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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 1
EXECUTIVE SUMMARY
In 1991, the U.S. International Trade Commission (the Commission)conducted a study on the pharmaceutical industry, Global Competitivenessof U.S. Advanced-Technology Manufacturing Industries: Pharmaceuticals,1
as part of a series on global competitiveness of U.S. advanced-technologymanufacturing industries requested by the Senate Committee on Finance.Many of the findings of that study are still valid today, although significantchanges have occurred in the industry. The purpose of this report is todescribe the principal factors currently affecting the competitiveness of theU.S. pharmaceutical industry, particularly in relation to the industries ofWestern Europe and Japan.
The pharmaceutical industry is complex, dynamic, and highly globalized;
moreover, the industry is characterized by high research and development(R&D) expenditures and extensive regulation of its products compared withother manufacturing sectors. The industry has also been affected by a highnumber of mergers and acquisitions (M&As), which have increasedglobalization and, arguably, heightened efficiency. In the Commissions1991 study, the major factors of competitiveness were found to be thosethat affect a companys ability to develop and deliver new pharmaceuticalproducts or new chemical entities (NCEs), particularly those NCEssuccessful on a global basis.2 In the United States, changes in U.S.Food and Drug Administration (FDA) policies have led to faster approvaltimes for NCEs, which result in extended periods during which companiescan exclusively market their pharmaceutical products. As noted in theCommissions 1991 competitiveness study, longer periods of marketexclusivity for pharmaceuticals increase sales revenues, and increasedsales revenues in turn lead to greater profits and potentially more fundingfor R&D.
The Commissions 1991 competitiveness study also indicated that changesin Government policies affect the competitiveness of pharmaceutical firms.
Sweeping changes in barriers to trade worldwide, from tariffs to intellectualproperty rights and patent issues have occurred since 1991. An initiative onpharmaceuticals, established during the Uruguay Round, was implementedon January 1, 1995, providing duty-free treatment for about 7,000pharmaceutical products and pharmaceutical intermediates; another 496products and intermediates became duty-free on April 1, 1997, andnegotiations are currently underway to make further additions. There is
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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greater participation of member countries of the World Trade Organization(WTO), formed in 1995, including those of the European Union (EU),3 inagreements relating to intellectual property and patents. In the Westernhemisphere, the North American Free Trade Agreement (NAFTA) hasresulted in low or no tariff barriers and greater protection of patents andintellectual property rights among Canada, Mexico, and the United States.
Overall, the U.S. pharmaceutical industry seems to enjoy a domesticenvironment conduciveto researching and developing drugs, protecting itsintellectual property, and obtaining regulatory approval to market itsproducts. There is also a strong trend in the United Statesto invest thoseprofits in new R&D. Recent improvements to the patent systems andGovernment regulatory policies in Western Europe and Japan are likely to
benefit the U.S. industry as well. Because of the strong internationalcomponent to this industry, that whichbenefits the industry in any one ofthese three areas will likely work to the benefit of theothers. Since agingpopulations will only bring a rise in the demand for drug products, theU.S. pharmaceutical industry, along with the industries of Western Europeand Japan, canexpect growing markets for their products.
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 3
PURPOSE AND SCOPE
In 1991, the U.S. International Trade Commission (the Commission)conducted a study on the pharmaceutical industry, Global Competitivenessof U.S. Advanced-Technology Manufacturing Industries: Pharmaceuticals,
as part of a series on global competitiveness of U.S. advanced-technologymanufacturing industries requested by the Senate Committee on Finance.In the Commissions 1991 study, the major factors of competitiveness werefound to be those that affect a companys ability to develop and deliver newpharmaceutical products or new chemical entities (NCEs), particularlythose NCEs successful on a global basis. While the ability to put innovativeproducts on the market is still considered the key to success in thepharmaceutical industry, pharmaceutical companies are currently affected
by several changes, such as lowertariff and nontariff barriers,improved protection of intellectualproperty rights, and globalconsolidation. The purpose of thisreport is to describe the principalfactors currently affecting thecompetitiveness of the U.S.pharmaceutical industry,particularly in relation to theindustries of Western Europe and
Japan.
The original study found that a pharmaceutical companys research anddevelopment (R&D) infrastructure is a major contributing factor to itscompetitiveness. R&D, which by its nature is capital intensive, is necessaryto create new, innovative treatments for the market. Sales revenuesgenerate company profits, allowing for more research, which in turn mightlead to another successful novel product. A cycle is initiated wherebyprofits from existing drug sales fund the development and marketing offuture drugs. The cycle may potentially be repeated for each new drugdeveloped and marketed.
The Commissions 1991 competitiveness study also indicated thatGovernment policies affect the competitiveness of pharmaceutical firms.Sweeping changes in barriers to trade worldwide, from tariffs to intellectualproperty rights and patent issues have occurred since 1991. There is
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 4
greater participation of member countries of the World Trade Organization(WTO), formed in 1995, including those of the European Union (EU), inagreements relating to intellectual property and patents. In the Westernhemisphere, the North American Free Trade Agreement (NAFTA) hasresulted in low or no tariff barriers andgreater protection of patents andintellectual property rights amongCanada, Mexico, and the United States.In the United States, changes inGovernment policies have also led tofaster approval times for NCEs by theU.S. Food and Drug Administration(FDA). As noted in the Commissions1991 competitiveness study,
Government policies that lead to longerperiods of market exclusivity increase the amount of sales revenues;increased sales revenues lead to greater profits and potentially morefunding for R&D. Another Government policy examined in this report is theinitiative on pharmaceuticals established during the Uruguay Round (seechapter 4). The agreement was implemented on January 1, 1995, providingduty-free treatment for about 7,000 pharmaceutical products andpharmaceutical intermediates; another 496 products and intermediatesbecame duty-free on April 1, 1997, and negotiations are currently underwayto make further additions. The cumulative effect of this initiative has not yetbeen ascertained. The Commissions 1991 competitiveness study
examined conditions of competitiveness in worldmarkets. Now, as then, the pharmaceutical industrycontinues to be global in scope and any distinctdelineation between a domestic and foreign firm isfurther blurred by continued consolidation. In theCommissions 1991 competitiveness study, countryand regional data were aggregated based ongeographical location of facilities rather than the
location of corporate headquarters. The samepractice will be used in this report, unless otherwise specified. Overviews ofthe U.S., Western European, 6 and Japanese industries, similar thoughless extensive than in the Commissions 1991 report, are provided forassessment of relative competitiveness.
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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HISTORY
The earliest drugstores date to the middle ages. The first known drugstore
was opened by Arabian pharmacists in Baghdad in 754, and many more
soon began operating throughout the medieval Islamic world and
eventually medieval Europe. By the 19th century, many of the drugstores inEurope and North America had eventually developed into larger
pharmaceutical companies.
Most of today's major pharmaceutical companies were founded in the late
19th and early 20th centuries. Key discoveries of the 1920s and 1930s,
such as insulin and penicillin, became mass-manufactured and distributed.
Switzerland, Germany and Italy had particularly strong industries, with the
UK, US, Belgium and the Netherlands following suit.
Legislation was enacted to test and approve drugs and to require
appropriate labeling. Prescription and non-prescription drugs became
legally distinguished from one another as the pharmaceutical industry
matured. The industry got underway in earnest from the 1950s, due to the
development of systematic scientific approaches, understanding of human
biology (including DNA) and sophisticated manufacturing techniques.
Numerous new drugs were developed during the 1950s and mass-
produced and marketed through the 1960s. These included the first oral
contraceptive, "The Pill", Cortisone, blood-pressure drugs and other heartmedications.
MAO Inhibitors, chlorpromazine (Thorazine), Haldol (Haloperidol) and the
tranquilizers ushered in the age of psychiatric medication.
Valium (diazepam), discovered in 1960, was marketed from 1963 and
rapidly became the most prescribed drug in history, prior to controversy
over dependency and habituation. Attempts were made to increase
regulation and to limit financial links between companies and prescribing
physicians, including by the relatively new U.S. Food and DrugAdministration (FDA). Such calls increased in the 1960s after
the thalidomide tragedy came to light, in which the use of a new anti-emetic
in pregnant women caused severe birth defects. In 1964, the World
Medical Association issued its Declaration of Helsinki, which set standards
for clinical research and demanded that subjects give their informed
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 6
consent before enrolling in an experiment. Pharmaceutical companies
became required to prove efficacy in clinical trials before marketing drugs.
Cancer drugs were a feature of the 1970s. From 1978, India took over as
the primary center of pharmaceutical production without patent protection.
