rans ‘siness Insights: Essentials Skip to Main Content Help View Gale Resources Select Interface Language: Engisn Eraish) 7 i BUSINESS INSIGHTS: ESSENTIALS Back to Search Results Pharmaceuticals Encyclopedia of Global Industries Pharmaceutical manufacturers produce a diverse range of preparations for human and veterinary treatment. The majority of these companies’ products are produced in final form for consumption such as ampoules, tablets, capsules, vials, ointments, medicinal powders, solutions, and suspensions. Industry output consists of two important lines. Pharmaceutical preparations promoted primarily to the dental, medical, or veterinary professions are called "ethical" drugs, also known as prescription drugs. Those sold openly to the public are commonly described as “over-the-counter” (OTC) drugs. industry companies may also produce therapies derived from genetic engineering or related biotechnology processes. Industry snapshot The pharmaceutical industry is one of the world’s most dynamic and lucrative in terms of sales volume. With global drug companies losing patent protection on drugs in multiple markets throughout the world in 2012 and 2013, research and development had become even more important for the industry. Generic drug manufacturers continued to pursue off-patent drug markets aggressively, and nations that wished to reduce their drug costs also encouraged the use of generic drugs. Pharmaceutical giants often spent multiple bilfions of dollars each year individually on drug research, and some companies conducted research on hundreds of medications at the same time. IMS Health reported that revenues in the global pharmaceuticals market nearly doubled between 2003, and 2011. In 2011 North America accounted for 36 percent of sales, Europe for 28 percent, the Asia- Pacific region for 17 percent, Japan for 12 percent, and Latin America for 7 percent. The company predicted a compound annual growth rate of 3 to 6 percent through 2016. Organization and Structure The two common categories of pharmaceutical preparations are ethical and over-the-counter (OTC). Worldwide, most ethical drugs are paid for by governments or consumers (patients) indirectly through third-party payers like health insurance companies. Ethical Drugs. The top six classes of prescription drugs were central nervous system and sense organs; cardiovascular, digestive and genitourinary; neoplasms, endocrine and metabolic diseases; parasitic and infectious diseases; and respiratory. These classes of finished-form drugs commanded the highest profit margins, but required high research and development and marketing expenses. Marketing and patenting were the iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin wwrans ‘siness Insights: Essentials two primary methods pharmaceutical firms used to maximize the profit potential of their discoveries. Specialized marketing techniques unique to the pharmaceutical industry evolved in the twentieth century Since doctors usually made the purchase decision for the customer or patient, and in most countries ethical drugs could not be advertised to the general public, most pharmaceutical marketing was directed at general practitioners. Branding was a primary method of product differentiation. Knowledgeable sales forces made regular calls on doctors in an effort to sway their prescribing decisions. Most pharmaceutical firms also employed advertising in medical journals, direct mail, conference sponsorships, and promotional giveaways. Patents were significant to the pharmaceutical industry, with most falling into either product patents, which covered a given chemical substance, and process patents, which protected the manufacturing technique used. Until the mid-1950s, most countries found process patents sufficient to protect pharmaceutical preparations. However, since circumventing these copyrights was relatively easy, many countries, including most of Europe and the United States, switched to product patents. Although nominal patent life, which is the span of time from patent issue to expiration, exceeded 15 years in all countries that granted patents, effective patent protection began to grow shorter in the 1970s due in part to the often lengthy goverment approval process. The proliferation of so-called "me too" and derivative drugs shortened pharmaceutical companies’ "pay back" period even further. By the early 1990s, all but 10 percent of patented drugs had a direct competitor, and some had more than one. The 1962 Thalidomide scare precipitated more stringent global drug safety and approval standards. The United States had required federal inspection of new compounds since the beginning of the twentieth century and had toughened those controls with the formation of the FDA in the late 1930s. However, it was not until the 1960s that governments in industrialized nations began imposing the stringent