Global Pharmaceutical Industry
The global pharmaceutical industry is expected to be worth more than $1 trillion in 2014, marking a 5% compound annual growth rate according to research from Urch Publishing.
The industry is comprised of companies that make, patent and sell drugs that have therapeutic effect. The market is highly competitive and entry is difficult due to a combination of strict regulations and the need for extensive research and development, involving time-consuming clinical trials.
In addition, high research and development costs, lengthy clinical trial processes, expiring patents and difficulty in gaining product approval from the appropriate regulatory bodies all mean that companies must produce blockbuster drugs and continue to do so to remain in good standing.
Other challenges facing the industry include pressure from purchasers, such as hospitals, who negotiate discounts with wholesalers or manufacturers when buying in bulk – thereby increasing pressure on pharmaceutical companies to produce cost-effective drugs to remain competitive and gain approval for new drugs. According to the Center for Drug Evaluation and Research, on average there have been less than 23 approvals annually over the past decade. Industry observer Pharmalot states there was a fall in the number of applications for approval received by the US Food and Drug Administration from just fewer than 40 in 2009 to 23 in 2010.
Though patents protect the intellectual property rights of specific drugs, usually for approximately 20 years, pharmaceutical companies face increasing pressure related to generics, which are drugs comprised of the same ingredients as patented drugs but sold under a drug’s chemical name rather than the pharmaceutical brand name.
Medical professionals can prescribe drugs under their chemical name without specifying a brand. The pharmaceutical market spans a spectrum of drugs and medication, including prescription, generic and over-the-counter drugs. The scope also includes drug delivery technology, drug discovery and development, vitamins and supplements, pathology, therapeutics, and pharmacies and drug stores.