The ABPI figures show that less was spent by the industry on research and development of new medicines, the industry's trade balance dipped and less was invested in capital expenditure.
And further figures for the first two months of this year also show that - as the ABPI predicted - the NHS medicines bill is on target for only a very small increase in 2005, and is likely to fall back. NHS spend on branded, innovative medicines has fallen by 4.3 per cent.
While the ABPI pointed out the warning signals that these new figures give, it also stressed that the general health of the pharmaceutical industry in the UK remains good. Exports are higher than ever; NHS medicines prices are more than 18 per cent lower, in real terms, than ten years ago, with a further price cut of seven per cent from January 1; and the UK-based industry has developed a quarter of the world's top-selling medicines.
Key indicators published by the ABPI today include:
Investment in R&D in 2003 - the latest year for which figures are available - was more than £3.2 billion, slightly down on the previous year when it was £3.3 billion. This is against a background where other high-tech businesses have registered an increase.
The industry's trade balance last year was £3.4 billion, the third highest of any industry in the UK. The previous year, the figure had been £3.6 billion. However, exports rose again to a record £12.2 billion.
Capital expenditure by British-based pharmaceutical companies - money invested in buildings and equipment - also fell back to £753 million in 2003, compared with an average over the past five years of £925 million.
At the same time, medicines continue to represent good value for money for the NHS. Despite a constant growth in the number of prescriptions issued, the medicines bill has grown at a slower rate than total NHS costs, accounting for only 12.5 per cent of the total.
Indeed, figures for the first two months of 2005 show that prices of modern medicines dropped by five per cent, and 2.2 per cent fewer were prescribed, amounting to a £50 million drop in NHS expenditure on branded medicines.
The annual cost of medicines prescribed by GPs in Britain is about £168 per person - less than half the medicines expenditure in some European countries.
While the UK-based industry remains highly successful, with key indicators registering figures of which any other industry would rightly be proud, there are nevertheless some worrying signs," said Vincent Lawton, President of the ABPI.
"It is not always easy to identify precisely why so many key areas should have dipped, but it is clear that the continuing threat posed by animal extremists is a contributory factor. It also provides a warning that the industry should not be over-burdened with bureaucracy - it is the most highly regulated industry in the country."
"We are operating on a global basis, and no company can be expected to invest in the UK if the environment here is not sufficiently welcoming. I hope that these figures indicate just a temporary blip, but the dangers of the UK losing out to other countries are very real."
"The increasingly competitive nature of the global market means that the industry cannot rest on its past achievements but needs to move with the times. There are challenges to national competitiveness of which European nations must be aware - including over-regulation and parochial thinking that is at odds with the global nature of the pharmaceutical industry."
Mr Lawton also highlighted a number of other factors that may have contributed to the decline in the key figures. These include:
The continuing problem of parallel imports, which undermine the success of the research-based industry while contributing only minor price benefits to the NHS.
The costliness and bureaucracy surrounding clinical trial work in the UK compared with many countries abroad.
Increasing difficulty in the supply of quality science graduates in the UK, with universities closing chemistry departments and a growing shortage of teachers with chemistry degrees.
Rivalry from Eastern European countries for pharmaceutical R&D, and tax incentives in countries such as Singapore and China.
Continuing poor take-up of new medicines in the UK. The market share for medicines launched within the past five years in Britain is only 16 per cent, compared with 28 per cent in the USA and higher proportions in countries including Spain, Canada, Australia, Switzerland, Germany, France, Italy and Japan.
The new figures are published in the ABPI's Annual Review, which covers the activities of the association during the previous year.
Pharmaceutical Price Regulation Scheme
Although the new PPRS included an unnecessary seven per cent price cut among its provisions, it nevertheless brought many benefits. Improvements to the PPRS included raising R&D allowances, and a number of concessions for smaller companies. The stability of a five-year scheme is also important to a business that works in the long term - it takes some 10-12 years to develop a new medicine.
Working with the NHS
A publication outlining principles for co-operative ventures between the pharmaceutical industry and the NHS was produced. It highlights pointers for productive joint working partnerships, giving examples of successful interaction.
The ABPI was involved in Ask About Medicines Week, which seeks to involve patients by fostering a broad dialogue on issues that affect people's health, especially medicines.
Access to medicines
Medicines that are being recommended for use by the National Institute for Clinical Excellence (NICE) are still not being prescribed for patients, and the ABPI has been working with Government bodies to try to remove this barrier to patients' access to modern, innovative medicines.
Animals and Medicines Research
The Government's newly established National Centre for the 3Rs (Reduction, Refinement and Replacement of animals in research) was warmly welcomed by the ABPI. It mirrors the ABPI's recommendations to Government in 2003, and the ABPI is sponsoring a new scientific post at the centre.
However, the activities of animal extremists remain a significant threat to research into new medicines. Levels of extremist attacks and actions against a number of animal breeders, contract research organisations and their suppliers are at an all-time high.
The UK-based industry took a world lead in providing the public with information about clinical trials work more than 18 months ago when the ABPI established its own website for companies to register information about clinical trials. Hence the ABPI fully endorsed proposals that emerged in late 2004 to establish a worldwide register of clinical trials on new prescription-only medicines.
A wide variety of brand new medicines were introduced during the year by member companies of the ABPI. These included new treatments for HIV, asthma in children, heart attacks, rheumatoid arthritis and colorectal cancer, as well as a vaccine against diphtheria, tetanus, pertussis and polio for children.
For further information, please contact: ABPI Press Office 020 7747 1410