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  • Inderjit Sood

What is pharmaceutical industry

The pharmaceutical industry (or medicine industry) is the commercial industry that discovers, develops, produces, and markets drugs or pharmaceutical drugs for use as different types of medicine and medications. Pharmaceutical companies may deal in generic or brandmedications and medical devices. They are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy and marketing of drugs.

Global Pharmaceutical Industry

The pharmaceutical industry is responsible for the development, production and marketing of medications. Thus, its immense importance as a global sector is inarguable. In 2014, total pharmaceutical revenues worldwide had exceeded one trillion U.S. dollars for the first time.

North America is responsible for the largest portion of these revenues, due to the leading role of the U.S. pharmaceutical industry. However, as in many other industries, the Chinese pharmaceutical sector has shown the highest growth rates over previous years.

Still, the leading pharmaceutical companies come from the United States and Europe. Based on prescription sales, NYC-based Pfizer is the world’s largest pharmaceutical company. In 2016, the company generated some 52.8 billion U.S. dollars in pure pharmaceutical sales.

Other top global players from the United States include Johnson & Johnson, Merck and AbbVie. Novartis and Roche from Switzerland, GlaxoSmithKline and AstraZeneca from the United Kingdom, and French Sanofi are the European big five.

Branded, patented medicines by far make up the largest share of pharmaceutical revenues. Humira, an anti-inflammatory drug, generated over 16 billion U.S. dollars of revenue worldwide in 2016.

Oncologics continue to be one of the three leading therapeutic classes based on revenue. In 2015, cancer drugs made almost 79 billion U.S. dollars of revenue globally. Other major therapy classes were pain drugs, antihypertensives and antidiabetics.

More than any other industry, the pharmaceutical sector is highly dependent on its research and development segment. Some pharmaceutical companies invest 20 percent and more of their revenues in R&D measures. The United States is a traditional stronghold of pharmaceutical innovation. The origin of most new substances introduced to the market can be traced back to the United States. Because of the steady loss of patent protection, the invention of new drugs is of vital importance for the pharmaceutical industry. Revenue losses due to patent expiry often are very significant, as can be seen with Pfizer’s Lipitor from 2012 on.

Revenue of the worldwide pharmaceutical market

1,105bn USD

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