpose  of  an SPC  is  to  prevent the  manufacturing  for 
the purpose of marketing of competing products on the EU market when it is in effect, it 
that  were  not  foreseen,  namely  preventing 
has 
generics/biosimilars  (1)  from  being  manufactured  in  the  EU  and  exported  to  third 
countries (where no legal protection applies) during the EU SPC term, and (2) from being 
manufactured in the EU (and then stored) early enough to be placed on the EU market 
immediately from day-1. 

The  absence  of  an  SPC  manufacturing  waiver,  in  practical  terms,  results  in  unduly 
extending SPC protection beyond its legal term. This is detrimental to the day-1 entry of 
generics/biosimilars  onto  the  EU  market  (as  they  can  be  supplied  from  day-1  by  firms 
based  in  ‘non-SPC’  third  countries),  but  also,  much  more  so,  to  the  competitiveness  of 
EU-based generics/biosimilars manufacturers, which are not able to compete with those 
based in ‘non-SPC’ third countries, neither in terms of export during the SPC term, nor 
of day-1 entry onto the EU market. 

The  following  charts  underline  the  difference  between  the  theoretical  (intended)  and 
practical  (i.e.  unintended  and  de  facto)  consequences  of  the  scope  of  the  exclusivity 
conferred by SPCs. 

47 Development of biosimilars involves some clinical trials. 

15 

 
 
                                                 
2.1.3.  Magnitude of the problem and urgency to act 

The  problems  described  above  preclude  major  export  opportunities  for  EU-based 
manufacturers  of  generics  and  biosimilars  (about  EUR 1bn  yearly  for  a  sample 
representing  32%  of  relevant  medicines  (see  detailed  quantification  in  section  6.3,  and 
tables  7.1  and  7.2)).  They  also  imply  a  loss  of  ‘lead time’  for  EU-based  manufacturers 
wanting  to  enter  into  the  EU  market  after  expiry  of  SPC  protection,  thus  making  these 
manufacturers  forego  significant  opportunities  in  a  fast-growing  global  pharmaceutical 
market, which is undergoing a significant shift toward generics and biosimilars. 

As indicated in section 1.2, as of 2020, a growing number of medicinal products will go 
off-patent/off-SPC48,  opening  a  significant  market  for  generics  –  and  biosimilars  in 
particular (expected to amount to EUR 95bn) – to competition. Indeed, the global market 
for generic medicines is expected to increase by 50% over the 5 year period up to 2021, 
reaching EUR 500bn. In this context, the biologics market is booming, with annual sales 
of  over  EUR  150bn  (biologics  currently  top  the  list  of  blockbusters),  and  originators 
increasingly  entering  the  market  of  biosimilars.  The  Pugatch  study  (2017)49  estimates 
that  every  year  a  global  market  of  between  USD  2.7bn  and  USD  5.4bn  is  opened  to 
generics and biosimilars competition. 

EU-based  manufacturers  of  generics  and  biosimilars  are  therefore  at  risk  of  foregoing 
significant sales opportunities, both within EU and in global markets. This will act to the 
detriment  of  existing  companies,  but  will  also  deprive  new  companies  from  the 
possibility of starting- and scaling up in high-growth markets. Companies will be faced 
with  a  stark  choice:  either  to  manufacture  in  Europe,  where  they  are confronted  with  a 
legal barrier; or to manufacture abroad. 

There is an urgent need to tackle the specific problems faced by EU-based generics 
and  biosimilars  manufacturers.  Markets  for  generics  and  biosimilars  are  becoming 
highly competitive, and these markets are steadily growing driven by a major patent/SPC 
cliff of blockbusters, especially in the biologics sector, and by increasing global demand 
for medicines (see further section 1.2). 

48   See Annex 14 for details. See also: World Preview 2017, Outlook to 2022, EvaluatePharma, 2017. 
49   http://www.pugatch-consilium.com/?p=2518 

16 

 
 
                                                 
This  has  been  understood  by  EU’s  trade  partners  that  recently  have  been  investing  in 
pharmaceutical manufacturing and biosimilars development50. 

Doing  nothing,  or  postponing  an  initiative  would,  firstly,  further  weaken  the  EU 
pharmaceutical industry (by not allowing it to seize the new emerging opportunities), and 
secondly,  unravel  the  EU’s  pioneering-effect  competitive  advantage  in  the  biosimilar 
sector in particular. 

2.2. Two problem drivers 

The two identified problems share the following drivers: 

-  Many of the EU’s trading partners grant weaker or no SPC protection, which is 
in stark contrast to the EU’s own SPC protection, thus leading to asymmetry in 
SPC protection globally; 

-  The market for generics and biosimilars is highly competitive with a strong ‘first 
mover’ effect (i.e. a clear advantage for the first mover) both in the export and 
EU markets. 

2.2.1.  Asymmetry in SPC protection globally 

While  the  TRIPS  agreement  obliges  all  EU  trade  partners  to  provide  at  least  20-year 
patent protection, it does not impose SPC protection – which is a sui generis right. Many 
trade partners of the EU do not provide for SPC or SPC-like protection at all (such as the 
BRIC  states)51,  some  offer  SPC  protection  with  a  manufacturing  waiver  for  export 
purposes (e.g. Canada), while others offer SPC or SPC-like protection that is in general 
shorter than the EU SPC protection (e.g. USA and Israel52). 

 The following table shows that, in most cases, SPC protection is the longest in the EU. 

Country 

US 
Korea 
China 
India 
Canada 

Molecules with 
known SPC expiry 
date 

Molecules with SPC 
expiry date earlier than 
in the EU 

Average difference in SPC 
expiry dates between EU and 
third country (years) 

109 
44 
41 
22 
40 

93 
40 
41 
22 
40 

2.06 
2.86 
3.31 
3.07 
3.53 

Note: See Annex 9 for details. 

50   The Asia-Pacific region has more biosimilar in development (led by China (269) and India (257)) than 
the rest of the world (the USA has 187 under development): See annex 7 and Deloitte Report 2018 Global 
life  sciences  outlook  Innovating  life  sciences  in  the  fourth  industrial  revolution:  Embrace,  build,  grow. 
Available  at:  https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Life-Sciences-Health-
Care/gx-lshc-ls-outlook-2018.pdf 
51   As of 2016, 56 out of the 164 states who are members of the WTO have a form of SPC-like protection 
for medicinal products. Conversely, this means that 108 of these state have no such protection. 
52   Based  on  the  data  available  on  the  differences  in  the  expiry  dates  between  EU  and  the  USA:  1) the 
overview provided by Medicines for Europe shows that in 80% of cases, protection expires later in the EU 
than in the USA, 2) the Deloitte study reports that SPC protection of only 4 out of the 11 most important 
biologics expires earlier in the EU, 3) QuintilesIMS selected a sample of 25 molecules and concludes that 
in many instances, the SPC in a Member State expires earlier than in the USA. However, it includes Poland 
and Slovenia, where SPC has been introduced only recently. 

17 

 
                                                 
Even  if  the  EU  were  able  to  convince  third  countries  to  accept  SPC-  or  SPC-like 
protection  via  its  FTAs,  CETA  is  likely  to  have  a  precedent  effect  in  future  FTA 
negotiations  negotiated.  Third  countries  accepting  to  introduce,  or  increase,  SPC 
protection might well, at the same time, ask for a manufacturing waiver. 

On this basis, it can be observed that: 

  there  is  a  reasonably  level  playing  field  between  most  countries  of  the  world 
insofar  as  patent  protection  is  concerned  (with  a  duration  of  20  years),  as 
provided for under TRIPS; 

  there  is  a  lack  of  a  level  playing  field  between  the  EU  and  other  countries 
regarding  SPC  (or  SPC-like)  protection,  which  is  simply  not  available  in  many 
third countries; more specifically, there is a lack of a level playing field between 
EU-based  manufacturers  of  generics/biosimilars  and  those  based  in  most  third 
countries  (56  submissions  from  generics/biosimilars  to  the  public  consultation 
claim that the longer the difference in the duration of protection, the less attractive 
the EU is for their manufacturing activities). 

Therefore, generics and biosimilars manufacturers established in third countries with no 
(or shorter) SPC or SPC-like protection are able to start manufacturing earlier than their 
EU-based  competitors  (this  is  a  driver  to  the  first  problem).  This  timing  advance  in 
manufacturing  also  puts  them  in  a  much  better  position  for  day-1  entry  onto  the  EU 
market (the driver of the second problem).  

Thus, the strong SPC protection in the EU introduced in the early 1990s is now creating 
unintended consequences not foreseen by the legislator at that time. In the early 1990s, 
developing countries did not constitute major competitors regarding the development of 
generics (whose market share was in any event limited). In addition, biosimilars did not 
even exist at that time. As a consequence, the two main problems described above had a 
low impact (causing little distortion). They were therefore not addressed in the  travaux 
préparatoires  of  the  1992  Regulation  (COM(90)101  final).  However,  today,  modern 
infrastructure  for  the  manufacturing  of  generics  and  biosimilars  can  be  found  in  many 
developing countries that have no SPC protection (and notably in the BRIC states). 

2.2.2.  The ‘first mover’ advantage 

These  problems  faced  by  EU-based  generics  and  biosimilars  manufacturers  are 
aggravated  by  the  dynamics  of  the  generics/biosimilars  markets  where  frequently  only 
the  first  products  to  enter  markets  in  a  timely  way  after  protection  expires  capture  a 
significant market share and are financially viable. In the EU, generic firms entering one 
year after the first generic entrant only capture 11% of the first entrant’s market share53. 
Even though the decline in prices for biosimilars is not as steep as in the case of generics, 
there  is  a  race  in  this  market  to  launch  first54,  since  later  entrants  have  difficulty  in 
gaining market share without a further reduction in prices. For biosimilars, studies show 
that  in  2016,  the  first  biosimilars  to  reach  the  market  captured  over  70%  market  share 

53   CRA  study  (2017).  A  number  of  studies  support  the  existence  of  a  first  mover  advantage  effect  for 
generic products. See Sharjarizadeh et al (2015), Yu and Gupta (2008), Hollis et al (1991). 
54   The degree of first mover advantage depends, in part, on the switching costs between reference product 
and the generic or biosimilar. Switching costs for biosimilars tend to be higher than for generics, including 
switching  studies,  longer-treatment  periods,  physician-acceptance  and  other  entry  barriers.  This  suggests 
that the effects of a ‘first-mover’ advantage might be stronger for biosimilars. 

18 

 
                                                 
(biosimilar volume)55. Second and third biosimilar entrants captured respectively 30-40% 
and 5-22% market share. 

In  order  to  capture  those  potential  sales,  companies  must  supply  the  EU  market  either 
from  their  own  plants  or  by  subcontracting  to  third  parties  based  in  countries  where 
protection of the reference medicine has already expired. 

2.3. Consequences:  relocation  and  decreasing  attractiveness  of  the  EU  as  a 

pharmaceutical hub 

The  problems  above  result  in  a  lack  of  a  level  playing  field  between  EU  and  non-EU 
based  generic  and  biosimilar  producers,  when  it  comes  to  competing  in  both  global 
markets and day-1 entry in the EU. As it will be shown below, this affects not only EU-
based manufacturers of generics and biosimilars, but also EU-based originators, and even 
EU  patients  (e.g.  in  terms  of  diversified  supply).  Thus,  the  whole  EU  pharmaceutical 
ecosystem is affected. 

This situation is particularly detrimental for small and medium-sized EU pharmaceutical 
companies  (see  Annex  16  on  SME  Test),  since  they  rarely  possess  manufacturing 
facilities in ‘non-SPC’ third countries. The creation and growth of EU-based start-ups is 
also affected, as they require a proper ecosystem on top of a regulatory environment free 
of  unintended  legal  barriers.  This  situation  gives  way  to  a  number  of  negative 
consequences that will be exacerbated over time. 

The  main  consequence of  the  above-mentioned  problems  is  increased  relocation and/or 
outsourcing  of  the  manufacturing  of  generics/biosimilars  outside  the  EU,  and  loss  of 
business  opportunities  inside  the  Union  more  generally,  as  companies  will  have  a 
tendency  to  circumvent  the  current  legal  barriers  they  face,  and  will  increasingly 
manufacture  in  third  countries  with  weaker  or  no  SPC  protection,  so  as  to  be  able  to 
compete in global markets or be ready for day-1 entry onto the EU market. 

Three examples of relocation:  

‘Levofloxacin’ (an antibiotic that reached the sales-status of blockbuster before the SPC expiry) 
went  out  of  SPC  protection  in  2011  in  Member  States.  Previously,  a  generic  manufacturer 
decided to set up production in Poland because SPC protection was not available in that country. 
From 2010 to 2016 (i.e. following SPC expiry in the USA and later in most EU Member States) 
the  compounded  market  value  creation  (sales  according  to  IQVIA)  was  more  than  EUR  120m. 
The generic manufacturer claims that the production would have been moved outside of the EU if 
the SPC had been applicable in the recently-joined Member States at that time.  

An  EU-based  generic  manufacturer  reported  that  it  decided  to  set  up  the  production  of 
‘remifentanil’  in  Serbia,  so  as  not  to  face  the  legal  barriers  to  manufacturing  in  the  EU.  This 
product was SPC-protected in all Member States at the time. The value creation of the generic 
medicine is over EUR 10m from 2011 to 2016 (according to IQVIA). 

A  developer  of  generics  and  biosimilars,  headquartered  in  Spain,  has  reported  the  successful 
launch  of  a  monoclonal  antibody  (a  complex  biosimilar)  in  several  countries  in  the  American 
continent, though the firm has had to expand production to Argentina due to EU SPC protection. 

Source: provided by generic manufacturers. 

55   The Impact of Biosimilar Competition in Europe (2017). The report analyses the impact on volume on 
two biosimilar therapy classes, Anti-TNF and EPO. 

19 

 
                                                 
Delocalisation/outsourcing  of  pharmaceutical  production  will  come  with  additional 
consequences, as follows: 

  Detrimental  impact  on  manufacturing  capacity,  employment  and  skills  in  the 

EU generics and biosimilars sector: 

-  Loss  of  jobs  in  the  EU  pharmaceutical  industry,  in  particular  the  generics  and 
biosimilars  sector,  which  accounts  for  160 000  jobs  in  the  EU,  according  to 
Medicines for Europe. 

-  Loss  of  know-how  and  a  brain  drain  of  highly-skilled  jobs,  especially  in  the 
biosimilars  sector,  where  R&D  is  increasingly  shifting  to  other  countries, 
notably in Asia. 

-  Relocation of R&D, in particular for biosimilars56: the biosimilars sector is R&D 
intensive,  and  R&D  for  biosimilars  tends  to  be  located  where  manufacturing 
takes place. If manufacturing of biosimilars is rendered less attractive in Europe, 
then there is a risk that R&D for biosimilars will also leave the Union, causing 
Europe  to  lose  its  related  expertise  and  competitive  advantage.  In  the  generics 
sector,  co-location  of  R&D  and  manufacturing  is  less  frequent,  and  the  risk  of 
delocalisation of R&D is thus lower. 

-  Loss  of  manufacturing  capacity:  once  production  is  delocalised,  it  might  well 
never return to the EU. This risk affects EU-based SPC-holders (that also use the 
manufacturing  capacity  of  generic  manufacturers)  as  well  as  generics  and 
biosimilars  manufacturers.  According  to  Medicines  for  Europe,  the  minimum 
cost of relocating the production of a single biological product is EUR 10m and 
it  takes  a  minimum  of  1.5-2  years.  If  the  relocation  requires  additional 
regulatory approvals to ensure that the safety, quality and efficacy of the product 
are not affected, costs easily multiply. Switching API suppliers has a high cost 
due  to  the  requirement  of  new  stability  batches  and  new  analytical  studies  on 
impurities,  among  others.  It  is  estimated  that  for  the  more  complex  APIs,  the 
cost associated to a change of API supplier could be around EUR 4m. Therefore, 
once an API supplier is chosen, the decision tends to be irreversible. 

  Detrimental impact on the EU pharmaceutical industry as a whole, including the 

innovative pharmaceutical industry in the longer term: 

-  Delocalisation  of  manufacturing  capacity  of  medicines  outside  the  EU  might 
negatively  affect  originators  investments  and  manufacturing  in  the  Union,  as 
originators  often  outsource  production  and  are  investing  in  biosimilars.  As 
already  mentioned,  originators  are  heavily  investing  in  developing  and 
commercialising  biosimilars  in  the  EU  and  other  markets  to  compete  with  the 
highly-lucrative innovative biologics (patent/SPC protected) of other originators. 
EMA  databases  (details  in  annex  5)  show  that  15  out  of  33  biosimilars  with 
current  valid  authorisations  in  the  EU  issued  to  major  originator  firms  (e.g. 
Amgen,  Boehringer,  Eli  Lilly,  Merck  and  Sanofi)  or  their  biosimilar  divisions 
(e.g.  Pfizer-Hospira,  Novartis-Sandoz  and  Novartis-Hexal).  Samsung  Bioepis 

56   Alcacer,  J.  and  Delgado  M.  (2016).  Spatial  organization  of  firms  and  location  choices  through  the 
value  chain.  Management  Science,  62(11),  3213-3234.  Analysing  locations  of  new  establishments  of 
biopharmaceutical firms in the USA from 1993 to 2005, authors show that collocation of activities varies in 
the value chain. Although present in all activities, it is larger for R&D and manufacturing than for sales. 

20 

 
                                                 
and  Celltrion,  which  have  6  biosimilars  authorisations  at  EMA,  often 
manufacture  and  license  to  originators57.  Approximately  30%  of  commercial 
biologics  (reference  products)  are  manufactured  by  contract  manufacturing 
organisations58, some of which are located in Asia (e.g. Samsung Bioepis). 

-  Loss  of  administrative  regulatory-related  skills  in  the  EU:  it  is  preferable  that 
regulators be located near an advanced R&D and production ecosystem. If it is 
delocalised, there will be lessened impact of EU rules on the global regulatory 
environment,  or  other  trade  partners  could  even  set  the  future  regulatory  rules 
for  global  markets.  This  would  impact  adversely  on  EU-based  originators  as 
well. 

57   https://www.dcatvci.org/5058-biosimilars-opportunities-and-challenges-in-the-us-and-eu 
58   http://www.pharmtech.com/biosimilars-supporting-contract-manufacturers-growth 

21 

 
                                                 
  Detrimental impact on EU patients and national public health budgets/systems: 

-  Less diversity of (quality) generics and biosimilars to EU patients, and reduced 
security  of  supply,  if  the  production  is  concentrated  in  particular  geographical 
regions outside the EU. 

-  An increasing dependence on imports of generics has been a trend in the EU. As 
reported by Member States to the Commission public consultation, the share of 
EU-manufactured generics decreased from 60% in 2010 to 55% in  2013 in the 
EU. A Commission Staff Working Document from 201459 revealed that while in 
the 1980s more than 80% of APIs destined for the EU market were of European 
origin, the proportion had decreased to 20% in 2008. The increased dependency 
on  non-EU  sources60  has  already  led  to  concerns  with  regard  to  maintaining 
security and quality of supply in the EU61. 

-  These  concerns  have  materialised  in  recent  years  also  in  the  form  of  some 
episodes of shortages, in the EU, of medicines mostly supplied from outside the 
EU  following  accidents  or  unexpected  events62.  The  website  of  the  EMA63 
provides a catalogue of shortages of supply of medicines in the EU. It should be 
noted that some shortages are due to disruptions to production which takes place 
exclusively outside the EU. 

-  An increasing risk of imported counterfeit and falsified medicines has also been 
detected  by  EU  customs  authorities,  which  in  2016  seized  almost  400 000 
pharmaceutical articles. 

-  A  significant  majority  of  citizens  in  the  public  consultation  ˗˗  32  out  of  43 
submissions  ˗˗  indicated  that  they  care  about  the  origin  of  production  of  the 
medicines  they  consume  (only  3  respondents  suggested  that  they  do  not  care). 
Some of the submissions express supply and quality concerns. 

-  The  relocation  of  clinical  trials  may  also  be  detrimental  to  certain  groups  of 
patients, as participants in such tests may benefit from experimental medicines. 

- 

In  the  medium  term,  competition  in  the  EU  will  be  reduced,  especially  for 
medicines  that  are  not  so  profitable  (Kyle  2017),  but  still  have  important 
therapeutic  value.  Reduced  competition  affects  access  to  medicines  for  EU 
patients and health expenditure for EU public health budgets. As often happens, 
reduced competition may lead to price increases. 

59   SWD(2014)216. 
60   China  is  the  world’s  leading  producer  and  exporter  of  active  pharmaceutical  ingredients  (APIs)  by 
volume,  accounting  for  20%  of  total  global  API  output,  and  having  displaced  India.  (Source: 
http://www.who.int/phi/publications/2081China020517.pdf)  In  the  past,  a  strong  delocalisation  of  API 
manufacturing  to  Asia  led  to  a  significant  dependency  on  commodity-APIs  from  Asia.  According  to  the 
CRA  report,  currently  Asia  accounts  for  63%  of  the  world’s  API  production.  European  API  production, 
mainly in Spain and Italy, accounts for 21% of the world market. 
61   https://www.reuters.com/article/us-pharmaceuticals-europe-india/eu-recommends-suspending-
hundreds-of-drugs-tested-by-indian-firm-idUSKBN16W0A4 
62   The Tianjinin explosion in 2015 in China damaged storehouses and production lines of medicines that 
led to shortages of supplies in the EU. 
63http://www.ema.europa.eu/ema/index.jsp?curl=pages/regulation/document_listing/document_listing_000
376.jsp&mid=WC0b01ac05807477a6 

22 

 
                                                 
-  Patients  in  a  few  Member  States  were  not  able  to  access  to  certain  treatments 
until a biosimilar was available. Therefore, limiting the day-1 entry capacity for 
EU  biosimilars  in  those  Member  States  could  make  a  difference  for  some  EU 
patients. 

It is thus apparent that the current situation vis-à-vis delocalisation and outsourcing is not 
only  detrimental  for  EU-based  manufacturers  of  generics  and  biosimilars,  but  also  for 
other categories of stakeholders. 

Problem tree: context – drivers – problems - consequences 

3.  WHY SHOULD THE EU ACT?  

3.1. Legal basis 

Regulation  (EC)  No  469/2009  concerning  the  SPC  for  medicinal  products  is  based  on 
Article 114 of the Treaty. An EU legislative initiative would prevent the heterogeneous 
development of national rules and practices which directly affect the functioning of the 
internal market. Thus, EU action to tackle the asymmetry in SPC protection and the ‘first 
mover’ effect should be grounded on this legal base. 

While the envisaged action does have an effect on the trade relations between the EU and 
third countries, its centre of gravity is the competitiveness of manufacturers of medicines 
within the internal market. 

23 

 
 
3.2. Necessity for action at EU level 

At national level, agreements between generics/biosimilar manufacturers and originators 
have  been  concluded  (see  section  6.2),  however  without  properly  addressing  the 
objective to create a level playing field for generics/biosimilar manufacturers within the 
whole of the EU territory. 

Firstly,  it  should  be  recalled  that  these  agreements  are  of  a  voluntary  nature.  While  in 
individual cases they may have led to positive results (e.g. allowing individual companies 
to advance manufacturing), originators are not bound by them. Generally speaking, and 
as  reflected  in  submissions  to  the  public  consultation,  these  agreements  are  not 
considered  to  have  been  successful  and  these  actions  are  therefore  not  sufficient  to 
address the challenges and objectives described in the problem definition. 

Secondly, assuming  they have  encouraged  day-1 entry  of generics and biosimilar, such 
agreements are limited to the jurisdiction of one Member State and do not cover the full 
territory  of  the  Union.  Even  if  individual  Member  States  introduced  binding  rules  on 
manufacturing, its territorial effect would always be limited. 

By  contrast,  action  at  EU  level  would  avoid  the  development  of  possibly  diverging 
national  legislation;  avoiding  such  diverging  national  approaches  has  been  a  main 
objective of the SPC Regulation. EU action would also enable the legislator to tackle ˗ 
from an internal market perspective ˗ the issue of the competitive advantage enjoyed by 
manufacturers based outside the EU over their competitors within the EU, a competitive 
advantage unintentionally created by the SPC Regulation itself. 

As a consequence, intervention at EU level is considered necessary. 

3.3. Added value of EU action 

EU-level action would bring significant added-value compared to national-level action to 
the extent that it would preserve the integrity of the internal market, by providing  for a 
uniform, transparent and fair approach. 

Indeed,  while  soft-law  approaches  based  on  voluntary  agreements  between  originators 
and  generics/biosimilars  manufacturers  are  already  possible  today  (and  used  in  certain 
Member States), as explained above, an increasingly heterogeneous and non-transparent 
situation across the EU would result if their use were generalised. 

4.  OBJECTIVES: WHAT IS TO BE ACHIEVED? 

An ‘objectives tree’ is included at the end of this section. 

4.1. General objectives 

The  general  objective  of  the  policy  action  is  to  create  a  level  playing  field  for  the 
manufacturing  of  generics  and  biosimilars  in  the  EU  vis-à-vis  manufacturing  in  third 
countries, for the purposes of export to third-country markets, and for timely entry into 
the EU-market ‘on day 1’. This would defend and increase the global competitiveness of 
the  EU  pharmaceutical  industry  (including,  but  not  limited  to,  manufacturers  of 
generics/biosimilars) and on jobs in the EU. 

As  stressed  by  Parliament,  this  objective  should  be  achieved  without  undermining  the 
market exclusivity granted under the SPC regime in protected markets. 

24 

 
4.2. Specific objectives 

The specific objectives sought with this initiative are the following: 

(1) Ensure that SPC protection in the EU does not prevent EU-based manufacturers 
of  generics  and  biosimilars  from  entering  unprotected  third  country  markets 
during the EU SPC protection period. 

The  criteria  for  monitoring  and  evaluating  this  objective  will  be,  among  other 
things, the evolution of future exports of EU generics and biosimilars (including 
APIs),  the  share  of  EU  exports  of  these  products,  and  the  market  share  of  EU 
generics/biosimilar in third country markets. 

(2) Ensure that SPC protection in the EU does not prevent EU-based manufacturers 

of generics and biosimilars from entering the EU market on day 1. 

For  some  products,  this  objective  can  be  partly  achieved  through  fulfilling 
specific  objective  (1).  This  is  because  building  manufacturing  capacity  in  a 
Member  State  for  export  purposes  during  the  SPC  term  would,  for  certain 
products, allow for a quicker scale up of production to enter the EU market on 
day1. 

The  criteria  for  monitoring  and  evaluating  of  this  objective  will  be  the  future 
evolution of the EU market share of EU-manufactured generics and biosimilars. 

Through  fulfilling  objectives  (1)  and  (2),  the  following  beneficial  consequences  would 
result: 

  strengthening and retaining manufacturing capacity and know-how in the EU, thereby 

reducing unnecessary delocalisation/outsourcing; 

 

reinforcing  the  EU  supply  chain  of  pharmaceutical  products  (less  dependency  on 
imports); 

  strengthening EU patients’ access to medicines by diversifying geographical sources 

of supply; 

 

reinforcing  the  sustainability  of  the  EU  health  systems,  including  from  the 
perspective of the national public health budgets; 

  removing obstacles to starting generic and biosimilar businesses in the EU, especially 
for SMEs that have more difficulties in overcoming obstacles and facing up to non-
EU competition64. 

The  above  objectives  must  be  compatible  with:  (i)  keeping  effective  SPC  protection  in 
the  EU  until  the  expiry  date  of  the  SPC,  i.e.  maintaining  the  exclusive  sales  of  SPC-
protected medicines until SPC expiry in each Member State; and (ii) not increasing risks 
of diversion of generics and biosimilars in Member States where an SPC is in effect. 

Additional  monitoring  criteria  for  both  objectives  would  be  the  evolution  of  the  future 
number of manufacturing sites in the EU, and jobs in the different segments of the EU-
based pharmaceutical industry. 

64 Other obstacles can also exist, such as lack of funding and social/labour market conditions. 

25 

 
                                                 
Objectives of the initiative – Objectives tree 

5.  WHAT ARE THE AVAILABLE POLICY OPTIONS? 

5.1. What is the baseline from which the options are assessed? 

The baseline scenario related to this initiative is ‘no policy change’ (status quo/option 0). 
With  no  policy  action,  the  identified  problems  would  not  be  fixed.  As  described  in 
section 2.3, this would generate a number of negative consequences for manufacturers of 
generics or biosimilars (loss of competitiveness), for patients and health systems, and for 
the EU pharmaceutical sector as a whole.  

In this scenario, some Member States could still apply unilateral approaches at national 
level,  e.g.  via  voluntary  agreements  between  stakeholders  (as  explained  under  section 
5.3.1,  5.3.2  and  6.2).  However,  such  approaches  are  not  likely  to  be  effective  and  risk 
undermining the single market. 

5.2. Options discarded at an early stage  

The following options have been discarded at an early stage: 

5.2.1.  Trying  to  persuade  third  countries  to  adopt  SPC  protection  in  line  with 
that of the EU (i.e., reducing the existing global SPC protection asymmetry) 

The Commission has already  persuaded,  via FTA negotiations, a few third countries  to 
introduce  SPC-type  protection.  However,  major  trading  partners  have refused  to  accept 
SPC  provisions  in  FTAs,  or  have  accepted  lower  levels  of  SPC  protection,  such  as 
Canada.  CETA  obliges  Canada  to  introduce  at  least  a  2-year  SPC  protection  that  will 
benefit the exports of European pharmaceuticals to Canada which amount to about EUR 

26 

 
4bn  annually65,  but  CETA  also  allows  Canada-based  generics  and  biosimilars,  during 
those 2-years of SPC protection, to manufacture for export purposes. 

The situation of the base-line scenario could be improved by giving higher priority to the 
introduction  of  SPC  protection  in  third  countries  in  on-going  and  future  FTA 
negotiations.  However,  giving  higher  priority  to  the  introduction  of  SPC  protection  in 
FTA negotiations is not a realistic option to effectively meet the objectives, since some 
trade  partners  might  not  accept,  in  the  short  to  medium  term,  to  introduce  SPC 
protection. In addition, such negotiations take time and, as regards the outcome, the EU 
is – by definition – dependent on the other partner. 

5.2.2.  Expanding the scope of the EU ‘Bolar patent/SPC exemption’ to allow for 

advance manufacturing for export purposes 

The  Bolar  patent  exemption,  defined  by  Articles  10(6)  of  Directive  2001/83  on  the 
Community  code  relating  to  medicinal  products  for  human  use  and  Articles  13(6)  of 
Directive 2001/82 on the Community code relating to medicinal products for veterinary 
use,  allows  small-scale  manufacturing  of  generics/biosimilars  to  take  place  during  the 
patent/SPC  protection  period  of  the  reference  medicine,  in  order  to  conduct  the  testing 
required  to  obtain  regulatory  approval.  The  aim  of  this  exception  is  to  speed  up  the 
regulatory approval of generic/biosimilar medicines, and their entry into the market once 
the  patent/SPC  of  the  reference  medicine  has  expired.  In  theory,  one  option  could 
hypothetically be to expand the scope of the Bolar exemption to include manufacturing 
for export and/or stockpiling for EU day-1 entry (see the Roland-Berger study). 