premarket approval systems that sometimes met with criticism during the 1990s, A German drug company had introduced Thalidomide as a "safe" sleeping pill in the 1950s. In the early 1960s, a U.S. drug company began testing the drug with a view to licensing it for sale in the United States. FDA tests revealed that when taken during a particular period of pregnancy, the drug caused severe birth defects Although the drug never made it to market in the United States, the implications spurred more rigorous approval requirements, including clinical tests, in the United States and Europe. For better or worse, some industry observers have linked stronger premarket regulations to the much-reduced flow of new drugs since 1960. Out-of patent or generic drugs gained considerable clout in the 1980s and remained strong into the early 2010s. Also known as multisource drugs, generics were ethical drugs that had lost their patent protection These compounds were then manufactured by small manufacturers and sold by prescription under a new brand name, usually at a lower cost. intense price competition of 30 percent to 70 percent below patented versions and low profit margins characterized this segment of the pharmaceutical industry. Generic producers tended to limit their operations to domestic and regional markets. Over-the-Counter Drugs. Over-the-counter (OTC) or nonprescription drugs were sold directly to consumers without a prescription. In general, these preparations had high advertising and low research expenditures, and few were genuinely new products. While OTC drugs made a relatively small contribution to industry-wide sales and profits in the 1990s, they iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin anrans ‘siness Insights: Essentials had the potential for increased sales as consumers increasingly turned to self-diagnosis, such as at- home pregnancy and cholesterol-testing kits, and self-medication. Background and Development Although some sources trace the pharmaceutical industry back only half a century, pharmaceutical practice evolved slowly over thousands of years of practical use of herbs, minerals, and other compounds. The word pharmacy derives from the Greek term "pharmakon," used by Homer in the Odyssey to describe a drug or charm. The discoveries of opium and hemlock have also been traced to ancient Greece. In spite of the spread of pharmaceutical knowledge throughout the Roman Empire, that civilization’s decline and the onset of the Middle Ages suppressed pharmacological progress in the Western world. While Asian and Middle Eastern medical knowledge continued to develop during the ensuing 12 centuries, little of that information made its way to the West. The Renaissance revived pharmaceutical research beginning in the late fifteenth century. The discovery of the "New World” brought new plant-based medicaments, such as belladonna, ipecacuanha, Jesuit's bark, and cocoa. In the sixteenth century the world's first pharmacopoeia, or guide to the preparation of known drugs and medicinal chemicals, was published in Germany. Pharmaceutical practices were professionalized when the Society of Apothecaries was established in London in the 1617. Some of the modem industry's largest companies grew from modest beginnings as small apothecaries, preparing treatments one dose ata time. The modern pharmaceutical industry can be traced to the isolation and development of several potent medicinal compounds that could be mass-produced in the nineteenth century. The first of these were the alkaloids, which were derived from plant sources. Many of the powerful drugs in this group, including morphine, strychnine, quinine, nicotine, and cocaine, were still in use in the twenty-first century. The isolation of these compounds allowed for accurate dosing and testing of purity. Discernment of these drugs’ chemical structure encouraged efforts at laboratory synthesis, and those experiments often yielded valuable related compounds. For example, in 1856, while trying to make quinine from aniline, William Perkins created the first artificial dye, aniline purple. Germany, already the focal point of the chemical industry, became a pharmaceutical center as well Researchers at chemical companies like Agfa, Bayer AG, and Hoechst AG formulated or isolated drugs from the by-products of their established businesses. Antipyretics (fever reducers) and analgesics (pain relievers) were distilled from coal tar, for example. The most familiar and enduring of these products, aspirin (acetylsalicylic acid), was discovered by Charles Gerhardt in 1853, but was not exploited until 1899 when Germany's Bayer recognized its therapeutic qualities. Hoechst sponsored Paul Erlich’'s groundbreaking discoveries in drug delivery and action at the turn of the twentieth century. Most notable was his isolation of Salvarsan, one of the first disease-specific medicines, for