Pharmaceutical market

The global pharmaceutical market is a massive steadily growing market on the world stage. In 2005 this market was valued at USD 582.71 billion. This represented a lower than normal growth rate of 5.95% over 2004, but explained by the expiry of USD 12 billion worth of drug patents. The pharmaceutical market is expected to grow by 7 – 8% in 2006, even though another USD 21.2 billion will go off-patent. The main pharmaceutical markets are as follows.

• United States - 42.56%
• Japan - 10.22%
• Europe inc UK - 29.04%
• Emerging Markets
• China    1.96%
• Mexico   1.66%
• Brazil   1.18%

In the last 20 years the pharmaceutical industry has moved its centre of activity from the European to the American market, from almost equal size 20 years ago to the American market being almost double the size of its European counterpart in 2004.

One of the main drivers for growth in the pharmaceutical market is the increase in an ageing population with the resultant concerns regarding lifestyle and healthcare. In developed nations the number of people aged 55 and over increased from 14.3% to 26.4% of the population between 2000 and 2005. With this change in “lifestyle” so the nature of the pharmaceutical industry changes, with more emphasis on non-communicable diseases than on the more traditional infectious diseases.

The pharmaceutical industry used to be in direct competition with the biotechnological industry sharing neither resources for research and development or even office space. Nowadays it is very difficult to represent the pharmaceutical companies as separate to the biotechnology companies. Both, now, research, develop and share information on many resources. In 2004 biotech products accounted for 27% of all products in the pharmaceutical sector’s research and development pipeline even though they only accounted for between 8-10% of the products in the pharmaceutical market.

Segmentation in the Pharmaceutical market

We have seen the geographic segmentation of the global pharmaceutical market above but the market is also divided into various therapeutic segments. Within the top five segments, four are designed to treat lifestyle disorders as opposed to the previous market leaders, infectious diseases. The five main therapeutic segments are shown below.

• Cardiovascular - 13.56%
• Central Nervous System - 11.08%
• Anti- Infectives -  7.99%
• Metabolism  - 7.39%
• Oncology -  6.90%

To manufacture products for these segments the pharmaceutical industry is moving to a more global business model with centralised research and global marketing. Drug development is being outsourced by the major pharmaceutical companies to smaller companies to save time and costs, with the finished product likely to involve more than one country.

Growth in the Pharmaceutical market

Due to increasing competitiveness and other factors such as increased R&D costs, tightening regulations and patent expiries, only four of the top ten pharmaceutical companies showed positive growth in 2005. While the industry as a whole grew there are obviously causes for concern with many of the major players.

With the customers becoming more aware of their own healthcare needs and what is on the market, pharmaceutical companies are also spending more on Direct to Consumer advertising, helping to educate customers on diseases, and therapies available to them.

The pharmaceutical market has always been backed by intensive research and is now being aided by strong technological developments as well. These developments are allowing the analysis of 100,000 compounds a day, which improves the rate of new drug development.

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