However, submissions received in the context of the public consultation did not identify 
this as an option. In addition, given that the Bolar exemption applies to both SPCs and 
patents,  expanding  the  Bolar  exemption  to  allow  for  export  manufacturing  and 
stockpiling during the patent term could conflict with Article 28 of TRIPS. 

5.2.3.  New ad-hoc licensing measures 

A  specific  type  of  license  could  be  defined,  which  would  be  applied  for  by  a 
generic/biosimilar  company  and  granted  by  a  competent  authority,  or  alternatively 
negotiated with an SPC-holder under the supervision of a competent public authority66, 
free of charge or against payment of a license fee67. This option would bring transparency 
for the SPC-holders that could identify and monitor the beneficiaries of such a license.  

However,  from  the  perspective  of  generic  companies,  the  administrative  procedures 
would involve costs and time delays, making it uncertain whether applying for a license 
would be economically sound. Moreover, SPC holders could tactically delay the grant of 
a  license  (e.g.  via  multiple  appeals)  making  investment  for  generics  very  uncertain,  or 
asking for unreasonably high royalties. 

65   EFPIA  welcomed  the  European  Parliament’s  green  light  to  CETA:  https://www.efpia.eu/news-
events/the-efpia-view/statements-press-releases/20170215-efpia-welcomes-the-european-parliament-s-
green-light-to-ceta/ 
66   In 1993, Italy adopted a similar measure for the SPCs granted in Italy under the Italian law preceding 
the introduction of the EU SPC system. 
67   See Max Planck Institute study on SPCs for the European Commission. 

27 

 
                                                 
5.2.4.  Cutting down the duration of the SPC 

Cutting  down  SPC  maximum  duration  (for  instance,  to  the  2  years  provided  for  in 
CETA)  would  reduce  the  EU  SPC  protection  asymmetry  with  respect  to  most  third 
countries. 

However, this option has several major drawbacks: 

 

It would significantly affect the current period of exclusivity (of up to 5.5 years in 
total)  enjoyed  by  SPC  holders  with  respect  to  placing  their  products  on  the  EU 
market  (it  should  be  stressed  that  none  of  the  retained  options  of  this  impact 
assessment  affect  this  core  exclusivity  of  SPC  holders).  Such  a  drastic  option 
would  go  directly  against  the  fundamental  objective  of  SPCs,  which  is  to 
compensate  for  the  loss  of  effective  patent  protection  due  to  development  and 
authorisation procedures. 

 

It would not solve the issue of timely day-1 entry onto the EU market, unless the 
EU SPC protection were completed removed in the EU, i.e. to align the EU with 
‘non-SPC’ third countries with manufacturing capacity, such as India. 

Such  an  approach  would  roll  back  and  overturn  more  than  25  years  of  EU  intellectual 
property  policy.  It  received  almost  no  support  from  stakeholders  in  the  public 
consultation (only 1% of the respondents to the public consultation supported this option, 
and in a different context to the problem definition articulated in this impact assessment). 

5.3. Description of the policy options 

Aside from the status quo (option 0), a number of policy options are considered below to 
ensure that SPC protection in Member States does not prevent EU-based manufacturers 
of generics and biosimilars from competing on an equal IPR footing with manufacturers 
based  in  third  countries.  Apart  from  the  status  quo,  two  broad  approaches  can  be 
envisaged: 

(1) Soft law approaches based on voluntary industry-led initiatives to allow EU-based 
manufacturers  of  generics  and  biosimilars,  during  the  SPC  term  of  the  reference 
medicine, to manufacture for export and/or stockpile purposes (Option 1). 

(2) Amending  the  EU  SPC  legislation  so  as  to  allow  EU-based  manufacturers  of 
generics  and  biosimilars,  during  the  SPC  term  of  the  reference  medicine,  to 
manufacture for export and/or stockpile purposes (Options 2 to 4). 

The  table  below  displays  these  two  approaches  that  are  considered  (in  addition  to  the 
status quo option) to tackle each of the two problems: 

Approaches related to the 1st problem  
(Objective 1: export during the EU SPC term) 

Approaches related to the 2nd problem 
(Objective 2: day-1 entry in the EU) 

Status quo 

Status quo 

Soft-law approach allowing advance 
manufacturing for export purposes 

Soft-law approach allowing advance 
manufacturing for stockpiling purposes 

Export waiver legislation (possibly with anti-
diversion measures such as specific labelling) 

Waiver legislation (possibly with anti-diversion 
measures), which could be an export waiver (to 
some extent) or a stockpiling waiver 

In total, nine (3 x 3) possible combinations of approaches are possible to tackle the two 
problems. Six of these combinations would entail different types of approaches to tackle 

28 

 
each  of  the  two  problems  (e.g.  the  EU  SPC  regime  could  be  amended  so  as  to  allow 
export  during  the  SPC  term,  while  a  soft-law  approach  would  be  promoted  in  order  to 
allow  stockpiling  so  as  to  facilitate  day-1  entry)  leading  to  complex  implementation, 
requiring users to become familiar and develop different operational strategies to achieve 
the two objectives. Among those six combinations, those combining the status quo with 
another approach might not tackle one of the problems. 

For  these  reasons,  the  options  analysis  below  does  not  address  specifically  all  nine 
possible combinations, while  it nevertheless distinguishes  between a waiver for export-
only  purposes  and  a  waiver  for  day-1  entry  purposes  (whose  combination  constitutes  a 
further option). 

On  this  basis,  the  following  options  can  specifically  considered  regarding  the  two 
specific objectives: 

Objective 1: export 
during the EU SPC term 

Objective 2: day-1 entry 
in the EU 

Option 0 

Option 1 

Option 2 

Option 3 

Status quo 

Soft-law approach allowing advance manufacturing for both 
export & stockpiling purposes  

Export waiver legislation68 

(No action or soft 
law approach) 

(No action or soft law 
approach) 

Stockpiling waiver legislation 

Option 4 

Legislation on both export and stockpiling waivers 

5.3.1.  Option 0: status quo 

Not  taking  any  policy  action  has  already  been  described  (cf.  the  baseline  described 
above). 

The  EU  would  continue  to  negotiate  FTAs  with  an  IPR  chapter  that  includes  SPC 
provisions,  but  as  explained  above,  this  trade  approach  is  not  effective  to  tackle  the 
problems  identified  (FTA  negotiations  take  years  and  a  number  of  trade  partners 
successfully resist adopting EU-like SPC protection). 

In  this  baseline  scenario,  a  few  Member  States  have  already  considered,  or  introduced, 
soft-law  measures  at  national  level  (e.g.  the  LEEM-CEPS  framework  agreement  in 
France  –  cf.  below)  aiming  to  allow  advance  manufacturing  of  generics  during  the 
patent/SPC term of the reference medicine for timely day-1 entry. As mentioned below, 
such a national non-regulatory approach, while it may be satisfactory in individual cases, 
is  not  desirable  from  the  point  of  view  of  the  single  market,  especially  regarding 
uniformity,  fair  treatment  and  transparency.  These  national  approaches  have  not  led  to 
successful results so far. 

68   An export waiver might, to a certain extent, also improve EU day-1 entry (2nd problem/objective) if the 
manufacturing capacity already established for export can be quickly scaled up on day-1 to meet demand in 
the EU. 

29 

 
 
                                                 
5.3.2.  Option 1: voluntary industry-led agreements/‘soft-law’ approaches 

try 

Without  requiring  any  legislative  changes,  the  Commission  in  collaboration  with 
Member  States  could 
to  facilitate  further  voluntary  agreements  between 
generics/biosimilars  manufacturers  and  originators  consisting  of  allowing  advance 
manufacturing  of  generics  during  the  SPC  term  of  the  reference  medicine.  Such 
voluntary  agreements  could  cover  manufacturing  export  purposes  to  unprotected  third 
countries and (this option 1)/or for stockpiling purposes for timely  day-1 entry onto the 
EU market.  

5.3.3.  Option  2:  introducing  a  manufacturing  waiver  for  export  purposes  in 

Regulation 469/2009 

This option envisages an amendment to Regulation 469/2009 to create an exemption to 
the SPC right69 that prevents manufacturing of SPC-protected products by non-authorised 
third  parties.  This  waiver  for  export  purposes  would  allow  developers  of  generic  and 
biosimilar products to manufacture these products in a Member State during the term of 
the SPC protection, with a view only to exporting them to third countries with shorter or 
no SPC protection.  

This  waiver  (for  export-only)  would  also  exempt  a  reasonable  temporary  storage  that 
would  happen  between  production  and  effective  export  of  batches.  Such  temporary 
storage/stockpiling could not be used for day-1 entry onto the EU market (i.e. the entire 
production under the waiver of this option 2 being exclusively for export markets). 

However,  manufacturers  producing  in  the  EU  under  this  (export-only)  waiver  could  be 
better  prepared  for  timely  entry  into  the  EU  market  by  scaling  up  their  established 
production on  day-1.  Therefore, indirectly  this  option  2 also  tackles  to  some  extent  the 
objective 2 (timely  day-1 entry). Its effectiveness in this latter regard would depend on 
the capability of firms to rapidly scale up production to meet demand. 

5.3.4.  Option 2-bis: implementing Option 2 with anti-diversion measures 

Anti-diversion  measures  could  consist  of  any  of  the  following:  a  special  labelling 
requirement,  a  notification  requirement70,  a  right  to  conduct  inspections  by  the  SPC 
holder, or the introduction of a reversal of the burden of proof in case of litigation. This 
could  reduce  the  risk  that  that  some  of  the  products  manufactured  in  a  Member  State 
under the waiver could end up on the market of that or another (SPC-protected) Member 
State. Section 6.4. further discusses several anti-diversion measures and their impact. 

69   By an amendment to Article 5 (limitation to the effects conferred by the SPC) or Article 4 (exception to 
the scope of protection of the SPC). 
70   From  Max  Planck Institute’s draft  final  report: A notification-based  solution was developed  in  CJEU 
case  law  concerning  repackaging  of branded  goods  in  the  context  of  parallel  imports.  When  the  original 
package (in which branded goods were first released on the EU market) is replaced by a different one on 
which  the  protected  mark  is  affixed  or  otherwise  remains  visible,  the  giving  of  prior  notice  to  the  trade 
mark  holder  is  one  of  the  conditions  that  must  be  fulfilled  in  order  for  such  measures  to  be  admissible 
under Art. 15 of Directive (EU) 2436/2015 on Trade Marks. If no such notice is given to the proprietor, the 
parallel  importer  infringes  the  trade  mark  right  ‘on  the  occasion  of  any  subsequent  importation  of  that 
product, as long as he has not given the proprietor such notice’. 

30 

 
                                                 
The  design  of  specific  anti-diversion  measures  would  need  both  to  take  into 
consideration the level of additional burden for SMEs (See Annex 16 on SME Test) and 
to address confidentiality concerns. 

5.3.5.  Option 3: introducing a manufacturing waiver for stockpiling purposes in 

Regulation 469/2009 

Similar to option 2, under this option, Regulation 469/2009 would be amended to create 
an exemption to the SPC right that prevents manufacturing of SPC-protected medicines 
by  non-authorised  third  parties.  This  waiver  for  stockpiling  purposes  would  allow 
developers  of  generic  and  biosimilar  products  to  manufacture  and  stockpile  these 
products in the EU during the term of SPC protection, with a view to being fully ready 
for timely day-1 entry in Member States. 

5.3.6.  Option  3-bis:  similarly  to  option  2-bis  above,  option  3  could  be 

implemented with anti-diversion measures 

5.3.7.  Option 4: introducing a manufacturing waiver for export and stockpiling 

purposes under Regulation 469/2009 

The SPC waiver proposed under this option would combine the features of the waivers of 
options 2 and 3. It would tackle both identified problems. Thus, this SPC manufacturing 
waiver  for  export  and  stockpiling  would  allow  developers  of  generic  and  biosimilar 
products  to  manufacture  these  products  in  a  Member  State  during  the  term  of  the  SPC 
protection  with  a  view  not  only  to  exporting them  to  third  countries  with  shorter  or  no 
SPC protection (as in option 2), but also to storing them to be able to enter the EU market 
as and from day-1 (as in option 3). 

5.3.8.  Option  4-bis:  similar  to  options  2-bis  and  3-bis,  option  4  could  be 

implemented with anti-diversion measures 

5.4. Timing scenarios for applicability of options 2 to 4bis 

In  addition  to  the  key  options  presented  above  which  relate  to  the  substance  (i.e.  the 
actual effects) of a waiver, and irrespective of which of them is preferred, a number of 
choices can be made regarding the ‘time-bound applicability’ of the waiver. It should be 
recalled that each SPC goes through four successive stages: (1)  not yet applied for; (2) 
applied for; (3) granted (but not yet in effect, since the basic patent is still in force), and 
(4) in effect (i.e. after the basic patent has expired). 

In this context, a waiver could be made applicable as follows (from the broadest to the 
narrowest capture in terms of SPCs covered): 

- 

- 

- 

- 

scenario 1: to all SPCs, even those which are already in effect when the waiver is 
introduced; 

scenario 2: only to granted SPCs which will enter into effect only after the waiver 
is introduced; 

scenario 3: only to SPCs which will be granted after the waiver is introduced (i.e. 
only to SPC applications); 

scenario 4: only to SPCs which will be applied for after the waiver is introduced 
(i.e. only to future SPC applications). 

31 

 
The  respective  impact  of  these  scenarios  –  which  anyway  will  be  of  a  transient  nature 
only – is analysed in section 6.8 below. 

Annex 10 provides further information about the expected numbers of SPCs that would 
be affected by each of these scenarios. 

6.  WHAT ARE THE IMPACTS OF THE POLICY OPTIONS?  

Further to the analysis below on the impact of the identified options, the tables in section 
7 below provide a detailed description of the impact of the options described above. (See 
also Annex 16 on SME Test.) 

6.1. Impact of option 0 

The  evolution  of  the  problems  related  to  the  baseline  scenario  (no  policy  action)  is 
analysed  in  section  2.3  above:  delocalisation  of  manufacturing  of  generics  and 
biosimilars  and  related  consequences  such  as  loss  of  employment  in  the  EU,  loss  of 
pharmaceutical-related  know-how,  and  relocation  of  R&D  activities  following 
delocalisation  of  manufacturing.  A  quantification  of  lost  opportunities  can  be  found  in 
section 6.3 below. 

Whilst option 0 is likely to seriously affect the competitiveness of the EU pharmaceutical 
industry (in particular but not limited to the generics and biosimilar sectors), it will also 
entail  negative  consequences  for  the  (health)  public  purse  and  for  patients,  in  terms  of 
security and quality of supply and access to medicines.  

6.2. Impact of option 1: voluntary industry-led agreements 

The impact of voluntary, industry-led initiatives, even if stimulated at EU level, is likely 
to  be  limited.  Indeed,  being  voluntary,  such  agreements  may  be  refused  by  the  SPC 
holder  of  the  reference  medicine,  may  only  be  adhered  to  by  a  few  manufacturers  of 
generics/biosimilars,  or  be  subject  to  dissuasive  conditions  (e.g.  high  financial 
compensation requested by the SPC-holder). 

Experience shows that comparable initiatives launched in some Member States have not 
been  very  effective.  The  LEEM-CEPS  framework  agreement,  introduced  in  2009  in 
France71,  is  an  example  at  national  level  of  this  soft-law  approach.  It  is  focused  on 
speeding  up  day-1  entry  of  locally  manufactured  generics  and  biosimilars,  in  exchange 
for compensation to the SPC holder. The LEEM-CEPS initiative has provided results for 
only four medicines since 2009. 

While  this  option  might  be  helpful  in  individual  cases,  it  may  not  be  optimal  from  the 
perspective  of  the  single  market  as  a  whole,  as  regards  uniformity,  fair  treatment  or 
transparency. 

If  however  it  were  pursued,  the  Commission  could  accompany  such  an  approach  with 
guidelines  clarifying  best  practice,  with  the  view  to  reducing  the  impact  of  the  above-
mentioned potential drawbacks. It should be noted that neither the public consultation nor 

71   See  Art. 
the 
sante.gouv.fr/IMG/pdf/accord_cadre_version_definitive_20151231.pdf 

‘LEEM-CEPS’ 

framework 

35.a.iii 

of 

agreement 

– 

http://solidarites-

32 

 
                                                 
the various studies feeding into this impact assessment favoured a voluntary approach to 
tackle the first identified problem. 

6.3. Impact of option 2: SPC manufacturing waiver for export-only purpose 

6.3.1.  Findings of studies 

The  impact  of  this  option  has  been  analysed  and  discussed  by  an  independent  study 
contracted  by  the  Commission  (CRA  study)  and  other  studies  sponsored  by  the 
pharmaceutical  industry  (2  by  generics  companies  and  4  by  the  originators  industry). 
Annex  12  provides  a  description  and  estimations  of  each  of  the  studies  sponsored  by 
industry. 

Whilst there are divergences in opinion and in study results as regards the magnitude of 
the impact of the introduction of an export waiver in the EU, all studies confirm that the 
net impacts of such a waiver on the EU’s pharmaceutical trade balance (net sales) and on 
job creation in the EU would be positive. 

The  CRA  and  OHE  (for  EFPIA)  studies  estimate  the  additional  exports  for  EU-based 
manufacturers of generics and biosimilars, the potential negative impact on the exports of 
EU  SPC-holders  in  unprotected  markets  and  the  impact  on  jobs  in  the  EU.  The  CRA 
study,  based  on  a  sample  of  117  non-biologics  molecules  and  17  biologics  molecules 
(representing about 32% of all molecules expiring in the EU over the considered period, 
per each of the two categories of molecules), for which the SPC term expires later in the 
EU compared to 8 third countries72, estimates that an SPC manufacturing for export-only 
purposes could result in additional export sales by EU-based production of those generics 
of EUR 7.6bn and for EU-based production of those biosimilars of between EUR 463m 
and EUR 2.97bn over 10 years73. 

CRA  estimates,  for  that sample,  a  potential  negative impact  of  this  waiver  on  EU  SPC 
holders’ sales of between EUR 139m to EUR 278m for unprotected non-biologics market 
and between EUR 868m and EUR 1.7bn for unprotected biologics markets over a 10 year 
period. 

Therefore,  the  net  additional  trade  balance  for  the  EU  pharmaceutical  industry 
represented  by  the  sample  of  CRA  would  be  between  EUR  6bn  to  EUR  10bn  over  10 
years. 

The  OHE  study  reviews  some  of  the  assumptions  undertaken  in  the  CRA  study  and 
recalculates  its  outcomes,  estimating  additional  sales  for  EU-based  manufacturers 
ranging  between  EUR  1.2bn  and  EUR  3.9bn  for  the  sample  over  10  years.  OHE 
estimates potential negative loses of exports for EU SPC holders ranging between EUR 
298m  and  EUR  573m  (the  EU  pharmaceutical  industry  exported  EUR  220bn  in  2016 
according  to  the  EFPIA  datacentre).  Therefore,  according  to  OHE,  the  additional  net 
trade  balance  for  the  EU  pharmaceutical  industry  represented  by  the  CRA  sample  of 
molecules over a decade could be between EUR 696m and EUR 3.6bn. 

In terms of job creation, CRA estimates that the additional net exports could be translated 
into  an  additional  20 000  to  25 000  direct  jobs  in  the  generics  and  biosimilars  sector 

72   Australia, Brazil, Canada, China, Japan, Russia, Turkey and the USA. 
73   These results are only based on a sample of 32% of the molecules. The real impact of the waiver could 
be of much higher magnitude when considering all the market. 

33 

 
                                                 
(assuming  constant  productivity  in  the  sector).  OHE  estimates  that  the  reduction  of 
exports  by  the  SPC-holders  would  negatively  impact  on  originator  jobs.  OHE  also 
reduced  the  estimations  of  CRA  of  generic/biosimilar  job-growth  to  between  2 837  to 
9 430 new jobs (if SPC-holders lose 10% of their sales). However, the OHE calculations 
fail to take account of the jobs that could be created/retained/transferred across divisions 
by originators, who are currently investing  massively in  biosimilars (see annexes 5 and 
7). 

These  numbers  above  should  be  considered  as  the  lower  range  since,  as  mentioned 
above, the effects here are estimated on a sample of 117 non-biological and 17 biological 
molecules, representing around one-third of the relevant market. 

The  Pugatch  study  focuses  exclusively  on  the  potential  impact  of  the  waiver  on 
originators  based  in  the  EU-28  and  Switzerland.  It  estimates  that  between  0.6%  and 
1.04% of the global sales of the originators sector could be open to competition (i.e. as 
opposed  to  actual  losses),  if  the  EU  introduces  an  SPC  manufacturing  waiver.  The 
Pugatch study does not take into account that EU exports by originators can also include 
biosimilars manufactured by originators. 

Pugatch  estimates  that  those  percentages  could  represent  between  USD 1.34bn  and 
USD 2.27bn  of  the  global  sales  by  European  originators  annually.  However,  Pugatch 
does not estimate which part of those shares opened to competition could be retained by 
European originators (or taken by their own exports of EU-manufactured biosimilars and 
generics), and which part will be taken by non-EU originators, EU-generics/biosimilars 
and non-EU generics/biosimilars. 

In  terms  of  jobs,  Pugatch  estimates  that  the  share  of  the  exports  that  could  be  open  to 
competition  represents  4 600  to  7 750  employees  in  the  originators  sector.  It  does  not 
estimate  how  many  of  those  jobs  could  ultimately  be  lost,  or  transferred  to  the 
generics/biosimilars  branches  of  other  originators  benefiting  by  the  waiver.  Therefore, 
the labour figures of Pugatch cannot be compared with the ones of CRA and OHE. 

6.3.2.  Feedback from public consultation 

According  to  the  inputs  provided  to  the  public  consultation,  generic  and  biosimilar 
companies (63  on-line submissions) support  the introduction of an SPC  manufacturing 
waiver.  56  out  of  63  submissions  are  of  the  opinion  that  SPCs  disadvantage  EU-based 
generics/biosimilars manufacturers compared with those based in countries with no SPC 
when exporting their products outside the Union (1 respondent denies this problem, and 2 
do not know), and indicate that they would invest more in EU manufacturing and would 
expect a high increase in their exports (6 submissions expect some competition with the 
exports of EU SPC holders). 

Originators’  submissions  to  the  consultation  reflect  their  broad  opposition  to  the 
introduction  of  an  EU  SPC  waiver:  54  out  of  71  originators  do  not  consider  that  EU-
based generics/biosimilars manufacturers face the above problems. 

More specifically, as regards the views of originators, they consider that: 

- 

It would send a negative policy signal to originator pharmaceutical companies and to 
trade partners as regards the EU commitment to IP. 

However, it should be recalled that the EU has rolled out SPC protection to third 
countries via FTAs in favour of originators (according to EFPIA, EU exports to 

34 

 
Canada  of  pharmaceutical  products  worth  EUR  4bn  yearly  will  significantly 
benefit from the new SPC protection introduced in Canada through CETA). 

-  The  waiver  would  erode  some  of  SPC  holders’  export  sales  (45  out  of  the  71 

submissions of originators to the public consultation expressed this concern). 

However,  as  analysed  above,  the  magnitude  of  that  erosion  is  limited  and 
compensated  by  the  economic  gains  expected  by  the  waiver.  In  addition,  EU 
SPC-holders  will  in  the  medium  term  face  increasing  competition  as  more  and 
more  countries  invest  in  development  and  manufacturing  of  generics  and 
biosimilars (annex 7). 

-  A  waiver  would  conflict  with  the  Union’s  international  obligations,  notably  FTAs 

concluded by the EU. 

A waiver would complement the Union’s trade policy approach overall. A waiver 
would also be consistent with existing international trade agreements, such as the 
Agreement  on  Trade-Related  Aspects  of  Intellectual  Property  Rights  (TRIPS) 
between members of the World Trade Organisation (WTO), as well as those free 
trade  agreements  (FTAs)  that  the  EU  has  concluded  with  third  countries  and 
which  foresee  protection  of  the  nature  of  supplementary  protection,  such  as 
CETA, which provides for a manufacturing waiver for export purposes. 

- 

 The  waiver  would  disincentive  investments  in  R&D  in  the  EU74  and  may  therefore 
result in some relocation of R&D outside the EU. 

Despite the waiver, the global IPR protection and enforcement framework in the 
EU would remain the strongest worldwide. 

Given  that  an  export  waiver  would  have  a  very  limited  effect  on  sales  of  SPC 
holders  (no  effect  in  protected  markets)  and  does  not  affect  to  other  major 
pharmaceutical-specific  EU  incentives  for  innovation,  there  would  not  be  a 
meaningful  negative  knock-on  effect  on  R&D incentives  for  originator  products 
as  a  result  (as  the  economic  gains  expected  from  R&D  would  be  broadly  the 
same). 

-  The  waiver  would  create  a  risk  of  illicit  diversion  of  generics/biosimilars  (made  in 
the  EU  under  the  waiver)  onto  the  EU  market  during  the  term  of  SPCs;  this  risk 
would  be  higher  since  the  waiver  would  allow  manufacturing  in  the  EU  during  the 
SPC term (see also section 6.4.1). 

A  risk  of  foreign  products  being  illicitly  placed  on  the  EU  market  is  already 
present  today.  It  is  kept  at  bay  by  the  EU’s  pharmaceutical  legislation  and  its 
legislation  regarding  the  enforcement  of  intellectual  property  rights.  In  addition, 
the  waiver  could  be  implemented  with  specific  anti-diversion  measures,  which 
could actually help reduce the risk of diversion onto the EU market (see section 
6.4). 

It should also be noted that there is no evidence of illicit diversion resulting from 
the  existence  of  the  ‘Bolar  exemption’  in  the  EU,  which  itself  if  a  form  of 
manufacturing waiver for clinical trials purposes (and is available during the term 
of both patents and SPCs). 

74   The waiver would reduce protection, to recoup originator investments in R&D in the EU (57 out of the 
71 submissions of originators expressed this concern). 

35 

 
                                                 
-  The  exports  gained  by  EU  generics/biosimilars  manufacturers  would  compete 
principally with SPC holders’ products made in the EU (i.e. due to the EU ‘goodwill 
branded effect’), and only in a negligible way with products made in countries such 
as China, Brazil or India, in view of the local barriers to imports. 

Contracting  manufacturing  organisations  working  under  EU  or  US  good 
manufacturing practice (GMP) are stablished globally. Biosimilars are taking up 
quickly  not  only  in  developed  countries  but  globally.  Asian  plants  are  also 
manufacturing  for  originators,  including  for  those  originators’  biosimilars 
divisions (see section 2.3 and annex 7). In relation to supposed local barriers in 3rd 
countries, the EU trade policy aims to remove those barriers (industry information 
provided  to  the  Commission  indicates  that  EU-based  manufacturers  have  been 
able to export to those markets upon expiry of the EU SPC75). 

Regarding  the  feedback  of  SMEs  in  the  sector  of  manufacturing  of  generics  and 
biosimilars, and SMEs devoted to innovative medicines (See Annex 16 – SME Test for 
further details): 

the  63  respondents  defining 

themselves  as  mostly  manufacturers  of 
Among 
generics/biosimilars, 12 respondents identified themselves as an SME and 1 as a start-up. 
The  vast  majority  of  SMEs  manufacturing  generics  and  biosimilars  supports  the 
introduction of a waiver in the EU, and considers that the longer duration of SPCs in the 
Union compared to non-EU countries makes manufacturing in the Union less interesting 
for them. 

Regarding  pharmaceutical  innovative  SME,  among  the  71  respondents  defining 
themselves  as  mostly  originators,  2  respondents  identified  themselves  as  an  SME 
involved in medicines biotechnology and one as a start-up in the field of biopesticides. In 
addition,  several  European  pharmaceutical  associations  such  as  EUCOPE,  EBE,  and 
EuropaBio conveyed the views of their start-ups and SME members in their submissions 
and accompanying letters sent to the Commission during the public consultation. A few 
national innovative pharmaceutical associations focused on start-ups and SMEs-members 
(Belgium and Germany) also provided their views. 

These  associations  representing  innovative  SMEs  have  expressed  concerns  that  the 
introduction of a manufacturing waiver would dilute SPC protection and therefore dilute 
the financial rewards they would receive for their inventions, as well as their possibility 
to get and secure funding for their innovative R&D (in particular because any process of 
legislative  change  might  stir  up  uncertainty  and  dampen  the  willingness  of  financial 
institutions  to  invest).  They  also  highlight  that  EU-manufactured  generics  are  likely  to 
compete  for  market  shares  in  unprotected  markets  with  the  original  brands  and  thus 
decreasing the actual or projected market share of these SMEs products. 

As indicted above,  these concerns may however be overstated, as  the economic impact 
on  originators  of  the  introduction  of  a  manufacturing  waiver  would  be  minimal  (SPC 
holders maintain full SPC-related market exclusivity in the Union). Despite the waiver, 
the  global  IPR  protection  and  enforcement  framework  in  the  EU  would  remain  the 
strongest worldwide. 

75   The Italian association Aschimfarma has indicated that its members exported products to the value of 
EUR 150m to Brazil, China, Russia and Mexico in 2016-17. 

36 

 
                                                 
Three associations representing patients and doctors favoured an SPC manufacturing 
waiver  on  the  grounds that  it  would  promote  early  competition  in  the market,  and  thus 
more  affordable  medicines.  Some  replies  from  public  authorities  claim  that  there  is  an 
increasing dependency on imports of medicines and APIs. Increased dependency on non-
EU sources has already led to stakeholder concerns with regard to maintaining security 
and quality of supply in the Union (as discussed in section 2.3). 

Shifting part of the production established under this export waiver on EU day-1 into the 
EU (in cases where it is possible to quickly scale up the production to meet the demand), 
could improve the timely entry of generics and biosimilars into the EU market. 

It should be recalled  however  that EU-based manufacturers of generics and  biosimilars 
could also achieve additional sales from exports to Member States where SPC protection 
has not been obtained. However, such a situation could in practice be easily prevented by 
SPC  holders  by  extending  SPC  protection  to  all  Member  States.  At  some  point  in  the 
future, the possible introduction of an EU unitary SPC title would also be relevant in this 
context. 

Many  stakeholders  consider  that  an  amendment  of  the  SPC  Regulation  to  introduce  an 
export-only  waiver  would  not  imply  any  implementation  costs  for  the  EU  budget, 
Member State authorities or manufacturers of generics and biosimilars. 

6.4. Impact  of  option  2-bis:  SPC  manufacturing  waiver  for  export  purpose 

with anti-diversion measures 

6.4.1.  The risk of diversion 

One  of  the  reasons  raised  by  SPC  holders  to  oppose  the  introduction  of  an  SPC 
manufacturing waiver is the potential risk of illicit diversion onto the EU market, or onto 
foreign markets still protected, of generics and biosimilars manufactured in the EU under 
the  waiver  (58  of  71  originator  respondents  to  the  public  consultation  expressed  this 
concern). Today, any generic or biosimilar product found on the territory  of a Member 
State  where  an  SPC  is  in  effect  is  considered,  by  default,  to  infringe  the  SPC.  With  a 
waiver,  this  would  not  necessarily  be  the  case  anymore,  which  these  stakeholders 
consider might make the identification of infringing products more difficult. 

respondents 

Other 
generics/biosimilars industry) consider this risk to be low, given that:  

the  public  consultation 

(coming  notably 

to 

from 

the 

  The  supply  of  medicines  is  highly  regulated  by  the  EU  acquis  on  falsified 

medicines (Directive 2011/62/EU), which includes: 

o  Obligatory  safety  features  –  a  unique  identifier  and  an  anti-tampering 

device - on the outer packaging of medicines; 

o  A common, EU-wide logo to identify legal online pharmacies; 

o  Tough rules on the import of active pharmaceutical ingredients; 

o  Strong record-keeping requirements for wholesale distributors. 

