UK pharmaceutical growth set to outpace European peers

According to a new report from QBE, Productivity and profit: forecast for the UK life sciences sector, pharmaceutical output will grow by 4.1% in real terms in 2023, supporting what minor growth is expected this year in the UK, with GDP predicted to increase by just 0.3%.

Growth output for UK pharmaceuticals is predicted to be higher than competitors in Germany
(1.2%), France (2.6%), and Spain (3.7%).   While growth is likely to lag behind Italy and Nordic countries for 2023, for the next three years (2024 to 2026), UK pharmaceutical output growth is forecast to average 1.3% a year, higher than the predicted 1.1% growth in Italy and 1% growth in Nordic countries over the same period.

Sector faces challenges from productivity decline and emerging risks

Despite the positive outlook, the sector will be subject to several risks over the next few years that have the potential to impact productivity and profits.

The UK economy has been beset by poor productivity since the global financial crisis, and in the life sciences sector, output has been worse than the majority of the economy with productivity declining by an average of 2.7% a year between 2010 and 2019. This has the potential to impact price competitiveness and profit margins, which could deter investment in the sector.

Other risks to watch for include post-Brexit compliance challenges, the potential government response to the EU’s recent pharmaceutical package, progress on negotiations for renewed UK membership of Horizon Europe (the EU-led funding programme for research and innovation), and healthcare policy positioning ahead of likely 2024 elections.

In order to boost growth, the report recommends firms across the life sciences sector focus on retaining and attracting talent and digitalisation.  Firms should also be alert to opportunities the switch in the regulation of medicines and medical products to the Medicines and Healthcare products Regulatory Agency (from the European Medicines Agency) offers.  Both in the way it may operate (such as the rapid approval protocols as announced in the 2023 Budget for the most impactful technologies and medicines such as cancer and mental health therapeutics) to satisfying overseas suppliers’ needs to sell into the UK.

Tim Galloway, Portfolio Manager for Life Sciences, QBE International, said: “The outlook for the UK life sciences sector remains broadly positive, but organisations should keep a close eye on emerging risks that have the potential to hamper future growth and profitability.  The changeover in regulation presents real opportunities for firms who are set up to avail of the rapid approval protocols and research and development, both the funding of and talent to deliver, will be key to this.”

Research for the report was conducted by Oxford Economics and Control Risks.

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For further information contact:

Sandra Villanueva, Corporate Communications, QBE, 020 7105 5284, Sandra.Villanueva@uk.qbe.com

Alexis Burris, Corporate Communications, QBE, 020 3465 3921, Alexis.Burris@uk.qbe.com

About QBE

QBE helps businesses build resilience through risk management and insurance.

QBE European Operations is part of QBE Insurance Group, one of the world’s leading international insurers and reinsurers and Standard & Poor’s A+ rated. Listed on the Australian Securities Exchange, QBE’s gross written premium for the year ended 31 December 2022 was US$20 billion.

As a business insurance specialist, QBE European Operations offers a range of insurance products from the standard suite of property, casualty and motor to the specialist financial lines, marine and energy. All are tailored to the individual needs of our small, medium and large customer base.

We understand the crucial role that effective risk management plays in all organisations and work hard to understand our customers’ businesses so that we offer insurance solutions that meet their needs – from complex programmes to simpler e-trading solutions – and support them in minimising their risk exposures. Our expert risk management and rehabilitation practitioners focus on helping customers improve their risk management so that they may benefit from a reduction in claims frequency and costs.