the treatment of syphilis. Through investment in such fundamental research, as well as some questionable business practices, German chemical/pharmaceutical companies dominated the industry until World War I, when hostilities forced many nations to establish their own manufacturing and research programs. Independent research also contributed to the advancement of the pharmaceutical industry. Frenchman Louis Pasteur’s conception of the germ theory of disease, combined with Briton Joseph Lister's application of that hypothesis in the use of antiseptics, has been called a “signpost to the modern pharmaceutical industry.” iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin antanva0ss ‘vines lights: Easels By the early twentieth century, patents were a familiar method used by European companies to protect their discoveries. Although the pace of drug development slowed in the first three decades of the twentieth century, the accidental rediscovery of sulphamides and their therapeutic qualities spurred increased research on the part of pharmaceutical companies, especially in the United States where original research had previously been limited. The pharmaceutical industry followed a somewhat unique pattern of internationalization. Although some pharmaceutical companies began exporting before the turn of the twentieth century, most relied on licensing and marketing agreements as well as joint ventures to gain an international presence before World War Il, Since many governments impeded the import of finished drugs with complicated testing and packaging requirements, pharmaceutical companies infiltrated foreign markets through the creation of affiliates. U.S. drug makers led the overseas postwar push through the establishment of subsidiaries. These companies could import the active ingredients from the overseas parent and then convert them into finished products under the laws of the new country. World War I! also marked the beginning of a period of intense competition to develop, patent, manufacture, and market new drugs. Many industry leaders, including Bayer and Hoechst in Germany; Roche Holding Ltd, and Ciba-Geigy AG in Switzerland; Pfizer Inc., Eli Lilly & Co., Merck & Co., Inc., and Abbott Laboratories in the United States; and Glaxo Holdings PLC, SmithKline Beecham, and Wellcome plc in the United Kingdom, were well established by this time. Fueled by intensified research during the war, major pharmaceutical discoveries came in rapid succession. For example, methods for mass production of penicillin were discovered. Streptomycin, which was used in the treatment of tuberculosis, was introduced in 1943. The first broad spectrum antibiotic, chloramphenicol, was discovered in 1947 Tetracyclines, corticosteroids, oral contraceptives, antihistamines, antidepressants, diuretics, semi- synthetic penicillins, and hundreds more were patented in the late 1940s and early 1950s. These developments transformed the pharmaceutical industry from a commodity chemicals business in which pharmacists compounded the actual doses into a field that relied on heavy investments in research and marketing to get the patents and brand names that drove sales. The 1960s and 1970s saw the advent of anticancer drugs, along with a nascent autoimmune therapy market. Worldwide pharmaceutical spending increased 9 percent in 2004, reaching nearly US$500 billion according to data from the research firm IMS Health. Of this total, nearly half was attributed to the United States and Canada, As the baby-boom generation reached retirement age, causing ongoing growth in the over-65 segment of the world's population in the early twenty-first century, pharmaceutical companies stood to benefit from a related rise in chronic health conditions like heart disease and diabetes. However, a number of roadblocks threatened industry profitability. In addition to an increase in the use of generic drugs, supported by expiring name-brand patents, fewer new drugs were being approved in the United States Perhaps the most significant industry challenge during the middle of the first decade of the twenty-first century was rising pressure from governments to lower drug prices. Amid these conditions, a debate began between drug makers and consumers over obtaining drugs from other countries, namely Canada, where government price controls kept costs lower compared to the United States, sometimes as much as 60 percent. As states like California pursued legislation that would allow lower-cost pharmaceuticals to be imported into the United States, industry players argued that the practice was not safe, since quality and safety measures could not be assured. They also charged that reimportation jeopardized research and development in the United States. Manufacturers reacted by iti gale ch orc scoatid nates serialsartcle/GALE7CI250 160000022 1SSA2OCGTt adee ec 7EGeSA7Se7 Auerys|_ce_onetm