The industry remained relatively small scale until the 1970s when it began
to expand to a greater rate. Legislation allowing for strong patents, to cover
both the process of manufacture and the specific products, came in to force
in most countries. By the mid-1980s, small biotechnology firms were
struggling for survival, which led to the formation of mutually beneficial
partnerships with large pharmaceutical companies and a host of corporate
buyouts of the smaller firms. Pharmaceutical manufacturing became
concentrated, with a few large companies holding a dominant position
throughout the world and with a few companies producing medicines withineach country. The pharmaceutical industry entered the 1980s pressured by
economics and a host of new regulations, both safety and environmental,
but also transformed by new DNA chemistries and new technologies for
analysis and computation. Drugs for heart disease and for AIDS were a
feature of the 1980s, involving challenges to regulatory bodies and a faster
approval process. Managed care and Health maintenance
organizations (HMOs) spread during the 1980s as part of an effort to
contain rising medical costs, and the development of preventative and
maintenance medications became more important. A new business
atmosphere became institutionalized in the 1990s, characterized by
mergers and takeovers, and by a dramatic increase in the use of contract
research organizations for clinical development and even for basic R&D.
The pharmaceutical industry confronted a new business climate and new
regulations, born in part from dealing with world market forces and protests
by activists in developing countries. Animal Rights activism was also a
challenge. Marketing changed dramatically in the 1990s. The Internet made
possible the direct purchase of medicines by drug consumers and of rawmaterials by drug producers, transforming the nature of business. In the
US, Direct-to-consumer advertising proliferated on radio and TV because of
new FDA regulations in 1997 that liberalized requirements for the
presentation of risks. The new antidepressants, the SSRIs,
notably Fluoxetine (Prozac), rapidly became bestsellers and marketed for
http://en.wikipedia.org/wiki/Efficacyhttp://en.wikipedia.org/wiki/Managed_carehttp://en.wikipedia.org/wiki/Health_maintenance_organizationhttp://en.wikipedia.org/wiki/Health_maintenance_organizationhttp://en.wikipedia.org/wiki/Animal_Rightshttp://en.wikipedia.org/wiki/Fluoxetinehttp://en.wikipedia.org/wiki/Fluoxetinehttp://en.wikipedia.org/wiki/Animal_Rightshttp://en.wikipedia.org/wiki/Health_maintenance_organizationhttp://en.wikipedia.org/wiki/Health_maintenance_organizationhttp://en.wikipedia.org/wiki/Managed_carehttp://en.wikipedia.org/wiki/Efficacy7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 7
additional disorders. Drug development progressed from a hit-and-miss
approach to rational drug discovery in both laboratory design and natural-
product surveys. Demand for nutritional supplements and so-called
alternative medicines created new opportunities and increased competition
in the industry. Controversies emerged around adverse effects, notablyregarding Vioxx in the US, and marketing tactics. Pharmaceutical
companies became increasingly accused ofdisease mongering or over-
medicalizing personal or social problems.
RESEARCH AND DEVELOPMENT
Drug discovery is the process by which potential drugs are discovered or
designed. In the past most drugs have been discovered either by isolatingthe active ingredient from traditional remedies or by
serendipitous discovery. Modern biotechnology often focuses on
understanding the metabolic pathways related to a disease state
orpathogen, and manipulating these pathways using molecular biology or
biochemistry. A great deal of early-
stage drug discovery has
traditionally been carried out by
universities and research
institutions. Public funding accountsfor 80% of the amount spent on
basic research for new drugs and
vaccines in the United States. Drug
development refers to activities
undertaken after a compound is
identified as a potential drug in order to establish its suitability as a
medication. Objectives of drug development are to determine
appropriate Formulation and Dosing, as well as to establish safety.Research in these areas generally includes a combination ofin
vitro studies, in vivo studies, and clinical trials. The amount of capital
required for late stage development has made it a historical strength of the
larger pharmaceutical companies.
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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INDUSTRY ASSOCIATIONS
European Confederation of Pharmaceutical Entrepreneurs (EUCOPE)
Drug Information Association (DIA)
European Generic Medicines Association European Federation of Pharmaceutical Industries and
Associations (EFPIA)
European Pharmaceutical Market Research Association (EphMRA)
International Federation of Pharmaceutical Manufacturers and
Associations (IFPMA)
Japan Pharmaceutical Manufacturers Association (JPMA)
New York Health Products Council (NYHPC)
Pharmaceutical Research and Manufacturers of America (PhRMA) Irish Pharmaceutical Healthcare Association (IPHA)
REGULATORY AUTHORITIES
International Conference on Harmonisation of Technical Requirements forRegistration of Pharmaceuticals for Human Use (ICH)
European Medicines Agency (EMEA)
Therapeutic Goods Administration (Australia) (TGA) U.S. Food and Drug Administration (FDA)
Ministry of Health, Labour and Welfare (Japan)
Medicines and Healthcare products Regulatory Agency (MHRA)
Central Drugs Standards Control Organisation (India) (CDSCO)
Ukrainian Drug Registration Agency
Medicines Authority (Malta)
http://en.wikipedia.org/wiki/EUCOPEhttp://en.wikipedia.org/wiki/Drug_Information_Associationhttp://en.wikipedia.org/w/index.php?title=European_Generic_Medicines_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/w/index.php?title=European_Pharmaceutical_Market_Research_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/wiki/Japan_Pharmaceutical_Manufacturers_Associationhttp://en.wikipedia.org/w/index.php?title=New_York_Health_Products_Council&action=edit&redlink=1http://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_Americahttp://en.wikipedia.org/wiki/Irish_Pharmaceutical_Healthcare_Associationhttp://en.wikipedia.org/wiki/International_Conference_on_Harmonisation_of_Technical_Requirements_for_Registration_of_Pharmaceuticals_for_Human_Usehttp://en.wikipedia.org/wiki/International_Conference_on_Harmonisation_of_Technical_Requirements_for_Registration_of_Pharmaceuticals_for_Human_Usehttp://en.wikipedia.org/wiki/European_Medicines_Agencyhttp://en.wikipedia.org/wiki/Therapeutic_Goods_Administrationhttp://en.wikipedia.org/wiki/Food_and_Drug_Administration_(United_States)http://en.wikipedia.org/wiki/Ministry_of_Health,_Labour_and_Welfare_(Japan)http://en.wikipedia.org/w/index.php?title=Central_Drugs_Standards_Control_Organisation_(India)&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ukrainian_Drug_Registration_Agency&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Ukrainian_Drug_Registration_Agency&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Central_Drugs_Standards_Control_Organisation_(India)&action=edit&redlink=1http://en.wikipedia.org/wiki/Ministry_of_Health,_Labour_and_Welfare_(Japan)http://en.wikipedia.org/wiki/Food_and_Drug_Administration_(United_States)http://en.wikipedia.org/wiki/Therapeutic_Goods_Administrationhttp://en.wikipedia.org/wiki/European_Medicines_Agencyhttp://en.wikipedia.org/wiki/International_Conference_on_Harmonisation_of_Technical_Requirements_for_Registration_of_Pharmaceuticals_for_Human_Usehttp://en.wikipedia.org/wiki/International_Conference_on_Harmonisation_of_Technical_Requirements_for_Registration_of_Pharmaceuticals_for_Human_Usehttp://en.wikipedia.org/wiki/Irish_Pharmaceutical_Healthcare_Associationhttp://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_Americahttp://en.wikipedia.org/w/index.php?title=New_York_Health_Products_Council&action=edit&redlink=1http://en.wikipedia.org/wiki/Japan_Pharmaceutical_Manufacturers_Associationhttp://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/wiki/International_Federation_of_Pharmaceutical_Manufacturers_and_Associationshttp://en.wikipedia.org/w/index.php?title=European_Pharmaceutical_Market_Research_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/wiki/European_Federation_of_Pharmaceutical_Industries_and_Associationshttp://en.wikipedia.org/w/index.php?title=European_Generic_Medicines_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/Drug_Information_Associationhttp://en.wikipedia.org/wiki/EUCOPE7/29/2019 phrma industry...
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THE COST OF INNOVATION
Drug companies are like other companies in that they manufacture
products that must be sold for a profit in order for the company to survive
and grow. They are different from some companies because thedrug business is very risky. For instance, only one out of every ten
thousand discovered compounds actually becomes an approved drug for
sale. Much expense is incurred in the early phases of development of
compounds that will not become approved drugs. In addition, it takes about
7 to 10 years and only 3 out of every 20 approved drugs bring in sufficient
revenue to cover their developmental costs, and only 1 out of every 3
approved drugs generates enough money to cover the development costs
of previous failures. This means that for a drug company to survive, it
needs to discover a blockbuster (billion-dollar drug) every few years.
