"In 1897, Felix Hoffmann created a new industry. He found a way of adding a cluster of two extra carbon and five extra hydrogen atoms to a substance extracted from willow bark. The result is known to chemists as acetylsalicylic acid. To everyone else it is known as aspirin. It turned Bayer, the dye-maker Hoffmann worked for, into the world's first modern drug company." Geoffrey Carr, The Alchemists, The Economist - Feb 19th 1998
Today's Pharmaceutical Industry is characterized by several important factors that influence the business environment in which each company operates:
ÃÂ·Severe competition from capitally strong competitors
ÃÂ·Strict government regulations
ÃÂ·Long approval wait time
ÃÂ·Technology as an important factor
ÃÂ·Lower levels of marketing and customer relations in comparison to other markets
- Sales share of the world's top 75 prescription medicines 2002
Industry Environment Analysis
In 1997, the $65 billion industry was composed of three strategic groups: patented prescription drugs, generic prescription drugs and over-the-counter drugs.
Firms such as Merck, SmithKline, Eli Lilly and others produced various types of brand name drugs. Pharmaceutical companies spent huge amounts of money on development. The products produced by companies are very innovative. Many companies market up to ten (10) "blockbuster" drugs each year. These drugs have a patent life of seventeen (17) years. However, since it takes on average twelve (12) years to get the drug to market, manufactures have only five (5) years in the market to recoup their heavy research and development costs. After the patent expires we move to our next strategic group; the generic prescription drug makers.
Pharmaceutical R&D expenditure in the UK
Pharma R&D expenditure ÃÂ£ millionPharma R&D as a % of output1
Research and Development in UK...