Pharma Industry

The pharma industry is complex, dynamic, and highly globalized, with many companies operating as multinationals in multiple countries.  Notwithstanding this global complexity, there is a new emerging trend of outsourcing various stages of the development and manufacturing process.  A blurring of geographic boundaries is taking place in the pharmaceutical industry with more than one nation being involved in the manufacture of a single finished product. The pharma industry continues to be characterized by high research and development (R&D) expenditures and extensive regulation of its products.

The top 10 pharmaceutical companies, on the basis of worldwide sales in 2003, were headquartered in either the United States of America or Western Europe. Surprisingly, no Japanese firm is in the top 10 list. However, several do appear in the next tier. The constitution of the top 10 club has more or less remained the same in the last three years, although some changes in the relative ranking have taken place. Lilly is an exception to this trend, having dropped out of the list in 2002 - its place being taken by Roche.

The pharma industry grew at a compound annual rate of 9.1 per cent from US$71 billion in 1981 to US$492 billion in 2003. The compound growth rate for the last five years was marginally higher at 9.7 per cent and one of the highest among any industry.

In terms of value, the retail generics market accounted for 13.3 per cent of the pharmaceutical market in 2003 and was valued at US$62 billion. In terms of volumes, the retail generics market accounted for about 30 per cent. Of the top 10 fastest growing pharma companies in 2003, six were generic companies; Schwarz Pharma occupied the first slot, followed by Endo, Apotex, Hexal, Ranbaxy and Pliva. The growth of the retail generics segment, which has been ranging between 4 - 5 per cent for the past few years, accelerated to 8.7 per cent in 2003. It is expected to maintain the same growth rate for the next five years due to the increasing number of drugs coming off the patent list.

By therapeutic category, the pharma industry is now dominated by cardiovascular drugs (including the cholesterol-lowering agents), which in 2003, were estimated to account for almost 13 per cent of industry sales (see Figure 3). Pharmaceuticals for disorders of the central nervous system (CNS) - an area that remains poorly understood in medical terms - represent the second-largest category, accounting for roughly 12 per cent of global sales. These drugs are driven, in recent years, by the emergence of important drugs for treating mental illnesses such as depression and schizophrenia. Anti-infectives, predominantly antibiotics, retain their importance as a major therapeutic class, despite the ageing of many key products. In 2003, according to estimates, anti-infectives accounted for about six per cent of global pharmaceutical sales.

Elsewhere, pharmaceutical industry trends indicate that strong growth in gastro-intestinal treatments, significantly those for ulcers and acid reflux, has enabled them to retain a near seven per cent share of global markets. The growing prevalence of respiratory diseases such as asthma in the industrialized world has seen this category retain its near six per cent share.

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