Drug discovery and development is
very expensive; of all compounds
investigated for use in humans only a
small fraction are
eventually approved in most nations
by government appointed medical
institutions or boards, who have to
approve new drugs before they canbe marketed in those countries. In
2010 18 NMEs (New Molecular
Entities) were approved and three
biologics by the FDA, or 21 in total, which is down from 26 in 2009 and 24
in 2008. On the other hand, there were only 18 approvals in total in 2007
and 22 back in 2006. Since 2001, the Center for Drug Evaluation and
Research has averaged 22.9 approvals a year.
This approval comes only after heavy investment in pre-clinicaldevelopment and clinical trials, as well as a commitment to ongoing safety
monitoring. Drugs which fail part-way through this process often incur large
costs, while generating no revenue in return. If the cost of these failed
drugs is taken into account, the cost of developing a successful new drug
(New chemical entity or NCE), has been estimated at about 1.3 billion USD
http://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Approved_drugshttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Pre-clinical_developmenthttp://en.wikipedia.org/wiki/Pre-clinical_developmenthttp://en.wikipedia.org/wiki/Clinical_trialhttp://en.wikipedia.org/wiki/Safety_monitoringhttp://en.wikipedia.org/wiki/Safety_monitoringhttp://en.wikipedia.org/wiki/New_chemical_entityhttp://en.wikipedia.org/wiki/New_chemical_entityhttp://en.wikipedia.org/wiki/Safety_monitoringhttp://en.wikipedia.org/wiki/Safety_monitoringhttp://en.wikipedia.org/wiki/Clinical_trialhttp://en.wikipedia.org/wiki/Pre-clinical_developmenthttp://en.wikipedia.org/wiki/Pre-clinical_developmenthttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Approved_drugshttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medication7/29/2019 phrma industry...
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(not including marketing expenses). Professors Light and Lexchin reported
in 2012, however, that the rate of approval for new drugs has been a
relatively stable average rate of 15 to 25 for decades. Industry-wide
research and investment reached a
record $65.3 billion in 2009. While thecost of research in the U.S. was about
$34.2 billion between 1995 and 2010,
revenues rose faster (revenues rose by
$200.4 billion in that time). A study by
the consulting firm Bain &
Company reported that the cost for
discovering, developing and launching
(which factored in marketing and other business expenses) a new drug(along with the prospective drugs that fail) rose over a five-year period to
nearly $1.7 billion in 2003. These estimates also take into account
the opportunity cost of investing capital many years before revenues are
realized (see Time-value of money). Because of the very long time needed
for discovery, development, and
approval of pharmaceuticals, these
costs can accumulate to nearly half the
total expense. Some approved drugs,
such as those based on re-formulationof an existing active ingredient (also
referred to as Line-extensions) are
much less expensive to develop.
Calculations and claims in this area are
controversial because of the implications for regulation and subsidization of
the industry through tax credits and federally funded research grants.
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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PRODUCT APPROVAL
In the United States, new pharmaceutical products must be approved by
the Food and Drug Administration (FDA) as being both safe and effective.
This process generally involves submission of an Investigational new
drug filing with sufficient pre-clinical data to support proceeding with human
trials. Following IND approval, three phases of progressively larger human
clinical trials may be conducted. Phase I generally studies toxicity using
healthy volunteers. Phase II can include Pharmacokinetics and Dosing in
patients, and Phase III is a very large study of efficacy in the intended
patient population. Following the successful completion of phase III testing,
a New Drug Application is submitted to the FDA. The FDA review the data
and if the product is seen as having a positive benefit-risk assessment,
approval to market the product in the US is granted.A fourth phase of post-approval surveillance is also often required due to
the fact that even the largest clinical trials cannot effectively predict the
prevalence of rare side-effects. Post-marketing surveillance ensures that
after marketing the safety of a drug is monitored closely. In certain
instances, its indication may need to be limited to particular patient groups,
and in others the substance is withdrawn from the market completely.
Questions continue to be raised regarding the standard of both the initial
approval process, and subsequent changes to product labeling (it may takemany months for a change identified in post-approval surveillance to be
reflected in product labeling) and this is an area where congress is active.
The FDA provides information about approved drugs at the Orange Book
site. In many non-US western countries a 'fourth hurdle' ofcost
effectiveness analysis has developed before new technologies can be
provided. This focuses on the efficiency (in terms of the cost perQALY) of
the technologies in question rather than their efficacy. In
England NICE approval requires technologies be made available by theNHS, whilst similar arrangements exist with the Scottish Medicines
Consortium in Scotland and the Pharmaceutical Benefits Advisory
Committee in Australia. A product must pass the threshold for cost-
effectiveness if it is to be approved. Treatments must represent 'value for
money' and a net benefit to society. There is much speculation that a NICE
style framework may be implemented in the USA in an attempt to decrease
http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Food_and_Drug_Administration_(United_States)http://en.wikipedia.org/wiki/Investigational_New_Drughttp://en.wikipedia.org/wiki/Investigational_New_Drughttp://en.wikipedia.org/wiki/Toxicityhttp://en.wikipedia.org/wiki/Pharmacokineticshttp://en.wikipedia.org/wiki/Dosinghttp://en.wikipedia.org/wiki/New_Drug_Applicationhttp://en.wikipedia.org/wiki/Cost_effectivenesshttp://en.wikipedia.org/wiki/Cost_effectivenesshttp://en.wikipedia.org/wiki/QALYhttp://en.wikipedia.org/wiki/NICEhttp://en.wikipedia.org/wiki/Scottish_Medicines_Consortiumhttp://en.wikipedia.org/wiki/Scottish_Medicines_Consortiumhttp://en.wikipedia.org/wiki/Pharmaceutical_Benefits_Advisory_Committeehttp://en.wikipedia.org/wiki/Pharmaceutical_Benefits_Advisory_Committeehttp://en.wikipedia.org/wiki/Pharmaceutical_Benefits_Advisory_Committeehttp://en.wikipedia.org/wiki/Pharmaceutical_Benefits_Advisory_Committeehttp://en.wikipedia.org/wiki/Scottish_Medicines_Consortiumhttp://en.wikipedia.org/wiki/Scottish_Medicines_Consortiumhttp://en.wikipedia.org/wiki/NICEhttp://en.wikipedia.org/wiki/QALYhttp://en.wikipedia.org/wiki/Cost_effectivenesshttp://en.wikipedia.org/wiki/Cost_effectivenesshttp://en.wikipedia.org/wiki/New_Drug_Applicationhttp://en.wikipedia.org/wiki/Dosinghttp://en.wikipedia.org/wiki/Pharmacokineticshttp://en.wikipedia.org/wiki/Toxicityhttp://en.wikipedia.org/wiki/Investigational_New_Drughttp://en.wikipedia.org/wiki/Investigational_New_Drughttp://en.wikipedia.org/wiki/Food_and_Drug_Administration_(United_States)http://en.wikipedia.org/wiki/United_States7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 12
CONTROVERSIES
Due to repeated accusations and findings
that some clinical trials conducted or
funded by pharmaceutical companies may
report only positive results for the preferred
medication, the industry has been looked at
much more closely by independent groups
and government agencies. In response to
specific cases in which unfavorable data
from pharmaceutical company-sponsored
research was not published, the Pharmaceutical Research and
Manufacturers of America have published new guidelines urging
companies to report all findings and limit the financial involvement in drugcompanies of researchers. US congress signed into law a bill which
requires phase II and phase III clinical trials to be registered by the sponsor
on the clinical trials.gov website run by the NIH. Drug researchers not
directly employed by pharmaceutical companies often look to companies
for grants, and companies often look to
researchers for studies that will make their
products look favorable. Sponsored
researchers are rewarded by drugcompanies, for example with support for
their conference/symposium costs. Lecture
scripts and even journal articles presented
by academic researchers may actually be
'ghost-written' by pharmaceutical
companies. Some researchers who have tried to reveal ethical issues with
clinical trials or who tried to publish papers that show harmful effects of new
drugs or cheaper alternatives have been threatened by drug companieswith lawsuits. Since 2008, pharmaceutical companies have been
increasing the cost of name-brand prescriptions to offset declining
revenues as out-of-patent drugs become available as generics.Simultaneously, pharmaceutical manufacturers are taking increasing
advantage oftax havens to avoid taxation.
http://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_Americahttp://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_Americahttp://en.wikipedia.org/wiki/Tax_havenhttp://en.wikipedia.org/wiki/Tax_havenhttp://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_Americahttp://en.wikipedia.org/wiki/Pharmaceutical_Research_and_Manufacturers_of_America7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 13
LEGAL ISSUES
Where pharmaceutics have
been shown to cause side-
effects, civil action has occurred,
especially in countries
where tort payouts are likely to
be large. The top 20
pharmaceutical cases account
for over $16 billion in recoveries.