ananva0ss ‘vines lights: Easels changing the names of certain drugs in Canada, creating confusion in pharmacies, and stepping up political action. Some consumer groups were critical of the industry's contributions to political campaigns, charging them with "greasing" legislatures in an effort to preserve profits. The situation was further complicated in 2005 when Canada, citing the danger of potential domestic shortages, announced that it was drafting legislation to limit bulk exports of essential drugs to the United States. By 2005 Canadian online pharmacies were exporting more than US$800 million worth of drugs annually to the United States. Current industry conditions With incomes rising in emerging markets, pharmaceutical companies focused more of their efforts on these nations. The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) predicted that drug sales in these nations would reach 28 percent of the global total by 2015. Meanwhile, this industry body expected that both the United States and Europe would see their share of the global drug market shrink, and projected the 2015 shares of these regions at 31 percent and 19 percent, respectively. Because of its profound reliance on new product introductions, the pharmaceutical industry spends more than any other industry on R&D. According to the IFPMA, as of 2012 annual global research and development spending in this industry reached US$135 billion. Many mergers and acquisitions stemmed in large part from rising R&D costs and a commensurate lack of blockbuster drugs on the market. Those companies unable to keep their development pipeline full were usually the first to seek mergers. Research comes at a steep price, however. Only 1 in 5,000 compounds discovered actually reaches the market. Pressures from other companies, the need for FDA approval, and demographic trends all create challenges to drug discovery and delivery. Global regulators approved 35 drugs in 2012. This approval is the final outgrowth of years of study, test trials, and heavy investment. The long and arduous process is a commitment to safety monitoring as well as fine-tuning the effects of the drug, Because of this long-term process and the cost of R&D of drugs that are never approved, the successful development of a new drug is very expensive. The IFPMA estimated this cost at US$1.38 billion in 2012, and noted that this high cost had reduced the number of drugs introduced to the global market each year. Industry research and technology A field of research based on genomics data, called proteomics, is the study of proteins and their functions. Once considered an unimaginably complex undertaking, the mapping of the Human Genome gave breadth to the possibility of understanding all known proteins and their functions through a thorough number-crunching of their genes. Myriad Genetics, a publicly traded company operating in this field, offered a variety of tests that helped patients understand their risks in relation to various diseases. This included the Prolaris prostate cancer test. In 2014 Myriad had an intemational office in Zurich, Switzerland, and performed proteomics research in Munich, Germany, as well Industry leaders Pfizer, Inc. iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin sitanva0ss ‘vines lights: Easels Pfizer's acquisition of Warner-Lambert in 1999 moved the company into a major presence in the pharmaceutical industry. Pfizer was founded in 1849 by cousins Charles Pfizer and Charles Erhart. Its first major product, santonin, was a treatment for parasites. Early in its history, the company was responsible for the mass production of citric acid, made from fermented sugar rather than expensive imported limes and lemons. It was also responsible for the successful mass production of penicillin, discovered earlier by Dr. Alexander Fleming. Its discovery of Tetracyn (tetracycline) in 1954, the first broad spectrum synthetic antibiotic, heralded the beginning of the pharmaceutical fight against bacterial infection. Pfizer's products include Lipitor, a cholesterol-lowering drug; Viagra, which treats erectile dysfunction; Zithromax, an antibiotic; Celebrex, a treatment for arthritis, developed by Pharmacia and copromoted by Pfizer; Norvasc, an antihypertensive; Zoloft, an antidepressant; and Diflucan, an antifungal. The expiration of Pfizer's patent on Lipitor exposed this pharmaceutical company to more competition from global generic drug manufacturers in 2013. The company had anticipated the expiration of its patents and it operated a separate segment, Established Products and Emerging Markets, which continued to produce Lipitor and other off-patent drugs. Pfizer also announced that although its Viagra patent expires in 2020, it had reached an agreement with the major generic drug manufacturer Teva Pharmaceuticals that would make generic Viagra available in late 2017. In 2014 