France Must Turn its Strengths into Competitive Advantages on the International Stage - 2 Major Factors for Success: Greater Emphasis on Innovative Technology and Renewed Partnerships

An Exclusive Study by AEC Partners on Behalf of the Leem

PARIS, September 9, 2010 - Is France an attractive investment option for the
international managers of pharmaceutical companies? On what basis? What
concrete measures will enable France to reindustrialise and remain a major
country in pharmaceuticals over the next ten years?

To provide objective answers to these questions, particularly
in the framework of the CSIS (Strategic Council for Healthcare Industries),
in 2009 the French Pharmaceutical Companies Association (Leem) commissioned
AEC Partners to conduct a study, the first in France, amongst major
pharmaceutical groups. This qualitative study was based on interviews with 73
international managers of pharmaceutical companies on several continents to
find out their views of France as an investment destination. The interviewees
represented nineteen major pharmaceutical companies accounting for over two
thirds of the French market.

The qualitative results presented today paint an encouraging
picture and reveal the challenges to be met:

First lesson of the study: France remains a relatively
attractive and legible market undergoing restructuring

    - By size, it is one of two large European markets and the
      fourth global market behind the United States, Japan and Germany;
    - As with other Western countries, however, it is trapped between
      two very attractive geo-economic forces: the United States and emerging
      countries.

Second lesson: an excellent industrial tradition, yet whose
social environment prompts mixed reactions and which must place greater
emphasis on innovative technology

    - The position of leading country for the production and export
      of pharmaceuticals in Europe, if not the world, can be explained by the
      French industrial environment: quality of the engineers and
      technicians, transport and telecommunications infrastructure, strong
      industrial tradition in the pharmaceutical sector and quality of the
      pharmaceutical distribution system;
    - However, the social environment is viewed much less positively
      due to two main factors: organisation of working time and labor
      relations, particularly in public transport and the civil service,
    - Yet this view is nuanced by industrialists who have a more
      intimate knowledge of France, who point out the difference between
      perception and reality. In particular, they stress the high
      productivity of the French workforce and the reforms undertaken, and
      note that other countries also have a complex and restrictive working
      environment.

Third lesson: a highly competitive academic R&D environment,
with underexploited potential, where cooperation and partnerships are
required

    - France has significant strengths to be a competitive global
      player in R&D: strike force of public research in the biomedical
      sector, excellence in the areas of engineering, mathematics, physics,
      quality of the healthcare system and skilled clinicians, opinion
      leaders with international reputations in several therapeutic areas;
    - Yet in the eyes of international managers, France, unlike other
      countries, is unable to turn its strengths into competitive advantages
      through lack of a strong investment policy for life science research,
      the fragmentation of public research, the relative dispersion of public
      investment and the shortage of public-private partnerships.

Fourth lesson: the positive perception of a political
environment that has incorporated dialogue and consultation

    - France stands apart from the rest of Europe with a clear
      political will to consider healthcare industries as a strategic sector,
      with a range of concrete measures and initiatives over the last three
      years: CSIS, R&D Dating meetings, General State of Industry meetings,
      "Great Loan", implementation of AVIESAN (French National Alliance for
      Life and Health Sciences) in 2009 and reform of the Research Tax Credit
      in 2008. These structural developments are viewed positively by
      economic decision makers.

The healthcare industry, a strategic sector

"Attractiveness isn't divisible," stresses Christian Lajoux,
Chairman of the Leem. "France is a major country in life sciences and
pharmaceuticals. For years it's been one of the leading European exporters of
pharmaceuticals with a trade surplus of nearly EUR7 billion in 2009, making
it the fourth contributor to the French balance of payments. The
pharmaceutical industry is undergoing a radical transformation: its products,
research approaches, the organisation of companies and geography. To ensure
that the transformation is successful, France must turn its strengths into
competitive advantages and above all maintain the legibility and visibility
of market regulation. The government has understood this; the industry must,
for its part, meet its commitments and enable the sector to strengthen its
strategic nature in the same way as energy, transport or space industries.
I'm convinced that we have the duty to maintain our international standing
and have it bear fruit."

The study authors emphasise three necessary conditions to
improve the effectiveness of research in France's healthcare sector:

    - Close the gap between perception and reality in relation
      to the French environment to increase the attractiveness of our
      country;
    - Open dialogue with all stakeholders in the French environment
      in order to develop a convergence of interests, consistent policies
      and united approaches;
    - Continue the reforms reorganising research and implement a
      proactive and ambitious policy to promote French excellence and
      develop public-private partnerships.

What influences the investment decisions of international pharmaceutical
companies?

The study conducted by AEC Partners on behalf of the Leem
reveals the decisive factors for investment decisions by managers of
pharmaceutical companies:

- Criteria linked to the size and growth potential of the
market under consideration

- Criteria "internal" to companies: the capillarity of
investments (a large part of investments are made in pre-existing sites); the
quality of local management and past performances of the subsidiaries or
sites; the nationality of the investing group: there is an inclination,
particularly amongst the Americans and French, to invest in home countries.

- Criteria linked to the country's environment. For R&D
managers, the main criteria taken into account are the quality and
accessibility of skills that can work within networks (development of
partnerships with public research). For clinical research managers, the
quality/speed/cost triangle takes precedence: quality and risk management of
clinical development plans, speed of implementation of clinical plans and
cost. In terms of industrial affairs, there is a trend towards reconversions
of existing sites and positioning on productions with high added value. For
bioproduction, the proximity of R&D centres is an important element. For
commercial operations decision makers, finally, the predictability and
recognition of innovation are major criteria. Pricing levels, the legibility
of healthcare policy and the speed and degree of market penetration are
particularly considered.

    Press contacts: Stéphanie Bou-Fleurot
    tel. +33-(0)1-45-03-88-38 - fax: +33-(0)1-45-03-88-75
    email: sfleurot@leem.org

    Linda Moraleda - tel. +33-(0)1-45-03-88-87
    email: lmoraleda@leem.org

Press contacts: Stéphanie Bou-Fleurot - tel. +33-(0)1-45-03-88-38 - fax: +33-(0)1-45-03-88-75 -
email: sfleurot at leem.org or Linda Moraleda - tel. +33-(0)1-45-03-88-87 - email: lmoraleda at leem.org