Due to high-profile cases
leading to large compensations,
most pharmaceutical companies
endorse tort reform. Recent controversies haveinvolved Vioxx and SSRI antidepressants.
PHARMACEUTICAL FRAUD
Pharmaceutical fraud involves activities that result in false claims to
insurers or programs such as Medicare in the United States or equivalent
state programs for financial gain to a pharmaceutical company. There are
several different schemes used to defraud the health care system which
are particular to the pharmaceutical industry. These include: GoodManufacturing Practice (GMP)
Violations, Off Label Marketing,
Best Price Fraud, CME Fraud,
Medicaid Price Reporting, and
Manufactured Compound Drugs.
The Federal Bureau of
Investigation (FBI) estimates
that health care fraud costsAmerican taxpayers $60 billion a
year. Of this amount $2.5 billion
was recovered through False Claims Actcases in FY 2010. Examples of
fraud cases include the GlaxoSmithKline $3 billion settlement, Pfizer$2.3
billion settlement and Merk $650 million settlement. Damages from fraud
http://en.wikipedia.org/wiki/Civil_actionhttp://en.wikipedia.org/wiki/Torthttp://en.wikipedia.org/wiki/List_of_Largest_Pharmaceutical_Settlementshttp://en.wikipedia.org/wiki/List_of_Largest_Pharmaceutical_Settlementshttp://en.wikipedia.org/wiki/Tort_reformhttp://en.wikipedia.org/wiki/Vioxxhttp://en.wikipedia.org/wiki/SSRIhttp://en.wikipedia.org/wiki/Pharmaceutical_fraudhttp://en.wikipedia.org/wiki/Medicare_(United_States)http://en.wikipedia.org/wiki/Health_care_systemhttp://en.wikipedia.org/wiki/Federal_Bureau_of_Investigationhttp://en.wikipedia.org/wiki/Federal_Bureau_of_Investigationhttp://en.wikipedia.org/wiki/Health_care_fraudhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Merkhttp://en.wikipedia.org/wiki/Merkhttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/Health_care_fraudhttp://en.wikipedia.org/wiki/Federal_Bureau_of_Investigationhttp://en.wikipedia.org/wiki/Federal_Bureau_of_Investigationhttp://en.wikipedia.org/wiki/Health_care_systemhttp://en.wikipedia.org/wiki/Medicare_(United_States)http://en.wikipedia.org/wiki/Pharmaceutical_fraudhttp://en.wikipedia.org/wiki/SSRIhttp://en.wikipedia.org/wiki/Vioxxhttp://en.wikipedia.org/wiki/Tort_reformhttp://en.wikipedia.org/wiki/List_of_Largest_Pharmaceutical_Settlementshttp://en.wikipedia.org/wiki/List_of_Largest_Pharmaceutical_Settlementshttp://en.wikipedia.org/wiki/Torthttp://en.wikipedia.org/wiki/Civil_action7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
KISHINCHAND CHELLARAM COLLEGE 14
can be recovered by use of the False Claims Act, most commonly under
thequi tamprovisions which rewards an individual for being a
"whistleblower", orrelator (law).
Antipsychotic drugs are now the top-selling class of pharmaceuticals in
America, generating annual revenue of about $14.6 billion. Every major
company selling the drugs Bristol-Myers Squibb, Eli Lilly,
Pfizer, AstraZeneca and Johnson & Johnson has either settled recent
government cases, under the False Claims Act, for hundreds of millions of
dollars or is currently under investigation for possible health care fraud.
Following charges of illegal marketing, two of the settlements set records
last year for the largest criminal fines ever imposed on corporations. One
involved Eli Lillys antipsychotic Zyprexa, and the other involved Bextra. In
the Bextra case, the government also charged Pfizer with illegallymarketing another antipsychotic, Geodon; Pfizer settled that part of the
claim for $301 million, without admitting any wrongdoing. On 2 July
2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a
$3 billion settlement of the largest health-care fraud case in the U.S. and
the largest payment by a drug company. The settlement is related to the
company's illegal promotion of prescription drugs, its failure to report safety
data, bribing doctors, and promoting medicines for uses for which they
were not licensed.
The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for
off-label, non-covered uses.Those and the drugs Imitrex, Lotronex, Flovent,
and Valtrex were involved in the kickback scheme.The following is a list of
the four largest settlements reached with pharmaceutical companies from
1991 to 2012, rank ordered by the size of the total settlement.
The following is a list of the four largest
settlements reached with pharmaceutical
companies from 1991 to 2012, rank orderedby the size of the total settlement. Legal
claims against the pharmaceutical industry
have varied widely over the past two
decades, including Medicare and Medicaid
fraud, off-label promotion, and inadequate
manufacturing practices.
http://en.wikipedia.org/wiki/False_Claims_Acthttp://en.wikipedia.org/wiki/Qui_tamhttp://en.wikipedia.org/wiki/Qui_tamhttp://en.wikipedia.org/wiki/Qui_tamhttp://en.wikipedia.org/wiki/Whistleblowerhttp://en.wikipedia.org/wiki/Relator_(law)http://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Eli_Lillyhttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/Zyprexahttp://en.wikipedia.org/wiki/Bextrahttp://en.wikipedia.org/wiki/Geodonhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/Bribinghttp://en.wikipedia.org/wiki/Paxilhttp://en.wikipedia.org/wiki/Wellbutrinhttp://en.wikipedia.org/wiki/Advairhttp://en.wikipedia.org/wiki/Lamictalhttp://en.wikipedia.org/wiki/Zofranhttp://en.wikipedia.org/wiki/Imitrexhttp://en.wikipedia.org/wiki/Lotronexhttp://en.wikipedia.org/wiki/Floventhttp://en.wikipedia.org/wiki/Valtrexhttp://en.wikipedia.org/wiki/Kickbackhttp://en.wikipedia.org/wiki/Medicare_fraudhttp://en.wikipedia.org/wiki/Medicare_fraudhttp://en.wikipedia.org/wiki/Off-label_usehttp://en.wikipedia.org/wiki/Off-label_usehttp://en.wikipedia.org/wiki/Medicare_fraudhttp://en.wikipedia.org/wiki/Medicare_fraudhttp://en.wikipedia.org/wiki/Kickbackhttp://en.wikipedia.org/wiki/Valtrexhttp://en.wikipedia.org/wiki/Floventhttp://en.wikipedia.org/wiki/Lotronexhttp://en.wikipedia.org/wiki/Imitrexhttp://en.wikipedia.org/wiki/Zofranhttp://en.wikipedia.org/wiki/Lamictalhttp://en.wikipedia.org/wiki/Advairhttp://en.wikipedia.org/wiki/Wellbutrinhttp://en.wikipedia.org/wiki/Paxilhttp://en.wikipedia.org/wiki/Bribinghttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/Geodonhttp://en.wikipedia.org/wiki/Bextrahttp://en.wikipedia.org/wiki/Zyprexahttp://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Eli_Lillyhttp://en.wikipedia.org/wiki/Bristol-Myers_Squibbhttp://en.wikipedia.org/wiki/Relator_(law)http://en.wikipedia.org/wiki/Whistleblowerhttp://en.wikipedia.org/wiki/Qui_tamhttp://en.wikipedia.org/wiki/False_Claims_Act7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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IMPORTANCE OF PHAMACEUTICALSPharmaceuticals are important in all aspects of health care and have beenshown to be the most cost-effective means of treating some diseases whencompared with surgical procedures. In the United States, emergence ofhealth maintenance organizations (HMOs), coupled with rising privatemedical care costs and Government management of Medicare andMedicaid health programs, hascontributed to a trend toward findingthe most cost-effective way of treatingillnesses. As a result of these trends,consumption of both ethical8 and over-the- counter (OTC) pharmaceuticalsincreased during 1993-97. Increases inWestern European and Japanese
consumption of pharmaceuticals alsooccurred during the period covered.
CompanySettlem
entViolation(s) Year Product(s)
Laws
allegedly
violated (if
applicable)
GlaxoSmithKline$3
billion
Off-label
promotion/failure
to disclose
safety data
2012Avandia/Wellbu
trin/Paxil
False Claims
Act/FDCA
Pfizer$2.3
billion
Off-label
promotion/kickba
cks
2009Bextra/Geodon/
Zyvox/Lyrica
False Claims
Act/FDCA
Abbott
Laboratories
$1.5
billion
Off-label
promotion2012 Depakote
False Claims
Act/FDCA
Eli Lilly$1.4
billion
Off-label
promotion2009 Zyprexa
False Claims
Act/FDCA
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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INDUSTRY REVENUES
For the first time ever, in 2006, globalspending on prescription drugs topped $643billion, even as growth slowed somewhat in
Europe and North America. The UnitedStates accounts for almost half of the globalpharmaceutical market, with $289 billion inannual sales followed by the EU andJapan. Emerging markets such as China,Russia, South Korea and Mexico outpacedthat market, growing a huge 81 percent.
