Industry: Drug Manufacturers #eusa #pharma


Posted On Feb 7 2017 by

#drug manufacturers

#

Drug Manufacturers – Major

The pharmaceutical industry consists of companies that research, develop, market, and distribute drugs for nearly every therapeutic need. Drug sales from the 65 largest pharmaceuticals totaled $606 billion in 2007 and continues to grow. [1]

Commercial drug companies are driven by research and patent protection. Developing a drug requires an enormous amount of investment in technology, materials, and time, and can be a risky venture for the company. However, after a new drug is successfully developed, thoroughly tested, and patented, it may be potentially very lucrative, especially if it addresses a common health problem (such as heart disease or cancer).

Pharmaceutical Industry Trends Forces

Pipeline Risks

Developing a new drug is a time-consuming and costly endeavor. Hundreds of thousands of candidate compounds must be screened to identify a handful of potential drugs. Even fewer of these candidate drugs are found to be effective at treating a disease. The drug must then pass strict safety standards in several series of clinical trials. According to the Pharmaceutical Research and Manufacturers of America’s 2006 Pharmaceutical Industry Profile. developing a new drug and bringing it to the market takes up to 10 to 15 years and on average costs $800 million. ray

The FDA has also become more strict in the approval process. In 2007, the FDA approved 19 new drugs, the lowest number since 1983. [2]

Generic drugs. stiff competition

For a detailed discussion of brand name vs generic medication, see also Brand name vs Generic medications .

Due to Food and Drug Administration (FDA) regulations. pharmaceutical patents last 17 years, during which a pharmaceutical company has an exclusive right to manufacture a particular drug. After the patent expires, generic versions of the product can be produced and sold by competitors. Generic medication is cheaper to produce (due to the substantially lower research and development costs) than brand medication, and the lower cost is often a strong incentive for consumers to choose generics over branded drugs. In addition, the presence of a generic alternative may force a decrease in the brand name medication’s price, through increased competition.

The generics industry itself is also facing the threat of cheaper competition. With the development of advanced drug manufacturing facilities in countries such as China, generics will likely undergo even further price cuts. China is already the world’s largest supplier of raw materials for drug manufacture, but has not produced significant amounts of finished drugs for export. Last year, the FDA approved the first Chinese generic, a copy of the AIDS drug nevirapine, and another ten other Chinese companies are expected to come out with generics this year. [3]

Political pressures: pricing/licensing

Pharmaceutical companies face constant pressure from governments and activist organizations to increase access by either lowering prices substantially or granting generic licenses. Although these policies would increase the volume of sales, there would be a significant impact on total profits. However, if price controls or granting generic licenses occur, then companies will be less likely to invest money and research into new and unique medications. If this intellectual piracy occurs, less investment will occur.

Dependence on health insurance

Changes in health care coverage may impact drug sales. If an insurance program changes its policies and removes coverage for a certain treatment, sales of related drugs are likely to decrease. In general, insurance programs are more likely to cover essential expenses, such as heart disease medication, and less likely to cover nonessential expenses, such as cosmetic surgery.

Litigation risk

Pharmaceuticals can face significant liabilities if a medication is later found to be defective or produce adverse reactions. Even though such adverse reactions are previously unknown and impossible to predict, damages claimed in such lawsuits are usually substantial. Depending on jurisdiction, the legal system may limit allowable damages.

Future Growth Strategies

Drug development costs have increased significantly in the past decade due to increased FDA regulations and the desire for long term testing. The total cost and time to market for new drugs can be in the hundreds of millions of dollars and up to a decade, respectively. In addition, competition with generic drugs in emerging markets such as China and India have put pressure on drug companies’ bottom lines. Despite these factors, drug companies do not prioritize cost cutting in the near future as much as other strategies for continued growth. In a recent survey of major executives at 15 large and medium drug companies, increased investment into R D ranked first as a priority for the future, having been cited by 66% of the survey group. Cost cutting tied with expanding into new markets, as well as restructuring marketing in drawing 40% of the group (each executive was given two votes). [4]

Market Share by Region

Worldwide pharmaceutical sales increased by 8% in 2006 to £328 billion. The U.S. dominates the global demand for pharmaceutical drugs based on dollar amounts, accounting for nearly half of all sales.

Pharmaceuticals World Market Share by Region (2006) [5]

Note: *Based on an average 2006 £/$ exchange rate of 1.85 [6]

Note: **Based on £ figures from 2005; does not account for exchange rate difference between 2005 and 2006

Major Drug Manufacturers

While there are a great number of smaller publicly traded drug companies, the top firms represent the majority of the market. The following companies are each active in multiple therapeutic areas, whereas smaller firms generally specialize in a very specific product market.


Pharmaceutical and Biotech Industry — Competitive Operating Metrics (2007)


Last Updated on: February 7th, 2017 at 4:15 pm, by


Written by admin


Leave a Reply

Your email address will not be published. Required fields are marked *