  The  EU  Bolar  patent  exception  also  created  a  type  of  manufacturing  waiver  in 
2004 for regulatory approval purposes for generics and biosimilars (not for export 
or  stockpiling  purposes),  and  no  particular  illicit  diversion of  products  has  been 
reported in this context.  

37 

 
  Already today, generics and biosimilars could potentially try to enter ‘at risk’ (i.e. 
in  breach  of  existing  IP  protection  in  the  EU)  the  EU  market  via  imports  from 
unprotected third countries. 

6.4.2.  Possible anti-diversion measures 

While opinions regarding the risks of diversion differ, anti-diversion measures could be 
envisaged  in  order  to  minimise  any  additional  risk  of  diversion  and  provide  additional 
transparency.  This  would  work  to  the  benefit  of  originator  companies,  by  reducing  the 
risk of exposure to IP infringements compared to the situation today. 

Over  70%  of  SPC-holding  companies  who  responded  to  the  Max  Planck  Institute’s 
survey  favoured  four  different  types  of  anti-diversion  measures  in  the  event  that  a 
manufacturing waiver were to be introduced in the EU: 

(a) Compulsory special labelling for the products produced under the waiver 

This  would  require  generics/biosimilars  manufacturers  to  affix  clear  indications 
or  labelling  on  the  product  packaging  manufactured  under  a  waiver,  for  export 
purposes (and/or stockpiling purposes under policy options 3 and 4)  

That special labelling should not conflict with existing labelling requirements for 
medicines  in  export  markets.  For  example,  in  the  case  of  medicines  for  the  EU 
market, Article 54 of Directive 2001/83/EC sets out the labelling requirements for 
medicines. 

This  labelling  option  was  also  favoured  by  SPC-holders  and  generic/biosimilars 
manufacturers (over 70% for both categories), should a waiver be introduced.  

However,  while  such  labelling  can  be  expected  to  be  effective  in  respect  of 
products  to  be  exported  under an  export  waiver  (option  2),  it  appears to  be  less 
necessary  in  respect  of  products  to  be  stockpiled  for  EU  day-1  entry  (options  3 
and  4  below)  given  the  already  strict  traceability  requirements  imposed  by  the 
Directive 2011/62/EU on falsified medicines. 

Regarding the costs associated with special labelling, the sector is already subject 
to traceability measures in the EU under that Directive. As a proxy for estimation 
of  the  cost  of  labelling,  the  evaluation  of  Regulation  953/2003  to  avoid  trade 
diversion  into  the  EU  of  certain  key  medicines76  found  that  a  pharmaceutical 
company incurred costs of circa EUR 200 000 between 2003-15 for adding a logo 
on  its  packs.  However,  that  cost  included  significant  fees  derived  from  the 
to  amend/extend  marketing 
obligation  of  getting 
authorisations for the medicines due to a change of packaging (which might not 
be necessary to implement this option). 

regulatory  authorities 

(b) Ex-ante information 

This would require generics/biosimilars manufacturers to notify SPC holders, or a 
public body (e.g. by Member State bodies), of their intention to rely on the waiver 

76   https://ec.europa.eu/transparency/regdoc/rep/10102/2016/EN/10102-2016-125-EN-F1-1.PDF 

38 

 
                                                 
– possibly with a specification of the quantities and destinations – before starting 
manufacturing77. 

This  option  would  create  a  slight  additional  administrative  burden  for 
generics/biosimilars  manufacturers,  and  might  create  confidentiality  issues  if 
overly detailed information was required from such manufacturers. 

A notification – combined with the timely publication of the related information – 
would be beneficial for SPC holders, as it would increase transparency and legal 
certainty,  and  facilitate  identification  by  them  of  possible  instances  of  illicit 
diversion, as they would have information regarding a manufacturer’s intention to 
use  a  waiver  in  respect  of  a  product.  An  advantage  of  such  notification 
requirements  for  generics/biosimilars  manufacturers  is  that  the  public  body  to 
which notifications were sent could publish the notifications, or alternatively give 
them, under request, to a court (or an equivalent body) in the event of litigation, 
so as to demonstrate the manufacturer’s good faith. 

In addition, a further safeguard would be the legal obligation on the manufacturer, 
pursuant to existing IPR enforcement legislation, to ensure that products are not 
released on the domestic market prior to expiry of the SPC. 

(c)  Ex-post notification 

This would require generics/biosimilars manufacturers to inform SPC holders, or 
a public body, that they have manufactured products under the waiver, for export 
purposes  (and/or  stockpiling  purposes  for  options  3  and  4)  –  possibly  with  a 
specification of the quantities and destinations. SPC holders could effectively use 
the information to prepare customs ‘applications for action’ aiming to prevent re-
imports. 

The assessment is similar to preceding point b, with slightly increased (ex-post) 
transparency  for  originators  and  an 
increased  administrative  burden  for 
generics/biosimilars manufacturers. 

(d) Shifting  the  burden  of  proof  for  infringement  from  SPC  holders  to  generic 

manufacturers  

This  would  require  generics/biosimilars  manufacturers,  when  they  are  found  to 
have manufactured, in a territory where an SPC is in effect, a product covered by 
an SPC, to prove that the product is intended for export, failing which the product 
would not enjoy the waiver. 

Any  legislation  introducing  an  SPC  manufacturing  waiver,  if  accompanied  with  anti-
diversion  and  transparency  measures,  would  take  due  account  of  the  cost  of  such 
measures  (e.g.  operative  cost,  administrative  burden),  which  could  potentially  have  a 
dissuasive  effect  regarding  the  actual  use  of  the  waiver.  The  cost  of  anti-diversion 
measures  would  be  negligible  for  major  manufacturers,  but  it  could  have  a  more 
significant impact on SMEs. 

77   The draft final report of Max Planck Institute study states that the SPC holder would, in that basis, be in 
a  better  position  to  monitor  the  market  for  possibly  infringing  products.  A  corresponding  solution  was 
developed in CJEU case law concerning repackaging of branded goods in the context of parallel imports 
(C- 102/77 (para. 14); C-427/93 (para. 78); C-348/04 (para. 64)). 

39 

 
                                                 
6.4.3.  Retained anti-diversion measure for option 2-bis 

In view of the above analysis, the preferred anti-diversion measure for this option 2-bis 
(an  SPC  manufacturing  waiver  for  export-only  purposes  with  anti-diversion  measures) 
would  be  a  legal  obligation  to  label  products  produced  under  the  waiver,  and  a 
requirement for any manufacturer of generics or biosimilars intending to make use of the 
waiver to notify this intention to a Member State public authority, which would publish 
that information.  

This labelling would allow effective and easy identification of generics/biosimilars to be 
exported  under  the  waiver,  and  to  check  whether  they  are  genuinely  in  the  process  of 
being exported. This labelling should be removable once the products have been exported 
outside the EU, in order not to conflict with any labelling requirement in the countries of 
destination, nor interfere with possible repackaging.  

The  notification  requirement  would  improve  transparency  for  SPC  holders.  A 
manufacturer to public authority notification would reduce the risk of collusion between 
the  SPC-holder  and  potential  manufacturers  vis-à-vis  the  option  of  a  manufacturer-to-
SPC-holder notification.  

This  approach  appears  to  be  cost-effective  and  proportionate,  and  is  favoured  by  SPC 
holders as well as manufacturers of generics/biosimilars. 

An  amendment  of  the  SPC  Regulation  to  introduce  an  export-only  waiver  with  anti-
diversion  measures  would  not  imply  any  implementation  costs  for  the  EU  budget  and 
very limited costs for Member State authorities, in relation to receiving the notifications 
of the intention of firms to use the waiver, publishing the information, and providing it, 
under  request,  to  a  court  in  the  event  of  litigation.  As  discussed  above,  the  measures 
should  take  into  account  the  potential  cost  of  implementation  on  manufacturers  of 
generics and biosimilars, especially for SMEs. 

6.5. Impact of Option 3: SPC manufacturing waiver for stockpiling purposes 

The impact of this option has been analysed and addressed by the studies contracted by 
the Commission. It should be noted that stakeholder studies have focused mostly on an 
export-only waiver. 

Generics  and  biosimilars  manufacturers  consider  that  a  stockpiling  waiver  would 
greatly  contribute  to  level  the  playing  field  between  the  manufacture  of  generics  and 
biosimilars in the EU versus manufacturers based in third countries with regard to timely 
EU day-1 entry. According to the inputs provided to the public consultation, 53 out of 63 
respondents  representing  generics  and  biosimilars  companies  (3  respondents  deny  this 
problem,  and  3  do  not  know)  consider  that  SPCs  disadvantage  EU-based  generics  and 
biosimilars  manufacturers  compared  with  those  based  in  countries  with  no  SPC  when 
placing  their  products  on  the  market  in  the  EU  immediately  after  the  SPC  expires.  41 
submissions  by  generics  and  biosimilars  companies  indicate  that  they  have  obtained 
marketing  authorisation(s)  in  the  EU  before  the  expiry  of  the  SPC  of  the  reference 
medicine  (under  the  Bolar  exemption).  Many  of  them  would  be  also  interested  in 
the  possibility  of 
‘early’  marketing  authorisations  with 
complementing 
manufacturing  for  stockpiling  purposes  (i.e.  during  the  SPC  term  of  the  reference 
medicine) in  view of timely entry  of their products onto  the EU  market, or  some  other 
mechanism that would have an equivalent effect. 

their 

40 

 
This  stockpiling  waiver  would  also  support  EU  generics/biosimilars  manufacturers  that 
are only interested in selling within the EU. In this regard, 3,372 pharmaceutical SMEs 
manufacture in  the EU, 1,765 of those  SMEs export,  and 1,362 of them export  outside 
the EU.  

As  discussed  under  option  2,  originators’  submissions  to  the  consultation  oppose  the 
introduction of any type of SPC waiver. 

The  CRA  study  estimates  that  an  SPC  waiver  for  stockpiling  purposes  would  result  in 
savings on pharmaceutical expenditure from this earlier competition and therefore lead to 
a speedier reduction of prices in Member States upon expiry of the SPC. CRA conducted 
a  simulation  of  the  impact  on  pharmaceutical  expenditures  on  the  basis  of  observed 
delays in generic and biosimilar entry during a sample period (Q1 2008 to Q3 2014) if 
such delays were reduced by up to 6 months. Their analysis indicates that if generic entry 
were  brought  forward  by  6  months,  savings  on  pharmaceutical  expenditure  would 
amount to EUR 1.1bn over a three-year period for the sample examined, due to the faster 
decline in prices, corresponding to a 4% saving. Regarding the biologics market, savings 
would amount to EUR 15m over a three-year period for a limited sample of 17 molecules 
examined,  which  corresponds  to  a  1%  saving  (it  should  be  noted  that  as  biosimilar 
penetration  increases  over  time,  the  beneficial  effects  on  pharmaceutical  expenditure 
would also increase). 

However, from the perspective of pharmaceutical expenditure, it could be argued that, in 
the medium to long term, timely entry of generics and biosimilars in the EU would tend 
to happen anyway from non-EU based producers under the baseline scenario (i.e. without 
any  waiver).  Therefore,  in  the  long  term,  and  disregarding  concerns  related  to  the 
strength  and  diversification  of  the  supply  chain,  the  stockpiling  feature  may  not 
necessarily  have  such  a  significant  impact  on  savings  to  the  health  systems  of  those 
Member States with a sizable national market. 

Patients, as indicated above, would enjoy additional sources of supply of medicines with 
this stockpiling waiver. As explained under option 2, a few patient and health practitioner 
groups, as well as public health institutions, favoured the SPC manufacturing waiver on 
the grounds that it would facilitate access to more affordable medicines. 

As  mentioned  above,  such  a  waiver  could  potentially  reduce  the  risk  of  relocation,  not 
only of manufacturing, but also of R&D (in the biologics/biosimilars sector). 

Since  a  stockpiling-only  waiver  would  likely  improve  the  timely  entry  of  EU-
manufactured generics and biosimilars, it could tackle – similar to an export waiver – the 
concerns  expressed  by  some  public  authorities  and  citizens  about  over-reliance  of 
imported medicines analysed in option 2 above. 

An  amendment  of  the  SPC  Regulation  to  introduce  this  stockpiling-only  waiver  would 
not imply any implementation costs for the EU budget and Member State authorities. 

6.6. Impact of Option 3-bis: SPC manufacturing waiver stockpiling purposes 

with anti-diversion measures 

The labelling measures proposed for option 2-bis above (waiver for export-only purposes 
with anti-diversion measures) might be unnecessary for this option 3-bis (stockpiling for 
entry  in  the  EU  market)  in  view  of  the  strict  traceability  requirements  imposed  by 
Directive 2011/62/EU on falsified medicines. 

41 

 
Among the anti-diversion measures  discussed in subsection 6.4.2, the preferred one for 
this option 3-bis would be a legal obligation for the manufacturer to notify a public body 
(e.g. a public authority of the Member State of establishment of the production facility) 
of the launch of production for stockpiling purposes. That public body would publish the 
content of the notification, or store it and provide it, under request, to a court in the event 
of  litigation.  This  would  be  a  simple  notification,  not  generating  significant  burden  or 
cost on the applicant or the public body. 

An  additional  safeguard  for  a  manufacturing  waiver  for  stockpiling  purposes  could 
consist of confining the effect of the waiver to the final months of the term of the SPC of 
the reference medicine. 

The introduction of a stockpiling-only waiver with the preferred anti-diversion measure 
above  would  imply  a  negligible  cost  in  additional  administrative  capacity  in  for  the 
public  body  charged  with  receiving,  publishing  and  dispatching  (by  a  court  order)  the 
notification. 

6.7. Impact  of  Options  4  and  4-bis:  SPC  manufacturing  waiver  for  export 

and stockpiling purposes (with anti-diversion measures) 

An  SPC  manufacturing  waiver  for  both  export  and  stockpiling  purposes  would  address 
both identified problems (manufacturing for export purposes and for timely entry into EU 
day-1  markets).  The  implications  of  these  options  4  (and  4-bis)  stem  from  the 
combination of effects described for options 2, 2 bis, 3 and 3 bis above. 

Options  2  to  4  would  be  especially  beneficial  for  EU  SMEs  manufacturing  generics  or 
developing  biosimilars,  because  they  do  not  necessarily  have  access  to  the  necessary 
funding or skills to outsource or delocalise production outside the EU. 

Anti-diversion  measures  in  options  2-bis,  3-bis  and  4-bis  should  take  account  of 
potentially  dissuasive  costs  for  SMEs  (additional  operational  costs  (e.g.  labelling),  the 
need  to  contract  specialised  attorneys  (e.g.  for  potentially  complex  notification 
procedures, and court proceedings). 

The preferred anti-diversion measure for this option 4-bis would be a combination of the 
preferred  measures  for  options  2-bis  (external  labelling  and  notification  for  production 
for export purposes) and 3-bis (notification for production intended for stockpiling). 

6.8. Impact  of  the  options  for  the  timing  of  the  introduction  of  the 

manufacturing waiver 

Scenario  1  (namely  immediate  application  to  all  SPCs,  including  those  which  are 
already  in  effect  when  the  waiver  is  introduced):  the  manufacturing  waiver  could 
arguably be viewed as a clarification of the initial objective of SPC protection (which, as 
explained above, was never intended to prevent exports outside the EU nor  day-1 entry 
onto the EU market after SPC expiry). This could justify its immediate entry into force, 
as happened with the EU Bolar patent exemption in 2004. However, this approach is not 
preferred,  as  it  might  negatively  affect  the  acquired  (property)  rights  and  legitimate 
expectations of SPC holders. In addition, it is not considered useful since, in respect of 
SPCs already having taken effect, it would be late at that stage for generics/biosimilars 
manufacturers to make investment decisions (especially for export purposes). 

These  objections  are  also,  to  a  certain  extent,  valid  for  scenario  2  (namely  application 
only  to  granted  SPCs  which  will  enter  into  effect  after  the  waiver  is  introduced),  and 
therefore this scenario is not preferred either. 

42 

 
Scenario 3 (namely application only to  SPCs which will be granted after the waiver is 
introduced)  would  strike  an  appropriate  trade-off,  by  making  the  waiver  applicable  to 
specific SPCs within a reasonable timeframe without affecting SPCs already granted, or 
granted  and  having  taken  effect.  Under  this  scenario,  while  only  a  limited  number  of 
SPCs would benefit from the waiver in the first years, the introduction of a waiver in EU 
SPC  legislation  would  already  send  a  clear  political  signal,  and  affect  investment 
decisions  by  manufacturers  of  generics/biosimilars  (and  reduce  pressure  to  relocate 
outside  the  Union)  well  before  the  waiver  starts  to  become  actually  applicable  to  a 
significant number of – and eventually all – SPCs. This scenario would apply to pending 
SPC applications, but a short transition period could provide an appropriate solution here. 

Scenario 4 (namely application only to SPCs which will be applied for after the waiver is 
introduced)  would  result  in  the  waiver  only  becoming  applicable  to  a  substantial 
percentage  of  all  SPCs  only  after  many  years.  This  solution  would  not  address  the 
problems at hand in the short to medium term, and is thus not preferred, considering the 
urgency to act. 

7.  HOW DO THE OPTIONS COMPARE? 

Table 7.1 provides information comparing the policy options in the light of the criteria of 
effectiveness  (how  each  option  achieves  the  specific  objectives)  and  efficiency  (cost-
benefits analysis).  

Table 7.2 compares the impacts of the policy options on stakeholders. (See also Annex 
16 for the SME test.) 

For the proportionality assessment and  coherence  of the preferred option (option  4-bis) 
see section 8 below. 

None of the options considered can be implemented by Member States individually in a 
satisfactory  matter.  The  problems  identified  are  of  an  EU  dimension.  Member  States 
taking  unilateral  action  would  lead  to  a  distortion  of  the  single  market  for 
pharmaceuticals, one of the core objectives of the exiting SPC Regulation. 

Table 7.1: Comparison of policy options against effectiveness and efficiency criteria 

(Note: ‘G/B’ = generics/biosimilars) 

Effectiveness 

 Objective 1:Allow 
G/B export during the 
SPC term 

Objective 2: 
Allow timely EU 
market entry from 
day-1 

Option 0 

(0) 

Option 1: 
voluntary 
industry-led 
agreements 

require 

(≈) Such agreements would not necessarily be 
available  for  all  G/B  manufacturers,  as  each 
agreement  would 
case-by-case 
negotiation. Risk of delays in starting exports 
(SPC  holder  can  file  appeals  or  delay 
negotiations).  
This  uncertainty  would  likely  prevent  G/B 
manufacturers 
upfront 
investment decisions (in the EU) based on the 
hypothetical  possibility  that  such  agreements 
might  be  made  in  some  cases  several  years 
later. 

from  making 

Efficiency 

-- 

Net effect (≈) 

Benefits (≈): No major changes expected in 
investment in the EU. Delocalisation and losses of 
jobs in the EU G/B sector will continue. 

Cost (≈/-): It might need the support/involvement of 
national administrations (e.g. mediation, appeals to 
be handled by courts). Originators might require the 
payment of royalties by G/Bs 

43 

 
 
 
 
 
 
 
 
 
Option 2: SPC 
manufacturing 
waiver for export 
purposes 

Option 3: SPC 
manufacturing 
waiver for 
stockpiling 
purposes 

Net effect (+) 

  CRA study (see revised by OHE): Increase of the 
EU pharmaceutical trade balance by EUR 6 -10bn 
over 10 years for a sample of molecules 
representing 32% of the relevant market; > 20 000 
additional jobs for that sample. 

Benefits (+): More exports, and – to a certain extent 
– improved EU day-1 entry. More investment in the 
EU (jobs in manufacturing, and in biosimilars 
R&D). Implementation does not require public 
funding. 

  CRA study (see revised by OHE): Increase of EU 
exports of generics/biosimilars by EUR 8-10.6bn 
over 10 years for a sample of molecules of 
molecules representing 32% of the relevant 
market; > 20 000 additional jobs for that sample. 

  CRA study: in term of improving EU day-1 entry, 
it is estimated that bringing forward by 6 months 
the entry of the generics/biosimilars sample 
implies EUR 1.1bn savings to the pharmaceutical 
health budget over 3 year. 

Cost (≈): Illicit generics/biosimilars diversion 
(counterfeiting risk) would not significantly 
increase. Erosion of jobs in innovators limited 
compared with the new opportunities in 
generics/biosimilar sector. 

  CRA study: decrease of EU SPC holders’ exports 
of EUR 0.14 - 0.28bn over 10 years for a sample 
or 117 non-biologics, and 0.8 - 1.7bn losses for 17 
biologics;  

  OHE estimates EUR 0.3 to 0.6bn losses in the 

non-biologics segment (Note: the EU 
pharmaceutical industry exported EUR 220bn in 
2016 with steady growth (EFPIA datacentre)). 

Net effect (+) 

CRA study estimates benefits in terms of savings for 
EU public health budgets expenditure in 
pharmaceuticals of up to 8% for the analysed sample 
(Bringing forward by 6 months the entry of the 
generics/biosimilars sample implies EUR 1.1bn 
savings over 3 years). 

Benefits (+): More investment in the EU (jobs in 
manufacturing, and in biosimilars R&D). Additional 
savings for health authorities due to more efficient 
EU day-1 entry. Implementation does not require 
public funding.  
CRA study estimates benefits in terms of savings for 
EU public health budgets expenditure in 
pharmaceuticals of up to 8%.  

Cost (≈): Risk of illicit diversion onto SPC-
protected markets could increase. Erosion of jobs in 
innovators limited compared with the new 
opportunities in the G/B sector. 

(++)  EU-based  G/Bs 
could  export  without 
any  prior  authorisation 
(no risk of delays as in 
option 1 above) 

(+) For some 
products, the EU 
G/B manufacturing 
capacity 
established for 
export could be 
quickly switched 
for day-1 entry in 
the EU.  

(0) 

(++)  Day-1  entry 
onto 
EU 
the 
market  would  be 
or 
ensured 
accelerated  

44 

 
 
 
 
 
(++) A waiver for export and stockpiling 
purposes would fully solve both problems. 

Net effect (++) 

  As in option 2 and option 3 

Option 4: SPC 
manufacturing 
waiver for export 
and stockpiling 
purposes 

Options 2 bis, 3 
bis and 4 bis: 
SPC 
manufacturing 
waiver (for 
export and/or 
stockpiling 
purposes) with 
anti-diversion 
measures 

Same  efficiency  as  corresponding  option  2 
((++)/(+)),  option  3  ((0)/(++))  and  option  4 
((++)/(++)),  provided  that  the  anti-diversion 
measures 
or 
burdensome. 

overly 

costly 

not 

are 

Benefits (++): More investment in the EU (jobs, as 
above). Additional savings for health authorities due 
to more efficient EU day-1 entry. Implementation 
does not require public funding. 
  As in option 2 + option 3 

Cost (≈): Risk of illicit diversion onto the EU could 
increase. Erosion of jobs in innovators limited 
compared with opportunities in the G/B sector. 
  As in option 2 above 

Net effect (++) 

  As in option 2, 3 or 4. 

Benefits (++): As in options 2 to 4 if the anti-
diversion measures are not too costly or burdensome 
(especially for SMEs). 
  As in option 2, 3 or 4. 

Cost (≈): The risk of illicit diversion would be 
virtually absent (i.e. unchanged). Negligible increase 
of administrative costs for the parties (including 
public administrations) related to the anti-diversion 
measures. 
  As in option 2, with negligible additional costs for 
generics/biosimilars manufacturers (and public 
authorities) to implement anti-diversion measures. 

45 

 
 
 
 
  
Table 7.2: Comparison of the impacts of policy options on stakeholders  

Notes: (1) ‘G/Bs’ = generics/biosimilars manufacturers; (2) Originators also develop biosimilars. 

Stakeholders  
Policy options  

EU-based G/BMs 
(attention to SMEs)  

SPC holders 

EU patients and 
Member States 
health budget 

EU citizens as 
employees 

EU regulatory 
experts/agencies 

Option 0 / 
Baseline 
Option 1: 
voluntary 
industry-led 
agreements 

Option 2: 
Introduce an SPC 
manufacturing 
wavier for export 
purposes only 

Option 3: 
Introduce an SPC 
manufacturing 
wavier for 
stockpiling 
purposes only 

0 

0 

0 

0 

0 

(0/≈) They will 
continue to have 
strong incentives to 
delocalise/outsource 
production (if not 
R&D, especially for 
biosimilars) to third 
countries that resist the 
introduction of EU-
type SPC. 
Possible payments to 
originators (royalties) 
(++) A legal barrier to 
investment in 
generics/biosimilars 
production in the EU 
would be lifted (also 
positively affecting 
biosimilars R&D). 
Contrary to option 1 
above, they would not 
face uncertainty by 
linking upfront 
investments on 
hypothetical future 
voluntary agreements. 

Estimated benefits 
(i.e. additional 
exports) for a sample 
(32% of the relevant 
market): EUR 7.6bn in 
generics, EUR 1.2 to 
2.1bn in biosimilars 
(CRA study); or EUR 
2-3bn (OHE-EFPIA). 

(++) As in option 2 
above.  
The stockpiling option 
would be an additional 
incentive for 
generics/biosimilars 
investment in the EU. 

(0/≈) Minor changes  
Slightly increased 
competition from EU G/Bs 
in some cases, but only 
when an agreement is 
agreed, and possibly 
compensated by royalties. 
They could get possible 
royalties. 

(0/≈) Minor changes 
See positive effects as 
in the options 2 to 4 
below, but only 
limited to a few cases 
and in a few Member 
States (when and 
where agreements are 
reached).  

(0/≈) No significant 
improvements in job 
opportunities in the 
EU G/Bs industry  

(0) Not much effect 
in limiting the risk 
of losing the 
predominant role 
and influence of the 
EU rules on the 
global regulatory 
environment, 
especially for 
biosimilars 

(≈/0) Their SPC-protected 
sales would not be 
affected. 
They are massively 
entering in the business of 
biosimilars and they can 
also benefit from 
production in the EU. 

(+) They would enjoy 
some improvement in 
better timely access to 
generics/biosimilars of 
high EU-made quality, 
and therefore a more 
diversified source of 
supply. 

(+) More investments 
and jobs opportunities 
in the 
generics/biosimilars 
sector in the EU. 
This would overcome 
any potential losses, 
in the short term, in 
the innovators sector 
(in the medium/long 
term innovators will 
face competition from 
biosimilars exported 
from third countries). 
Originators will also 
create jobs for their 
biosimilars activities 
in the EU and can 
benefit from this 
option. 

(≈) It would limit 
the risk of losing the 
predominant role 
and influence of the 
EU rules on the 
global regulatory 
environment, 
especially for 
biosimilars. 

With the export waiver, in 
the short term they would 
face earlier additional 
competition from EU-
based G/Bs in off-patent 
export markets. With the 
stockpiling waiver, in the 
short term they would face 
earlier additional 
competition from EU-
based G/Bs in off-SPC EU 
market. However, in the 
medium/long term they 
will anyway face 
competition from non-EU-
based biosimilars. 

By limiting the risk of 
delocalisation of generics, 
originators will find more 
opportunities of 
manufacturing production 
in the EU. 

For an export waiver, 
estimated lost sales by 
SPC holders (for a sample 
of 32% of the relevant 
market)78: 
  EUR 139 - 278m for 
non-biologics and EUR 
868m – 1,7bn for biologics 
(CRA study); 
  EUR 191 - 573m 
(OHE-EFPIA) for non-
biologics. 
If the waiver is 
accompanied by anti-

(++) The stockpiling 
feature would bring 
additional time gains 
for timely access in 
the EU day-1, and a 
more diversified 
source of supply. 

78   The  Pugatch  study  estimates  that  between  0.61%  and  1.04%  of  global  sales  of  originators  would  be 
opened to competition, as opposed to sales actually lost. 

46 

 
  
 
 
 
 
 
 
 
 
 
 
                                                 
Stakeholders  
Policy options  

EU-based G/BMs 
(attention to SMEs)  

SPC holders 

diversion measures, this 
would decrease the current 
exposure of originators to 
IP-infringements (and 
therefore lead to clear 
benefits also for this 
industry).  

EU patients and 
Member States 
health budget 

EU citizens as 
employees 

EU regulatory 
experts/agencies 

Option 4: 
Introduce an SPC 
manufacturing 
wavier for export 
and stockpiling 
purposes 

Estimated benefits 
(additional sales in the 
EU market in addition 
the additional export 
sales estimated in 
option 2): 
Exceeding the above 
figures which relate to 
an export-only waiver. 

The impacts of options 2 and 3 would be cumulative 

Estimated savings on 
public health budgets 
expenditure on 
pharmaceuticals of up 
to 8 % (CRA study). 

Estimated impact on 
employment by EU-
based G/B firms:  
For the sample 
considered CRA 
estimate an increase 
of 20 000 – 25 000 
direct jobs. 
OHE-EFPIA 
estimates a net 
increase of 
pharmaceutical jobs 
of 2,837 to 9,430 
(assuming 10% loss 
of sales for 
originators). 

8.  PREFERRED OPTION 

8.1. Preferred option 

The  preferred  option  of  this  impact  assessment  is  option  2-bis,  namely  amending 
Regulation  (EC)  No  469/2009  to  introduce  an  SPC  manufacturing  waiver  for  export 
purposes,  accompanied  by  anti-diversion  measures.  This  option  is  considered  to  be  the 
most  balanced  and  proportionate  approach,  which  also  takes  account  of  the  views  and 
concerns  of  both  generic/biosimilar  firms  and  originator  firms,  in  a  field  that  is 
particularly sensitive. 

This would fully address the first identified problem (loss of export markets) and would 
address,  to  a  certain  extent,  the  second  identified  problem  (lack  of  timely  EU  day-1 
entry). 

The preferred anti-diversion measures would be: 

-  compulsory labelling; and 

-  compulsory  notification  to  a  public  body  of  the  intention  to  manufacture  products 

pursuant to the waiver. 

With an SPC manufacturing waiver for export purposes, the accompanying anti-diversion 
requirements would constitute an effective means to allow for easy identification of any 
generics/biosimilars illicitly diverted onto the EU market during the SPC term (instead of 
being exported). This would work to the clear advantage of the entire EU pharmaceutical 
industry, including originators. I t would clearly be in the interest of the manufacturer to 
label  and  notify  its  intention  of  relying  on  the  waiver.  It  goes  without  saying  however 
that if the manufacturer were tempted to illicitly divert part of the production onto the EU 

47 

 
 
 
 
 
 
 
 
 
market  during  the  SPC  term,  the  products  could  then  be  deemed,  by  default,  as  IP-
infringing.  Labelling  and  notification  requirements  constitute  a  guarantee  for  SPC 
holders  and  were  suggested  by  stakeholders  during  the  consultation  conducted  by  Max 
Planck  Institute  for  the  Commission  in  the  context  of  the  contracted  study  on  the  legal 
aspects of the EU SPC. 