US profit growth was maintained even whilstother top industries saw little or no growth. Despite this, "the
pharmaceutical industry is and has been for years the most profitableof all businesses in the U.S. In the annual Fortune 500 survey, thepharmaceutical industry topped the list of the most profitable industries,with a return of 17% on revenue." Pfizer's cholesterol pill Lipitorremains abest-selling drug worldwide. Its annual sales were $12.9 billion, more thantwice as much as its closest competitors: Plavix, the blood thinner fromBristol-Myers Squibb and Sanofi-Aventis; Nexium, the heartburn pill from
AstraZeneca; and Advair, the asthma inhaler from GlaxoSmithKline. IMSHealth publishes an analysis of trends expected in the pharmaceuticalindustry in 2007, including increasing profits in most sectors despite loss ofsome patents, and new 'blockbuster' drugs on the horizon.
Teradata Magazine predicted that by 2007, $40 billion in U.S. sales couldbe lost at the top 10 pharmaceutical companies as a result of slowdown inR&D innovation and the expiry of patents on major products, with 19blockbuster drugs losing patent.
MARKET LEADERS IN TERMS OF HEALTHCARE REVENUE
The following is a list of the 20largest pharmaceutical and biotech companies ranked by healthcarerevenue. Some companies (e.g., Bayer, Johnson and Johnson and Procter& Gamble) have additional revenue not included here. The phrase BigPharma is often used to refer to companies with revenue in excess of $3billion, and/orR&D expenditure in excess of $500 million.
http://en.wikipedia.org/wiki/Atorvastatinhttp://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_saleshttp://en.wikipedia.org/wiki/Clopidogrelhttp://en.wikipedia.org/wiki/Esomeprazolehttp://en.wikipedia.org/wiki/Fluticasone/salmeterolhttp://en.wikipedia.org/wiki/IMS_Healthhttp://en.wikipedia.org/wiki/IMS_Healthhttp://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/Biotechhttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/Johnson_and_Johnsonhttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/R%26Dhttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Procter_%26_Gamblehttp://en.wikipedia.org/wiki/Johnson_and_Johnsonhttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/Biotechhttp://en.wikipedia.org/wiki/Pharmaceuticalhttp://en.wikipedia.org/wiki/IMS_Healthhttp://en.wikipedia.org/wiki/IMS_Healthhttp://en.wikipedia.org/wiki/Fluticasone/salmeterolhttp://en.wikipedia.org/wiki/Esomeprazolehttp://en.wikipedia.org/wiki/Clopidogrelhttp://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_saleshttp://en.wikipedia.org/wiki/Atorvastatin7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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RevenueRank2008
Company Country TotalRevenues
HealthcareR&D 2006
Net income/(loss) 2006
Employees2006
(USD (USD (USD
millions) millions) millions)
1 Pfizer USA 33,547 7,599 19,337 122,200
2 Novartis Switzerland 26,475 7,125 11,053 138,000
3 Merck & Co. USA 22,476 4,783 4,434 74,372
4 Bayer Germany 17,914 1,791 6,450 106,200
5 GlaxoSmithKline UnitedKingdom
15,691 6,373 10,135 106,000
6 Johnson andJohnson
USA 14,268 5,349 7,202 102,695
7 Sanofi France 13,284 5,565 5,033 100,735
8 HoffmannLaRoche
Switzerland 33,547 5,258 19,337 122,200
9 AstraZeneca UnitedKingdom
26,475 3,902 11,053 138,000
10 AbbottLaboratories
USA 22,476 2,255 1,717 66,800
11 Bristol-MyersSquibb
USA 17,914 3,067 1,585 60,000
12 Eli Lilly andCompany
USA 15,691 3,129 2,663 50,060
13 Amgen USA 14,268 3,366 2,950 48,00014 Boehringer
IngelheimGermany 13,284 1,977 2,163 43,000
15 Schering-Plough USA 10,594 2,188 1,057 41,500
16 BaxterInternational
USA 10,378 614 1,397 38,428
17 TakedaPharmaceuticalCo.
Japan 10,284 1,620 2,870 15,000
18 Genentech USA 9,284 1,773 2,113 33,500
19 Procter & Gamble USA 8,964 n/a 10,340 29,258
SUM 497,519 70,843 110,077 1,342,700
AVERAGE 22,476 2,255 1,717 66,800
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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MARKET LEADERS IN TERMS OF SALES
The top 15 pharmaceutical companies by 2008 sales are:
Rank Company Sales($M)
Based/Headquartered in
1 Pfizer 43,363 United States
2 GlaxoSmithKline 36,506 United Kingdom
3 Novartis 36,506 Switzerland
4 Sanofi-Aventis 35,642 France
5 AstraZeneca 32,516 United Kingdom
6 HoffmannLa Roche 30,336 Switzerland
7 Johnson & Johnson 29,425 United States
8 Merck & Co. 26,191 United States
9 Abbott 19,466 United States
10 Eli Lilly and Company 19,140 United States
11 Amgen 15,794 United States
12 Wyeth 15,682 United States
13 Bayer 15,660 Germany
14 Teva 15,274 Israel
15 Takeda 13,819 Japan
MERGERS, ACQUISITIONS, AND CO-MARKETING OF DRUGS
A merger, acquisition, orco-marketing deal between pharmaceutical
companies may occur as a result of complementary capabilities between
them. A small biotechnology company might have a new drug but no sales
or marketing capability. Conversely, a large pharmaceutical company might
have unused capacity in a large sales force due to a gap in the company
pipeline of new products. It may be in both companies' interest to enter into
a deal to capitalize on the synergy between the companies.
http://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_saleshttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Novartishttp://en.wikipedia.org/wiki/Novartishttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Sanofi-Aventishttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Abbott_Laboratorieshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Eli_Lilly_and_Companyhttp://en.wikipedia.org/wiki/Eli_Lilly_and_Companyhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Amgenhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Teva_Pharmaceutical_Industrieshttp://en.wikipedia.org/wiki/Israelhttp://en.wikipedia.org/wiki/Takeda_Pharmaceutical_Companyhttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Co-marketinghttp://en.wikipedia.org/wiki/Biotechnologyhttp://en.wikipedia.org/wiki/Biotechnologyhttp://en.wikipedia.org/wiki/Co-marketinghttp://en.wikipedia.org/wiki/Mergers_and_acquisitionshttp://en.wikipedia.org/wiki/Japanhttp://en.wikipedia.org/wiki/Takeda_Pharmaceutical_Companyhttp://en.wikipedia.org/wiki/Israelhttp://en.wikipedia.org/wiki/Teva_Pharmaceutical_Industrieshttp://en.wikipedia.org/wiki/Germanyhttp://en.wikipedia.org/wiki/Bayerhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Wyethhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Amgenhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Eli_Lilly_and_Companyhttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Abbott_Laboratorieshttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Johnson_%26_Johnsonhttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Hoffmann%E2%80%93La_Rochehttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/AstraZenecahttp://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Sanofi-Aventishttp://en.wikipedia.org/wiki/Switzerlandhttp://en.wikipedia.org/wiki/Novartishttp://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/GlaxoSmithKlinehttp://en.wikipedia.org/wiki/United_Stateshttp://en.wikipedia.org/wiki/Pfizerhttp://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_sales7/29/2019 phrma industry...
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PHARMACEUTICAL SECTOR: INDUSTRY ANALYSIS
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PRESCRIPTIONS
In the U.S., prescriptions have increased over the
past decade to 3.4 billion annually, a 61 percent
increase. Retail sales of prescription drugsjumped
250 percent from $72 billion to $250 billion, whilethe average price of prescriptions has more than
doubled from $30 to $68.
PATENTS AND GENERICS
Patents have been criticized in the developing world, as they are thought toreduce access to existing medicines.[74]However, without the financialincentive of patents, future innovation of medicines is discouraged.
