Parallel trade in drugs - in which they are bought at lower prices in one country and prescribed in another - currently represents 5 per cent of the total European pharmaceutical market, but "benefits neither social security systems nor patients," he claimed in an address to the Kangaroo Group, which promotes the development of a single European market.
In Europe, individual governments set pharmaceutical prices and are always trying to lower these prices, but those countries that favour innovation in their pricing policy are the target of parallel import from countries that impose the lowest price, he suggested.
"Parallel trade strikes at industry's ability to fund new research and also threatens Europe's ability to attract R&D investment from global companies," said Sir Tom.
Despite finalisation of the important review of the EU pharmaceutical legislation last year, the core problems faced by the R&D-based industry remain, stressed Sir Tom, who is currently president of the European Federation of Pharmaceutical Industries and Associations (EFPIA).
Over the last decade, he said, Europe's leadership in the pharmaceutical sector has lost ground, with a steady transfer of R&D activities to the US, where conditions are more favourable to pharmaceutical innovation. People in Europe are healthier, living longer, with a better quality of life than ever before, and medicines play a large part in this. However, Europeans increasingly depend on pharmaceutical R&D conducted elsewhere.
Karl von Wogau, German Christian Democrat Member of the European Parliament and chairman of the Kangaroo Group, also expressed his concern that research is moving more and more to the US. He said the main competitiveness disadvantage of Europe lies in the fact that an internal market for pharmaceuticals has never been established, making the setting of prices complex.