The Evolving Landscape of the Pharmaceutical Industry

Pharmaceutical Industry is one of the pharmacy related topics that we could chose for future presentation. This paper will analyse the part of gigantic healthcare sector that deals with medications which called a pharmaceutical industry. 

“Wherever the art of medicine is loved, there is also a love of humanity”

Pharmaceutical Industry - this broad term encompasses several branches of it like drug discovery, development and production etcetera. This industry works to prevent infections, maintain health and cure disease though the usage of developed medications. It works for people and impact global population, so they are monitored by multiple international regulatory bodies like World Health organization (WHO) and US Food and Drug Administration (FDA) etc. to ensure patent, drug quality, pricing and overall safety of the consumers. The 21st century pharmaceutical industry has come across a long way from its root in 19th century pharma to be in a stage where it stands today.

The History of Pharmaceutical Industry: From the Beginning to Nowadays

The history of pharmaceutical industry ways back to mid-1800s to 1945. It was the beginning phase for the industry initiated by local apothecaries who distributed botanical drugs like morphine and quinine to wholesale manufactures after a German apothecary assistant Friedrich Serturner isolated morphine, an analgesic sleep-inducing drug, from opium. That was the first intentional drug discovery from plant. However, the industry was born in late nineteenth century as emerging chemical sector. GlaxoSmithKline was the world’s first medicine producing factory in 1859 after producing patented medicine in 1842.Meanwhile in U.S, two German immigrant founded Pfizer in 1849 as fine chemical business which later boomed by high demand of painkillers and antiseptics during World War I. Later came Switzerland with establishment of home-grown pharmaceutical industry during the second half of the 19th century followed by the Germany. German dye maker, Fredrich Bayer was the first one to discover aspirin. Then the discovery of insulin and penicillin by Fredrich Banting and Alexander Flaming during the interwar while (1918 – 1939) caused breakthrough period for pharmaceutical industry. Simultaneously, the advancement was taking place in eastern part of the world as well like India and China. Since then the pharmaceutical business began to expand worldwide with the biggest global medicine market run by countries like U.S, Japan, Germany, China, Ireland, and France etc.

Ireland is the home for majority of world’s top pharmaceutical companies like Pfizer, Novartis, Takeda, Johnson and Johnson, Teva, GlaxoSmithKline and Wyeth etc. The setup of a manufacturing operation named Leo Laboratories in South Dublin in 1995 gave birth to the pharmaceutical sector in Ireland. Later in 1960’s drug manufacture begun to grow there. During that period the focus was towards the identification and usage of Active Pharmaceutical ingredients (API). Since its establishment in Ireland, primary manufacturing has been the backbone of the sector. Primarily, the pharmaceutical companies in Ireland focused on the production and export of Active Pharmaceutical Ingredient to other countries. Convenient facilities like transport, water, electricity etc. and high population densities, Dublin fulfilled the requirement of drug manufacturing companies so, most of the Dublin areas were site of preference for API operations. But along with the growth of this sector the industries shifted from primary manufacturing to secondary manufacturing. By 1990’s the pharmaceutical companies in Ireland began the secondary manufacturing which is the production of high- value finished products like parenteral and oral dose. Most of the manufacturing organization also started carrying out dual manufacturing operation (both primary and secondary manufacturing) in single facilities. Later in 2000’s, America’s one of the largest pharmaceutical company Wyeth established its bioprocessing facility in Grange Castel, Dublin. Thereafter, Ireland was successfully established as a choice for biopharmaceutical operations worldwide. Since 1959, the pharmaceutical sector in Ireland has been growing continuously and now has expanded into industrial cornerstone as 8 of the top 10 pharmaceutical companies operates there. Ongoing research in this field is promoting its growth but the growth of this industry is not free of challenge.

Analysis of Challenges and Structure if the Industry

Currently the pharmaceutical industry is facing a grand challenge on its business model. Over the past decade concerns regarding drug efficacy and safety has been raised resulting increased regulatory scrutiny. The industry's productivity and development possibilities are likewise under tension as medicinal research spending plans become progressively strained. Contrarywise, generic drugs assist to withhold drug costs in line. For example, in United States almost 70% of the drugs prescribed by medical professionals are generic drugs. In addition, key patent terminations between 2010–2014 have been evaluated to put more than US$209 billion in yearly medication deals in danger, coming about in $113 billion of deals being lost to conventional substitution. The root of this problem is the reduced number of new drugs approved by regulatory bodies over the world from almost around couple of decades. In 2007 only 19 new molecular entities (NMEs) were approved by FDA which is the lowest value since 1983. Similarly, in 2008 one 21 NEMs were approved where only 6 of them were developed by 15 largest pharmaceutical companies. In 2009, 24 new NEM’s were approved out of which 10 were developed. This shows the number of potential revenues generating drug as research and percentage expenditure has fallen gradually. Now, without a rapid increase in research and development productivity today’s pharmaceutical sector cannot sustain to cover loss of revenue due to patent expirations. This problem has a direct link with the way business operates in research-based and generic pharmaceutical companies.

Surface view shows that pharmaceutical industry is divided into two main categories namely Big pharma and Generic company. Big pharma represents those very well-known companies that are entitled as research-based pharmaceutical company while the generic companies are those that deals with the large-scale manufacture of patented medicines without involvement in drug discovery and research. Generic companies manufacture and sells those products that are already commercially established in market thus is a low-risk business with high profit. In a nutshell, the generic companies have a zero chance of producing unsuccessful product while the probability to produce successful drug by research-based pharma companies is rare. For this reason, generic companies dominate the big pharma in terms of finance coverage percent in business market. It is estimated that research based pharmaceutical companies only covers 40% of finance worldwide while generic companies outstand with >90% coverage. In 2013, out of 4000 million prescribed drugs, 84% of them were generic drugs. This asymmetric ratio of sales and profit is because of the patent system. This accounts for the difference in business profile of Big pharma and generic company.

To overcome this financial difference, researched based pharmaceutical companies now need to work on their R&D plans. They need to come up with ideas that reduce the input and increase output. Since the past thirty years, big pharma’s around the world have developed and launched several blockbuster drugs (drugs that solve medical problem related to millions of population at once).However, most of them will be falling off patent in coming years opening the best approach for generic company to grasp significant benefit out of it. In the past, medicines for unaddressed ailments like anti-cholesterol and anti-depression were developed. But the current expectation reveals the only the modified blockbuster drug would be developed in the future that will significantly reduce profit due to market saturation. The business model that once supported the success of drug developer is not working anymore. Pharmaceutical companies must find new ways to bring innovative ideas, as the competition to run the company and make profit is going to be tough in business market.

Conclusion

The pharmaceutical industry has been successfully contributing to mankind since 1800’s but over the past few decades the entire sector is facing tough time. Despite of huge investment on R & D the outcomes are not that promising. The growth of market has slowed and is expected to get lower due to the increasing issues of cost, patent expiries, regulatory changes, market access-pressures, and shift toward generic drugs etc. Historically, the pharmaceutical industry practiced tremendous growth with the introduction of medicines for unaddressed diseases but, the current situation demands the industry to work on the development of effective medications like wearable device, telemedicine, nanotechnology and precision medicine for their growth. With an increasing interest in generic treatment, pharmaceutical industry along with global economy are likely to be affected. So, To stay competitive in the market, different industries can adopt different approaches like control operation cost, manage price pressure and shrink margin, develop innovative drug to enhance R&D productivity, and work to sustain growth in a generic competitive market etc.

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