Reconciling patents and universal access to medicine would require anefficient international policy ofprice discrimination. Moreover, underthe TRIPS agreement of the World Trade Organization, countries mustallow pharmaceutical products to be patented. In 2001, the WTO adoptedthe Doha Declaration, which indicates that the TRIPS agreement should beread with the goals of public health in mind, and allows some methods forcircumventing pharmaceutical monopolies: via compulsorylicensing orparallel imports, even before patent expiration. In March 2001,40 multi-national pharmaceutical companies brought litigationagainst South Africa for its Medicines Act, which allowed the genericproduction of antiretroviral drugs (ARVs) for treating HIV, despite the factthat these drugs were on-patent. HIV was and is an epidemic in South
Africa, and ARVs at the time cost between 10,000 and 15,000 USD perpatient per year. This was unaffordable for most South African citizens, andso the South African government committed to providing ARVs at pricescloser to what people could afford. To do so, they would need to ignore thepatents on drugs and produce generics within the country (using acompulsory license), or import them from abroad. The Indianpharmaceutical company Cipla audaciously offered to make the drugs at
350 USD per patient per year, roughly 1/40th of the lowest price availablefrom a patent holder, which stunned the world community. After massiveinternational protest in favor of public health rights (including the collectionof 250,000 signatures by MSF), the governments of several developedcountries (including The Netherlands, Germany, France, and later the US)backed the South African government, and the case was dropped in Aprilof that year.
http://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_saleshttp://en.wikipedia.org/wiki/Pharmaceutical_industry#cite_note-74http://en.wikipedia.org/wiki/Pharmaceutical_industry#cite_note-74http://en.wikipedia.org/wiki/Pharmaceutical_industry#cite_note-74http://en.wikipedia.org/wiki/Price_discrimination#International_price_discriminationhttp://en.wikipedia.org/wiki/TRIPShttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/Doha_Declarationhttp://en.wikipedia.org/wiki/Compulsory_licensinghttp://en.wikipedia.org/wiki/Compulsory_licensinghttp://en.wikipedia.org/wiki/Parallel_importshttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Medicines_Acthttp://en.wikipedia.org/wiki/Ciplahttp://en.wikipedia.org/wiki/MSFhttp://en.wikipedia.org/wiki/MSFhttp://en.wikipedia.org/wiki/Ciplahttp://en.wikipedia.org/wiki/Medicines_Acthttp://en.wikipedia.org/wiki/South_Africahttp://en.wikipedia.org/wiki/Parallel_importshttp://en.wikipedia.org/wiki/Compulsory_licensinghttp://en.wikipedia.org/wiki/Compulsory_licensinghttp://en.wikipedia.org/wiki/Doha_Declarationhttp://en.wikipedia.org/wiki/World_Trade_Organizationhttp://en.wikipedia.org/wiki/TRIPShttp://en.wikipedia.org/wiki/Price_discrimination#International_price_discriminationhttp://en.wikipedia.org/wiki/Pharmaceutical_industry#cite_note-74http://en.wikipedia.org/wiki/Annual_pharmaceutical_drug_sales7/29/2019 phrma industry...
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PUBLICATIONS
The drug company Merck & Co. publishes the Merck Manual of Diagnosisand Therapy, the world's best-selling medical textbook, and the MerckIndex, a collection of information about chemical compounds.
MARKETING
Pharmaceutical companies commonly spend a large amount onadvertising, marketing and lobbying. In the US, drug companies spend $19billion a year on promotions. Advertising is common in healthcare journalsas well as through more mainstream media routes. In some countries,notably the US, they are allowed to advertise directly to the general public.Pharmaceutical companies generally employ sales people (often called
'drug reps' or, an older term, 'detail men') to market directly and personallyto physicians and other healthcare providers. In some countries, notablythe US, pharmaceutical companies also employ lobbyists to influencepoliticians. Marketing of prescription drugs in the US is regulated by thefederal Prescription Drug Marketing Act of 1987.
TO HEALTHCARE PROFESSIONALS
Currently, there are approximately 81,000 pharmaceutical sales
representatives in the United States pursuing some 830,000pharmaceutical prescribers. A pharmaceutical representative will often tryto see a given physician every few weeks. Representatives often have acall list of about 200-300 physicians with 120-180 targets that should bevisited in 1-2 or 3 week cycle. The number of pharmaceutical sales repshas been shrinking between 2008 and 2010, an estimated 30% industrywide reduction has occurred and current estimates are there May only be60,000 pharmaceutical sales reps in the United States.
TO INSURANCE AND PUBLIC HEALTH BODIESPrivate insurance or public health bodies (e.g. the NHS in the UK) decidewhich drugs to pay for, and restrict the drugs that can be prescribedthrough the use of formularies. Public and private insurers restrict thebrands, types and number of drugs that they will cover. Not only can theinsurer affect drug sales by including or excluding a particular drug from a
http://en.wikipedia.org/wiki/Merck_%26_Co.http://en.wikipedia.org/wiki/Merck_Manual_of_Diagnosis_and_Therapyhttp://en.wikipedia.org/wiki/Merck_Manual_of_Diagnosis_and_Therapyhttp://en.wikipedia.org/wiki/Merck_Indexhttp://en.wikipedia.org/wiki/Merck_Indexhttp://en.wikipedia.org/wiki/Lobbyistshttp://en.wikipedia.org/wiki/Prescription_Drug_Marketing_Act_(PDMA)http://en.wikipedia.org/wiki/Pharmaceutical_sales_representativehttp://en.wikipedia.org/wiki/Pharmaceutical_sales_representativehttp://en.wikipedia.org/wiki/Pharmaceutical_sales_representativehttp://en.wikipedia.org/wiki/Pharmaceutical_sales_representativehttp://en.wikipedia.org/wiki/Prescription_Drug_Marketing_Act_(PDMA)http://en.wikipedia.org/wiki/Lobbyistshttp://en.wikipedia.org/wiki/Merck_Indexhttp://en.wikipedia.org/wiki/Merck_Indexhttp://en.wikipedia.org/wiki/Merck_Manual_of_Diagnosis_and_Therapyhttp://en.wikipedia.org/wiki/Merck_Manual_of_Diagnosis_and_Therapyhttp://en.wikipedia.org/wiki/Merck_%26_Co.7/29/2019 phrma industry...
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formulary, they can affect sales by tiering or placing bureaucratic hurdles toprescribing certain drugs as well. In January 2006, the U.S. instituted a newpublic prescription drug plan through its Medicare program knownas Medicare Part D. This program engages private insurers to negotiatewith pharmaceutical companies for the placement of drugs on tieredformularies.
TO RETAIL PHARMACIES AND STORES
Commercial stores and pharmacies are a major target of non-prescriptionsales and marketing for pharmaceutical companies.
DIRECT TO CONSUMER ADVERTISING
Since the 1980s new methods of marketing for prescription drugs toconsumers have become important. Direct-to-consumer media advertisingwas legalized in the FDA Guidance for Industry on Consumer-DirectedBroadcast Advertisements. Internationally, many pharmaceuticalcompanies market directly to the consumer rather than going through aconventional retail sales channel.
CONTROVERSY ABOUT DRUG MARKETING AND LOBBYING
There has been increasing controversy surrounding pharmaceuticalmarketing and influence. There have been accusations and findings ofinfluence on doctors and other health professionals through drug reps,including the constant provision of marketing 'gifts' and biased informationto health professionals; highly prevalent advertising in journals andconferences; funding independent healthcare organizations and healthpromotion campaigns; lobbying physicians and politicians (more than anyother industry in the US); sponsorship ofmedical schools or nurse training;sponsorship of continuing educational events, with influence on thecurriculum; and hiring physicians as paid consultants on medical advisoryboards.
To help ensure the status quo on U.S. drug regulation and pricing, thepharmaceutical industry has thousands of lobbyists in Washington, DC thatlobby Congress and protect their interests. The pharmaceutical industryspent $855 million, more than any other industry, on lobbying activities from1998 to 2006, according to the non-partisan Center for Public Integrity.
http://en.wikipedia.org/wiki/Medicare_Part_Dhttp://en.wikipedia.org/wiki/Medical_schoolhttp://en.wikipedia.org/wiki/Medical_schoolhttp://en.wikipedia.org/wiki/Medicare_Part_D7/29/2019 phrma industry...
