Some of the world’s largest pharmaceutical companies were raided early yesterday as the European Commission launched a wide-ranging inquiry to determine whether they were acting illegally to prevent new drugs from coming on to the market.

Announcing the investigation, Neelie Kroes, the Competition Commissioner, said: “If innovative products are not being produced, and cheaper generic alternatives to existing products are in some cases being delayed, then we need to find out why and, if necessary, take action.”

Companies that found EU and national competition inspectors on their doorsteps yesterday included Pfizer, GlaxoSmithKline, AstraZeneca, Johnson & Johnson, Merck & Co and Sanofi-Aventis.

Ms Kroes insisted that the inspections were not targeting companies suspected of wrongdoing, but were the starting point of a broad inquiry into the pharmaceutical sector to uncover information about intellectual property rights and litigation and settlement agreements. The investigation is expected to last more than a year.

“By its nature, this is information that companies tend to consider highly confidential,” Ms Kroes said. “Such information may also be easily withheld, concealed or destroyed. That is why we decided that inspections were necessary.”

AstraZeneca, which the Commission fined ¤-<NO>using the patent system to delay market entry of rivals to its ulcer drug Losec, confirmed that it was part of the sector inquiry and was “co-operating fully”.

The company, which has lodged an appeal against the fine, said in a brief statement that the inquiry “relates to the introduction of innovative and generic medicines for human consumption on to the market and covers commercial practices, including the use of patents”.

Commenting on behalf of the sector, the European Pharmaceutical Federation said that it hoped “this inquiry will enable the Commission to better understand the nature and process of innovation in the pharmaceutical sector and the importance of intellectual property rights in driving pharmaceutical innovation”.

The Commission has already launched similar inquiries into other areas — telecommunications, energy and financial services — to establish how companies in a particular sector behave, to determine whether EU competition rules are being flouted.

Ms Kroes said that she had chosen her latest target because she was determined to use her antitrust powers to solve problems that make a difference to the lives of individuals.

“Few things make more of a difference than this,” she said, pointing out that about € 200 billion (£149.4 billion) is spent on medicines in the EU every year — the equivalent of € 400 for every man, woman and child.

“Without new pharmaceuticals, the quality of some medical treatments will stagnate,” she said. “Without generic products, the cost of some medical treatments will remain high.”

The Commission justified its claim that market forces were not operating satisfactorily by noting that the number of novel medicines being placed on the market was declining. Between 1995 and 1999, an average of 40 novel molecular entities were launched annually. The figure was 28 over the next five years. To try to reverse the trend, the Commission and the European pharmaceuticals industry launched an innovative medicines initiative last month in the hope of increasing public and private funding for drug research.

Industry sources maintain that apart from the high cost and time involved in developing new products, European manufacturers also face tougher regulatory burdens than competitors in the US or in emerging economies such as India.

Ms Kroes’s decision to turn the spotlight on the pharmaceutical sector using her antitrust powers follows an announcement on Monday of a new investigation into Microsoft’s business practices, after the Commission had received complaints that the company was unfairly penalising competitors.

Pill box

— 28 new types of drugs went on sale between 2000 and 2004, far fewer than the 40 that hit the market from

— 1995 to 1999 AstraZeneca was fined ¤60 million for filing misleading information to patent offices to delay generic versions of its ulcer drug Losec for most of the 1990s

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