A changing regulatory landscape means that the drugs companies are increasingly at risk
Pharmaceutical companies are asking for specialist insurance products due to key regulatory, intellectual property (IP) and counterfeiting risks. “These are some of the most potentially damaging risks to pharmaceutical company income streams and are not covered under traditional insurance placements," said James Bird, partner at JLT's life science team.
In the US the Food and Drug Administration (FDA) is increasing regulation in the pharmaceutical industry. Interventions have steadily increased over the last three years, interrupting production for the companies concerned. Other regulators are likely to follow the FDA’s lead and risk managers need to be aware of how this could affect their companies.
Another key risk is cyber espionage making drugs companies increasingly concerned with protecting their IP. Years of research can be lost if a cyber criminal breaks into a company's computer system.
Closely linked to IP theft is the risk that counterfeiters pose to pharmaceutical companies. The World Health Organisation suggests that approximately 30% of drugs in Africa, parts of Asia and Latin America are counterfeit.
"The pharmaceutical industry is fraught with risk and is only getting riskier every year. Based on current trends, we are confident that non-damage business interruption insurance will increasingly be considered a key insurance purchase within the sector," added Bird.