Pfizer held patents on a wide variety of drugs, some of which had expired in certain countries but not in others. With US$51.6 billion in 2013 revenues, Pfizer was one of the largest companies in the pharmaceutical business with more than 78,400 employees in 2013. Both Pfizer's total revenues and its employee count had declined from previous years as some of its important drug patents had expired GlaxoSmithKline. Glaxo was established as an offshoot of Joseph Nathan's New Zealand-based import-export business in 1873 to produce baby food, especially powdered milk sold under the Glaxo brand. Son Alec Nathan established the firm's marketing focus in Great Britain in the early twentieth century with the memorable slogan "Builds Bonnie Babies." The company expanded internationally after World War I, around the same time that it got into vitamin production. Glaxo entered the pharmaceutical market in 1927 with the launch of a liquid vitamin D concentrate, Ostelin. Acquisitions diversified the firm into veterinary medicine, medical instruments, and drug distribution after World War ||. Glaxo grew quickly in the 1980s on sales of its blockbuster antiulcer drug Zantac, and claimed 5 of the top 50 prescription drugs in the early 1990s. Glaxo Wellcome's merger in 1999 with Smithkline Beecham to become GlaxoSmithKline (GSK) followed similar pharmaceutical merger and acquisition fever in the late 1990s. By 2003 the company was the world's second-leading pharmaceutical enterprise. In addition to prescription drugs, GlaxoSmithKline also produces dental care products, nutritional drinks and vitamins, and over-the-counter medical products. These include skin care products, smoking cessation products, and pain relief products. This pharmaceutical company pursued a strategy of reducing its overhead costs in 2013, GlaxoSmithKline sold some of its over-the-counter product lines to other consumer products companies in 2013: Prestige Brands Holdings bought North American product lines, Aspen bought international product lines, and Omega Pharma bought European product lines. Suntory bought Lucozade and Ribena, two of GlaxoSmithkline's nutritional drink brands. The company also faced the fallout of a scandal in China, as Chinese regulators investigated bribery allegations against some of its managers in China. The Pharmaceutical and Vaccines division of GlaxoSmithKline in that country reported 61 percent lower sales for the third quarter of 2013 as a result of the bribery investigation. This caused overall Pharmaceutical iti gale ch ore scoot nates serialsartcle/GALE7C250 160000022 1SSA2OCGTt ade ec 7EGeSA7Se7 uerys!_ce_enetim anavons fines nts: Essortals and Vaccines sales from emerging markets to fall for the quarter as well. Sanofi, Aventis was formed in 1999 following the merger of Rhone-Poulenc and Hoescht's pharmaceutical, agricultural, and veterinary businesses. In 2004 Sanofi-Synthelabo acquired Aventis, forming Sanofi- Aventis, Europe's largest pharmaceutical company and the world’s third largest. Sanofi-Aventis reported 2012 revenues of EUR 34.9 billion. This global pharmaceutical giant did business in more than 100 nations. It has a workforce of more than 110,000, of which over 93,000 work in the pharmaceuticals segment. Sanofi-Aventis also employs workers who research vaccines and create animal care products, such as Frontline, The company made the diabetes drugs Lantis and Apedra; the cancer drugs Taxotere, Aloxatine, and Jevtana; and the multiple sclerosis drug Aubagio. Sanofi-Aventis also produced generic drugs, which it offered in emerging markets. These drugs included Zentiva, Kendrick, and Medley. Novartis AG. Headquartered in Basel, Switzerland, Novartis was formed in 1996 by the merger of two diversified chemical businesses, Ciba-Geigy and Sandoz, which had previously been joined during the first half of the century, Novartis reported total revenues of US$57.9 billion in 2013, an increase from US$56.7 billion in 2012. The company also expanded its workforce that year, which rose to 135,696 from 127,724 during the previous year. The company received revenue from many regions of the globe: 36 percent came from Europe, 33 percent from North America, and 22 percent from Africa, Asia, and Australasia. The pharmaceutical company had a massive research budget, with US$9.9 billion spent on research in 2013. As a result, Novartis AG had a huge drug pipeline, and in 2013 it was researching 144 different pharmaceuticals. Merck & Co., Inc. Merck traces its history across the Atlantic Ocean to Germany, where Freidrich Jacob Merck established an apothecary in 1668. A descendant, Heinrich Emmanuel Merck, started manufacturing drugs (including morphine, codeine, and cocaine) in 1827. Around the turn of the century, he sent his grandson, George, to the United States to set up operations. The two companies were separated during World War 