The  preferred  option  2-bis  appears  the  most  proportionate  to  achieve,  in  a  satisfactory 
manner,  the  objectives  pursued  by  this  initiative  taking  into  consideration  the  interests 
and concerns of all parties, for the following reasons: 

(1) It  is  a  realistic  measure,  and  more  effective  than  option  1  (i.e.  industry-led 
agreements)  that  can  be  unilaterally  refused  by  SPC  holders,  or  for  which  each 
individual  implementation  can  be  subject  to  appeals  or  overly 
lengthy 
negotiations; 

(2) It  is  a  simple  and  non-costly  measure  for  stakeholders  and  Member  State 

authorities to implement; 

(3) It could deliver potential early effects for investments and growth in the sector; 
(4) Its  effectiveness  to  achieve  both  objectives,  and  its  efficiency,  will  be  easy  to 

monitor (see next sub-section); 

(5) The  anti-diversion  measures  will  also  add  transparency  to  the  pharmaceutical 

system in the EU; 

(6) It  does  not  have  any  impact  on  overall  SPC  protection  within  the  EU  (i.e.  SPC 
holders would continue to enjoy their market exclusivity in the EU until  day-1), 
and  any  risk  associated  with  illicit  diversion  onto  the  EU  market  is  minimised 
with anti-diversion measures; 

(7) The administrative costs for the Commission to adopt the legislative proposal and 
for  future  monitoring  and  evaluation  purposes  would  not  require  any  new 
budgetary commitment. 

Insofar  as  the  objective  of  promoting  the  swift  entry  of  EU-made  generics  and 
biosimilars  onto  the  EU  market  immediately  after  SPC  expiry  (i.e.  on  day-1),  this 
objective  would  be  achieved,  to  a  certain  extent,  for  manufacturers  having  set  up 
manufacturing  capacity 
that  1 362  EU-based 
pharmaceutical SMEs already export outside the Union, see Annex 16), as they might be 
able,  after  SPC  expiry,  to  use  the  same  manufacturing  capacity  (or  scale  it  up)  with  a 
view to swiftly supplying the EU market. 

for  export  purposes 

(recalling 

Coherence of each option with other EU policies objectives 

Regarding  the  coherence  of  each  option  with  other  EU  policies  objectives,  it  is 
compatible  with  health  policies  (including  taking  due  account  of  regulatory  labelling 
requirements).  The  preferred  option  would  also  be  consistent  with  EU  pharmaceutical 
legislation.  All  obligations  flowing  from  that  body  of  law  also  apply  to  manufacturers 
that would take advantage of the derogation introduced by the waiver. In particular, this 
proposal  would  not  affect  the  existing  EU  rules  and  safeguards  laid  down  in  Directive 
2011/62/EU  amending  Directive  2001/83/EC  on  the  Community  code  relating  to 
medicinal  products  for  human  use,  with  regard  to  the  prevention  of  the  entry  into  the 
legal supply chain of falsified medicinal products, and as laid down in EU legislation on 
civil  and  customs  enforcement  of  intellectual  property  rights  (namely  Directive 
2004/48/EC  and  Regulation  (EU)  No  608/2013).  Furthermore,  this  initiative  does  not 
provide for any derogation from, and is applied without prejudice to, the applicability of 

48 

 
all  relevant  Union  pharmaceutical  legislation  on  the  manufacture  of  generics  and 
biosimilars,  including  Directive  2001/83/EC  on  the  Community  code  relating  to 
medicinal products for human use, as amended, and Commission Delegated Regulation 
(EU)  No  2016/161  on  the  rules  for  the  safety  features,  which  lay  down  stringent 
standards regarding the identification and monitoring of certain medicines placed on the 
market  in  the  Union  in  order  to  guarantee  the  reliability  of  the  supply  chain  and  to 
safeguard public health. 

An SPC manufacturing waiver would not contradict EU trade policy, because it is not a 
protectionist measure for EU companies: 

  The  aim  is  to  level  the  playing  field  regarding  the  manufacturing  of  generics  and 
biosimilars  in  the  EU  (whether  the  manufacturer  is  an  EU  or  non-EU  company) 
the 
vis-à-vis 
competitiveness of the EU as a hub for the pharmaceutical industry. 

third  countries-based  manufacturing.  It 

improving 

is  about 

  The  waiver  co-exists  with  ongoing  efforts  from  the  EU  to  continue  to  export  its 

SPC model of protection to third countries via FTAs. 

This  proposal  complements the Union’s trade policy approach overall and is  consistent 
with  existing  international  trade  agreements,  such  as  the  Agreement  on  Trade-Related 
Aspects  of  Intellectual  Property  Rights  (TRIPS)  between  members  of  the  World  Trade 
Organisation (WTO), as well as those free trade agreements that the EU has concluded 
with third countries and which foresee protection of the nature of the EU supplementary 
protection certificate. 

Table 8: Summary of the costs and benefit of this preferred option 

Stakeholders 

Costs 

Benefits 

Likelihood of the benefits 

EU based 
manufacturers of 
generics and 
biosimilars 

3rd-country based 
manufacturers of 
generics and 
biosimilars 

(≈) 

(++) 

Very high. They can invest in the EU with full certainty 
that their EU production can enter on  day-1 global and 
EU markets 

(0) 

(0) 

They  will  face  additional  competition  from  EU 
manufacturing.  However, 
for 
medicines  is  high  and  they  will  continue  to  have  a 
strong demand 

the  global  demand 

SPC-holders 

(≈) 

(≈) 

in 

third  countries) 

(≈)  In  the  short  run  (while  the  biosimilar  capacity  is 
built 
they  can  see  additional 
competition  on  off-patent/SPC  markets  due  to  the  EU 
generics/biosimilars  exports.  Their  EU  sales  during  the 
EU SPC term would not be affected 
SPC-holders  also  manufacture  biosimilars  and  can 
benefit  from  the  waiver  in  some  cases,  and  from  a 
stronger industrial base in the EU 
Anti-diversion measures will offer additional protection 
against  IP  infringements  SPC-holders  are  currently 
facing 

EU patients and health 
budgets 

(0) 

(+) 

EU employees 

(0) 

(+/++) 

They  can  benefit  from  a  more  robust  supply  of 
medicines,  and  a  more  geographical  diversification  of 
the supply 

High  for  developers  and  manufacturers  of  biosimilars 
and generics.  
Negligible, especially in the medium and long term, for 
jobs  in  the  SPC-holders  sector.  SPC  protection  in  the 
EU  is  not  affected,  SPC  holders  will  face  competition 
abroad  either  from  EU-based  or  third-country  based 

49 

 
EU 
expertise 

EU R&D 

regulatory 

(≈) 

(≈/+) 

(0) 

(+) 

manufacturers, and SPC-holders can also create jobs for 
their biosimilars manufacturing activities in the EU 

Limit the risk of losing the predominant role of the EU 
rules on global regulatory environment 

Positive impact on biosimilars R&D, which requires 
investments of several hundred million euro per 
biosimilar 

8.2. REFIT (simplification and improved efficiency) 

REFIT considerations are not warranted, as this initiative is not a revision of Regulation 
469/2009, but a targeted amendment to tackle the problems identified. 

A broader evaluation of Regulation 469/2009 may be considered in the context of the on-
going analysis of pharmaceutical incentives requested by the Council in June 2016. 

The  preferred  option  is  strictly  limited  to  the  introduction  of  an  SPC  manufacturing 
waiver,  without  affecting  the  other  features  of  the  EU  SPC  regime  such  as  the  subject 
matter of protection and duration, especially since certain CJEU cases related to SPCs are 
still pending. 

9.  HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? 

After  the  entry  into  force  of  the  preferred  option,  the  Commission  will  monitor  its 
implementation with a view to assessing its effectiveness. 

Given that the  manufacturing  exemption will  apply  to  the SPC entering into effect, the 
first  evaluation  should  take  place  about  five  years  from  the  entry  into  force  of  the 
exemption. In  the first  two to  three years after  the entry into force, the G/B companies 
can be expected to adjust their investment decisions taking into account the exemption. 
During this time, no changes in production or exporting activities are expected. 

initiative  could  be  considered  as  successful 

The 
influenced  companies’ 
investment/location  decision  to  produce  molecules  covered  by  the  manufacturing 
exemption in the EU without harming the R&D activities of companies developing new 
medicines.  This  could  be  measured  by  means  of  a  survey  among  pharmaceutical 
companies active in the EU. 

if 

it 

The table below shows the list  of monitoring  indicators. As a starting point, the period 
five  years  prior  to  the  entry  into  force  of  the  exemption  should  be  considered.  These 
indicators  could  be  calculated  for  the  EU  and  compared  to  other  developed  economies 
(e.g.  the  USA,  Canada)  taking  into  account  the  potential  impact  of  reforms  of 
pharmaceutical patent laws or pharmaceutical entry regulations. 

Operational objectives 

Monitoring indicators 

More manufacturing of 
generics and biosimilars in 
the EU 

- Trends in the number of EU G/B manufacturing 
sites 

- Profile of EU G/B manufacturing sites - 
information on employment, turnover, R&D as 
reported in company level databases 

50 

 
More exports of EU-
manufactured generics and 
biosimilars 

Timely day-1 entry in the 
EU for EU-manufactured 
generics and biosimilars 

- Trends in annual exports of EU-based G/B 

- Analysis of entry of EU branded/manufactured 
products in export markets for molecules covered by 
manufacturing exemption in the EU 

- Analysis of sales dynamics and competition 
(number and origin of entrants) in export markets for 
the molecules covered by manufacturing exemption 

- Trends in the number of marketing authorisations of 
generic and biosimilar products granted to the 
companies with manufacturing sites in the EU and 
timing of entry in Member States. This indicator 
should take into account the size of the company and 
in case of SME it dependence on the large company 

- Location of manufacturing for day-1 entry: trends 
in manufacturing sites for the molecules covered by 
manufacturing exemption in the EU and outside 

The available data sources include, but are not limited to: Eurostat, OECD, data provided 
on EMA website, Eudra GMP, databases on pharmaceutical pricing (e.g. IMS Health) or 
company level databases (e.g. Bureau van Dijk). These sources should allow constructing 
all the above indicators without the need for any additional reporting by companies. 

As  regards  the  benchmark  for  the  monitoring  indicators,  an  increase  or  no  (negative) 
change  to  the  levels  prior  to  the  entry  into  force  could  be  considered  as  a  success.  A 
counterfactual analysis is required to fully capture the impacts of the proposal. 

51 

 
ANNEX 1: PROCEDURAL INFORMATION 

  Lead DG, Decide Planning/CWP references 

DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) 

  Organisation and timing 

The deadline for adoption of a proposal by the Commission is May 2018. 

Interservice  meetings  took  place  on  31.03.2017,  7.07.2017,  6.12.2017,  6.2.2018, 
28.2.2018 and 27.4.2018. 

  Consultation of the RSB 

An upstream meeting with the RSB took place on 12.1.2018. 

This impact assessment was sent to the RSB on 12.2.2018. 

A  meeting  with  the  RSB  took  place  on  7.3.2018.  On  9.3.2018  the  RSB  delivered  a 
positive opinion with some reservations. The table below clarifies how these reservations 
have been reflected in the final version of this impact assessment. 

RSB comments 

DG GROW’s replies 

Main considerations 

(1)  The report does not sufficiently reflect the 
views and concerns of relevant stakeholder 
groups, including SPC holders and SMEs. 

The  views  of  SPC  holders  are  better  reflected 
(in  particular  in  section  6.3.2),  and  an  SME 
Test  has  been  included  as  new  Annex  16. 
Appropriate  cross-references  to,  and  content 
from,  new  Annex  16  are  included  through  the 
text of the impact assessment. 

The  content  of  annex  2  (stakeholders  views) 
has  been  expended  (including  specifically 
description  of  the  SMEs  participating  in  the 
Commission consultation and their views). 

(2)  The  report  does  not  elaborate  all  relevant 
options  and 
in 
particular  regarding  the  timing  of  the 
waivers. 

their  key  dimensions, 

the 

impact  have  been  expanded; 

The description of the options and the analysis 
of 
in 
their 
are  now 
particular 
commented  in  section  sections  5.4  and  6.8)  in 
addition 
to  Annex  10.  The  notification 
requirements  (safeguards)  are  better  explained 
in section 6.4.2. 

timing 

issues 

Further considerations and adjustment 
requirements 

(1)  The  different  parts  of  the  report  (problem 
description,  objectives,  impacts)  should  more 
systematically  reflect 
the  concerns  of  all 
stakeholder groups, including the SPC holders. 
In  this  regard,  it  could  be  useful  to  revise  the 

A  new  paragraph  on  general  objectives  has 
been inserted into section 4.1. 

The  views  of  SPC  holders, 
including 
innovative  SMEs,  are  better  reflected  (in 
particular in section 6.3.2). 

52 

 
 
in  order 

objectives 
the 
importance  of  the  continued  protection  of 
patent rights. 

to  better  reflect 

The  content  of  annex  2  (stakeholders  views) 
has been expended. 

(2)  The  analysis  should  better  reflect  the 
strengths and weaknesses of the key studies. In 
addition, it should clarify the robustness of the 
cost and benefit estimates. 

evaluating 

Annex  12  provides  a  summary  of  the  eight 
studies 
the 
the 
manufacturing waiver. The main strengths and 
weaknesses  of  each  study  are  discussed  in 
detail,  and  a  table  recapping  a  comparison  of 
all studies has been added. 

impact  of 

timing 

The 
been 
considerations 
summarised  in  the  main  text  (see  sections  5.4 
and 6.8) in addition to Annex 10. 

have 

Section  6.4.2  on  possible  anti-diversion 
measures has been strengthened. 

regarding 

Clearer  explanations  have  been  provided 
stockpiling, 
(section  6.5) 
including  the  possibility  (and  rationale)  of 
limiting  the  stockpiling  waiver  to  the  last 
months of the term of the SPC. The use of soft 
law has also been considered. 

the 

International 
issues  (including  TRIPS  and 
FTAs) have been addressed in a more detailed 
way (cf. Sections 6.3.2 and 8.1). 

Impacts  on  SMEs  have  been  analysed  in  a 
more detailed way in the main text as well as in 
Annex  16,  which  provides  a  specific  ‘SME 
test’. 

This  initiative  is  not  about  reviewing  the  SPC 
system  in  general.  Such  a  review  is  still 
ongoing,  and  is  related  to  a  wider  review  of 
pharmaceutical  incentives  asked  for  by  the 
Council.  

(3) The set of options should be more complete 
and  detailed.  The  main  report  should  include 
the options for the timing of the introduction of 
the  manufacturing  waiver.  This  is  currently 
analysed in an annex. The report further needs 
to  consider  differentiating  the  options  on  the 
duration  of 
in 
comparison  with  the  duration  of  the  export 
waiver. 
the 
accompanying  use  of  a  soft-law  approach  for 
some options. 

stockpiling  waiver 

consider 

should 

also 

the 

It 

(4)  The  report  should  better  explain 
the 
potential impacts of the manufacturing (notably 
of  the  stockpiling)  waiver  with  regard  to  the 
EU’s trade policy and to the compatibility with 
WTO-TRIPS provisions. 

(5)  The  impact  assessment  should  include  a 
more  comprehensive  analysis  of  costs  and 
benefits  of  the  proposed  options  for  SMEs.  It 
should  also  better  reflect  SME  views  on  the 
different options and their potential impacts. 

(6)  The  report  should  include  a  proportionate 
evaluation  of  the  specific  effects  of  the  SPC 
legislation,  covering  both  the  origins  of  the 
SPC  legislation  as  well  as  the  intended  and 
unintended  consequences  of  it.  It  should  also 
explain  the  timing  of  the  more  comprehensive 
evaluation  of  the  Intellectual  Property  Rights 
framework for medicinal products. In addition, 
it  should  clarify  the  REFIT  dimension  of  the 
for 
examine 
initiative, 
simplification and burden reduction. 

potential 

i.e. 

53 

 
  Evidence, sources and quality 

DG GROW has conducted and contracted several studies related to SPCs in the context 
of the Single Market Strategy (the first 3 studies were published together with the SPC 
online public consultation):  

  A  study  contracted  to  Charles  River  Associates  (CRA)  on  ‘Assessing  the 
economic  impacts  of  changing  exemption  provisions  during  patent  and  SPC 
protection in Europe’79 (CRA study – 2016);  

  An in-house DG GROW analysis of the SPC framework in the EU: ‘25 years of 
SPC  protection  for  medicinal  products  in  Europe:  Insights  and  challenges’80 
(Mejer study – 2017);  

  A  study  on  the  economic  aspects  of  the  SPC:  ‘Economic  Analysis  of 

Supplementary Protection Certificates in Europe’ (Kyle study - 2017)81; 

  A  study  on  the  legal  aspects  of  the  SPC  awarded  to  the  Max  Planck  Institute 

(MPI); 

  A  study  analysing  the  combined  effect  of  pharmaceutical  incentives  in  Europe, 

realised by Copenhagen Economics. 

In  addition,  the  following  eight  studies  evaluating  the  impact  of  manufacturing  waiver 
were sponsored by generic/biosimilar stakeholder and SPC-holders:  

  Vicente, V., & Simões, S. (2014). Manufacturing and export provisions: Impact 
on  the  competitiveness  of  European  pharmaceutical  manufacturers  and  on  the 
creation of jobs in Europe. Journal of Generic Medicines (BluePharma) 

  Roland  Berger  (2015),  Extension  of  the  Bolar  exemption  regarding  production 

for export and launch preparation. (Pro Generica) 

  Nomisma  (2015),  The  generic  drugs  system  in  Italy.  Scenarios  for  sustainable 

growth. (Assogenerici) 

  Sussell,  J.  A.,  Tebeka,  M.  G.,  Jena,  A.  B.,  &  Vanderpuye-Orgle,  J.  (2017), 
Reconsidering  the  economic  impact  of  the  EU  manufacturing  and  export 
provisions. Journal of Generic Medicines (AbbVie) 

  Logendra  and  Troein  (2017),  Assessing  the  impact  of  proposals  for  a 
Supplementary Protection Certificate (SPC) Manufacturing Exemption in the EU. 
Quintiles IMS (EFPIA) 

  Pugatch Consillium (2017), Unintended Consequences (AbbVie, La Roche & US 

Chamber of Commerce) 

  Office of Health Economics (2018), Review of CRA’s Report (EFPIA) 

79   https://publications.europa.eu/en/publication-detail/-/publication/6e4ce9f8-aa41-11e7-837e-
01aa75ed71a1/language-en 
80   https://ec.europa.eu/docsroom/documents/26001/attachments/1/translations/en/renditions 
/native 
81   https://ec.europa.eu/docsroom/documents/25621/attachments/1/translations/en/renditions 
/native 

54 

 
                                                 
  European  Economics  (2018),  Impacts  of  Reducing  Patent  and  Extended 
Protections against Manufacturing for Stockpiling and Export (EuropaBio). 

Annex  12  critically  discusses  main  strengths  and  weaknesses  of  the  studies  evaluating 
impact of manufacturing waiver. 

55 

 
ANNEX 2: STAKEHOLDERS’ VIEWS 

consultationJanuary82A total of 231 replies were provided to the on-line consultation: 43 
replies  from  the  general  public,  71  from  originators  industry/associations,  63  from 
generics and biosimilars industry/associations, 15 from health authorities/doctors/patients 
groups 
health 
insurance/reimbursement/health  technology  assessment,  from  a  doctors’  organisation, 
and  2  from  patients’  associations),  34  from  patent  offices/practitioners,  and  5  from 
industry/trade authorities. 

organisations 

national 

(mostly 

dealing 

from 

with 

The  statistics  corresponding  to  respondents  identified  as  SMEs  or  start-ups  are  the 
following: 

-  Among  the  63  respondents  defining  themselves  as  mostly  manufacturers  of 
generics/biosimilars, 12 respondents identified themselves as an SME and one as 
a start-up; 

-  Among  the  71  respondents  defining  themselves  as  mostly  originators,  2 
in  medicines 
themselves  as  an  SME 

respondents 
involved 
biotechnology and one as a start-up in the field of bio-pesticides. 

identified 

In  addition,  several  pharmaceutical  associations  (Medicines  for  Europe,  EUCOPE,  and 
EuropaBio) also represent pharmaceutical start-ups and SMEs and conveyed SME views 
both  by  responding  to  the  public  consultation  and/or  by  sending  position  papers  to  the 
Commission  services.  The  input  of  these  position  papers  is  taken  into  account  in  this 
summary of replies. 

  Views expressed by generics/biosimilars manufacturers  

Most  generics/biosimilars  (‘G/B’)  manufacturers  support  the  introduction  of  a 
manufacturing waiver, considering that: 

  SPCs  disadvantage  EU-based  G/B  manufacturers  compared  with  those  based  in 
countries  with  no  SPC  when  exporting  G/Bs  outside  the  Union.  This  problem  is 
confirmed by 56 out of 63 G/B respondents (1 respondent denies this problem, and 2 
do not know). 

  SPCs  disadvantage  EU-based  G/B  manufacturers  compared  with  those  based  in 
countries with no SPC when placing G/Bs on the market in the EU immediately after 
the  SPC  expires;  this  problem  is  confirmed  by  53  out  of  63  G/B  respondents  (3 
respondents deny this problem, and 3 do not know). 

  The  EU  SPC,  in  its  current  form,  increases  reliance  on  imports  of  medicines  and 

active pharmaceutical ingredients from outside the EU; 

82   https://ec.europa.eu/info/consultations/public-consultation-supplementary-protection-certificates-spcs-
and-patent-research-exemptions_en 

56 

 
 
 
                                                 
  The  entry  into  force  of  the  EU  SPC  regulations  in  a  Member  State  triggers  the 
delocalisation to another country or licensing of manufacturing to a country with no 
or less stringent SPC type protection; 

  Already today, it is not always possible to source active pharmaceutical ingredients 

(‘APIs’) from the EU; 

  The  introduction  of  an  SPC  manufacturing  waiver  in  the  EU  would  increase  their 
sales in countries outside the EU when protection abroad expires; would lead them to 
increase their manufacturing in the EU; would not increase the risk of infringement 
of SPCs in the EU; and would not significantly reduce originators’ sales in countries 
outside the EU when protection abroad expires. 

The  vast  majority  of  SMEs  manufacturing  generics  and  biosimilars  also  share  these 
views, and in general consider that the longer duration of SPCs in the Union compared to 
non-EU countries makes manufacturing in the Union less interesting for them. 

  Views expressed by originators 

Originators’  submissions  to  the  consultation  reflect  their  broad  –  though  not 
overwhelming – opposition to the introduction of an EU SPC manufacturing waiver: 54 
out  of  71  originators  do  not  consider  that  EU-based  manufacturers  face  export  or  EU 
day-1 entry-related problems vis-à-vis their competitors based in non-EU countries (with 
shorter or no SPC protection). 

A  strong  majority  of  the  originators  consider  that  the  current  EU  SPC  framework  does 
not  put  EU  based  generics/biosimilars  manufacturers  at  a  disadvantage  compared  with 
foreign-based manufacturers, neither when exporting generics/biosimilars outside the EU 
nor  when  it  comes  to  placing  generics/biosimilars  on  the  EU  market  when  SPC 
protection in the EU expires. 

Most  originators  oppose  the  introduction  of  an  SPC  manufacturing  waiver  in  the  EU, 
considering that it would: 

  increase the risk of infringement of SPCs in the EU; 

  reduce protection to recoup their investments in R&D in the EU; 

  reduce their sales in countries outside the EU when protection abroad expires; 

  erode IPR protection, sending a negative message to those innovating and investing 

in the EU, or intending to do so;  

  increase competition from EU-based generics/biosimilars on the EU market; 

  provide  EU-based  generics/biosimilars  manufacturers  with  limited  benefits  only  – 
arguing  that  European  generics  companies  are  often  the  first  to  market  in  the  EU, 
and  that  SPC(-like)  protection  is  also  available  in  firms’main  export  markets  (the 
USA, Japan, etc.). 

Regarding  pharmaceutical  innovative  SME,  among  the  71  respondents  defining 
themselves  as  mostly  originators,  2  respondents  identified  themselves  as  an  SME 
involved in medicines biotechnology and one as a start-up in the field of biopesticides. In 
addition,  several  European  pharmaceutical  associations  such  as  EUCOPE,  EBE,  and 
EuropaBio conveyed the views of their start-ups and SME members in their submissions 
and accompanying letters sent to the Commission during the public consultation. A few 
national innovative pharmaceutical associations focused on start-ups and SMEs-members 

57 

 
also  provided  their  views.  These  associations  representing  innovative  SMEs  have 
expressed  concerns  that  the  introduction  of  a  manufacturing  waiver  would  dilute  SPC 
protection  and  therefore  dilute  the  financial  rewards  they  would  receive  for  their 
inventions,  as  well  as  their  possibility  to  get  and  secure  funding  for  their  innovative 
R&D.  They  also  highlight  that  EU-manufactured  generics  are  likely  to  compete  for 
market  shares  in  unprotected  markets  with  the  original  brands  and  thus  decreasing  the 
actual or projected market share of these SMEs products. 

  Views expressed by other stakeholders 

A  large  majority  of  the  43  citizens  who  answered  the  consultation  state  that  they  care 
about the origin of productions of the medicines they consume, while only 3 said they do 
not care. 

10 out of 15 respondents in the group of patients/doctors/insurers agree that the EU SPC 
system puts EU-based manufacturers of generics and biosimilars at a disadvantage vis-à-
vis  competitors  based  in  third  countries  when  it  comes  to  export.  Only  1  respondent 
considers  that  this  is  not  a  problem.  6  respondents  of  this  category  see  also  an  issue 
regarding  timely  EU  day-1  entry  for  EU-based  manufacturers  of  generics  and 
biosimilars. 3 respondents do not consider that this is a problem. 

Outside the framework of the public consultation, strong political support was expressed 
for the introduction of a manufacturing waiver by Parliament in a number of Resolutions; 
in  particular,  its  May  2016  Resolution  on  the  Single  Market  Strategy  ‘urge[d]  the 
Commission to introduce and implement before 2019 an SPC manufacturing waiver’, so 
as  to  boost  the  competitiveness  of  the  generics  and  biosimilar  sector,  ‘while  not 
undermining the market exclusivity granted under the SPC regime in protected markets’. 

58 

 
 
ANNEX 3: WHO IS AFFECTED AND HOW? 

  Practical implications of the initiative 

As  mentioned  above,  the  main  impacts  of  the  introduction  of  an  SPC  manufacturing 
waiver would be: 

  EU-based manufacturers of generics/biosimilars would benefit from a more level 
playing  field  in  respect  of  third-country  manufacturers,  as  they  would  be  able  to 
(1) manufacture  generics/biosimilars  in  the  EU  during  the  SPC  term  for  exporting 
them  to  (‘non-SPC’)  third  countries,  and/or  –  depending  on  whether  the  waiver 
would be for export and/or for stockpiling purposes – (2) manufacture and stockpile 
generics/biosimilars in the EU just before the end of the SPC term for being able to 
supply the EU market immediately after SPC expiry (from  day-1). It should not be 
forgotten  that  the  increasing  number  of  originator  firms  possessing  generics  and 
biosimilar divisions or subsidiaries in the EU would also benefit from the waiver. 

To  implement  anti-diversion  measures,  the  generics/biosimilars  manufacturers 
would have to foresee certain obligations, such as labelling and notification. 

  The  pressure  to  relocate  the  manufacturing  of  generics/biosimilars  outside  the  EU 
would reduce, positively affecting employment in that sector, including high-skilled 
jobs. EU-based R&D would also benefit from this, especially regarding biosimilars, 
a sector in which the EU could then hope to keep its pioneer advantage. All players 
of  the  EU  pharmaceutical  ecosystem,  including  SMEs,  would  benefit  from  its 
sustained  strength  and  dynamism  (including  for  instance  sufficient  manufacturing 
capacities,  and  suitable  skills),  which  is  likely  to  have  many  outcomes  including 
promoting the creation and growth of EU start-ups. 

  Originators  (SPC  holders)  would  face  slightly 

increased  competition 

in 
unprotected markets (namely from EU-based manufacturers of generics/biosimilars) 
(1) for export purposes during the SPC term, and/or (depending notably on whether 
the waiver would be for export and/or for stockpiling purposes) (2) for day-1-entry 
purposes. This may lead to some decrease (of slower-than-expected increase) of their 
sales  and  of  the  related  employment.  However,  this  increase  in  competition  in 
unprotected markets is expected to remain low compared to the intense competition 
already generated today by manufacturers established in (‘non-SPC’) third countries. 
It may also be recalled that the core legal protection resulting from SPCs in the EU, 
providing  SPC  holders  with  exclusive  rights  regarding  the  placing  their  products 
onto the EU market during the SPC term, will not be affected at all. So while there 
may be a second-order effect there will be no first-order one.  

  EU patients and Member State public health systems (budgets) would benefit from 
a timely market entry of generics/biosimilars onto the EU market (possibly resulting 
in lower prices), and also from better security of supply. 

  Public  authorities  may  need  to  receive  and  publish  notifications  related  to  anti-
diversion  measures,  potentially  leading  to  a  small  but  manageable  administrative 
workload. 

59 

 
  Summary of costs and benefits 

I. Overview of Benefits (total for all provisions) – Preferred Option 

Description 

Direct benefits 

Amount 

Comments 

of 

EU-made 

Exports 
generics/ 
biosimilars during the SPC term, under a 
waiver  that  would  at  least  cover  export 
purposes  

Increased  employment  by  EU-based 
manufacturers of generics/biosimilars 

Savings  for  Member  States’  national 
expenditure on pharmaceuticals 

Indirect benefits 

of 

Improvement 
pharmaceutical 
beneficial to originators) 

the  whole  EU 
(also 

ecosystem 

Increase of the EU 
pharmaceutical trade balance 
by EUR 6 -10bn over 10 years 
for a sample of (117+17) 
molecules (32% of the 
relevant medicines) 

CRA study, section 3.4 

Amount above revised down 
to EUR 2-3bn 

OHE-EFPIA  

> 20 000 additional jobs 
Revised down to 3 000 to 
9 400 jobs 

CRA study, S. 3.4 
OHE-EFPIA  

~ 4-8 % savings 

CRA study 

A  healthy,  vibrant  EU  pharma  ecosystem  will  clearly  be 
beneficial  not  only  for  generics/biosimilars  manufacturers  but 
also for originators and research organisations, as well as for the 
creation and growth of start-ups.  

II.Overview of costs – Preferred option 

EU-based 
generics/biosimilars 
manufacturers  

EU-based SPC holders 
(originators) 

Administrations  

One-off 

Recurrent 

One-off 

Recurrent 

One-off 

Recurrent 

Manufacturing 
waiver for 
export purposes  

Direct 
costs 

0 
 Negligible 
cost of 
notification 
of the 1st 
production  

Minor logistical 
costs relating to 
specific labelling  
The related costs 
could be around 
EUR 10 000 per 
product per 
year83.0 

/ 

/ 

0 

A few 
thousand 
per EU 
MS 

Stablishi
ng an IT 
solution 

83   Considering that the evaluation of Regulation 953/2003 to avoid trade diversion into the EU of certain 
key  medicines  found  that  a  pharmaceutical  company  incurred  costs  of  a  few  hundred  thousand  euro 
between  2003-15  for  adding  a  logo  on  its  packs  and  for  getting  regulatory  authorities  to  amend/extend 
marketing authorisations for the medicines due to a change of packaging. 