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Some advocacy groups, such as No Free Lunch, have criticized the effectof drug marketing to physicians because they say it biases physicians toprescribe the marketed drugs even when others might be cheaper or betterfor the patient. There have been related accusations ofdiseasemongering (over-medicalising) to expand the market for medications. Aninaugural conference on that subject took place in Australia in 2006. In2009, the Government-funded National Prescribing Service launchedthe "Finding Evidence - Recognising Hype" program, aimed at educatingGPs on methods for independent drug analysis.It has been argued that thedesign of the Diagnostic and Statistical Manual of Mental Disorders and theexpansion of the criteria represent an increasing medicalization of humannature, or "disease mongering", driven by drug company influence onpsychiatry. The potential for direct conflict of interest has been raised,partly because roughly half the authors who selected and defined the DSM-
IV psychiatric disorders had or previously had financial relationships withthe pharmaceutical industry. The president of the organization that designsand publishes the DSM, the American Psychiatric Association, recentlyacknowledged that in general American psychiatry has "allowed thebiopsychosocial model to become the bio-bio-bio model"
DEVELOPING WORLD
The role of pharmaceutical companies in
the developing world is a matter of somedebate, ranging from those highlighting theaid provided to the developing world, tothose critical of the use of the poorest inhuman clinical trials, often withoutadequate protections, particularlyin states lacking a strong rule of law. Othercriticisms include an alleged reluctance ofthe industry to invest in treatments ofdiseases in less economically advancedcountries, such as malaria; Criticism forthe price ofpatented AIDS medication,which could limit therapeutic options for patients in the Third World, wheremost of the AIDS infected people are living. However, a better policyofprice discrimination would benefit to both patients and companies.
http://en.wikipedia.org/wiki/No_Free_Lunch_(organization)http://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/National_Prescribing_Servicehttp://www.nps.org.au/health_professionals/ferhhttp://en.wikipedia.org/wiki/Diagnostic_and_Statistical_Manual_of_Mental_Disordershttp://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/Conflict_of_interesthttp://en.wikipedia.org/wiki/American_Psychiatric_Associationhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/Rule_of_lawhttp://en.wikipedia.org/wiki/Malariahttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/AIDShttp://en.wikipedia.org/wiki/Third_Worldhttp://en.wikipedia.org/wiki/Price_discriminationhttp://en.wikipedia.org/wiki/Price_discriminationhttp://en.wikipedia.org/wiki/Third_Worldhttp://en.wikipedia.org/wiki/AIDShttp://en.wikipedia.org/wiki/Patenthttp://en.wikipedia.org/wiki/Malariahttp://en.wikipedia.org/wiki/Rule_of_lawhttp://en.wikipedia.org/wiki/State_(polity)http://en.wikipedia.org/wiki/American_Psychiatric_Associationhttp://en.wikipedia.org/wiki/Conflict_of_interesthttp://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/Diagnostic_and_Statistical_Manual_of_Mental_Disordershttp://www.nps.org.au/health_professionals/ferhhttp://en.wikipedia.org/wiki/National_Prescribing_Servicehttp://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/Disease_mongeringhttp://en.wikipedia.org/wiki/No_Free_Lunch_(organization)7/29/2019 phrma industry...
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SWOT ANALYSIS:
Strengths:
1. Cost Competitiveness
2. Developed Industries with Strong Manufacturing Base3. Well Established R&D infrastructure
4. Access to pool of highly trained scientists,
Weaknesses:
1. Low investments in innovative R&D.
2. Lack of resources to compete with MNCs for New Drug Discovery &Research
3. Lack of strong linkages between industry andacademia.
4. Low medical and healthcare expenditure inthe country
Opportunities:
1. Significant export potential.
2. Marketing alliances for MNC products indomestic market and international market.
3. Contract manufacturing arrangements withMNCs
4. Potential for developing India as a centre for international clinical trials.
Threats:
1. Product patent regime poses serious challenge to domestic industryunless it invests in research and development
2. R&D efforts of Indian pharmaceutical companies hampered by lack of
enabling regulatory requirement.
3. Drug Price Control Order puts unrealistic ceilings on product prices andprofitability
4. Export effort hampered by procedural hurdles in India as well as non-tariff barriers imposed abroad.
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Power of Suppliers
Volume benefits occur
Inputs standard, available locally
Numerous suppliers-switching cost low
Suppliers can go for forward integration
Raw material cost constitute more than50% of
the total expenses
Barriers to Entry
Very low barriers to entryGovernment policies supportive
For entry price regulation exists
Economies of scale exist
Proprietory technology and
Product will exist after 2005
Industry Competition
Highly competitive.Top five players have
mere
18% market share
Lower fixed cost andhigh working capital
Threats of Substitutes
No substitutes for themedicines
Biotechnology is a threat
synthetic pharma product
Power of Buyers
End consumers do not have bargaining power
Brand identity exists but is in the hands
Of Influencer (Doctors)
Price Sensitivity is less
Highly fragmented market, so buyer
Concentration v/s industry is low
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OVERVIEW OF PHARMACUETICAL INDUSTRY IN INDIA
The Indian pharmaceutical industry currently tops the chart amongst India's
science-based industries with wide ranging capabilities in the complex field
of drug manufacture and technology. A highly organized sector, the Indianpharmaceutical industry is estimated to be worth $ 4.5 billion, growing at
about 8 to 9 percent annually. It ranks very
high amongst all the third world countries, in
terms of technology, quality and the vast
range of medicines that are manufactured.
It ranges from simple headache pills
to sophisticated antibiotics and complex
cardiac compounds; almost every type of
medicine is now made in the Indian
pharmaceutical industry. The Indian
pharmaceutical sector is highly
fragmented with more than 20,000
registered units. It has expanded
drastically in the last two decades. The
Pharmaceutical and Chemical industry in
India is an extremely fragmented market with severe price competition and
government price control. The Pharmaceutical industry in India meetsaround 70% of the country's demand for bulk drugs, drug intermediates,
pharmaceutical formulations, chemicals, tablets, capsules, orals and
injectibles. There are approximately 250 large units and about 8000 Small
Scale Units, which form the core of the pharmaceutical industry in India
(including 5 Central Public Sector Units).The Government has also played
a vital role in the development of the India Software Industry. In 1986, the
Indian government announced a new software policy which was designed
to serve as a catalyst for the software industry. This was followed in 1988with the World Market Policy and the establishment of the Software
Technology Parks of India (STP) scheme. In addition, to attract foreign
direct investment, the Indian Government permitted foreign equity of up to
100 percent and duty free import on all inputs and products.
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CURRENT SCENARIO
India's pharmaceutical industry is now the third largest in the world in terms
of volume and stands 14th in terms of value. According to data published
by the Department of Pharmaceuticals, Ministry of Chemicals andFertilizers, the total turnover of India's pharmaceuticals industry between
September 2008 and September 2009 was US$ 21.04 billion. Of this the
domestic market was worth US$ 12.26 billion. The Indian pharmaceuticals
market is expected to reach US$ 55 billion in 2020 from US$ 12.6 billion in
2009. The market has the further potential to reach US$ 70 billion by 2020
in an aggressive growth scenario. Moreover, the increasing population of
the higher-income group in the country, will open a potential US$ 8 billion
market for multinational companies selling costly drugs by 2015. Besides,
the domestic pharma market is estimated to touch US$ 20 billion by 2015,
making India a lucrative destination for clinical trials for global giants.
Further estimates the healthcare market in India to reach US$ 31.59 billion
by 2020.
Diagnostics Outsourcing/Clinical Trials
The Indian diagnostic services are projected to grow at a CAGR of more
than 20 per cent during 2010-2012. Some of the major Indian
pharmaceutical firms, including Sun Pharma, Cadilla Healthcare andPiramal Life Sciences, had applied for conducting clinical trials on at least
12 new drugs in 2010, indicating a growing interest in new drug discovery
research.
Generics
India tops the world in exporting generic medicines worth US$ 11 billion
and currently, the Indian pharmaceutical industry is one of the worlds
largest and most developed. Moreover, the Indian generic drug market togrow at a CAGR of around 17 per cent between 2010-11 and 2012-13.
Union Minister of Commerce and Industry and Minister for Trade and
Industry, Singapore, have signed a 'Special Scheme for Registration of
Generic Medicinal Products from India' in May 2010, which seeks to fast-
track the registration process for Indian generic medicines in Singapore.
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ADVANTAGE INDIA
The Indian Pharmaceutical Industry, particularly, has been the front runner
in a wide range of specialties involving complex drugs' manufacture,
development and technology. With the advantage of being a highlyorganized sector, the pharmaceutical companies in India are growing at the
rate of $ 4.5 billion, registering further growth of 8 - 9 % annually. More
than 20,000 registered units are fragmented across the country and reports
say that leading Indian pharmaceutical companies control 70% of the
market share with stark price competition and government price
regulations.
Competent workforce: India has a pool of personnel with high managerial
and technical competence as also skilled workforce. It has an educatedwork force and English is commonly used. Professional services are easily
available.
Cost-effective chemical synthesis: Its track record of development,
particularly in the area of improved cost-beneficial chemical synthesis for
various drug molecules is excellent. It provides a wide variety of bulk drugs
and exports sophisticated bulk drugs.
