Economics of Industry

Two years ago, the Office of Health Economics published a research paper describing some of the activities of eighteen European pharmaceutical companies in the Developing Countries in ·1979-80 (Worlock 1982). The same small study group which collected these data have now updated the information, providing statistics for 1981-82. The new study covers a slightly larger number of companies- 22 as against 18.

The performance of the United Kingdom economy has been the subject of much critical comment in recent years. Of course, economic achievement can be viewed from many different perspectives, giving rise to conflicting interpretations of national progress. Furthermore, it is axiomatic that global indicators camouflage a spectrum of experience spanning all degrees of success and failure. Yet, on balance, the censures would appear to be justified.

In the summer of 1982 the Medico-Pharmaceutical Forum held a meeting on 'Disparities in European Medicine'. The aim was to compare and contrast the various aspects of health and medical care in Europe. Disparities were not difficult to find. The conclusion of the meeting endorsed the theme; despite the growth in European communication and development of the EEC, the harmonisation of European medical practice has been very slow, indeed 'convergence is a long way off (Lancet, 1982).

Therapeutic progress in recent decades has made a major contribution to reductions in mortality and has extended control to the symptoms of many chronic diseases. Thus developments in chemotherapy and immunisation have combined with economic, social and environmental improvement to bring about the restructuring of mortality profiles illustrated in Figure 1.

The published proceedings of the symposium held at the Royal College of Physicians, London in September 1982 by the Office of Health Economics to mark the 20th Anniversary of OHE.

The Office of Health Economics has recently widened its scope to take a special interest in the health care problems of the Poor World, with particular reference to. the role of  medicines.

As a contribution to the discussion in this area, OHE is publishing this paper, which was delivered by Dr Arnold Warlock of The Wellcome Foundation Ltd at the 11th Assembly of the International Federation of Pharmaceutical Manufacturers' Associations in Washington in June 1982.

Britain has very little to be proud of on the industrial front in the 1980s. Many of its traditional industries — the so-called 'smokestack industries' — are in decline.

Unlike the great majority of OHE publications, this paper was not researched and written 'in-house'. It is a minimally edited translation of a study prepared in German by Dr Klaus Leisinger of the Swiss company CIBA-GEIGY. Hence its style, and at certain points its interpretation, differs from that of OHE; yet as regards the basic sentiments expressed OHE fully supports the line taken.

This paper was originally written for the benefit of a single pharmaceutical company. However the company agreed when it was commissioned that it should be made generally available once it had been studied within that company, and this publication is the outcome.

In his Inquiry into the Nature and Causes of the Wealth of Nations, which was first published in 1776, Adam Smith placed special emphasis on the assertion that the ultimate purpose of producing any good (or service) is to meet the needs of its consumers. The economists of Western Europe and North America who have built on such thinking over the past two centuries have developed it into what is often referred to as the theory of consumer sovereignty.