60 

 
 
 
 
 
 
 
 
 
 
  
                                                 
Indirect 
costs 

/ 

0 

for e-
filing 
and 
publicati
on of the 
notificati
on  

/ 

Possible 
loss of 
employm
ent by 
origina-
tors84 

Possible decrease in 
sales (1) in export 
markets during the 
SPC term and (2) in 
the EU immediately 
after SPC expiry.  
Available estimations 
include: 

  EUR 139 - 278m 
for non-biologics 
and EUR 868m – 
1,7bn for biologics 
(CRA study, S. 3.4) 

  EUR 191m – EUR 
573m for non-
biologics (OHE-
EFPIA) 

84   The Pugatch study mentions a range of 4,500-7,700 direct job exposes to competition. However, that 
study does not estimate how many of those jobs exposed to competition might be finally lost due to the 
waiver. 

61 

 
 
                                                 
ANNEX 4: DIFFERENCES BETWEEN GENERIC AND BIOSIMILAR MEDICINAL PRODUCTS 

Table A3.1. Differences between generic and biosimilar medicinal products 

Generics 

Biosimilars 

Size and structure of 
molecule 

Simple and small chemical structure 
that can be fully characterised 

Large and complex structures, 
difficult to fully characterise 

Method of production 

Chemical synthesis - identical copies 
can be made by chemists in the lab 

Made in living organisms - 
identical copies cannot be made 

Immunogenicity 

Lower potential 

Assurance of product 
quality 

About 50 tests and controls are 
required to demonstrate identity, 
strength, quality, potency and purity. 

Higher capacity to produce immune 
system responses 

About 250 tests and controls are 
required to demonstrate identity, 
strength, quality, potency and 
purity. 

Development timeline 

Few months to very few years 

Several years 

Cost of development to 
reach approval 

EUR 2m -3m 

EUR 70-300m / USD 300m 

Additional tests for 
marketing authorisation 
purposes 

Identical to reference medicine; thus 
only proof of bioequivalence to the 
reference product is needed 

Similar to, but not identical, to the 
reference product, thus additional 
tests (and trials) are required 

Authorising agency 

National medicines agencies or EMA 
(European Commission) 

Only EMA (European 
Commission) 

Discount over the 
reference product price 
after expiry 

80-90% 

20-30% 

Interchangeability with 
reference medicine 

Yes for patients already treated with 
the reference medicine 

Value chain location 

Relatively easy to delocalise the 
production, and delink development 
from manufacturing 

No interchangeability or automatic 
substitution (some Member States 
are introducing almost automatic 
substitution) 

The production is difficult to 
delocalise85 (i.e., once delocalised, 
it might not be moved again) as it 
is highly sensitive to environmental 
changes; therefore development 
and manufacturing tend to be close 
to each other86 

Sources: Based on CRA Report (2017), Deloitte Report. 

85   According  to  Medicines  for  Europe,  the  minimum  cost  of  relocating  the  production  of  a  single 
biological product is EUR 10m and it takes a  minimum  of 1.5 to 2 years. If the relocation results in the 
need for additional regulatory approvals to ensure that the safety, quality and efficacy of the  product are 
not affected, the costs easily multiply. 
86   Alcacer,  J.  and  Delgado,  M.  (2016),  ‘Spatial  organization  of  firms  and  location  choices  through  the 
value  chain’.  Management  Science,  62(11),  3213-3234.  Analysing  locations  of  new  establishments  of 
biopharmaceutical firms in the USA from 1993 to 2005, authors show that collocation of activities varies in 
the value chain. Although present in all activities, it is larger for R&D and manufacturing than for sales. 

62 

 
 
 
                                                 
 
 
ANNEX 5: BIOSIMILARS APPROVED IN THE EU AS OF DECEMBER 2017 

Biosimilar Trade Name 

Marketer 

Active Substance 

Epoetins 
Abseamed 
Binocrit 
Epoetin Alfa Hexal 
Retacrit (2) 
Silapo 
Filgrastims 
Accofil 
Filgrastim Hexal 
Grastofil (3) 
Nivestim 
Ratiograstim 
Tevagrastim 
Zarzio (4) 
Follitropins 
Bemfola 
Ovaleap 
Growth Hormones 
Omnitrope (5) 
Insulins 
Abasaglar (6) 
Lusduna (7) 
Insulin lispro Sanofi 
Low-Molecular Weight Heparins 
Inhixa 

Thorinane 

Medice 
Sandoz 
Hexal 
Hospira 
Stada 

Accord 
Hexal 
Apotex 
Hospira 
Ratiopharm 
Teva 
Sandoz 

Finox 
Teva 

Sandoz 

Eli Lilly 
Merck 
Sanofi 

Techdow Europe AB 

Pharmathen S.A. 

Monoclonal Antibodies 
Amgevita/Solymbic (8) 
Cyltezo (9) 
Imraldi 
Flixabi (10) 
Inflectra (11) 
Remsima (11) 
Rixathon/Riximyo (12) 
Truxima/Blitzima/Ritemvia/Rituzena (13)  Celltrion 
Ontruzant (14) 
Parathyroid Hormone Fragment 
Movymia 
Terrosa 
Fusion Proteins 
Benepali 
Erelzi (15) 

Amgen 
Boehringer Ingelheim 
Samsung Bioepis 
Samsung Bioepis 
Hospira 
Celltrion 
Sandoz 

Samsung Bioepis 

STADA Arzneimittel 
Gedeon Richter 

Samsung Bioepis 
Sandoz 

epoetin alfa 
epoetin alfa 
epoetin alfa 
epoetin zeta 
epoetin zeta 

filgrastim 
filgrastim 
filgrastim 
filgrastim 
filgrastim 
filgrastim 
filgrastim 

Reference 
Drug 

Year of 
Approval 

Eprex/Erypo  2007 
Eprex/Erypo  2007 
Eprex/Erypo  2007 
Eprex/Erypo  2007 
Eprex/Erypo  2007 

Neupogen 
Neupogen 
Neupogen 
Neupogen 
Neupogen 
Neupogen 
Neupogen 

2014 
2009 
2013 
2010 
2008 
2008 
2009 

2014 
2013 

follitropin alfa 
follitropin alfa 

GONAL-f 
GONAL-f 

somatropin 

Genotropin 

2006 

insulin glargine 
insulin glargine 
insulin lispro 

Lantus 
Lantus 
Humalog 

2014 
2017 
2017 

enoxaparin 
sodium 
enoxaparin 
sodium 

adalimumab 
adalimumab 
adalimumab 
infliximab 
infliximab 
infliximab 
rituximab 
rituximab 
trastuzumab 

teriparatide 
teriparatide 

etanercept 
etanercept 

Clexane 

2016 

Clexane 

2016 

Humira 
Humira 
Humira 
Remicade 
Remicade 
Remicade 
MabThera 
MabThera 
Herceptin 

Forsteo 
Forsteo 

Enbrel 
Enbrel 

2017 
2017 
2017 
2016 
2013 
2013 
2017 
2017 
2017 

2017 
2017 

2016 
2017 

(1) Three additional biosimilars were approved by the EMA but subsequently had their 
authorisations withdrawn. 

(2)  An  FDA  advisory  committee  recommended  approval  of  Hospira’s  U.S.  biosimilar 
application in May 2017, but the application was rejected by the FDA in June 2017. 

(3) A biosimilar application to market in the USA was accepted for review by the FDA 
but has not been approved. 

63 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(4)  Approved  in  the  USA  as  a  biosimilar  under  the  Biosimilar  Price  Competition  and 
Innovation Act of 2009 (BPCIA) with the trade name Zarxio. 

(5) Approved in the USA under the 505(b)(2) pathway. 

(6) Original EU trade name was Abasria; it was approved in the USA under the 505(b)(2) 
pathway with the trade name Basaglar and launched in the USA in December 2016. 

(7)  In  July  2017,  Lusduna  received  tentative  approval  in  the  USA  under  the  505(b)(2) 
pathway. 

(8) Approved in the USA in September 2016 with trade name Amjevita. Amgevita and 
Solymbic are different trade names for the same monoclonal antibody. 

(9) Approved in the USA in August 2017 as a biosimilar under the BPCIA. 

(10)  Approved  in  the  USA  in  April 2017  as  a  biosimilar  under  the  BPCIA  under  trade 
name Renflexis. 

(11) Inflectra has been approved in the USA as a biosimilar under the BPCIA. Inflectra 
and Remsima are different trade names for the same monoclonal antibody. 

(12) Rixathon and Riximyo are different trade names for the same monoclonal antibody. 
A biosimilar application to market in the USA has been accepted by the FDA. 

(13)  Celltrion’s  MabThera  biosimilar  was  first  approved  in  Europe  in  February  2017 
under  the  name  Truxima.  Additional  marketing  authorisations  under  the  trade  names 
Blitzima,  Ritemvia,  and  Rituzena  (previously  Tuxella)  were  granted  in  July  2017.  A 
biosimilar application to market in the USA has been accepted by the FDA. 

(14)  Samsung  Bioepis  announced  in  November  that  it  had  received  marketing 
authorisation in Europe. 

(15) Approved in the USA as a biosimilar under the BPCIA. 

CHMP  Issues  Positive  Opinions  Two  additional  biosimilars,  Amgen/Allergan’s  Mvasi 
and Celltrion’s Herzuma, have received favorable opinions from EMA’s Committee on 
Medicinal  Products  for  Human  Use  (CHMP)  and  may  soon  be  approved  in  Europe. 
Mvasi,  a  biosimilar  of  Genentech’s  Avastin  (bevacizumab),  received  a  favorable 
recommendation from CHMP on 9 November 2017. Mvasi was approved as a biosimilar 
in  the  USA  in  September  2017.  Celltrion’s  Herzuma,  a  biosimilar  of  Genentech’s 
Herceptin (trastuzumab), received a positive opinion from CHMP on 14 December 2017. 
If,  as  anticipated,  the  Commission  follows  the  recommendation  of  CHMP,  Mvasi  and 
Herzuma likely will be approved in Europe in the coming months. 

Pending Biosimilar Applications in Europe Eleven additional biosimilar applications are 
under evaluation by the EMA as of December 2017: three applications for biosimilars of 
AbbVie’s  (adalimumab),  one  application  for  a  biosimilar  of  Sanofi’s  Lantus  (insulin 
glargine),  six  applications  for  biosimilars  of  Amgen’s  Neulasta  (pegfilgrastim),  one 
application for a biosimilar of Janssen’s Remicade (infliximab) and four applications for 
biosimilars of Genentech’s Herceptin (trastuzumab). 

The  six  pending  applications  for  biosimilars  of  Amgen’s  Neulasta  (pegfilgrastim)  are 
particularly  notable,  since  EMA  has  rejected  a  number  of  the  previous  applications  for 
pegfilgrastim  biosimilars  and  no  pegfilgrastim  biosimilars  have  been  approved  to  date. 
Indeed,  two  of  the  currently  pending  applications  for  pegfilgrastim  biosimilars  are 
resubmissions  of  rejected  applications.  Sandoz’s  resubmitted  application  was  accepted 
for review in October 2017, while Mylan/Biocon’s resubmitted application was accepted 
for  review  in  November  2017.  Other  pending  applications  include  applications  from 
Coherus, Spain’s Cinfa, and Indian pharmaceutical manufacturer USV. 

EMA  is  also  reviewing  Mylan/Biocon’s  application  for  Ogivri,  a  biosimilar  of 
Genentech’s  Herceptin  (trastuzumab).  Ogivri  was  approved  as  a  biosimilar  in  the  USA 

64 

 
on December 1, 2017. However, Mylan/Biocon’s application for marketing approval for 
Ogivri in Europe, like its application for its pegfilgrastim biosimilar, ran  into problems 
last  summer  after  a  European  inspection  of  Biocon’s  manufacturing  facility.  Like  the 
pegfilgrastim  application,  the  Ogivri  application  was  withdrawn  in  August  2017  but 
resubmitted in November. 

2017 has been a record-setting year for biosimilar approvals in Europe. Although the first 
biosimilars  to  the  European  market  were  approved  in  2006  and  2007,  the  number  of 
approved biosimilars has doubled in the past two years. These approvals have expanded 
the market into new therapeutic areas and new classes of biologics. 

65 

 
 
 
ANNEX 6: ANALYTICAL METHODS 

The analytical methods used in the various studies mentioned in Annex 1 are explained 
in the text of the respective studies. 

66 

 
 
 
ANNEX 7: GENERIC AND BIOSIMILAR MARKET IS EXPANDING 

1)  Massive global demand for medicines 

There  is  a  worldwide  increasing  and  massive  demand  for  medicines.  This  is 
confirmed  by  industry  (IFPMA  and  EFPIA)  data  showing  that  the  total  global 
spending  on  medicines  increased  from  EUR  950bn  in  2012  to  EUR  1.1  trillion  in 
2017, and consistent with the US Commerce Department’s similar data pointing out 
to  a  global  spending  of  USD  1.3  trillion  expected  by  2020  with  annual  growths  of 
5%. 

2)  Shift towards more generics and biosimilars 

In  all  markets,  especially  in  developing  countries,  the  consumption  of  medicines  is 
shifting  toward  generics  and  biosimilars.  Generics  and  biosimilars  could  represent 
80%  of  the  volume  of  medicines  by  2020  with  a  future  growth  forecast  at  a 
compound  annual  growth  rate  of  6.9%.  For  the  US  market,  data  from  US  Generic 
Pharmaceutical  Association  indicates  an  increase  from  27%  in  2012  to  36%  of  the 
total  sales  by  2017  and  making  80%  of  the  filled  prescription  sales87  of  the 
pharmaceutical market by 2020. In the Union, Medicines for Europe claims that 56% 
of  the  volume  of  medicines  supplied  correspond  to  generics  and  biosimilars.  Japan 
government  set  a  target  of  80%  market  penetration  of  generics  and  biosimilars  in 
Japan by 2020. 
IFPMA 2017 report88 highlights that the spending on generic drugs is driving most of 
the growth in the leading emerging markets, which will contribute to the increase in 
the  share  of  generic  spending.  The  revenues  from  generics  in  2021  are  expected  to 
reach USD 495-505 billion. 
There  was  a  growth  peak  of  generics  until  2012  driven  by  a  major  ‘patent  cliff’89; 
however,  perspectives  are  bright  with  a  rejuvenated  pipeline  of  blockbuster  in  part 
due  to  biologics,  plans  to  take  up  generics  use  in  major  markets  as  Japan,  strong 
demand in emerging economies and new generics’ opportunities in specialised fields 
or new delivery technologies. The global market for generic medicines should reach 
EUR  500bn  by  2021  from  330  in  2016  (a  50%  increase  in  5  years).  According  to 
several  sources  (e.g.  CRA  study  and  Deloitte),  emerging  middle  classes  in  Asia 
demand branded generics/biosimilars with strong reputation. 

The biologics market is booming with annual sales of over EUR 150bn. In the EEA 
the  share  of  biologics  (including  biosimilars)  in  the  total  pharmaceutical  sales  was 
16%  in  2008  and  increased  to  21%  in  the  12  months  ending  in  2014  Q390.  Now 
biologics account for over a third of all new drugs in clinical trials or awaiting FDA 

87   Generic  Pharmaceutical  Association,  Generic  Drug  Savings  in  the  USA  –  7th  Annual  Edition  (2015): 
http://www.gphaonline.org/media/wysiwyg/PDF/GPhA_Savings_Report_2015.pdf 
88   https://www.ifpma.org/wp-content/uploads/2017/02/IFPMA-Facts-And-Figures-2017.pdf  
89   A ‘patent cliff’ refers to the situation that takes place when the legal protection (afforded by a patent or 
SPC) of one or several successful medicine(s) expires (in a short period of time for all of them), causing a 
very sharp drop in sales for the right-holder(s). 
90   CRA report, page 24. 

67 

 
                                                 
approval91.  According  to  Medicines  for  Europe,  by  2018,  50%  of  pharmaceutical 
expenditure will relate to biologicals. 

As  well  as  biologics,  the  biosimilars  sector  is  booming.  Biosimilars  providing  new 
avenues to address key therapy areas such as cancer, orphan conditions and chronic 
diseases with increasing prevalence at a lower cost for public health authorities and 
health providers. Biosimilars, despite their complexity and high cost of development 
(see  above)  are  especially  interesting  for  the  pharmaceutical  industry  at  large 
because: 
-  The  first  generation  of  biologics92  have  started  to  reach  the  end  of  their 
patent/SPC protection or other forms of market exclusivity in the coming years. 
According  to  Baker&McKenzie,  by  2019  approximately  50%  of  the  biologics 
the  USA;  Over  EUR  90bn  of  current 
market  will  be  off-patent 
reference/innovator  products  will  become  susceptible  to  biosimilar  competition 
by  202093.  In  the  USA  only,  it  is  estimated  that  the  biosimilar  market  may  be 
worth  USD  11bn  by  2020  (accounting  for  4-10%  of  the  biologics  market  by 
2020). 

in 

-  The best-selling pharmaceuticals in the world today are biologics94. For example, 
blockbuster  biologic  Humira®  (Adalimumab)  tops  the  sales  ranking  with  EUR 
8bn in the 1st semester of 2017 according to Bloomberg. 

- 

Price competition in the market of biologics is not as intensive as in the case of 
classic generic markets. In the EU, the discount of the biosimilar to the biologic 
has  averaged  about  20  to  30%95  (comparing  with  typically  50  to  80%96  for 
classic generics). 

3)  Traditional originators also interested in biosimilars97 

As  a  result,  not  only  traditional  companies  in  the  generics  sector  are  developing 
biosimilars, also traditional pharmaceutical/biotech/R&D innovators companies have 
obtained  marketing  authorisations  to  commercialise  biosimilars.  EMA  databases 
(details in annex 5) show that 15 out of 33 biosimilars currently in force in the EU 
were  issued  directly  to  classic  originators  (Amgen,  Boehringer,  Eli  Lilly,  Merck, 
Sanofi)  or  their  biosimilars’  divisions  (Pfizer-Hospira,  Novartis-Sandoz,  Novartis-
Hexal).  Samsung  Bioepis  and  Celltrion  count  with  6  biosimilars  authorisations  at 

91   See  US  Commerce  Department-International  Trade  Administration,  2016  Top  Markets  Report 
Pharmaceuticals. 
92   More than 400 biopharmaceutical products, including over 140 recombinant proteins approved in the 
USA and Europe. Over 40 recombinant proteins have blockbuster (over USD 1bn a year) markets. 
93   This is consistent with other estimations signalling around USD 81bn – see Rovira, J., et al, The impact 
of Biosimilars’ entry in the EU Market. Granada (Spain): Andalusian School of Public Health (2011). 
94   http://www.expansion.com/empresas/2017/08/08/5988c908e5fdea32328b4627.html 
95   Footnote  92  of  CRA  study.  See  Grabowski  H.,  Guha  R.,  and  Salgado,  M.  (2014),  Biosimilar 
competition:  Lessons  from  Europe,  Nature  Reviews,  Drug  Discovery,  Feb  2014,  Vol.  13;  or  Pricing  of 
biosimilars,  Gabi  Online,  23  March  2012  available  at  http://gabionline.net/Biosimilars/Research 
/Pricing-of-biosimilars). 
96   Danzon  P.M.  and  Furukawa  M.F.  (2014),  ‘Cross-national  evidence  on  generic  pharmaceuticals: 
pharmacy  vs  physician-driven  markets’,  NBER  working  paper  no.  17226  and  Charles  River  Associates 
(2016). 
97   https://www.dcatvci.org/5058-biosimilars-opportunities-and-challenges-in-the-us-and-eu  

68 

 
                                                 
EMA that often manufacture and license to originators. FDA databases show that 6 
out  of  9  biosimilars  are  registered  by  originators  (Amgen,  Boehringer,  Pfizer  and 
Novartis-Sandoz). 

4)  Global  competition  in  the  pharmaceutical  industry;  EU  lead  advantage  on 

biosimilars fading 

Expecting  growth  is  also  strong  in  emerging  markets  (the  so-called  ‘pharmerging’ 
countries).  China  is  now  the  second  market  for  pharmaceuticals  ahead  of  Europe. 
This  scenario  of  strong  demand  is  accompanied  by  an  increasing  R&D  and 
to  compete  on 
manufacturing  capacity  and  know-how 
pharmaceutical market98. Therefore the pharmaceutical industry operates in a  highly 
competitive and global market. 

third-countries 

in 

The  EU  was  pioneering  in  introducing  regulatory  procedures  for  approval  of 
biosimilars (the EMA authorised the 1st biosimilar in 2006, 9 years before the FDA99 
authorised  the  first  biosimilar  in  2015)  and  therefore  the  EU  gained  a  competitive 
advantage  in  the  development  of  biosimilars,  however,  other  trade  blocs,  including 
BRICS, have updated their regulatory rules and are becoming increasingly attractive 
for investments in biosimilars100 (IMS Health identified in 2011 South Korea, India 
and  Brazil  as  key  macroeconomic  drivers  of  growth,  attracting  foreign  capital  by 
creating  manufacturing  and  R&D  centres  of  excellence  for  biosimilars101;  In  South 
Korea,  35%  of  the  national  medical  R&D  budget  was  invested  into  biosimilars 
development in 2012 according to Deloitte report).  

5)  First mover advantage in the market of generics and biosimilars 

As  the  pharmaceutical  market  is  global  and  highly  competitive,  the  ‘first 
generic/biosimilar  mover(s)’  usually  takes  most  of  the  market  share  where 
patent/SPC expires (see third driver in section 2 below). Indeed, regarding the first-
mover advantage in the off-patent/SPC EU market, DG GROW studies show that in 
the EU, generic firms entering 1 year after the first generic entrant only capture 11% 
of  first  entrant  market  share  during  the  first  year,  and  20%  of  first  entrant  market 
share after being 2 years in the market. Late entrants in biosimilar industry also face 
competitiveness disadvantage. Studies show that in 2016, first biosimilars to market 
captured  72%  market  share,  while  2nd  and  3rd  entrants  only  captured  30%  and  5% 
respectively. 

6)  EU giving the longest SPC protection 

Despite that positive pioneering effect in the EU, and the efforts being made via FTA 
negotiations to get trade partners to introduce EU SPC type protection, it is a fact that 
the  EU  frequently  gives  longer  patent  and  SPC  protection  for  pharmaceutical 

98   See  footnotes  related  to  pages  7  and  8  of  Deloitte  report  2015.  See  page  3  of  this  US  Commerce 
Department-International  Trade  Administration,  2016  Top  Markets  Report  Pharmaceuticals: 
https://www.trade.gov/topmarkets/pdf/Pharmaceuticals_Executive_Summary.pdf 
99   The Patient Protection and Affordable Care Act signed into law on March 2010 authorised the FDA to 
approve biosimilars that were approved under the Public Health Service Act of 1944 or the Federal Food, 
Drug,  and  Cosmetic  Act (FFDCA). In  2015,  Zarxio became  the  first biosimilar  product  approved by  the 
FDA: http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm436648.htm 
100  See pages 7 and 8 of Deloitte report 2015. 
101  https://weinberggroup.com/pdfs/Shaping_the_biosimiliars_opportunity_A_global_perspective 
_on_the_evolving_biosimiliars_landscape.pdf 

69 

 
                                                 
products  than  its  trade  partners.  This  differential  might  hinder  investment  in 
biosimilars and generics in the EU. 

70 

 
 
 
ANNEX 8: IMPACTS OF THE CURRENT SPC REGIME (BASELINE SCENARIO) 

The  following  table  summarises  the  main  impacts  of  the  current  EU  SPC  regime  (cf. 
Reg. 469/2009) on various stakeholders during the SPC protection period: 

Note: ‘G/Bs’ means ‘generics/biosimilars’ 

Impact on 
stakeholders 
 
according to 
their location 
 

SPC holders 
(originators) 
… 
(holding IP 
protection) 

Manufacturer
s of generics 
or biosimilars 
… (‘G/Bs’) 

Patients … 

… located in a Member State… 

… located in a non-EU country … 

… where an SPC has been 
granted 

… where no SPC 
has been granted 

… where IP 
protection is in 
force 

… where no IP 
protection is in 
force 

The effects of the basic patent 
are extended by up to 5 (½) 
years, allowing originators to 
prevent any local 
manufacturing and marketing 
of G/Bs, thereby resulting in 
increased sales and profits.  

G/Bs are prevented from 
manufacturing and marketing 
G/Bs. This also prevents G/Bs 
(1) from manufacturing for 
export, even to countries 
where no IP protection is in 
force, and (2) from being 
ready to supply the (SPC-
covered) EU market from day-
1, if at all104. 

Patients cannot access G/Bs 
during the SPC term of 
protection. 

Moreover they may be unable 
to access EU-made G/Bs until 
some time after SPC expiry in 
the EU103, if at all104. 

Originators cannot 
prevent competitors 
from manufacturing 
and marketing 
G/Bs. 

Originators can 
prevent competitors 
from manufacturing 
and marketing 
G/Bs. 

Originators cannot 
prevent competitors 
from manufacturing 
and marketing 
G/Bs. 

G/Bs are free to 
manufacture if they 
have manufacturing 
capacity and market 
G/Bs, for domestic 
use or for export (to 
countries without IP 
protection), or so as 
to be ready to 
supply the EU 
market102 on day-1. 

Patients can access 
G/Bs manufactured 
domestically (if 
there is 
manufacturing 
capacity) or, more 
likely104, imported 
from non-EU 
countries where 
there is no IP 
protection 
(anymore). 

G/Bs are prevented 
from manufacturing 
and marketing 
G/Bs, including for 
export purposes if 
there is not a 
manufacturing 
waiver. 

Patients cannot 
access G/Bs. 

Moreover they may 
be unable to access 
EU-made G/Bs 
until some time 
after SPC expiry in 
the EU103, if at 
all104. 

G/Bs are free to 
manufacture and 
market G/Bs, for 
domestic use or for 
export (to other 
countries without IP 
protection), or so as 
to be ready to 
supply the EU 
market from day-1. 

Patients can access 
G/Bs manufactured 
domestically (or 
imported from 
similar countries). 

However, they may 
not be able to 
access EU-made 
G/Bs until some 
time after SPC 
expiry in the EU103, 
if at all104. 

102  Including SPC-covered Member States (which could not be supplied during the SPC term). 
103  Depending on the time EU-based manufacturers of generics/biosimilars will need to make preparations 
to be ready to supply the EU market after SPC expiry. 
104  Considering the strong ‘first mover’ advantage associated with generics entry, it may well happen that 
for a certain medicine no EU-based manufacturer of G/Bs – even when legally free to do so – will actually 
capture a meaningful share of the EU market, leaving all/most of the market to G/Bs located in non-SPC 
non-EU countries, even after SPC expiry. It is possible that some of the EU market  may be captured by 
G/Bs based in Member States where no SPC applies; however, today SPC protection is filed on average in 
20 Member States, which means that for most (successful) medicines very few Member States are SPC-
free, and in those Member States it is not guaranteed that there is adequate G/Bs manufacturing capacity. 

71 

 
                                                 
ANNEX 9: COMPARISON OF SPC PROTECTION EXPIRY DATES 

There  is  no  publicly  available  data  that  would  allow  an  assessment  of  the  scope  of 
different expiry dates across different regions in the world for medicinal products whose 
molecules  are  under  SPC  protection  in  Member  States.  Below,  we  discuss  the  SPC 
expiry dates for the sample of molecules that were provided by Medicines for Europe and 
that were used in the CRA study. 

Differences in expiry dates 

In their note on manufacturing waiver (October, 2017), Medicines for Europe provided 
Commission services with data on  109 molecules with the SPC expiry dates (including 
paediatric  extensions  where  applicable)  in  the  EU  and  five  other  countries  –  the  USA, 
South Korea, China, India and Canada. The list of molecules along with the SPC expiry 
dates of the related substance patents can be found at the end of this Annex. 

Table  1  below  provides  an  overview  of  Medicines  for  Europe  data  coverage  and  the 
differences  in  expiry  dates.  For  most  of  these  molecules,  protection  expires  in  the 
Member States later than in at least one other region. This is the case only for the USA 
and  South  Korea,  as  China,  India  and  Canada  do  not  provide  for  SPC  protection. 
Focusing only on those molecules for which expiry dates are later in the EU, the average 
difference is above two years in the USA and South Korea and above three years in CN, 
IN and CA. This is consistent with results provided by the CRA (2016) where, based on a 
sample of 70 molecules, authors show that the protection expiry difference between five 
Member  States  (France,  Germany,  Italy,  Spain  and  UK)  ranges  between  2.23  (for  the 
USA) and 3.85 years (for Canada). 

Table 1: Differences in SPC expiry dates between Member States and third country 

Country 

Molecules 
with expiry 
date 

Molecules with 
expiry date earlier 
than in the EU 

Difference in expiry date 
between EU and third country (in years) 
Max 
Min 

Average 

US 
KR 
CN 
IN 
CA 

109 
44 
41 
22 
40 

93 
40 
41 
22 
40 

2.06 
2.86 
3.31 
3.07 
3.53 

0.01 
0.16 
0.16 
0.16 
0.16 

5.50 
5.65 
6.47 
5.31 
6.56 

Source: Calculations based on the data provided by Medicines for Europe. 

Note: The maximum difference of expiry date can be as long as 6.5 years. This is due to the fact that the 
duration of SPC is calculated based on application filing date and not the priority filing date. 

Representativeness 

The representativeness of the Medicines for Europe list is assessed using Alice de Pastors 
database. For consistent comparison between two databases, this assessment focuses on 
molecules for which SPC protection (including paediatric extension) in the EU expires in 
2018  or  later  and  those  approved  between  2 000  and  2014.  This  leaves a  sample  of  97 
molecules of the Medicines for Europe list105. Those molecules represent 22% (24%) of 

105  For 11 molecules the expiry date is before 2018, and one molecule (sonidegic) has been first approved 
in the EU only in 2015. 

72 

 
                                                 
all medicinal products (with EMA authorisation) approved between 2 000 and 2014 for 
which SPC will expire in the future106. 

A closer look at the data shows that the molecules listed on Medicines for Europe cover 
only few ATC classes (level-3) when compared to the Alice de Pastors data. Considering 
only  those  therapeutic  indications  which  appear  on  the  Medicines  for  Europe  list,  the 
representativeness of this list increases to 39%. 