1, when George Merck temporarily relinquished much of his firm's stock to the U.S. government in an effort to combat anti-German sentiment. After the war, the government returned corporate control to Merck, but the German and U.S. firms retained their separate entities. His successor and son, George W. Merck, established the company's reputation for innovative research. Some of the company's major discoveries included vitamin B12, cortisone, and streptomycin. Merck merged with another U.S. firm, Sharp and Dohme, Incorporated, in 1953 to beef up marketing and distribution. Those capabilities, combined with efficient production and continuing research, catapulted Merck to the top of the pharmaceutical industry in the late 1980s. As one of the largest pharmaceutical companies in the world, Merck maintained a sizable drug pipeline in January 2014, with 20 drugs that had reached the phase || stage, 14 drugs that had reached the stage III phase, and 9 more drugs under review by regulators, These drugs included treatments for Alzheimer's disease, cancer, Hepatitis C, and diabetes. The company also had contraceptives in the pipeline. In addition, Merck offered a variety of over-the-counter products that included Coppertone sunscreen, Dr. iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin msanva0ss ‘vines lights: Easels Scholls shoe inserts, and the Claritin allergy drug. Merck lost its United States patent on asthma drug ‘Singulair in 2012, which affected its financial results for that year. With the wide variety of other pharmaceuticals and over-the-counter drugs it still had available, it stil posted revenues of US$47.3 billion for the year and employed a workforce of 83,000. Johnson & Johnson. Johnson & Johnson's history dates to 1885 when brothers Robert Wood Johnson, James Wood, and Edward Mead Johnson founded a start-up company in New Brunswick, New Jersey, selling antiseptic surgical dressings. In 1891 they produced their first sterile product for surgeons. Band-Aid bandages were introduced in 1921. With the spin-off of Ethicon in 1941, a separate business was created for surgical sutures and related products and equipment. In 1959 it purchased McNeil Laboratories, which was followed by the purchase of Belgium-based Janssen Pharmaceutical in 1961. Many companies followed in the 1980s, and by its 100th anniversary, Johnson & Johnson was a well-established leader in health care supplies, equipment, and pharmaceuticals. At the beginning of the 2010s Johnson & Johnson comprised 250 companies worldwide and marketed health care products in more than 175 countries. Its Tylenol, Aveeno, Mylanta, Motrin brand names are well recognized. In the mid-2010s Johnson & Johnson offered a wide variety of consumer products and over-the-counter medications in addition to prescription pharmaceuticals. As with other U.S.-based global pharmaceutical companies, currency translation effects dragged down Johnson & Johnson's top line in 2013 as the U.S. dollar gained value against emerging market currencies. The company reported that its international pharmaceutical product sales rose by 9.6 percent for the year, but currency effects reduced this value by 2.2 percent. Pharmaceutical products showed much stronger revenue growth than consumer products for that year, and this segment also posted nearly twice the overall revenues at US$28.1 billion versus US$14,7 billion. In total, the company posted annual revenues of US$71.3 billion for 2013, an increase from USS67.2 billion in 2012. Bristol-Myers Squibb. Bristol-Myers Squibb was formed in 1989, when Bristol-Myers acquired Squibb for US$12.7 billion. The older of the two companies, Squibb, was founded in New York City in 1858 by Edward Squibb. In the early years, the firm focused on the production of pure ether and chloroform. This company manufactures both prescription drugs and over-the-counter medicines. Important prescription drugs for Bristol-Meyers Squibb in 2013 included Yervoy, a skin cancer drug; Sprycel, a leukemia drug; Nivolumab, a lung cancer drug; Onglyza, a diabetes drug; and Orencia, an arthiritis drug The company also made Excedrin and Bufferin, which are over-the-counter pain relief medications. Total revenues for the company declined from US$17.6 billion in 2012 to US$16.4 billion in 2013 Roche Holding. Roche was founded in 1894 by Fritz Hoffmann-La Roche to standardize production of pharmaceutical compounds. Roche reported revenues of CHF 46.8 billion in 2013. The company makes both drugs and diagnostic tests; pharmaceutical sales rose by 7 percent for the year, which surpassed the growth of the diagnostics segment. Roche noted especially strong annual performance from its cancer, arthritis, and eye medications. With the Swiss franc performing even better than the U.S. dollar in 2013, currency translation effects also limited sales growth for Roche during the year. AstraZeneca