Why pharmaceuticals is a sovereignty question, not just a market

Every conversation about digitalising a pharmaceutical plant ends up at the same objection: why does this sector move so slowly? Inertia has little to do with it. The caution is the memory, written into regulations, of what happens when a medicine reaches a patient before anyone has proved it is safe.

This is part 1 of 3 of the “Pharmaceutical digital transformation” series; it continues with part 2, from molecule to batch release. The technology makes sense only once the context does, so we start where the sector starts: its history, its economic weight, and the reason states now treat pharmaceutical manufacturing as a strategic asset.

A century that built the rulebook

The twentieth century gave the industry its two defining forces at almost the same time. One was a run of innovations that changed what medicine could do at all: antibiotics, vaccines, then, after Watson and Crick published the structure of DNA in 1953, the long road to biotechnology. The first medicines made by genetically engineered cells arrived in the 1980s; the first biosimilar was approved in the EU only in 2006.

The other was a series of scandals that showed what the same industrial capability could do when nobody controlled it. Good manufacturing practice, marketing authorisation dossiers and pharmacovigilance were not drawn up by a committee working in the abstract. Each layer was added after something went wrong.

Anyone arriving from IT should keep that in mind. Almost every control that looks like bureaucracy from outside is what remains of a specific failure. Before proposing to remove one, find out which failure it was written for. The validation lead will usually know, and will appreciate being asked.

COVID-19 changed the political status of the sector

The pandemic did what no white paper had managed. For months, who could make what, where and how fast was front-page news across Europe.

Two lessons stuck. No country solved the problem alone: the vaccines came out of international coordination, shared expertise and pooled funding, with regulators more closely aligned than anyone would have predicted a few years earlier. The second lesson was less comfortable. Europe found out how much of its own supply chain it did not control.

There was no return to normal afterwards. Bringing critical production back within reach became a long-running policy effort, and pharmaceutical plants came to be seen as infrastructure a state cannot afford to lose. The NIS2 Directive reflects that view: manufacturers of basic pharmaceutical products and pharmaceutical preparations are listed in its health sector. For a European site, the cybersecurity of a packaging line has become a regulatory matter rather than an IT preference.

The economic weight

Leem reported, for 2022: a world market of about USD 1,482 billion, 42.6% of it generated in the United States, and French exports of EUR 33.8 billion producing a EUR 5.9 billion trade surplus. More recent European figures measure something else, and the two should not be read as one series: the first is a United States share, the second a North American one, and the two bodies do not use the same method.

According to EFPIA’s Key Data 2024, North America accounted for 53.3% of world pharmaceutical sales in 2023, against 22.7% for Europe. The industry invested an estimated EUR 50 billion in R&D in Europe that year and directly employed some 900,000 people. EFPIA also reports that 67.1% of the sales of new medicines launched between 2018 and 2023 were made on the US market, against 15.8% on the five largest European markets.

Put those numbers side by side and the strategic anxiety explains itself. Europe still accounts for close to a quarter of the world’s pharmaceutical sales and a large share of its research, but the market’s centre of gravity has moved west, and new medicines reach American patients first.

R&D is the product

It is tempting to see a pharmaceutical company as a manufacturer. It is closer to the truth to see a research organisation that happens to own factories. The cost of discovering and proving a molecule dwarfs the cost of pressing it into a tablet.

That has a direct consequence for digitalisation. The data generated during development is, in a real sense, the asset, worth more than any batch it describes. A company that loses a batch loses a batch. A company that cannot demonstrate the integrity of its development data can lose the molecule. This is why data integrity, which comes back again and again in this series, is taken as seriously in pharma as financial reporting is elsewhere.

What this means for an OT project

Three consequences shape every engineering decision downstream.

Availability is a public-health parameter. When a line stops, the cost is not only lost revenue. For a product made on a single qualified site, an outage can become a shortage, and a shortage reaches patients. That is the largest difference between an industrial risk model and a corporate IT one.

Traceability cannot be bolted on later. Being able to reconstruct, years afterwards, exactly what happened to a given batch is a design constraint. A system that was not built to produce that evidence will not be persuaded to produce it after go-live.

And the regulator has a say in your architecture. In a GxP plant, network segmentation, access management and audit trails are inspected. A design that satisfies a security auditor but not a GMP inspector has failed.

The industry is cautious for reasons that are written down. Digitalising it means working out which of those reasons still apply to the technology in front of you, and which have become habit.

In the next article we follow a drug substance from the first synthesis of an active ingredient to batch release, because the manufacturing steps are where the digital systems actually attach.

References

• EFPIA, The Pharmaceutical Industry in Figures. Key Data 2024 (market shares, R&D, employment): efpia.eu
• European Medicines Agency, Biosimilar medicines: overview (first EU approval in 2006): ema.europa.eu
• Directive (EU) 2022/2555 (NIS2), Annex I, sector 5 Health: eur-lex.europa.eu