Table 2: SPC expiry dates in the EU and other regions for selected molecules 

Product Name 

ABATACEPT 

ABIRATERONE 

ADALIMUMAB 

AFATINIB 

EU 

US 

KR 

CN 

IN 

CA 

23-Nov-22 

02-Jul-21 

07-Feb-21 

07-Feb-21 

07-Feb-21 

15-Mar-18 

13-Dec-16 

16-Oct-18 

31-Jul-17 

01-Apr-19 

02-Oct-17 

02-Oct-17 

12-Dec-26 

22-Jan-22 

02-Sep-26 

12-Dec-21 

12-Dec-21 

12-Dec-21 

AFLIBERCEPT (EYLEA) 

23-May-25 

18-Nov-23 

AFLIBERCEPT (ZALTRAP) 
ALEMTUZUMAB 
(LEMTRADA) 

ALISKIREN 

ALISKIREN + AMLODIPINE 
ALISKIREN + 
HYDROCHLOROTHIAZIDE 

ALOGLIPTIN 

01-Feb-28 

02-Dec-25 

12-Feb-25 

12-Feb-25 

12-Feb-25 

12-Feb-25 

16-Sep-28 

24-Aug-29 

09-Nov-27 

09-Nov-27 

09-Nov-27 

09-Nov-27 

07-Apr-20 

21-Jul-18 

07-Apr-20 

21-Jul-18 

07-Apr-20 

21-Jul-18 

15-Mar-18 

13-Dec-16 

ALOGLIPTIN + METFORMIN 

23-Sep-28 

27-Jun-28 

AMBRISENTAN 

03-Oct-20 

29-Jul-18 

10-Jul-15 

10-Jul-15 

10-Jul-15 

ANIDULAFUNGIN 

18-Mar-18 

17-Feb-20 

APREPITANT 

13-May-19 

17-Apr-15 

ATAZANAVIR SULFATE 

04-Mar-19 

20-Dec-17 

ATOMOXETINE 
ATORVASTATIN + 
EZETIMIBE 

BAZEDOXIFENE 

BELATACEPT 

BELIMUMAB 

BEVACIZUMAB 

BILASTINE 

BORTEZOMIB 

28-May-19 

26-May-17 

01-Apr-16 

01-Apr-16 

15-Sep-19 

25-Apr-17 

16-Apr-22 

04-Apr-17 

23-May-26 

15-Jun-25 

15-Jun-26 

17-Jul-23 

16-Dec-19 

04-Jul-19 

04-Mar-18 

04-Mar-18 

04-Mar-18 

03-Jun-22 

04-Jun-17 

26-Apr-19 

03-Nov-17 

06-Apr-17 

06-Apr-17 

06-Apr-17 

BRENTUXIMAB VEDOTIN 

25-Oct-27 

18-Jan-25 

CANAKINUMAB 

CASPOFUNGIN 

CERTOLIZUMAB 

26-Aug-28 

02-Nov-27 

25-Oct-16 

26-Jul-15 

03-Oct-14 

03-Oct-14 

01-Oct-24 

13-Apr-24 

06-May-21 

06-May-21 

03-Oct-14 

06-May-21 

CEFTAROLINE FOSAMIL 

17-Dec-23 

11-Apr-22 

CINACALCET 

CLEVIDIPINE 

26-Oct-19 

08-Mar-18 

05-Sep-17 

03-Nov-19 

05-Jan-21 

11-Mar-14 

11-Mar-14 

11-Mar-14 

DABIGATRAN ETEXILATE 

17-Feb-23 

28-Dec-21 

02-Dec-18 

DARIFENACIN 

17-Mar-15 

13-Mar-15 

11-Jan-11 

106  There  are  441  medicinal  products  approved  between  2000-14  for  which  the  SPC  will  expire  in  2018 
and later. 

73 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
DARUNAVIR 

DASATINIB 

DEFERASIROX 

DENOSUMAB 

DERQUANTEL 

DRONEDARONE 

DULOXETINE 

ECULIZUMAB 
EFAVIRENZ+EMTRICITABINE
+TENOFOVIR 
EMTRICITABINE + 
TENOFOVIR 

ERLOTINIB 

ETRAVIRINE 

EVEROLIMUS 

EZETIMIBE 
EZETIMIBE + 
ROSUVASTATIN 

24-Feb-19 

09-May-17 

22-Nov-21 

28-Jun-20 

04-Dec-20 

04-Dec-20 

04-Dec-20 

04-Dec-20 

02-Sep-21 

05-Apr-19 

26-May-25 

19-Feb-25 

25-Jun-21 

27-Jun-16 

06-Aug-11 

26-Jul-16 

09-Aug-15 

11-Aug-18 

18-Jan-15 

01-May-20 

16-Mar-21 

05-Jan-15 

05-Jan-15 

03-Aug-18 

21-Nov-13 

08-Jun-13 

08-Jun-13 

24-Feb-20 

25-Jan-18 

11-Sep-17 

21-Mar-20 

08-May-19 

01-Sep-23 

13-Dec-20 

12-Jan-19 

19-Jan-19 

09-Mar-20 

18-Apr-18 

25-Apr-17 

07-Jan-14 

07-Jan-14 

15-Sep-19 

25-Apr-17 

06-Jun-15 

EZETIMIBE + SIMVASTATIN 

02-Apr-19 

25-Apr-17 

FESOTERODINE 

FINGOLIMOD 

24-Apr-22 

11-May-19 

05-Nov-19 

05-Nov-19 

18-Oct-18 

18-Feb-19 

FLUTICASONE FUROATE 

16-Jan-23 

03-Aug-21 

08-Mar-21 

08-Mar-21 

08-Mar-21 

FOSAPREPITANT 

28-Feb-20 

04-Mar-19 

GEFITINIB 
GLIMEPIRIDE + 
PIOGLITAZONE 

IMATINIB 

GOLIMUMAB 

04-Mar-19 

05-May-17 

12-Jan-16 

21-Jun-21 

19-Jun-16 

21-Dec-16 

04-Jul-15 

06-Mar-13 

04-Feb-13 

04-Jan-13 

05-Apr-25 

03-Feb-24 

08-Jul-21 

08-Jul-21 

08-Jul-21 

08-Jul-21 

INSULIN DETEMIR 

04-Dec-19 

16-Jun-19 

INSULIN GLARGINE 

06-May-15 

12-Feb-15 

02-Jun-16 

04-Jan-14 

INSULIN GLULISINE 

01-May-20 

18-Jun-18 

IPILIMUMAB 

IVABRADINE 

LACOSAMIDE 

LAPATINIB 

LASOFOXIFENE 

LENALIDOMIDE 

LINAGLIPTIN 

LINEZOLID 

MARAVIROC 

METFORMIN + SITAGLIPTIN 
METFORMIN + 
VILDAGLIPTIN 

MICAFUNGIN 

MIRABEGRON 

NATALIZUMAB 

OMALIZUMAB 

PALIPERIDONE 

PEGFILGRASTIM 

PERTUZUMAB 

24-Aug-25 

25-Mar-25 

25-Mar-18 

25-Sep-12 

30-Aug-23 

19-Mar-22 

12-Jun-23 

29-Sep-20 

06-Nov-19 

01-Aug-19 

01-Aug-19 

01-Aug-19 

24-Apr-20 

09-Jan-15 

01-Aug-16 

01-Aug-16 

23-Jul-22 

04-Oct-19 

24-Apr-22 

24-Apr-17 

16-Mar-17 

18-May-15 

20-Sep-22 

06-Aug-21 

11-Sep-21 

05-Sep-21 

05-Sep-21 

05-Sep-21 

08-Apr-23 

26-Jul-22 

07-May-22 

07-May-22 

07-May-22 

07-May-22 

05-Nov-24 

09-Dec-19 

03-Apr-22 

12-Sep-19 

12-Sep-19 

12-Sep-19 

29-Sep-20 

17-Mar-19 

07-Jun-17 

10-Jun-15 

01-Jan-28 

04-Nov-23 

25-Jan-20 

16-Mar-16 

14-Aug-17 

30-Nov-16 

02-Feb-15 

27-Apr-10 

11-Apr-23 

11-Apr-23 

11-Apr-23 

25-Aug-17 

20-Oct-15 

02-Aug-15 

02-Aug-15 

23-Jun-25 

15-Jul-25 

74 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
POSACONAZOLE 

20-Dec-19 

19-Jul-19 

10-Oct-15 

PRASUGREL 

PRUCALOPRIDE 

RALTEGRAVIR 

RANIBIZUMAB 

RASAGILINE 

RIVAROXABAN 

ROFLUMILAST 

ROMIPLOSTIM 

SAXAGLIPTIN 

SEVELAMER 

SILODOSIN 

SITAGLIPTIN 

SOLIFENACIN 

SONIDEGIB 

SORAFENIB 

SUNITINIB 

TAFLUPROST 

TEDUGLUTIDE 

TEMSIROLIMUS 

TIGECYCLINE 

TOCILIZUMAB 

TRABECTEDIN 

27-Feb-19 

14-Oct-17 

16-Nov-20 

16-Nov-15 

02-Jan-23 

03-Oct-23 

09-Sep-12 

09-Aug-12 

23-Jan-22 

04-Jul-19 

04-Mar-18 

04-Mar-18 

12-Oct-19 

07-Feb-17 

04-Mar-18 

10-Dec-14 

02-Oct-23 

28-Aug-24 

10-Mar-21 

12-Nov-20 

12-Nov-20 

12-Nov-20 

02-Jul-19 

27-Jan-20 

07-Feb-19 

07-Feb-14 

07-Feb-14 

05-Feb-24 

19-Jan-22 

04-Oct-24 

31-Jul-23 

12-Dec-22 

03-May-21 

03-May-21 

03-May-21 

10-Aug-19 

16-Sep-14 

08-Oct-14 

26-Nov-18 

30-Nov-18 

08-Oct-14 

12-Jan-13 

05-Jul-22 

26-Jul-22 

09-Jan-23 

07-May-22 

07-May-22 

07-May-22 

16-Dec-18 

19-Nov-18 

07-Mar-17 

18-Aug-30 

25-Jul-29 

05-Apr-27 

05-Apr-27 

05-Apr-27 

05-Apr-27 

21-Jul-21 

12-Jan-20 

24-Jul-21 

15-Feb-21 

22-Dec-22 

18-Dec-22 

11-Apr-22 

14-Apr-20 

14-Apr-20 

15-Aug-19 

21-Feb-18 

09-Apr-16 

16-Jan-24 

30-Jul-24 

20-Sep-22 

28-Jun-27 

01-Dec-20 

01-Dec-20 

04-Nov-17 

04-Nov-17 

10-Mar-12 

10-Mar-12 

TRASTUZUMAB 

27-Aug-28 

12-Oct-27 

03-May-24 

03-May-24 

03-May-24 

03-May-24 

TRASTUZUMAB EMTANSINE 

19-Nov-28 

02-Jul-28 

10-Dec-24 

10-Dec-24 

10-Dec-24 

10-Dec-24 

TULATHROMYCIN 

13-Nov-18 

24-May-19 

VARENICLINE 

VILDAGLIPTIN 

VINFLUNINE 

VORICONAZOLE 

28-Sep-21 

10-May-20 

02-Aug-21 

02-Aug-21 

27-Sep-22 

09-Dec-19 

03-Apr-22 

12-Sep-19 

12-Sep-19 

12-Sep-19 

19-Jul-19 

19-Jul-14 

24-Jul-16 

24-May-16 

02-Feb-11 

ZOLEDRONIC ACID 

16-May-13 

02-Mar-13 

12-Oct-11 

Source: Medicines for Europe 

75 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ANNEX 10: ASSESSMENT OF WAIVER TIMING SCENARIOS 

If an SPC manufacturing waiver was introduced, different scenarios could be envisaged 
in respect of its time-related applicability, as mentioned in the main text. 

To evaluate the impact of the proposed scenarios 1 and 2 on the number of existing SPCs 
that  would  be  actually  affected  by  the  waiver,  this  assessment  relies  on  information 
provided  in  the  Alice  de  Pastors  database.  The  sample  is  limited  to  SPCs  filed  with 
reference to a first marketing authorisation granted in the EU until end 2015 and to those 
SPC  for  which  the  basic  patent  expires  before  1  January  2026.  Croatia,  where  SPC 
protection became available only recently, is excluded. SPCs are national rights and their 
geographical scope of protection differs as illustrated in Mejer (2017). In the assessment 
that  follows,  we  are  therefore  looking  at  the  number  of  distinct  basic  patent-product 
pairs  for  which  the  SPC  was  applied  for  in  the  EU  (i.e.  number  of  SPC  bundles).  For 
each  basic  patent-product  pair  we  consider  the  first  expiry  date  in  the  EU.  Finally  we 
assume that the amended Regulation will enter into force as of 1 May 2019. 

There are 481 basic patent-product pairs for which the SPC will expire on 1 May 2019 
and later. The distribution of those pairs by the basic patent expiry year is presented in 
graph below, with the red line indicating 1 May 2019. 

Scenario  1:  Immediate  effect.  This  option  will  directly  impact  136  SPC  bundles  which 
will be in effect as of 1 May 2019, and then progressively 28 additional bundles still in 
2019, then with an average of 52 bundles per year between 2020 and 2025. 

Scenario  2:  Only  those  SPC  bundles  for  whose  SPCs  will  enter  into  effect  on  or  after 
1 May 2019 will be subject to the waiver i.e. those for which the basic patent protection 
will  expire  on  or  after  30  April  2019.  This  will  be  about  52  bundles  per  year  between 
2020 and 2025. 

Scenario  3:  We  do  not  have  data  on  SPC  grant  dates  (which  vary  between  Member 
States due to procedural differences). Still, assuming that an SPC is granted on average 
five years before patent expiry, the waiver would, on average, be available from 2025. 

Scenario 4: SPCs are filed on average 9 years after the basic patent filing (Kyle, 2017; 
Copenhagen Economics, 2018). Assuming that the Regulation enters into force on 1 May 
2019, the main impact of manufacturing waiver would be on patents expiring in or after 
2028107. 

107  It could be that few SPCs enter into effect very rapidly after they are applied for. 

76 

 
                                                 
Graph: Number of SPC bundles by the basic patent term expiry year 

Note: The graph above shows the number of SPC bundles (i.e. basic patent-product pairs) by year of basic 
patent expiry, i.e. year when SPC protection begins. The dashed red line indicates the assumed date of the 
entry into the force of Regulation (1st May 2019). Only those bundles with first SPC expiry after 1st May 
2019 are considered. Source: own calculations based on Alice de Pastors Database. 

77 

1324213438628496647445457020406080Number of SPC bundles201420152016201720182019.42019.5202020212022202320242025 
 
  
 
ANNEX 11: BIOPHARMACEUTICALS R&D AND MANUFACTURING ACTIVITIES 

This Annex provides an overview of the structure of the pharmaceutical industry in the 
EU,  by  looking  at  the  manufacturing,  R&D,  trade,  FDI  and  EMA-compliance 
manufacturing sites. 

Production in the EU 

Data Box: Pharmaceutical manufacturing in the EU 

The analysis presented below is based on the ESTAT database for structural business statistics (SBS) 
and  size  class  data,  all  of  which  are  published  annually.  It  presents  an  overview  of  statistics  for  the 
pharmaceuticals manufacturing sector in the EU, as covered by NACE Rev. 2 Division 21. 

 

In  2015  there  were  around  4 000  enterprises  throughout  the  EU-28  for  which 
pharmaceuticals  manufacturing  was  their  principal  activity.  They  employed 
nearly  570 000  persons.  The  value  of  production  amounted  to  EUR  260bn  in 
2015 and the value added generated was EUR 84bn, a little more than one third of 
the turnover generated. 

  The  pharmaceuticals  manufacturing  (Division  21)  sector  in  the  EU-27  is 
characterised by its small number of very large, capital-intensive enterprises. The 
manufacturing  is  very  international  as  60%  of  production  is  generated  by  firms 
with  foreign  ownership  (i.e.  with  a  controlling  company  located  outside  the 
reporting country). 

  Pharmaceutical  production  in  the  EU  is  quite  concentrated  as  62%  of  EU-28 
production  takes  place  in  four  Member  States:  Germany,  Ireland,  France  and 
Italy. 55% of the overall value added in the sector is generated in those economies 
(cf. Table 2 below). 

  Four  small  Member  States  appear 

in  pharmaceutical 
manufacturing:  Ireland,  Belgium,  Denmark  and  Slovenia.  In  2014, 
the 
contribution of value added in pharmaceutical manufacturing relative to the total 
manufacturing  ranges  between  10-20%  and is  the  highest  for  Ireland  (34%)  (cf. 
Table 2). 

to  be  specialised 

Innovation within the pharmaceuticals manufacturing sector 

Data Box: R&D in pharmaceutical manufacturing 

R&D  data  have  been  collected  according  to  2002  guidelines  of  the  Frascati  Manual.  This  table 
presents research and development (R&D) expenditure statistics performed in the business enterprise 
sector by industry according to the International Standard Industrial Classification (ISIC) revision 4. 
Depending  on  the  country,  R&D  institutes  serving  enterprises  are  either  classified  with  the  industry 
concerned, or grouped under ‘Research and Development’ (ISIC rev.4, Division 72). When these R&D 
institutes  are  classified  with  the  industry  served,  the  evaluation  of  R&D  in  these  industries  is  more 
accurate and more comparable between countries for the industries concerned. This results, however, 
in an underestimation of the percentage of BERD performed by the service sector as compared with 
other countries. 

The  data  covers  21  Member  States.  The  following  are  missing:  Bulgaria,  Croatia,  Cyprus,  Malta, 
Luxembourg, Latvia and Lithuania. 

 

In 2013, among the Member States for which data is available for pharmaceutical 
sector,  intra-mural  expenditure  was  USD  15  billion  and  put  the  EU-28  and 

78 

 
 
represented 16% of overall R&D spending in manufacturing in OECD countries, 
China, Romania and Singapore. 

  For the sample of counties reported, R&D spending grew by 26% from its values 

in 2009 to 2013. 

  EU-28  is  the  second  larger  R&D  spender  behind  the  USA.  But  its  relative 
importance  is  decreasing  vis-a-vis  China.  The  data  indicates  that  R&D 
manufacturing expenditure in China more than doubled from the level of USD 4.2 
billion  in  2009  to  USD  9.8  billion  in  2013,  while  to  level  of  expenditure  in 
Germany increased by 10% from USD 4.8 billion in 2009 to USD 5.2 billion in 
2013. 

 

In  Belgium,  Denmark,  Hungary  as  well  as  Slovenia,  R&D  expenditure  in 
pharmaceutical  manufacturing  accounted  for  about  one  third  of  all  R&D 
expenditure  in  manufacturing.  In  contrast,  this  share  was  well  below  10 %  in 
Germany, France and the United Kingdom. 

International trade 

Data Box: International trade in pharmaceutical and medical products 

The  data  used  in  this  section  comes  from  Eurostat’  COMEXT  database  for  the  Member  States  and  in 
United Nations’ COMTRADE database for the non-EU countries. The focus is on Division 54 ‘Medicinal 
and pharmaceutical products’ of the Standard international trade classification revision 4 (SITC Rev. 4)108. 

Bias  in  the  data:  Extra-EU  imports  and  exports  are  reported  by  the  Member  State  where  the  customs 
declaration is lodged, usually the place where the goods cross the EU external frontier (here referred to as 
the  exit/entry  Member  State).  This  is  not  necessarily  the  Member  State  of  actual  import  or  export.  The 
geographical  allocation  of  an  extra-EU  flow  is  biased  in  the  case  the  entry/exit  Member  State  is  not  the 
actual importing/exporting Member State. This issue particularly impacts the extra-EU imports of Member 
States having important ports for transhipment (e.g. Antwerp in Belgium or Rotterdam in the Netherlands). 
Furthermore, differences in the VAT schemes. 

Limitations: Trade statistics do not fully reflect the globalised nature of the pharmaceutical industry where 
value chain is fragmented. Intermediate input (e.g. products and substances) may cross borders at several 
points  in  the  manufacturing  chains.  This  is  particularly  true  for  the  simple  products  being  produced  in 
chemical  synthesis.  Furthermore,  existing  classification  does  not  allow  distinguishing  between  patent 
protected and off-patent products or the production process i.e. chemical v. biological. 

  Trade in medicinal and pharmaceutical products has been growing steadily since 
2002.  Extra-EU  trade  almost  tripled  from  EUR  76  billion  in  2002  to  EUR  220 
billion in 2016 which translates to an average annual growth of 7.8%. In the same 
period,  intra-EU  trade  more  than  doubled  from  EUR  156  billion  to  EUR  327 
billion, equivalent to an average annual growth of 5.4 %. 

Increasing demand in the developing countries and medicinal products going off 
patent in the developed world are drivers behind this increase. 

 

In  2002,  both  intra-EU  and  extra-EU  trade  in  medicinal  and  pharmaceutical 
products  accounted  for  4.2 %  of  total  intra-EU  and  extra-EU  trade.  These 
remained  fairly  close  between  2002  and  2014  but  started  diverging  in  2015.  In 

108  http://ec.europa.eu/eurostat/statistics-explained/index.php/International_trade_in_medicinal 
_and_pharmaceutical_products 

79 

 
                                                 
2016, the share was more than 1% higher in extra-EU trade (6.4 %) than in intra-
EU trade (5.3 %). 

  The  EU  was  by  far  the  major  world  trader  in  medicinal  and  pharmaceutical 

products (SITC division 54) in 2016. 

  The EU export pharmaceutical products to highly regulated markets with strong 
patent protection and high per-capita spending on healthcare. The USA stands out 
as  the  EU’s  main  trading  partner  over  the  period  2001-2016.  50%  of  Extra-EU 
export  concentrated  in  three  countries:  the  USA  (33.6%),  Switzerland  (11.4%), 
and  Japan  (6.1 %).  Those  countries  are  suitable  for  high-quality,  complex 
medicines  for  which  the  EU  has  comparative  advantage  in  manufacturing.  On 
fourth  place  there  is  China  (5.7%)  followed  by  Russia  (4.3 %)  and  Australia 
(3.1%) (see Table 1 for details). 

  Switzerland and the USA were however not the countries with the annual highest 
growth rates. Market growth is shifting toward emerging markets in Asia, Latin 
America  and  elsewhere,  where  pharmaceutical  sales  are  forecast  to  expand  at 
double  digit  rates  (see  Annex  7  for  the  data  on  trends  in  global  demand  for 
medicines). 

  For  extra-EU  exports  both  China  (21 %)  and  Russia  (10 %)  had  higher  annual 
growth  than  the  USA  (9.2 %).  Strong  export  growth  rates  were  also  present  in 
Brazil  (8.7%)  and  Singapore  (8.6%).  Further  reforms  of  legislative  systems, 
especially  regarding  patent  protection  and  enforcement,  as  well  as  improving 
regulatory  conditions,  will  make  these  markets  increasingly  attractive  for  EU 
industry, which competes on quality, not on prices. 

 

In imports to the EU double digit growth was found in Singapore (17.8 %), Brazil 
(13.5 %), Canada (12.4 %), China (11.4 %) and Israel (11.3 %) while Switzerland 
(8.3 %)  and  the  USA  (7.0 %)  grew  somewhat  less  strongly.  Medicinal  products 
going  off  patent  in  the  EU  as  well  as  increasing  ability  to  compete  from  these 
countries contribute to increased importation into the EU market. 

  While for the EU15 the main trading partners are developed economies, many of 
the Member States who joined the Union in and after 2004 Russia remains a key 
trading partner, along with other former Soviet Republics. 

  Finally,  looking  at  the  relative  importance  of  intra-EU  exports  to  extra-EU 
exports  shows  that  for  the  largest  Member  States  who  joined  the  Union  in  and 
after  2004  (i.e.  Hungary,  Poland  and  Romania),  the  value  of  their  export  to  the 
EU is  more than double than export to non-EU markets. The opposite holds for 
the western and northern Member States (and, amongst those, in particular for the 
Nordic Member States). 

80 

 
 
 
 
Table 1: Extra EU-28 exports of medicinal and pharmaceutical products, top 10 trading partners, 2001, 2006, 2011 and 2016 (EUR million) 

Export 

Import 

EU-28 
USA 
Switzerland 
Japan 
China 
Russia 
Australia 
Canada 
Brazil 
Israel 
Singapore 

Source: Eurostat, Trade Statistics. 

2016 

2011 

2006 

2001 
40.860  66.813  103.400  144.200 
48.408 
12.985  23.525 
16.431 
9.334 
4.946 
8.789 
3.081 
2.750 
8.256 
863 
466 
6.240 
3.658 
1.428 
4.446 
2.414 
1.513 
4.206 
3.266 
1.771 
3.175 
1.014 
907 
1.214 
432 
434 
1.213 
650 
351 

30.722 
11.503 
6.297 
3.981 
7.292 
3.875 
3.412 
2.593 
762 
1.220 

Average 
annual 
growth 
2001-
2016 

8,8% 
9,2% 
8,3% 
8,1% 
21,1% 
10,3% 
7,5% 
5,9% 
8,7% 
7,1% 
8,6% 

2011 

2001 

Share of 
exports by 
country 
2016 
2016 
2006 
100,0%  23.528  35.314  53.137  75.386 
33,6%  11.526  15.416  19.149  31.658 
7.901  13.731  19.771  26.171 
11,4% 
1.279 
1.148 
6,1% 
2.912 
578 
5,7% 
24 
9 
4,3% 
326 
381 
3,1% 
1.113 
193 
2,9% 
277 
41 
2,2% 
2.889 
581 
0,8% 
2.656 
227 
0,8% 

1.310 
2.355 
19 
326 
1.002 
446 
1.961 
2.925 

1.222 
890 
8 
414 
746 
111 
410 
780 

Average 
annual 
growth 
2001-
2016 

Share of 
imports by 
country 
2016 

8,1% 
7,0% 
8,3% 
0,7% 
11,4% 
6,5% 
-1,0% 
12,4% 
13,5% 
11,3% 
17,8% 

100,0% 
42,0% 
34,7% 
1,7% 
3,9% 
0,0% 
0,4% 
1,5% 
0,4% 
3,8% 
3,5% 

81 

 
 
  
Foreign Direct Investments 

Data Box: FDI in development and manufacturing of medicinal products 

The  Financial  Times,  a  leading  global  daily  business  and  economic  publication,  tracks  worldwide 
announcements  for  investments  by  companies  across  all  industries  and  activities  through  its  FDI 
Intelligence (FDI) database. 

In this section information the focus is on pharmaceuticals and biotechnology industries with the activities 
related to manufacturing and development (i.e. ‘R&D’ as well as ‘Design, Development and Testing’). 

  FDI  data  indicates  that  between  2003  and  2015,  nearly  2,400  investments  have 
been  announced  in  the  activities  related  to  development  and  manufacturing  of 
medicinal products totalling approximately USD 140 billion around the world and 
creating over 275 000 jobs in 98 countries. 

 

Investments and announcements have been primarily concentrated in a number of 
the  emerging  economies  and  established  markets.  Combined,  the  80%  of  the 
invested  dollars  have  been  invested  in  the  EU  (32%)109,  the  USA  (24%),  China 
(13%), Singapore (7%), and India (5%). 76% of the global announcements took 
place in these regions (see Table 2 for details). 

Table 2: Summary of Worldwide announcements of FDI projects, 2003-2016 

Total value 
(million USD) 
total 

share 

Announcements 
(number) 
total 

share 

Jobs estimated 
(number)* 
total 

share 

45,086  
33,322  
18,495  
10,307  
 7,516  
 3,397  
 3,197  
 2,236  
 1,999  
 1,331  
 1,058  

11,241  

32% 
24% 
13% 
7% 
5% 
2% 
2% 
2% 
1% 
1% 
1% 

8% 

860  
490  
220  
 91  
151  
 30  
 64  
 42  
 44  
 27  
 14  

333  

36% 
21% 
9% 
4% 
6% 
1% 
3% 
2% 
2% 
1% 
1% 

14% 

 63,469  
 61,646  
 29,476  
9,353  
 25,579  
3,019  
5,894  
 -  
6,436  
3,075  
2,306  

 28,426  

27% 
26% 
12% 
4% 
11% 
1% 
2% 
- 
3% 
1% 
1% 

12% 

139,185  

100% 

 2,366  

100% 

 238,679  

100% 

EU-28 
US 
CN 
SG 
IN 
CH 
CA 
RU 
BR 
MY 
KR 

Rest of the World 

TOTAL 

Source: FT fDi database. *where the data is available 

  Within  the  EU,  75%  of  the  value  of  FDI  announcements  was  for  the  following 
receiving  Member  States:  Ireland,  Germany,  France,  UK,  Belgium,  Spain  and 
Italy. 

  The  vast  majority  of  announcements  concerned  pharmaceuticals.  Over  the  last 
decade,  77%  of  announced  projects  in  the  field  of  medicine  development  and 

109 The figures above take into account cross-border investments of European firms in Europe. About 50% 
of the FDI in Europe is coming from Europe. 

82 

 
 
 
                                                 
production with the value of announced capital investment amounted to 79% of 
planned capital investment took place in pharmaceuticals. 

  There  is  relatively  more  new  greenfield  investment  in  biotechnology  when 

compared to pharmaceuticals. (Table 3). 

Table 3: Projects announced in pharmaceuticals and biotechnology by their type 

Number of countries 
Total announcements: 

Collocation (share in Total) 
Expansion (share in Total) 
New (share in Total) 

Pharmaceuticals 
85 
1705 
5% 
37% 
58% 

Source: FT fDi database. *where the data is available 

Biotechnology 
45 
517 
4% 
26% 
70% 

  The EU is very attractive as a place for biotechnology investments with the 31% 
of  the  value  announcement  concerning  this  region.  It  is  followed  by  the  USA 
(28.5%), China (15.4%), Singapore (6.8%), Switzerland (5.8%) and India (3.8%). 

  While FDI in pharmaceutical R&D and  manufacturing  are widely spread across 
the  globe  (95  countries),  projects  in  biotechnology  are  more  geographically 
concentrated (50 countries, including 18 Member States). 

Location of Biopharmaceutical manufacturing sites 

Data Box: EudraGMP database 

The data provides complete information on all pharmaceutical manufacturers who are compliant with 
Good  Manufacturing  Practice  (GMP).  The GMP  is a code  of  standards concerning  the  manufacture, 
processing, packing, release and holding of a medicine. Any manufacturer of medicines intended for 
the EU market, no matter where in the world it is located, must comply with GMP. We are considering 
only Good Manufacturing Practice (GMP) compliance for authorized sites in the EEA and in in third 
countries and limited to ‘Manufacturing operations’. Sites that produce biological products are identify 
as  sites  for  which  the  certificate  has  been  granted  for  manufacturing  of  ‘Biotechnology  products 
(1.3.1.5)’. 

Table 4: Global distribution of FDI projects and European GMP-compliance for biotechnology 
manufacturing of medicinal products 

Number of FDI 
projects (2003-2015) 

Number of sites that are 
EU GMP compliant 

EU-28 
US 
SG 
KR 
JP 
BR 
TR 
IR 
TW 
IN 
CN 
IL 

234 
69 
4 
3 
3 
1 
1 
1 
1 
1 
1 
1 

193 
156 
23 
4 
7 
2 
2 
0 
1 
32 
47 
6 

83 

 
 
 
 
CA 

12 

1 

Note 1: Biotechnology is used to produce medicinal products for complex therapeutic purposes when they 
cannot  be  synthesized  chemically  or  produced  in  sufficient  amounts  from  biological  material  by  simple 
extraction. Source: FT fDi database and EudraGMP database. 

Note 2: The number of EU GMP compliant plants in China, India and Canada are expected to increased 
(from one plant in each of those countries in 2015) in view of the number of FDI projects (47 in China, 32 
in India, and 12 in Canada).  

