Global pharmaceutical industry

The pharmaceutical industry is responsible for the research, development, production, and distribution of medications. The market has experienced significant growth during the past two decades, and pharma revenues worldwide totaled 1.27 trillion U.S. dollars in 2020.

Top pharmaceutical companies

The pharma industry is comprised of some major multinational companies. Based on the prescription drugs market, Pfizer is one of the world’s leading pharmaceutical companies. The company, which has its global headquarters in New York City, generated total revenues of around 51.7 billion U.S. dollars in 2019, the majority of which was derived from sales of its products. However, the company saw a heavy drop in revenues in 2020, after the spin-off of its Upjohn generics business. Other top global players from the United States include Johnson & Johnson, Merck & Co., and AbbVie.

Pharma industry by country

Many of the leading pharma companies come from the United States, and, therefore, it is no surprise that the country has the largest national pharmaceutical market worldwide. China has become one of the main players in the industry, and annual growth rates of the emerging pharma market have been strong in recent years. However, projected pharmaceutical sales show that the established markets of North America and Europe will still be leading the way in 2024. Some of the biggest European companies are Novartis, Roche, GlaxoSmithKline, and Sanofi.

How much do companies spend on R&D?

More than any other industry, the pharmaceutical sector is highly dependent on research and development, with companies investing around 20 percent or more of their sales revenues in R&D projects. This share can be much higher at companies that specialize in research and generate low sales. The discovery of new drugs is vital for the continued growth of pharma companies, and sales of new branded drugs can provide sizeable contributions to total revenues. However, the loss of patent protection can have serious consequences, and competition from generic drugs is a major challenge for companies. The expiration of a product patent can result in a significant reduction in revenues, as experienced by Pfizer’s Lipitor from 2012 onwards.

All eyes on pharma and biotech

Soon after the COVID-19 pandemic hit the world with full force, it became clear that without new therapies and particularly vaccines the world would be stuck in a permanent cycle of lockdowns and crises. Consequently, pharmaceutical companies came into the public’s focus, with the pressure to provide results quickly growing. This was especially true for the global leaders of the vaccine market – GSK, Pfizer, Merck & Co., and Sanofi. However, out of these four, only Pfizer managed to develop a widely-used, safe, and effective jab so far, together with German biotech company BioNTech, which originally discovered this vaccine. AstraZeneca, previously not a company focused on vaccines, developed a vaccine together with the Oxford University. Theirs is the COVID-19 vaccine used in most countries worldwide.

Published by Matej Mikulic, Sep 10, 2021

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