Legal & Financial Framework: India has a 53 year old democracy andhence has a solid legal framework and strong financial markets. There is
already an established international industry and business community.
Information & Technology: It has a good network of world-class
educational institutions and established strengths in Information
Technology.
Globalization: The country is committed to a free market economy and
globalization. Above all, it has a 70 million middle class market, which is
continuously growing.
Consolidation: For the first time in many years, the international
pharmaceutical industry is finding great opportunities in India. The process
of consolidation, which has become a generalized phenomenon in the
world pharmaceutical industry, has started taking place in India.
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RANBAXY
Ranbaxy is among the predominant pharmaceutical companies in India and
was founded in 1961. Ranbaxy is a research based pharma giant and
became a public limited company in 1973. Ranbaxy was recently ranked
among the top 10 international pharmaceutical companies in the world
have presence across 49 countries. Ranbaxy is also reputed for its 11
state-of-the-art manufacturing facilities in countries like China, India, Brazil,
South Africa, and Nigeria. The company has also won several awards and
recognitions for its pioneering initiatives in the developing markets of the
world. Ranbaxy is also a member of the Indian Pharmaceutical Alliance
and Organization of Pharmaceutical Producers of India. In the present
scenario Ranbaxy commands more than 5% share of the Indian
pharmaceutical market. Ranbaxys product portfolio is diverse and includes
drugs that cater to nutrition, infectious diseases, gastro-enteritis, pain
management, cardiovascular ailments, dermatology, and central nervous
system related ailments. Ranbaxys operations in India are designed under
as many as 9 SBUs which take care of the various categories of medicinesand drugs that are manufactured by Ranbaxy. The company is especially
well-known for having the highest research and development (R&D) budget
among pharma companies in the world which is as high as US$ 100
million. Ranbaxy India operations are handled by 2,500 employees and the
companys market share in India is worth around US$6 billion.
Company name Sales inUS$ million
Cipla 1,033.46
Ranbaxy Lab 951.03
Dr Reddy's Labs 866.44
Sun Pharma 805.51
LupinLtd 603.99
Aurobindo Pharma 582.27
Piramal Health 483.1
Cadila Health 354.02
Matrix Labs 310.06
Wockhardt 309.68
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DR. REDDY'S LABORATORIES
Dr. Reddy's Laboratorie is one of the popular
pharmaceutical companies with base in more
than 100 countries. The medicines of Dr. Reddy'sLaboratories Limited are easily available all
across the globe. Dr. Reddy's Pharmaceutical
Company is very much customer friendly. It takes
care of the fact that maximum people get benefited by the products of this
pharmaceutical company. It commercialized various treatments so as to
provide high tech treatment to the masses. It tries to meet the medical
needs of the people. Though Dr. Reddy's Laboratories is located in various
parts of the world, it has its headquarters in India. The subsidiaries of this
company are found at various countries like US, Germany, UK, Russia and
Brazil. 16 countries have the representative offices of Dr. Reddy's
Laboratories Limited. 21 countries have third party distribution.
CIPLA
Cipla was founded by Khwaja Abdul Hamied in 1935
and was known as The Chemical, Industrial and
Pharmaceutical Laboratories, though it is better known
by the acronym Cipla today. Cipla was registered in August, 1935 as apublic limited enterprise and it began with an authorized capital of Rs. 6
lakh. Though set up in 1935, it was only in 1937 that Cipla began
manufacturing and marketing its pharmaceutical products. Today, the
company has its facilities spread across several locations across India such
as Mumbai, Goa, Patalganga, Kurkumbh, Bangalore, and Vikhroli. Apart
from its strong presence in the Indian market, Cipla also has an extensive
export market and regularly exports to more than 150 countries in regions
such as North America, South American, Asia, Europe, Middle East,Australia, and Africa. For the year ended 31st March, 2007 Ciplas exports
were worth approximately Rs. 17,500 million. Cipla is also considerably
well-known for its technological innovation and processes for which the
company received know-how loyalties to the tune of Rs. 750 million during
2006-07.
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SUN PHARMACEUTICALS: Sun Pharmaceuticals
was set up in 1983 and the company started off with
only 5 products to cure psychiatric illness. Sun
Pharma is known worldwide as the manufacture of
specialty Active Pharmaceuticals Ingredients andformulations. However, the company is also
concerned with chronic treatments such as cardiology, psychiatry,
neurology, gastroenterology, diabetology, and respiratory ailments. Active
Pharmaceuticals Ingredients (API) include peptides, steroids, hormones,
and anti-cancer drugs and their quality is internationally approved. The
international offices of Sun Pharmaceuticals Industries Ltd. are located in
British Virgin Islands, Russia, and Bangladesh.
There are 3 major group companies of Sun Pharmaceuticals Industries are:
Caraco Pharmaceuticals Laboratories (based in Detroit, Michigan) Sun Pharmaceuticals Industries Inc. (Michigan) Sun Pharmaceuticals (Bangladesh)
Aurobindo Pharma
Aurobindo Pharma, an India-based private
pharmaceutical company having presence
around the world. Aurobindo Pharma was set
up in the year 1986 and started its operations
in 1988-89 in Pondicherry, India. Now, the
company is headquartered at Hyderabad, India. Further, and the
pharmaceutical major markets over 180 APIs and 250 formulations
throughout these destinations. This Indian pharmaceutical major has filed
over 110 DMFs and 90 ANDAs for the USA market. So far, Aurobindo has
received 45 ANDA approvals (both final and tentative) from USA alone.Aurobindo Pharma products cover segments like
Antibiotics, Anti-Retro Virals, Gastroenterologicals, Anti-Allergics, CVS,
CNS
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CHALLENGES
Over the past decade, pharmaceutical companies have
entered a difficult period where shareholders, the market
and regulators have created significant pressures forchange within the industry. The core issues for most of
drug companies are declining productivity of in-house R &
D, patent expiration of number of block buster drugs,
increasing legal and regulatory concern, and pricing issue. Current global
financial conditions and the threat of a broad recession accelerated the
timetable for implementing transformational changes in global
organizations, as the industry confronts lower corporate stock prices and
an increasingly cost-averse customer. Leaders of the largest global
pharmaceutical companies recognize the need for transformational change
in their organizations, but will need to move swiftly to ensure sustained
growth. Transformations in the business model of larger pharmaceutical
industry spell more opportunities for Indian pharmaceutical companies.
Pharmaceutical production costs are almost 50 percent lower in India than
in western nations, while overall R&D costs are about one-eighth and
clinical trial expenses around one-tenth of western levels. Riding on better
sales in the domestic and export markets, Indian pharmaceutical industry is
expected to continue with its good performance. There are opportunities inexpanding the range of generic products as more molecule come off
patent, outsourcing, and above all, in focusing into drug discovery as more
profits come from traditional plays. At the same time, the Indian Pharmacy
Industry would have to contend with several challenges particularly the
Effects of new product patent
Drug price control
Regulatory reforms
Infrastructure development
Quality management and
Conformance to global standards.
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GROWTH
The Indian pharmaceutical market reached US$ 10.04 billion in size, with a
value-wise growth rate of 20.4 per cent over the previous years
corresponding period on a Moving Annual Total (MAT) basis for the 12months ended July 2010. Cipla maintained its leadership position in the
domestic market with 5.27 per cent share, followed by Ranbaxy. The
highest growth in the domestic market was for Mankind Pharma, which
grew 37.2 per cent. Leading companies in the domestic market such as
Sun Pharma (25.7 per cent), Abbott (25 per cent), Zydus Cadila (24.1 per
cent), Alkem Laboratories (23.3 per cent), Pfizer (23.6 per cent), GSK India
(19 per cent), Piramal Healthcare (18.6 per cent) and Lupin (18.8 per cent)
had impressive growth during July 2010, shows the data.
The pharmaceuticals industry in India will grow by over 100 per cent over
the next two years. The pharmaceutical industry is currently growing at the
rate of 12 per cent, but this will accelerate soon. The sale of all types of
medicines in the country stands at US$ 9.61 billion, which is expected to
reach around US$ 19.22 billion by 2012. India's domestic pharmaceutical
market is valued approximately at US$ 12 billion in 2010, and has shown a
strong growth of 21.3 per cent for the 12 months ending September 2010. It
estimates that over the next 10 years, the domestic market will grow to US$49 billion, at a compounded annual growth rate (CAGR) of 15 per cent. The
formulations industry is expected to prosper parallel to the pharmaceutical
industry. It is expected that the domestic formulations market in India will
grow at an annual rate of around 17 per cent in 2009-10, owing to
increasing middle class population and rapid urbanization.
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