84 

 
 
Table 5: Overview of the biopharmaceutical R&D and manufacturing activities 

Notes: Pharmaceutical manufacturing refers to activities performed in the business enterprises which report pharmaceutical manufacturing as their primary activity (C21 in NACE Rev. 
2 and ISIC Rev. 4. The OECD data on R&D refers to R&D expenditure statistics performed in the pharmaceutical manufacturing companies. Data on R&D projects comes from IMS, 
R&D Focus (see Table 3 in Kyle study). IMS R&D Focus includes information on drug development projects, including the organizations involved in each project and their respective 
roles. The projects are report by country of leading company headquarter. Trade statistics comes from Eurostat’ COMEXT and United Nations’ COMTRADE databases. The focus is 
on Division 54 - Medicinal and pharmaceutical products. FT fDi Intelligence is a source of FDI data. Pharmaceutical and biotechnology projects in ‘Life science’ cluster are taken into 
account. Statistics reported refer to FDI project announcements in manufacturing and R&D - i.e. ‘R&D’ as well as ‘Design, Development and Testing’ - of medicinal products. 

85 

 
 
 
 
Table 5 (cont.) Overview of the biopharmaceutical R&D and manufacturing activities 

Notes: Pharmaceutical manufacturing refers to activities performed in the business enterprises which report pharmaceutical manufacturing as their primary activity (C21 in NACE Rev. 
2 and ISIC Rev. 4. The OECD data on R&D refers to R&D expenditure statistics performed in the pharmaceutical manufacturing companies. Data on R&D projects comes from IMS, 
R&D Focus (see Table 3 in Kyle study). IMS R&D Focus includes information on drug development projects, including the organizations involved in each project and their respective 
roles. The projects are report by country of leading company headquarter. Trade statistics comes from Eurostat’ COMEXT and United Nations’ COMTRADE databases. The focus is 
on Division 54 - Medicinal and pharmaceutical products. FT fDi Intelligence is a source of FDI data. Pharmaceutical and biotechnology projects in ‘Life science’ cluster are taken into 
account. Statistics reported refer to FDI project announcement in manufacturing and R&D - i.e. ‘R&D’ as well as ‘Design, Development and Testing’ - of medicinal products. 

86 

 
 
ANNEX 12: STUDIES ON THE MANUFACTURING WAIVER 

This  impact  assessment  draws  on  eight  studies  that  evaluate  or  discuss  the  impact  of  a 
manufacturing  waiver:  one  contracted  by  the  Commission,  two  sponsored  by  generic/ 
biosimilar manufacturers and five by SPC-holders. 

  CRA  (2017),  Assessing  the  economic  impacts  of  changing  exemption  provisions 

during patent and SPC protection in Europe (European Commission) 

  Office of Health Economics (2018), Review of CRA’s Report (EFPIA) 

  European  Economics  (2018),  Impacts  of  Reducing  Patent  and  Extended  Protections 

against Manufacturing for Stockpiling and Export (EuropaBio) 

  Vicente,  V.,  &  Simões,  S.  (2014).  Manufacturing  and  export  provisions:  Impact  on 
the competitiveness of European pharmaceutical manufacturers and on the creation of 
jobs in Europe. Journal of Generic Medicines (BluePharma) 

  Sussell,  J.  A.,  Tebeka,  M.  G.,  Jena,  A.  B.,  &  Vanderpuye-Orgle,  J.  (2017). 
Reconsidering  the  economic  impact  of  the  EU  manufacturing  and  export  provisions. 
Journal of Generic Medicines (AbbVie) 

  Roland  Berger  (2015),  Extension  of  the  Bolar  exemption  regarding  production  for 

export and launch preparation. (Pro Generica) 

  Logendra  et  al  (2017),  Assessing  the  impact  of  proposals  for  a  Supplementary 
Protection  Certificate  (SPC)  Manufacturing  Exemption  in  the  EU.  Quintiles  IMS 
(EFPIA) 

  Pugatch  Consillium  (2017),  Unintended  Consequences  (AbbVie,  La  Roche  &  US 

Chamber of Commerce) 

The table below provides an overview of these studies and summarizes the main strengths and 
weakness of each of them. A detailed discussion follows. 

87 

 
Table 12.1: Overview of the economic studies evaluating the manufacturing waiver  

Study 

Funding 

Type of study 

Coverage 

Strengths 

Weaknesses 

CRA (2017) 

European 
Commission 

Quantitative : micro data 
(117 molecules with expiry 
dates 2015-2025) 

Export waiver 

Stockpiling 

EFPIA 

Sensitivity analysis of CRA 

EuropaBio 

Critical discussion of CRA 

- 

- 

Office of Health 
Economics (2018) 

European Economics 
(2017) 

Quintiles IMS (2017) 
also cited as Logendra et 
al (2017) 

EFPIA 

Case study: 25 medicinal 
products (23 molecules) 

Export waiver 

Identifies specific barriers 
to enter in 3rd countries 

Assumptions well-
grounded in the literature 
and supported by data 

Counterfactual scenario 

Assumptions based on case 
studies (ref. to Quintiles 
IMS) 

Critical review 

Limited data on 
the biosimilar market 

Biased assumptions to minimise the 
effects estimated in CRA 

Fails to offer solution/alternative data 
to address limitations 

Biased sample does not reflect reality 
of SPC landscape in the EU: MA 
prior enlargement, products with 
invalidated SPCs. 

Pugatch Consillium 
(2017) 

AbbVie, La Roche 
& US Chamber of 
Commerce 

Quantitative: 
approximation from global 
demand for medicines 

Export waiver 

Illustrates the strong 
evolution of pharma market 

Over-interpretation of results: 
sales at risk = ‘lost sales’ 

Vincente & Simoes 
(2014) 

BluePharma 

Quantitative: micro data 
(55 molecules) 

Export waiver 

Stockpiling 

Assumptions base on the 
information from generic 
producers 

Lack of counterfactual scenario 

Sussel et al (2017) 

AbbVie 

Sensitivity analysis of V&S 

- 

Counterfactual 

Not transparent about assumptions 

Roland Berger (2015) 

Progenerica 

Quantitative: micro data 

Export waiver 

Difficult to assess as no methodological annex is available; 
still, results in line with CRA 

88 

 
 
 
CRA  (2017)  Assessing  the  economic  impacts  of  changing  exemption  provisions 
during patent and SPC protection in Europe (European Commission) 

The  CRA  estimates  that  an  SPC  manufacturing  for  ‘export-only  purposes’  could  result  in 
additional export sales by EU-based production of those generics of EUR 7.6bn and for EU-
based production of those biosimilars of between EUR 463m and EUR 2.97bn over 10 years. 

CRA  estimates,  for  that  sample,  the  potential  negative  impact  of  this  waiver  on  EU  SPC 
holders’ sales in EUR 139m to EUR 278m for the generics market and in between EUR 868m 
to EUR 1.7bn for biologics over a 10 years period. Therefore, the net additional trade balance 
for  the  EU  pharmaceutical  industry  represented  by  the  sample  of  CRA  would  be  between 
EUR 6 - 10bn over 10 years. 

The estimations are based on the sample of 117 non-biological molecules and 17 biological 
molecules whose SPC protection in Europe expires during the period 2016-2030 and earlier 
in  at  least  one  of  8  third  countries considered  (i.e.  Australia,  Brazil,  Canada,  China,  Japan, 
Russia, Turkey and US) which account for 60% of the EU export in the pharmaceuticals. The 
117  molecules  represent  32%  (by  count)  of  all  molecules  whose  SPCs  expire  in  Europe 
during the period 2016-2030. 

To  estimate  the  impact  of  the  SPC  export  waiver  to  third  countries  the  CRA  deducts  the 
estimated  sales  achieved  by  European  generics  producers  in  third  countries  without  the 
waiver  from  the  sales  achieved  under  an  SPC  export  waiver.  This  simplifies  to  the  sum  of 
lost  sales  during  the  SPC  term  in  Europe,  plus  the  benefit  of  first  mover  advantage  from 
earlier entry under the export waiver. 

In  their  analysis  of  manufacturing  waiver  the  CRA  makes  assumptions  about  market 
structure, price dynamics and sales volumes that could be achieved by generic and innovator 
firms located in the EU. These assumptions are made for each export market separately and 
are based on results of the studies published in peer-reviewed journals or in Reports. 

Due  to  the  lack  the  detailed  data  on  the  individual  drug  sales  in  export  markets  the  CRA 
made  assumptions  at  the  country  level  -  in  a  way  averaging  over  medicinal  products  with 
different characteristics. 

Another  limitation  is  the  estimation  of  the  impact  of  manufacturing  waiver  for  biological 
molecules.  The  CRA  has  information  on  17  molecules  only.  The  issue  is  that  biologic 
revolution  came  in  the  late  1990s  but  the  biosimilar  entry  -  i.e.  marketing  authorization 
procedures  to  show  that  the  biosimilar  drug  is  therapeutically  equivalent  to  an  already 
approved original biologic drug – have only been approved recently: in 2006 in the EU and 
in 2015 in the United States. 

Underlying  assumptions  of  CRA  Study  have  been  critically  reviewed  by  Office  of  Health 
Economics  (2018)  and  European  Economic  (2018)  Reports.  The  Commission  has  analysed 
the different critical remarks. Below we discuss the main criticisms in detail. 

Office of Health Economics (2018) 

  Claims that SPC protection is not often the longest in Europe 

Relying on the finding of the case studies in Logendra  et al (2017), the OHE claims 
that only 2 out of 25 molecules expire later in the EU than in three or more non EU-
countries.  However,  the  same  case  study  analysis  also  shows  that  14  out  of  25 
molecules  expire  in  at  least  one  out  of  six  non-EU  countries  before  the  EU.  Taking 
into account the high volume of sales derived from one product only, plus the fact that 

89 

 
this sample only considers 25 molecules for only 6 export markets, we consider that 
OHE  does  not  prove  that  opportunities  for  export  markets  are  not  relevant  or 
significant. 

Relying on the finding of the case studies in Logendra et al (2017), the OHE claims 
that  only  1  out  of  25  molecules  has  earlier  expiry  date  in  the  USA  compared  to  the 
EU.  From  this,  it  is  derived  that  only  4%  of  the  molecules  could  benefit  from  an 
export waiver in 3rd countries, implying that an export waiver would result in net gains 
of  only  EUR  2bn.  This  figure  has  been  misinterpreted  by  other  position  papers  who 
stated, in  turn,  that  only 4%  of  molecules will have  market opportunities  in  all third 
countries.  The  OHE  study,  based  only  on  25  molecules  expiring  in  the  EU  vis-à-vis 
the  USA,  offers  less  robustness  than  the  117  samples  examined  in  the  CRA  study, 
which includes 8 different export countries. 

 It  also  needs  to  be  noticed  that  OHE  paper  is  based  on  the  results  of  Quintiles  IMS 
study (Logendra et al 2017), which presents biased expiry dates for SPC protection in 
the Union because it includes Poland and Slovenia (which introduced SPC protection 
only  after  2004).  Therefore,  any  reference  to  expiry  dates  offered  by  Logendra  et  al 
does not reflect the current situation where the SPC can be applied for in all Member 
States. 

  Claims that estimates of markets shares are not consistent across countries 

Estimations  from  US,  Canada,  Australia,  &  Japan  come  from  the  IMS  Institute  for 
Healthcare  Informatics  November  2013  Report  on  ‘The  Global  use  of  medicines: 
Outlook  through  2017’,  which  bases  its  estimations  also  on  IMS  Health  Midas  data 
(2013). Therefore, all estimations, based on primary and secondary information, come 
from the same source, IMS data. 

  Claims that CRA fails to take account of erosion curves for generics 

Given  the  long-term  nature  of  diseases  treated  by  biosimilars,  switching  between 
reference  product  and  biosimilar  are  slower.  This  is  why  CRA  puts  a  specific 
emphasis  on  erosion  curves  for  biosimilars.  Switching  rates  between  reference 
products  and  generics  are  faster.  Generic  market  erosion  is  not  as  gradual  as  for 
biosimilars,  therefore  first-move  advantage  is  likely  to  have  a  bigger  impact.  CRA 
models the market share adapting it to the specificities of each market.  

Therefore, market shares addressed in the CRA cannot be deemed incorrect, they are 
modelled according to the mains dynamics which characterise each market. 
  Claims that potential market shares for generics in 3rd countries are exaggerated 

OHE refers once more to case studies in Logendra et al (2017) to exemplify, based on 
a  sample  of  five  molecules,  that  the  potential  market  share  for  generics  is 
overestimated in third countries. These five molecules are treatments for chronical use 
in cardiovascular domain. Given the chronic nature of these therapies and the initiating 
specialist  prescription,  slow  generic  entry  is  justified  for  these  cases110.  The  market 

110  Example of low take-up of Losartan in European market, same molecule used in Quintiles IMS. In this case, 
low  generic 
is  not  only  an  export  market  characteristic,  but  a  product  characteristic: 
http://www.gabionline.net/Generics/Research/Impact-of-delisting-ARBs-in-Denmark 

take-up 

90 

 
                                                 
shares of these case studies is used to reduce by 4 percentage points the market shares 
put forward in the CRA study (sample of 117 molecules).  

While we acknowledge market shares to be different depending on the molecule, and 
the  export  country,  we  do  not  find  justified  to  claim  CRA  market  shares  are  not 
correct, especially when comparing those to a selected sample of five molecules which 
have very particular characteristics that are not representative of the overall market.  

  Claims that the first-mover advantage is not proven 

OHE  questions  the  validity  of  a  first-mover  advantage  by arguing  that  this  is  a  very 
country  specific  effect  and  that  it  cannot  be  assumed  to  exist  in  other  countries 
different than Canada. 

What literature points out, is that the magnitude of the first mover advantage depends 
on different factors. The nuances will vary depending on the market context, such as 
prescriber characteristics, route of administration, competitive dynamics, capabilities, 
lead time and product label. First-mover advantage can be difficult to surmount, but it 
is  not  always  impossible,  especially  for  2nd  market  entrants  having  experience  and 
large  resources.  Strong  clinical  developments  and  commercial  strategies  are  also 
important factors for determining market advantage111.  

The  CRA  study  already  takes  a  conservative  approach  by  estimating  a  first  mover 
advantage of limited impact: it is only estimated over two years and the magnitude is 
limited.  On  top  of  that,  no  first  mover  advantage  is  modelled  in  the  study  when 
quantifying the benefits of a possible waiver for biosimilars.  

Removing  completely  the  effect  of  a  first  mover  advantage  from  the  model  is  not 
deemed  appropriate  or  realistic,  especially  considering  the  already  conservative 
approach taken by the CRA study.  

Relying on the information from case studies discussed in Logendra et al (2017) OHE revises 
downward the CRA estimates: for the generic gains on export from EUR 7.6bn in CRA down 
to  EUR  1.3bn  and  on  the  potential  losses  for  SPC  holders  from  EUR  139m  in  CRA  up  to 
EUR  573m  according  to  OHE.  This  recalculation  by  OHE  does  not,  however,  contradict 
CRA’s conclusions: namely those generic gains on exports - and losses for SPC holders will 
largely compensate any potential losses for the SPC holders.  

In  2018,  Europe Economics, sponsored by EuropaBio,  published another review of CRA’s 
study. This study offer critique similar to the OHE (2018) but no alternative quantification is 
provided.  The  final  conclusion  of  Europe  Economics  (2018)  is  that  CRA  study  could  be 
overestimating the benefits of an export waiver, but their main concern is the possibility that a 
manufacturing waiver will undermine the sustainability of protection against stockpiling.  

The  issue  of  the  sustainability  of  protection  raised  by  industry  is  not  addressed  in  the  CRA 
report, since it was not the objective of this study, but it has been properly addressed in this 
impact assessment with the possibility of introduction of anti-diversion measures.  

111  https://www.mckinsey.com/industries/pharmaceuticals-and-medical-products/our-insights/pharmas-first-to-
market-advantage  

91 

 
                                                 
Logendra  et  al  (2017)  Assessing  the  impact  of  proposals  for  a  Supplementary 
Protection Certificate (SPC) Manufacturing exemption in the EU, Quintiles IMS 

Analysing  25  case  studies,  Logendra  et  al  (also  quoted  as  Quintiles  IMS),  sponsored  by 
EFPIA,  argues  that  there  would  be  potential  losses  to  European  originators  in  the  form  of 
decreased  export  value  for  the  EU,  if  an  SPC  manufacturing  exemption  is  introduced.  This 
study  argues  that  an  export  model  based  on  a  ‘SPC  manufacturing  waiver’  would  not  yield 
much result for different reasons.  

Several arguments are brought to justify their claims: 1) market opportunities for generics in 
3rd countries are little; 2) European generics will erode sales of European innovative products 
in  3rd  countries  because  they  will  compete  on  the  European  brand;  3)  the  potential 
opportunities for molecules having a later expiry date in the EU than in the rest of the world is 
very limited; 4) API production is already located in a cost-efficient way. 
1)  One of the main critics of the study is that opportunities for generics in 3rd countries are 
few, mostly because of high take-up of local generic products in 3rd countries, incentivized by 
localization policies. In order to support its argument, the authors present case studies of five 
molecules for chronic use in cardiovascular diseases in 4 different market shares.  

This  factor  is  already  acknowledged  in  the  CRA  study,  which  presents  a  sensitive  analysis 
reducing the possibility of export for European generic firms in 3rd markets (see pages 121 
and  132  of  the  CRA  Report).  The  final  impacts  show  that  when  assuming  that  sales  of 
European generic firms can only attain 10% market share in 3rd markets, the additional sales 
obtained  are  only  12%  (for  generics)  and  5-6%  (for  biosimilars)  lower  than  the  original 
estimates.  

Firstly, while the few case studies that Quintiles show that different market shares might exist 
depending  on  the  molecule,  they  fail  to  provide  solid  justification  on  why  the  estimation 
provided by CRA is not valid. 

Secondly, if new European generics cannot enter export markets, European innovators should 
not  experience  any  erosion.  An  export  waiver  in  any  case  would  then  create  a  substitution 
effect  between  generics  to  the  advantage  of  EU  generics  by  speeding  the  entrance  of 
European generic in export markets. 

2) The study presents the idea that European generics will mostly take sales at the expense of 
European innovative companies, by competing with branded generic products in 3rd countries 
post  patent  expiry.  The  report  grounds  this  argument  on  few  case  studies  which  show  that 
originators’  brands  retain  some  volume  share  after  patent  expiry.  From  this  evidence,  it  is 
extrapolated that generics manufactured in the EU would capitalise on their ‘European brand 
value’ and go on to compete with originators’ exports. 

On  one  hand,  considering  the  chronic  nature  of  the  diseases  represented  by  the  molecules 
analysed by Logendra et al, one could expect a low rate of switching between the reference 
product  and  the  generic  (whether  that  generic  were  imported  from  the  EU  or  from  another 
developed  country,  or  produced  locally),  as  patients’  established  medication  is  not  easily 
subject to switching (this phenomenon can also be observed in the EU). 

On  the  other  hand,  where  significant  market  opportunities  are  expected,  the  Logendra  et  al 
study  does  not  take  into  account  that  originators’  exports  would  anyway  face  competition 
from  branded  generics  produced  in  other  developed  countries  such  as  Canada,  or  generics 
production outsourced by EU firms to non-EU countries.  

92 

 
3)  The  report  argues  that  SPC  protection  expires  earlier  in  a  sample  of  analysed  Member 
States than in export markets. A close look into their data shows that more than 50% of the 
molecules  considered  have  an  earlier  expiry  date  in  a  non-European  country.  In  addition,  it 
needs to be noticed that earlier SPC expiry in the chosen EU sample is due to the inclusion of 
Poland  and  Slovenia  (which  introduced  SPC  protection  after  2004).  As  this  means  that  this 
study relied on now-outdated data, its conclusions are no longer valid.  

4)  Finally,  the  study  argues  that  APIs  are  currently  sourced  mostly  from  China  and  India 
because  of  cost-effectiveness  decisions.  However,  the  study  fails  to  acknowledge  that  this 
competitiveness  advantage  is  reducing  over  time112.  This  proposal  does  not  aim  to  promote 
European API production per se, but to ensure that if this competitiveness advantage from 3rd 
countries currently supplying API disappears, Europe will not be constrained by regulation to 
keep importing from less cost-efficient countries. 

Pugatch Consilium (2017) Unintended consequences 

The  Pugatch  study  (2017)  sponsored  by  AbbVie,  La  Roche  and  the  US  Chamber  of 
Commerce  estimates  that  with  an  EU  SPC  manufacturing  waiver  between  USD  1.34bn  to 
USD 2.27bn of annual exports of European originators (0,61% to 1.04% of their total global 
sales, corresponding to 4.600 to 7.750 originators’ jobs in the Europe) would be exposed to 
generic and biosimilar competition in export markets. 

On  one  hand,  this  study  seems  to  assume  that  all  innovators  sales  open  to  competition  are 
sales at risk. This assumption would imply that currently SPC-holder do not face competition 
from other countries in 3rd markets on the off-patent period. As Logendra et al (2017) study 
shows, currently European generic firms face strong competition from the rest of the world.  

On the other  hand, the study seems to  suggest  that the totality of sales at risk, are potential 
sales  which  can  be  lost  because  of  the  increased  competition  of  the  export  waiver.  As 
reasoned above, it is unrealistic to assume that the totality of EUR 1.34bn – EUR 2.27bn will 
be  lost,  because  they  are  already  currently  open  to  competition  from  other  non-European 
countries,  and  because  the  waiver would  also  benefit  their  own  EU-based  manufacturing  of 
biosimilars and generics (for exports and EU day-1 entry).  

The Pugatch study attempts to quantify the potential job losses that could be derived from the 
export waiver. In order to do so, they assume that the reduction of R&D jobs will be by the 
same magnitude that the share of sales at risk – 0.61 – 1.04%.  

Finally,  the  Pugatch  study  fails  to  acknowledge  that,  as  shown  in  Annex  5,  the  waiver  will 
also  benefit  EU-based  generics  &  biosimilars  branches  of  originators  as  most  biosimilars 
approved by EMA and FDA as of December 2017 are commercialised by the main innovative 
companies (originators). 

Vicente and Simões (2014). Manufacturing and export provisions: Impact on the 
competitiveness of European pharmaceutical manufacturers and on the creation 
of jobs in Europe. Journal of Generic Medicines 

In 2014, the Journal of Generic Medicines published a study by Vicente & Simões, sponsored 
by  the  European  generics  and  biosimilars  association  (Medicines  for  Europe).  This  study 
analysed the potential impacts of introducing a manufacturing and an export waiver in the EU.  

112  Competition in the World API’s market, Chemical Pharmaceutical Generic Association, 2015. 

93 

 
                                                 
Based  on  a  sample  of  55  generics,  5  European  markets  (France,  Germany,  Italy,  Spain  and 
UK),  and considering only  export markets in Latin America, the implementation of an SPC 
manufacturing  and  export  waiver  would  create  8 890  direct  jobs  and  30 000  additional 
indirect  jobs  within  8  years.  Disaggregating  both  effects,  manufacturing  provision  only 
accounts for the creation of 8 000 jobs direct jobs, 24 000 – 32 000 indirect jobs. 

The  methodology  behind  the  study  relies  on  the  first  mover  advantage.  Considering  the 
limited sample and the omission of a counterfactual, generalisation of these results should be 
taken carefully. Even though this study presents some limitations, such as lack of evidence for 
the  parameters  provided  or  the  omission  of  a  counterfactual,  its  merits  lies  on  settling  the 
grounds for a controversial debate, which was later replicated by others researchers. 

In  2017,  the  Journal  of  Generic  Medicines  published  a  study  by  Sussell  et  al,  financed  by 
AbbVie, that replicates the model used in the study of Viente & Simoes (see above), applying 
a  number  of  adjustments.  Those  adjustments  include  an  arithmetical  correction113,  the 
introduction  of  a  counterfactual114,  a  revision  of  the  parameters  and  a  sensitivity  analysis. 
While some of these adjustments are well justified - such as the arithmetical correction or the 
introduction of a counterfactual – others (e.g. the revision of the parameters) present the same 
weaknesses since no clear evidence is presented to justify their validity115. 

This study considers that the effects of an SPC manufacturing waiver would be smaller those 
reported  by  Vicente  &  Simoes  (2014):  30%  less  additional  production  in  the  EU  and  1.898 
new  direct  jobs  (and  6,642  new  indirect  jobs).  The  results  of  the  study  were  also  notorious 
because  under  some  scenarios,  the  authors  claim  that  the  number  of  job  losses  in  the 
innovative sector could be higher than the job creation in the generics sector. However, this 
result relies on an important assumption: after patent expiry, competition of generics will not 
drive prices of innovative products down, thus post-patent innovative products will be sold at 
their  pre-generic  price.  Evidence  shows  that,  while  branded  generic  products  can  hold  a 
higher price than generics after patent expiry, market competition drive prices down once the 
patent has expired116. It also needs to be observed that, in order to obtain a negative net effect 
on  job  creation,  the  authors  compare  an  upper  bound  estimation  of  2,490  jobs  loss  in  the 
innovative sector (as acknowledge by the authors) with a lower bound for the creation of jobs 
in the generic sector (1,890 jobs). 

Based on the limited evidence provided by Sussell et al as regards their estimates and the type 
of calculations  used,  no robust results can  be inferred on positive or negative net effects on 
job creation. The study only offers a counterfactual and arithmetic correction and alternative 
parameters which are used as a robust test to criticise Vicente and Simoes study. 

113  In their arithmetical calculation, Vicente & Simões (2014) duplicate the business volume to be captured by 
generics after the 3rd of patent expiry. This leads to an overestimate of the calculations. 
114  Predicted decrease of market share due to one month delay after entry of 1st generic manufacturer is taken 
from the results of Hollis et al (2002). 
115  Robustness  checks  are  a  valid  and  a  common  measure  to  validate  the  results  of  obtained  through  models. 
However, usually some insight or reasoning is given in order change the parameters. In this case, Sussell et al do 
not offer any explanation which justifies the magnitude of the variation of the parameters. 
116  Copenhagen  Economics,  ‘Study  of  the  economic  impact  of  supplementary  protection  certificates, 
pharmaceutical incentives and rewards in Europe’. 

94 

 
                                                 
Roland Berger (2015) Extension of the Bolar exemption regarding production for 
export and launch preparation  

In 2015, Roland Berger consultants finalised a study contracted by Progenerika (the German 
association  of  generic  manufacturers)  that  estimates  the  highly  positive  impact  of  a 
patent/SPC manufacturing waiver for export purposes in additional EUR 4.7bn exports for the 
German industry over a decade and additional 6 900 jobs. 

95 

 
 
 
ANNEX 13: NUMBER OF MARKETING AUTHORIZATION REFERRED TO IN SPC APPLICATIONS 

Table 22.1: Number of marketing authorisations (MA) granted between 1995 
and 2014 that have been listed in SPC applications 

Year of 1st MA 
in the EU 
1995 
1996 
1997 
1998 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2006 
2007 
2008 
2009 
2010 
2011 
2012 
2013 
2014 
Total: 

MA with SPC 
(all) 
35 
41 
39 
36 
43 
36 
42 
37 
28 
41 
26 
40 
37 
29 
40 
24 
45 
36 
56 
44 
755 

MA with SPC 
(Biologicals only) 
1 
2 
3 
2 
8 
9 
10 
7 
2 
6 
3 
9 
9 
1 
13 
5 
6 
5 
14 
9 
124 

Source: Alice de Pastors database and EMA website. 

96 

 
 
 
 
ANNEX 14: PATENT CLIFF AND GEOGRAPHICAL SCOPE OF SPC PROTECTION 

Graph 23.1: Number of SPC bundles and the geographical scope of protection in the EU 

Note: The Graph shows the number of SPC bundles by the year of patent term expiry (solid red line) 
and the year of the SPC expiry (dash red line). Solid black line shows the average number of Member 
States where the basic patent has been validated. There are two periods where the patent term ends for 
substantial  number  of  patents  –  60  and  above  -  i.e.  2010  and  2021.  The  black  line  shows  that  the 
geographical  coverage  of  protection  in  the  EU  is  increasing  over  time  indicating  that  the  SPC 
protection in the EU is getting mainstreamed. 

The data used to develop this graph comes from the Alice de Pastors database. We consider only those 
SPCs that were applied with reference to EP patent. We exclude SPC that were rejected in the granting 
process  or  withdrawn  by  the  applicant.  Similar  to  Annex  10,  we count  distinct  basic  patent-product 
pairs for which the SPC was applied for in the EU (i.e. number of SPC bundles). As the expiry dates 
differ  from  one  Member  State  to  another,  for  each  basic  patent-product  pair  we  assume  that  SPC 
expires 3 years after the end of patent term. 

The geographical scope of protection is the number of countries where the SPC was  applied  for the 
same  basic-patent  product  pair.  The  average  shown  in  the  graph  should  be  considered  as  a  lower 
bound for the following reasons. First, Member States are not obliged to cite the EP patent application 
number. Second, for 20% of the products the SPC was applied for with reference to more than one 
basic  patent  in  at  least  one  Member  State  and  we  are  not  able  to  identify  the  product  patents. 
Finally, depending on patent availability the same product may be protected by two different patents 
in two different geographical regions. 

To illustrate the point, the graph shows that average geographical scope of protection with the basic 
patent  terms  expiry  in  2024  is  about  13  Member  States.  Still,  according  to  Mejer  (2017)  and  Kyle 
(2017) the average geographical scope of SPC protection for the medical products approved in 2014 
was about 20 Member States. 

97 

4681012Number of EU MS20406080Number of EP20052010201520202025yearthe end of basic EP termthe end of SPCaverage number of MS where basic EP was validated 
 
 
 
ANNEX 15: IMPACT OF A POSSIBLE SPC MANUFACTURING WAIVER ON R&D IN THE EU 

Originators / SPC holders 

G/B manufacturers 

Classical medicines 
(non-biologics / 
‘small molecules’) 

Biologics 

Generics 

Biosimilars 

R&D 
requirements 

Very high 
(need for clinical trials; up to EUR 2 000m per 
medicine; high risk of failure) 

For biologics: Mixed location factors as 
manufacturing and R&D tend to be co-located 

Impact of a SPC 
manufacturing 
waiver on R&D 
conducted in the 
EU 

- Many factors other than IPR-related (e.g. 
skills, tax incentives) determine R&D 
location and EU will remain attractive due to 
excellent ecosystem and infrastructure to 
conduct R&D. 

- Other EU pharmaceutical-specific incentives 
will not vary with the waiver (e.g., orphan 
incentives). 

- The global IPR protection and enforcement 
framework in the EU remains the strongest 
worldwide; 

Low 
(no need for clinical 
trials; minor risk of 
failure; EUR 2-3 m 
development cost) 

High positive impact 
is expected since the 
waiver would help 
retain and promote 
generics 
manufacturing in the 
EU. 

High 
(need for some 
clinical trials; 
medium to high risk 
of failure; up to 
EUR 300 m R&D 
cost) 

Positive impact is 
expected since, for 
biosimilars, as R&D 
and manufacturing 
tend to be co-located. 

98 

 
 
 
ANNEX 16: SME TEST 

The  Union  aims  to  improve  the  overall  approach  to  entrepreneurship,  and  has  permanently 
anchored the ‘Think Small First’ principle in policy making to promote growth of SMEs (and 
start-ups in particular). SMEs are the backbone of the EU economy, creating more than 85% 
of new jobs in Europe. Also in the pharmaceutical sector, SMEs play a key role. 

The  potential  impacts  of  the  proposed  initiative  on  SMEs  have  therefore  been  considered; 
they are reported throughout the impact assessment and below in an aggregated format. 

