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http://www.cordis.lu/eims/src/eims-r32.htm

This paper maps the recent innovation record of the European pharmaceutical industry vis-à-vis its US and Japanese counterparts. On the whole it is a story of success. German and Swiss chemical firms were amongst the world's first pharmaceutical manufacturers, establishing the tradition of a research-based industry. That tradition still survives, and although in the post-war world US multinationals came to dominate world markets, European companies have held their own and remain amongst world leaders with UK firms, in particular, rising up the rankings. A number of factors - the rising cost of R&D needed to meet regulatory requirements, the squeeze imposed on public health care budgets and the introduction of biotechnology - have combined to challenge the established routines of the industry in the 1980s. Firms have responded with a series of strategies - collaborations and alliances; mergers and attempts to develop new markets. The paper analyses the innovative performance and strategies adopted by different European firms in the face of these challenges. It examines different measures of innovation - R&D, patenting, the introduction of new chemical entities, and sales of top selling drugs - and finds none of them wholly satisfactory as a measure of innovation. In particular they fail to pick up new developments in biotechnology which is increasingly dominating routes to new drug discover and new treatments. The paper concludes that Europe's industry is at present holding its own through a mixture of collaboration and international merger. However, it is vital for the industry to be underpinned by a vibrant and creative science base if it is to meet the challenge of the coming decades.

German and Swiss chemical firms were amongst the world's first pharmaceutical manufacturers, establishing the tradition of a research-based industry. That tradition still survives, and although in the post-war world US multinationals came to dominate world markets

BTW, US corporations were helped by the confiscation of German patents, equipment and trademarks after the WWII. The main investment was done by the US taxpayers who paid for the war effort. Now they have to pay twice.