Pharmaceutical Connect > Current Outlook
The Pharmaceutical Industry Today
The pharmaceutical industry has evolved. Over the last five years alone, megamergers have completely changed the competitive layout, particularly in joining companies internationally. Some examples include the mergers between Glaxo Wellcome and SmithKline Beecham, Pfizer and Pharmacia, and Sanofi-Synthelabo and Aventis.
Another trend that has been appearing is one of alliances between larger pharmaceutical companies and smaller biotechnology companies. The larger company will typically in-license experimental products from the smaller company in exchange for cash and profit-sharing splits.
The global pharmaceutical market was worth $492 billion in 2003, according to IMS Health, and is expected to continue growing based on three factors: the aging of the baby boomer generation, the lengthening of average life expectancy, and a rising incidence in chronic diseases. Sales of pharmaceuticals in North America represented almost half of global sales in 2003. Japan also has a strong showing in the pharmaceutical industry because of its size, low generic penetration, and high spending on health care. In the future, it is expected that China will become a major market for pharmaceuticals.
Currently the leading therapeutic areas in global sales of pharmaceuticals are cholesterol and triglyceride reducers, antiulcerants, and antidepressants. The antiulcerants class was previously the top-selling therapeutic class, but strong sales of statin drugs, such as Lipitor, have propelled cholesterol-reducers to the leading status.
The controversial issue of drug pricing in the United States is one that is probably not going to go away any time soon. Reimportation of pharmaceutical drugs from non-U.S. countries is not yet a common occurrence because there are many unresolved issues, such as the safety and regulation of these drugs. Because most government-run healthcare systems outside of the U.S. demand lower prices from pharmaceutical companies, drug prices outside of the U.S. tend to be about 25% to 50% less than they are in the U.S. In a March 2004 statement, former U.S. Health and Human Services Secretary Tommy Thompson said that legislation allowing reimportation of drugs from Canada is inevitable.