This  impact  assessment  and  the  preferred  policy  option  have  taken  into  account  the 
pharmaceutical SMEs, and an SME-test has been conducted in line with the 4-steps foreseen 
in the Commission’s Better Regulation policy. 

Step-1: Identification of affected businesses 

There  are  various  types  of  SMEs  active  in  the  pharmaceutical  sector.  For  the  purpose  of 
assessing  the  effects  of  this  proposal,  the  following  types  of  SMEs  active  in  the 
pharmaceutical sector can be distinguished:  

1.  SMEs engaged in manufacturing activities related to generics and biosimilars 

They  include  companies  manufacturing  on  their  own  behalf  as  well  as  companies 
working  as  a  subcontractor  (e.g.  such  as  contract  development  and  manufacturing 
organisations, ‘CDMOs’). 

2.  SMEs engaged in research supporting the development of biosimilars117; 

3.  SMEs  engaging  in  R&D  with  a  view  to  developing  innovative  pharmaceutical 
products (i.e. potential future SPC holders), and SMEs manufacturing those products. 

The SMEs covered by points 1 and 2 above are the main beneficiaries of the proposal. The 
impact of the proposal on SMEs covered by point 3 needs to be assessed. 

- SMEs engaged in manufacturing activities related to generics and biosimilars 

According to Eurostat, in 2015 in the EU28 there were 3 724 SMEs active in pharmaceutical 
manufacturing,  representing  88%  of  the  firms  and  22%  of  the  workforce,  in  the 
pharmaceutical  sector118.  This  includes  only  those  SMEs  whose  primary  activity  is 
pharmaceutical manufacturing119, and does not necessarily capture SMEs specialized in other 
activities120  such  as  pharmaceutical  R&D,  commercialisation  of  generics121  or  innovative 
products (for the later type of SMEs see data below). 

117  As explained in the impact assessment, biosimilars are highly intensive on R&D investments (in the range of 
several hundred million euro per molecule). 
118 Annex 4, 7 and 11 of this impact assessment describe more general the pharmaceutical sector and its weight 
in the EU economy (export, employment, FDI). 
119 It includes both SMEs manufacturing original as well as generic/biosimilar products. 
120 Another statistical source of pharmaceutical SMEs (not limited to manufacturing activities) in the EU is the 
register of the SME office of the EMA. This register contains over 1,500 companies registered as active in the 
pharmaceutical sector in the EEA having the SMEs status. This presents a sharp increase (10 times more than in 
2006).  Pharmaceutical  enterprises  can  apply  for  SME  status  at  the  EMA  before  requesting  financial  or 

99 

 
                                                 
 
A high  number of SMEs manufacture generics in the EU, and to  a lesser extent biosimilars 
(the 1st biosimilar was approved in the EU in 2006, and biosimilars require higher investments 
and risks122). 

Recent  decades  have  seen  a  steep  shift  towards  outsourcing  of  manufacturing  to  reduce  the 
risk of onerous overcapacities. Thus, manufacturing outsourcing to ‘contract development and 
manufacturing organisations’ (CDMOs) represented a USD 62bn market in 2016. Industry’s 
annual growth rate was almost 7% (slightly above the growth of the pharmaceutical sector as 
a  whole  which  is  almost  6%)123.  Despite  an  on-going  trend  towards  concentration  in  the 
CDMO sector, it still remains fragmented with a majority of CDMO being privately owned 
(small family-run or mid-market companies). 

Export performance of European SMEs: the Table below provides an overview of exporting 
activities by SMEs focused on pharmaceutical manufacturing. About half of the 3,724 SMEs 
in  pharmaceutical  manufacturing  (i.e.  1 765  firms)  are  exporting,  77%  of  these  exporting 
companies export outside the EU. 

The exporting activities of these SMEs vary from one Member State to another. The share of 
exporting firms is the highest in Germany, Belgium, Austria and Spain (with more than 60% 
of SMEs exporting outside the country of production) and lowest in in Poland, Denmark or 
UK (less than 35%). Exporting SMEs in Poland, Hungary, Austria and UK are relatively more 
focused on the EU market than non-EU124. In 2015 about 40% of the turnover generated by 
SMEs  has  been  exported  out  of  this  50%  outside  the  EU.  SMEs  in  Denmark,  Hungary  and 
Spain exported more than 50% of their turnover. 

Table 16.1: Overview of EU SMEs activities in pharmaceutical manufacturing, 2015 

Number of SMEs 

Total 

Exporting 

Share 
Exporting 

Exporting 
outside 
EU 

74 
87 
69 
459 
92 
81 
296 

50 
61 
33 
362 
28 
49 
197 

68% 
70% 
48% 
79% 
30% 
60% 
67% 

34 
45 
26 
262 
25 
38 
177 

Share 
exporting 
outside EU 
68% 
74% 
79% 
72% 
89% 
78% 
90% 

Turnover 
(EUR m) 

Export by SMEs (EUR 
m) 

Total  

Extra-EU 

n.a. 
806 
278 
4916 
357 
764 
3904 

1234 
275 
111 
1323 
182 
68 
2396 

644 
82 
23 
630 
93 
34 
1227 

AT 
BE 
CZ 
DE 
DK 
EL 
ES 

the 

the 

For 

from 

SME 

EMA 

EMA. 

Register 

assistance 

administrative 
https://fmapps.ema.europa.eu/SME/search_advanced2.php 
121 Of the 282 SMEs in the EMA register that gave their consent to publish their data, 247 are developing and 
commercializing generic medicines (of which 70 SMEs in ‘early  manufacturing/Research & Discovery stage’, 
76 in ‘development stage’ and 195 in ‘Commercialisation/Marketing stage (EU/Non-EU)). 
122  According  to  the  Eudra  GMP  database  234  sites  in  the  EU  are  GMP  compliant  for  biotechnological 
manufacturing.  This  is  much  smaller  than  the  overall  number  of  4 000  of  pharmaceutical  manufacturing 
companies as reported in Eurostat (cf. Annex 11). 
123http://www.ey.com/Publication/vwLUAssets/ey-study-opportunities-in-the-consolidating-cdmo-
industry/$File/ey-study-opportunities-in-the-consolidating-cdmo-industry.pdf  
124 This is under the assumption that all companies which export outside the EU also trade within the EU. 

see: 

100 

 
 
 
                                                                                                                                                         
FR 
HR 
HU 
IE 
IT 
NL 
PL 
PT 
RO 
SE 
UK 

Total 

274 
45 
75 
n.a. 
394 
208 
301 
127 
121 
138 
531 

133 
17 
31 
53 
234 
102 
82 
50 
43 
64 
176 

49% 
38% 
41% 
n.a. 
59% 
49% 
27% 
39% 
36% 
46% 
33% 

125 
17 
20 
41 
195 
60 
51 
37 
36 
53 
120 

94% 
100% 
65% 
77% 
83% 
59% 
62% 
74% 
84% 
83% 
68% 

n.a. 
64 
246 
n.a. 
6661 
1371 
444 
622 
368 
725 
2527 

733 
91 
127 
5130 
2366 
736 
83 
144 
226 
270 
1195 

3372 

16691 
Source: Eurostat. Only Member States for which data is available are included in the Table. 

24051 

1362 

1765 

294 
15 
55 
4518 
1081 
170 
17 
84 
20 
167 
756 

9909 

- SMEs engaged in research supporting the development of biosimilars 

In the EU, biosimilars are evaluated by the EMA (annex 5 shows that, so  far, only 36 have 
been authorised in the EU). 

The  EMA  SME-register  shows  that  23  SMEs  are  registered  under  the  product  category 
‘biosimilars’, 9 in ‘early manufacturing/Research & Discovery stage’125, 14 in ‘development 
stage’126, and 13 in ‘Commercialisation/Marketing stage (EU/Non-EU)’127. 

-  SMEs  doing  research  with  the  view  to  view  to  developing  innovative  pharmaceutical 
products (i.e. potential future SPC holders) 

including  SMEs.  This  shows 

In the field of pharmaceutical innovation, start-ups and SMEs are playing an important role, 
especially in the initial steps of innovation. The Commission’s pharmaceutical sector inquiry 
reported  that  approximately  25%  of  molecules  in  clinical  development  were  acquired  from 
other  companies, 
that  pharmaceutical  companies  are 
increasingly externalising their R&D. According to EBE, when the EMA analysed the origin 
of  new  medicines,  27%  of  all  new  medicines,  and  61%  of  new  medicines  for  orphan 
indications originated from SME. Newer figures confirm that significant medical innovation 
comes  from  SMEs.  The  cumulative  figures  from  the  EMA’s  PRIME  scheme  indicate  that 
44% (15 out of 34) of PRIME applications granted in 2017 came from SMEs. 
The  SMEs  register  of  the  EMA  has  185  SMEs  registered  with  a  focus  on  new 
formulations/delivery  methods,  and  2  SMEs  developing  complex  biologically  derived 
proteins  and  peptides.  We  can  observe  a  high  number  (256)  of  SMEs  specialised in  orphan 
treatments (these category of SMEs especially relies on orphan incentives, under Regulation 

125  These  9  companies  are  located  in  BE  (2  employees),  FR  (3  employees),  ES  (201  employees),  DE  (68 
employees),  PL  (102  employees),  HU  (two  companies  with  38  employees),  IE  (85  employees),  and  AT  (69 
employees). 
126  These  14  companies  are  located  in  CY  (85  employees),  UK  (11  employees,  83  employees  ),  BE  (2 
employees, and 18 employees) FR (3 employees), ES (201 employees), DE (68 employees, and 26 employees), 
PL (102 employees), HU (two companies with 38 employees), IE (85 employees), SE (10 employees) and AT 
(69 employees). 
127 These 13 companies are located in GR (1 employee), CY (85 employees), DK (5 employees), SI (13), DE 
(three companies with 47, 7 and 26 employees), PL (102 employees), HU (two companies with 38 employees), 
IE (85 employees), LV (1 employee and 5 employees). 

101 

 
 
 
                                                 
(EC) No 141/2000 on orphan medicinal products, for their investments in innovation). We can 
also  observe  a  high  number,  118,  of  SMEs  specialised  in  paediatric  treatments.  77  of  these 
SMEs  are  also  involved  in  orphan  treatments,  with  a  majority  of  them  having  less  than  10 
employees. 159 SMEs are registered as active in the medical devices field.  

IP  protection  is  very  important  for  these  SMEs.  The  European  Patent  Office  (EPO),  for 
instance, has produced a series of case studies on European SMEs, including SMEs dealing 
with biotechnology and medical devices, which are leveraging the power of patents and other 
IP  rights  to  achieve  business  success.  The  resulting  case  studies  illustrate  how  new  and 
established  SMEs  have  developed  the  IP  management  capabilities  they  need,  and  how  they 
are using IP to their advantage. 

Step-2: Consultations that captures the SME angle 

This impact assessment has been elaborated paying due consideration to all inputs provided 
by  stakeholders.  The  SME  angle  has  been  taken  into  account  throughout  the  consultation 
process, visits to industrial sites, bilateral meetings, and the participation of the Commission 
services in seminars/round tables, as explained below. 

i)  Commission’s public consultation on SPCs and patent research exemptions 

This public consultation included a set of six specific sub-questionnaires for the six groups of 
stakeholders, including (II) originators industry/associations and (III) generics and biosimilars 
industry/associations, both of which included SMEs. 

The  questionnaires  addressed  to  these  industrial-related  stakeholders  (groups  (II)  and  (III) 
above) included identification-related questions allowing for the identification of submissions 
corresponding  to  start-ups  and  SMEs.  In  the  case  of  SMEs,  following  the  EU  definition  of 
SME (Small/medium company (except start-up), fewer than 250 employees, annual turnover 
of EUR 50m or less, and annual balance sheet of equal to EUR 43m or less) and start-up). 

The  statistics  corresponding  to  respondents  identified  as  SME  or  start-up  profiles  are  the 
following: 

-  Among  the  63  respondents  defining  themselves  as  mostly  manufacturers  of 
generics/biosimilars (group III), 12 respondents identified themselves as an SME and 
1 as a start-up. The table below reflects the answers of those 13 SMEs and start-ups 
(they are anonymised) to the questions related to the problems defined in the impact 
assessment (and related questions). 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

Yes 

Yes 

Yes 

N/A 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

- 

Yes 

Yes 

Yes 

Yes 

Yes 

N/A 

Yes 

N/A 

Yes 

Yes 

Yes 

Yes 

- 

Yes 

Yes 

Yes 

Yes 

Yes 

N/A 

Yes 

No 

N/A  Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

Yes 

N/A 

N/A 

Yes  N/A 

Yes  N/A   N/A  N/A  Yes  Yes 

- 

- 

- 

Yes 

Yes 

Yes 

Yes 

Yes  N/A 

Anonymised 
respondents  

Agreement with 
problem 1 (export 
losses)? 
Agreement with 
problem 2 (EU day-
1)? 
Over-reliance on 
import of APIs? 
SPC triggers 
delocalisation? 
Biosimilar R&D 
and manufacturing 
tend to be placed 
together? 

102 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-  Among the 71 respondents defining themselves as mostly originators (group II), only 
2 respondents identified themselves as an SME involved in medicines biotechnology 
and one as a start-up in the field of biopesticides. The table below reflects the answers 
of those 3 companies (they are anonymised) to the questions related to the problems 
defined in the impact assessment (and related questions): 

Do you agree with problem 1 
(loss of export)? 

Do you agree with problem 
2 (EU day-1)? 

Are problems 1 and 2 more 
relevant for biosimilars? 

SME respondent 1 
(biologics) 

SME respondent 2 
(start-up biotech) 

SME respondent 3 
(biopesticides) 

Yes 

Yes 

N/A 

No answer (N/A) 

Yes 

N/A 

N/A 

Yes 

- 

In  addition,  several  European  pharmaceutical  associations  such  as  Medicines  for  Europe, 
EUCOPE, EBE, and EuropaBio conveyed the views of their start-ups and SME members in 
their  submissions  and  accompanying  letters  sent  to  the  Commission  during  the  public 
consultation. A  few  national pharmaceutical associations  with  start-ups and  SMEs-members 
also provided their views. 

ii)  Max Planck Institute’s SPC stakeholders consultation  

The  terms  of  reference  for  the  study  on  the  legal  aspects  of  the  SPC  that  the  Commission 
contracted to the Max Planck Institute (MPI) flagged the need to pay attention to the needs of 
SMEs in biopharmaceutical sector. The final report of the study discusses a few aspects of the 
SPC  that  specifically  affect  SMEs  (e.g.  the  issue  of  ‘third  party  holders  of  marketing 
authorisations’,  the  scope  of  the  Bolar  exemption  regarding  third  party  supply  of  APIs  that 
seems to affect especially to SMEs). Some SMEs and universities replied to the consultation 
launched by MPI in the context of the study. Some respondents to the consultation highlighted 
the potential benefits of a manufacturing waiver for SMEs128. 

iii) Visits to premises of pharmaceutical SMEs 

As  part  of  the  Commission  services’  SME  experience,  a  representative  of  DG  GROW 
involved in this initiative visited two pharmaceutical SMEs in Barcelona in November 2015. 

iv)  Participation of the Commission in round tables and seminars 

The  Commission  was  active  in  participating  in  events  organised,  or  co-organised,  by 
representatives of pharmaceutical SMEs, as follows: 

-  12th EGA Legal Affairs Conference, 8-9 March 2016, Brussels 

-  European  Parliament  SME  Intergroup  in  cooperation  with  Medicines  for  Europe, 
Boosting  SMEs  through  the  Supplementary  Protection  Certificate  (SPC)  Waiver,  27 
September 2017  

-  EuropaBio’s  roundtable  on  ‘The  important  role  of  SMEs  in  fostering  healthcare 

biotech innovation’, 28 September 2017 

128 Question 67 of the questionnaire addressed by the MPI and the IfD Allensbach to industry asked: ‘What do 
you think of the idea of introducing such an ‘SPC waiver’?’ cf. Annex to the Final Report. 

103 

 
 
                                                 
-  EUCOPE  Members’  meeting:  revision  of  the  EU  framework  for  SPCs,  17  October 

2018 

-  Bundesverband  der  Pharmazeutischen  Industrie  (BPI)  10th  parliamentary  evening 
‘Sustainable  Healthcare  Systems  and  a  competitive  pharmaceutical  industry  –  A 
mission impossible?’ on 18/10/2017 

-  Presentation on SPCs – at an event organised by White&Case, which counted with the 
participation of pharmaceutical stakeholders such as EUCOPE, 3 November 2017 

-  Small  and  Medium  Entrepreneurs  of  the  European  People’s  Party,  in  cooperation 
with EUCOPE, ‘How to foster Europe as an R&D hub of pharmaceutical SMEs?’, 28 
November 2017 

-  European Parliament - SME Europe, in cooperation with the European Association for 
Bioindustries:  The  Future  of  Medicine:  Promoting  an  Innovative  Ecosystem  to 
Position. European Biotech SMEs at the Forefront of Cutting-Edge Science, 11 April 
2018 

-  Workshop  at  the  European  Parliament  ‘Boosting  jobs,  growth,  competitiveness  and 
consumer  rights  in  Europe  through  the  Supplementary  Protection  Certificate 
Manufacturing  Waiver’  organized  by  EPP  in  association  with  Polish  Union  of 
Employees in Pharmaceutical Industry on 21 February 2018 

The Commission representatives  have  attended additional  workshop on issues  related to  the 
SPC, that involved SMEs, organised inter alia by the Permanent Representations before the 
EU  of  Denmark,  Hungary  and  Poland,  (bio)Pharma  Ireland  high-level  seminar  in  Brussels, 
EuropaBio Healthcare Council meeting attended by senior industry representatives, or the 7th 
European Innovation Summit in the European Parliament (with EuropaBio as co-organiser). 

v)  Bilateral  meetings  of  the  Commission  representatives  with  pharmaceutical  industry 

representatives  

Commission representatives have had numerous bilateral meetings with representatives from 
the pharmaceutical industry, who conveyed the position of pharmaceutical SMEs involved in 
manufacturing of generics and biosimilars and innovative medicines. 

vi)  Letters send by SMEs and start ups 

Following  the  publication  of  the  Single  Market  Strategy  in  October  2015,  and  especially  in 
the  context  of  the  public  consultation  on  SPCs,  international,  European  and  national 
pharmaceutical  associations  with  significant  members  representing  SME,  start-ups  and 
universities  sent  letters  to  the  Commission  stating  their  position  on  the  SPC  manufacturing 
waiver  (confirming  the  position  provided  by  the  SPC-holders,  generics  and  biosimilar 
manufacturers  during  the  public  consultation).  These  associations  included  the  International 
Council  of  Biotechnology  Associations  (ICBA),  Medicines  for  Europe,  The  European 
(EBE),  European  Confederation  of  Pharmaceutical 
Biopharmaceutical  Enterprises 
Entrepreneurs  (EUCOPE),  Aschimfarma,  BioM  Biotech  Cluster  Development,  and  BIO 
Belgium. 

Step-3: Measurement of the impact on SMEs 

The impact assessment analyses a number of policy options, which pay particular attention to 
the SME-angle. 

-  The baseline scenario (status quo/option 0 of the impact assessment)  

104 

 
No  policy  action  would  continue  to  result  in  a  number  of  negative  consequences  for 
manufacturers of generics or biosimilars (loss of competitiveness), especially for SMEs that 
manufacture in the Union (either on their own behalf or as a subcontractor). Manufacturers of 
generics  and  biosimilars  highlight  that  SMEs  cannot  easily  circumvent  the  unintended 
consequence  of  lack  of  an  intellectual  property  protection  level  playing  field,  vis-à-vis  non 
EU-based competitors, by delocalising production. SMEs have less financial resources and a 
more  limited  negotiating  position  when  it  comes  to  outsource  production  to  third  countries. 
Some large manufacturers of generics and biosimilars can make use of their factories located 
in third counties with shorter or no SPC protection to duly enter export markets and the EU 
day-1 market. 

Therefore,  not  doing  anything  would  especially  affected  to  EU-based  SMEs  in  the  generics 
and biosimilar sector. 

-  New had-hoc licensing measures 

SME  might  also  not  have  the  same  negotiating  position  when  negotiating  license  fees  with 
SPC-holders  as  larger  companies,  nor  can  easily  engage  in  a  process  of  application  for  a 
licence129  as  the  decision  of  the  granting  authority  could  be  subject  multiple  administrative 
and judicial appeals until the decision is firm potentially years after the upfront investment in 
manufacturing is needed. 

-  Cutting down the duration of the SPC 

As  indicated  by  associations  representing  SPC-holders,  a  reduction  of  the  term  of  SPC 
protection would have a direct negative impact on the ability of SMEs active in R&D and/or 
manufacturing of original products to secure sufficient funding. 

-  Soft-law approaches (including voluntary agreements) (option 1 of the impact assessment) 

As explained in the main text, soft law approaches have already been tested at national level 
but are considered not effective. They might be of very little interest in particular for SMEs 
that engage in generics and biosimilars manufacturing. SMEs cannot advance investments or 
make  them  subject  to  subject  to  future  case-by-case  agreements,  in  particular  not  where 
complex  products  like  biosimilars  are  at  stake.  In  general,  SMEs  are  less  resilient  to 
uncertainty. 

For SMEs, voluntary agreement could only work if there were to be a strong involvement of 
public authorities (national authorities and/or the Commission) to support the participation of 
SMEs  in  these  types  of  initiatives.  SMEs  have  limited  human  resources  to  engage  in 
cooperation  agreements  with  third  parties,  and  their  negotiating  position  vis-à-vis  large 
companies holding SPCs might be limited. 

-  SPC manufacturing waiver for export and/or stockpiling purposes, without anti-diversion 

measures (option 2 to 4 of the impact assessment) 

A manufacturing waiver, as a statutory targeted derogation from the scope of protection of the 
rights conferred by the EU SPC, would exempt from SPC infringement those acts directed to 
the  manufacturing  of  generic  and  biosimilar  medicines  for  the  purposes  of  export  and/or 
stockpiling. According to the impact assessment, this statutory derogation would be the most 
effective and simplest option to tackle the problems identified in the impact assessment. This 

129 E.g. Italian Decreto legislativo of 10.2.2005, n. 30, articoli 81 e 200. 

105 

 
                                                 
would be especially true for EU-based SMEs manufacturing generics and would be measured, 
given their financial, resources and negotiating position limitations, as discussed above. 

Throughout  the  consultation  process,  associations  of  SMEs  engaged  in  the  research  and 
development  (and  sometimes  manufacturing)  of  original  products  (in  particular  biotech 
products)  have  expressed  concerns  that  the  introduction  of  a  manufacturing  waiver  would 
dilute SPC protection and therefore dilute the financial rewards they would receive for their 
inventions, as well as their possibility to get funding for their innovative R&D. In particular, 
representatives  of  innovative  SMEs  have  expressed  the  concern  that  policies  reducing  the 
value of their IP will have direct impact on SMEs’ ability to secure sufficient funding. 

In practice however, these concerns appear to be overstated. As demonstrated in this impact 
assessment,  the  economic  impact  on  originators  of  the  introduction  of  an  export  waiver  is 
minimal. SPC holders maintain full market exclusivity in Europe during the term of the SPC 
protection, which on average is amongst the highest in the world. They will, as a result of the 
waiver, face an increased competition in unprotected markets. However, such competition is 
increasing anyway (even if it does not come from EU-based manufacturers of medicines, then 
it  comes,  or  will  come,  from  manufacturers  based  in  third  countries).Given  that  the  likely 
negative impact of the export waiver on SPC holders is limited, it should not adversely affect 
SMEs engaged in R&D and manufacturing activities. 

In addition, given that the scope of a manufacturing waiver proposal is clearly confined and 
limited, there should be no grounds to assume that access to capital is affected by ‘regulatory 
uncertainty’. 

The table below comprises a ‘competitiveness analysis’ of the policy option of introducing a 
manufacturing waiver for export (Option 2) and stockpiling (Option 3) in EU legislation, from 
the perspective of SME: 

Table: Impact of Options 2 and 3 on SMEs 

Option 3: 

Stockpiling waiver 

For SME manufacturers that are 
currently  not  exporting  outside 
the EU, and do not plan to scale 
up  to  export  outside  the  EU,  a 
stockpiling  waiver  would  assist 
in  scaling  up  production  to  be 
ready  for 
into 
domestic  or  to  other  Member 
State market upon SPC expiry. 

timely  entry 

SME type 

Option 2: 

Export waiver 

with 

SMEs 
manufacturing 
generic and biosimilars  

EU-based 
in 

activities 

The  potential  window  of  opportunity  for 
exporting  European  generics 
to  non-
European markets without SPC protection 
prior  to  European  SPC  expiry  is  no 
negligible as the SPC protection in the EU 
extent  the  patent  life  on  average  of  3.5 
years. 

The  waiver  will  lift  the  barrier  allowing 
for  additional  investment  in  the  local 
production  or  more  efficient  use  of 
manufacturing capacity for primary (APIs) 
and secondary manufacturing. 

The  waiver  is  also  expected  to  improve 
access  to  the  APIs  and  make  the  supply 
chain stronger. 

the  SMEs  manufacturers  of 
40%  of 
medicines in the EU (1 362 firms) who are 
currently  exporting  outside  the  EU  will 
directly benefit from this measure.  

Part  of  the  60%  SMEs  not  currently 
engaged in extra-EU export might scale up 

106 

 
 
production  for  export  purposes  taking 
advantage of the export waiver. 

Indirectly,  the  export  waiver  will  support 
SMEs  who  currently  export  outside  the 
EU, and  those  that will  take advantage of 
the  export  waiver  to  scale  up  production 
for  extra-EU  export,  and  scale  up 
additional production as of EU day-1. 

SMEs with EU-based R&I core 
activities 

  For innovative products, there should be very little to no impact on 
the reward to innovation (given that SPC holders maintain the core 
of  their  SPC  rights  and  are  exposed  to  a  limited  additional 
competition  only).  Thus,  any  negative  impact  on  innovation 
incentives and the possibility to get funding should be minimal.  
  For biosimilars, a legal barrier to investment in generics/biosimilars 
production  in  the  EU  would  be  lifted.  This  would  have  a  huge 
positive  impact  on  biosimilars  R&D,  which  might  otherwise 
delocalise (given that for biosimilars R&D and manufacture tends to 
happen at the same location) 

Note: The qualitative impact on competitiveness in terms of exports and job-creation is analysed in detailed in 
the impact assessment and its annex on the studies (Annex 12). For the general assessment of options see Section 
7 of the impact assessment 

Foregoing option with anti-diversion measures 

While opinions differ regarding the risks of diversion, anti-diversion measures could usefully 
be  envisaged  in  order  to  minimise  any  additional  risk  of  diversion  and  provide  additional 
transparency.  The  impact  assessment  identifies  two  preferred  anti-diversion  measures:  a 
special labelling requirement and a once-off notification of manufacturing under the waiver in 
each Member State of making. 

to  benefit  from 

In  order 
the  manufacturing  waiver  with  anti-diversion  measures, 
manufacturers  of  generics  and  biosimilars,  including  SMEs,  would  need  to  comply  with 
additional  labelling  requirements,  and  bear  additional  administrative  costs  related  to 
submission of a notification to a public authority. 

These anti-diversion measures might not have a positive impact on micro and small SMEs if 
the cost of the measure or its implementation procedures were cumbersome and of uncertain 
outcome. The pharmaceutical sector is already highly regulated; SMEs need to comply with 
the  EU  strict  general  regulatory  rules,  and  specific  anti-falsified  medicines  rules  as  large 
businesses  do.  Additionally,  the  pharmaceutical  sector,  especially  the  originators  and 
biosimilar  ones,  can  be  highly  capital  intensive.  Therefore  additional  cost  of  compliance 
should be minimised, considering the limitations faced of SMEs. 

A  proxy  to  estimate  the  cost  of  labelling  can  be  found  in  the  Commission’s  evaluation  of 
Regulation  953/2003  to  avoid  trade  diversion  into  the  EU  of  certain  key  medicines130  That 
evaluation  found  that  a  pharmaceutical  company  incurred  costs  of  up  to  EUR  200 000 
between  2003-15  for  adding  a  logo  on  its  packs.  However,  that  cost  included  fees  of  EUR 
100 000  derived  from  the  obligation  of  getting  regulatory  authorities  to  amend/extend 
marketing authorisations for the medicines due to a change of packaging, which would not be 
necessary  for  the  notification  scheme  proposed  in  this  initiative.  Deducting  that  figure,  the 

130 http://trade.ec.europa.eu/doclib/docs/2016/april/tradoc_154437.pdf  

107 

 
                                                 
cost of labelling on the basis of this initiative would amount to a cost of EUR 10 000 per year. 
Given  that  the  total  turnover  of  SMEs  active  in  the  pharmaceutical  sector  in  2015  was 
EUR 24bn, with average per SME of EUR 8m, the labelling cost would impose the cost equal 
to  around  0.1%  of  annual  turnover.  Therefore,  the  potential  impact  of  those  safeguards  on 
SMEs  is  low  and  would  not  significantly  increase  the  cost  of  production.  In  this  light,  and 
given the need to protect originators against illicit diversion of IP-infringing products on the 
European market, these extra costs appear justified. 

The  envisaged  notification  should  be  simple  and  should  be  a  once-off  exercise  in  each 
Member State of making. 

-  Preferred option 

Bearing  in  mind  that  EU  legislation,  administrative  rules  and  procedures  are  meant  to  be 
simple and easy to understand, the preferred option for this initiative has taken into account 
SMEs’  interests,  by  including  a  set  of  non-cumbersome  labelling  and  notification 
requirements.. 

Step-4: Assessment of alternative options and mitigating measures 

The  impact  assessment  and  abovementioned  analysis  shows  that  SMEs,  as  defined  in 
Commission Recommendation 2003/361 and its subsequent amendments, manufacturing G/B 
are facing a significant higher burden than large companies in relation to the SPC protection. 
This  is because they cannot  easily circumvent the unintended consequences of lack of level 
playing  field  in  intellectual  property  protection  vis-à-vis  non  EU-based  competitors,  by 
delocalising production. Measures to tackle this issue need to take SMEs into account. 

The preferred option of the impact assessment (option 2 bis) envisages mitigating measures to 
minimise negative impact on SMEs (both SMEs intending to apply for the waiver and SME 
which  hold  SPCs).  On  one  hand,  it  introduces  safeguards  that  are  easy  to  comply  with  by 
SMEs, such a simplified reporting obligation (a notification and a simple labelling, bearing in 
mind  that  SMEs  need  already  to  fulfil  labelling  requirements  for  their  production).  This 
notification would  ideally  be  conducted  via  on-line  with  automatic  receipt  of  submission  of 
the notification with all the required information fields completed. That notification will then 
be published, so that SMEs holding SPCs can be aware of any manufacturing activity, by a 
third party, taking place during the term of their SPCs. 

Authorities in charge of handling the notification can consider a level of administrative fees in 
accordance with the size of the companying which files the notification. 

It  is  not  appropriate  to  exempt  any  category  of  SME  from  the  transparency/anti-diversion 
measures related to a manufacturing waiver, i.e. an SPC exemption should be accompanied by 
measures  that  minimise  risk  of  illicit  diversion  of  medicines.  Finally,  an  SPC  exemption 
should  not  entail  lower  transparency  in  the  pharmaceutical  system  by  comparison  with  the 
base line scenario. 

108