ple. iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin anrans ‘siness Insights: Essentials The April 1999 merger of Astra AB and Zeneca Group plc created AstraZeneca, a pharmaceutical and agricultural chemical products company. Astra was founded in 1913 in Sweden by Adolf Rising, Hans von Euler, and Knut Sjoberg. Its marketing of Xylocaine (lidocaine) in the late 1940s was one of its first worldwide breakthroughs. However, the marketing of Neurosedyn, better known as Thalidomide, under license from German-based Chemie- Griinenthal, nearly brought the company and its image to ruin in the 1960s. Zeneca's history began in name in 1993 with the divestment of the pharmaceuticals, agrom and specialty chemicals divisions of U.K.-based Imperial Chemical Industries. IC's history began in the dyes and dyestuffs industries of the late 1850s. AstraZeneca reported weaker sales during the first three quarters of 2013 because of drug patent expirations; for this period, total revenues declined by 9 percent. Without including currency translation effects, AstraZeneca would have reported 7 percent lower revenues for this period. Like the other major pharmaceutical companies, AstraZeneca incurred sizable research expenses; at US$3.4 billion for the first nine months of 2013, research costs were equivalent to 18 percent of year-to-date revenues. Including revenues from the fourth quarter of 2012 and the first three quarters of 2013, AstraZeneca had around US$26.2 billion in annual revenue. Major countries in the industry The United States. The IFPMA reported that total pharmaceutical sales in the United States reached US$337 billion in 2011 The United States continued to run a trade deficit in terms of pharmaceuticals, with US$62.4 billion in imports and US$35.3 billion in exports for that year. Europe. As the second-largest market for medicine after the United States, and the home of several of the largest drug companies in the world, Europe makes up a sizable portion of the global pharmaceutical industry. The IFPMA estimated that European manufacturers produced about EUR 205 billion worth of drugs in 2011. Europe also operated with a positive trade balance in regard to drugs. The region exported drugs worth around EUR 230 billion and imported drugs worth around EUR 210 billion that year. Japan. According to the IFPMA, Japan spent US$127 billion on pharmaceutical products in 2011. Although this was less than half of what the United States spent, the island nation still placed second for overall drug spending. Japan also maintained a sizable trade deficit in this industry, even after the drug industry reforms, as total drug imports of US$19.0 billion far exceeded total exports of US$3.4 billion. China, China's pharmaceutical industry grew as the nation's economy boomed. With a large population that was. rapidly growing wealthier, total drug sales in China reached US$66.9 billion in 2011. At slightly more than half of the size of the Japanese market, the Chinese drug market was still larger than the markets of developed countries outside of the United States and Japan. Although China is a major exporter with a history of global leadership in many export categories, this was not the case with pharmaceuticals in 2011, The nation imported drugs worth US$9.97 billion and exported drugs worth US§2.58 billion during iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin anrans ‘siness Insights: Essentials that year. Further Readings Amold, Matthew. "Past the Patent Cliff: Pharmas Are Set for Rebound in NMEs, Says IMS." Medical Marketing & Media, July 12, 2012. Available from www.mmm-online.com. Bowman, Andrew. "Emerging Market Pharma Spending to Nearly Double by 2016." Financial Times, July 13, 2012. "Brand Name Pharmaceutical Manufacturing in the U.S." IBISWorld, August 2012. Available from www. ibisworld.com. “Bristol-Meyers, Matrix Tie Up for HIV Drugs (To Be Manufactured and Sold in India and Sub-Saharan Aftica)." India Business Insight, June 30, 2011 "Chart Pack: Biopharmaceuticals in Perspective.” Pharmaceutical Research and Manufacturers of ‘America, October 15, 2012. Available from www.phrma.org "China's Pharmaceutical Industry to Hit 10t Yuan." China Daily, July 6, 2012 'EvaluatePharma Brings Out Medtech Sales Growth Rate Forecast." Entertainment Close-up, October 5, 2012 Gatyas, Gary. "IMS Health Acquires TTC, Strengthening Pharma R&D Services Capabilities." IMS Health, August 15, 2012. Available from www.imshealth.com. "Generic Pharmaceutical Manufacturing in the U.S." IBISWorld, July 2012, Available from www. ibisworld.com. “Global Pharmaceuticals and Medicine Manufacturing.” IBISWorld, October 2012. Available from www ibisworld.com, Herper, Matt, "The Global Drug Market Will Swell to $1.2 Trillion While Big Pharma Treads Water." Forbes, July 12, 2012. “Industry, NGOs Team to Provide Joint Progress on Neglected Tropical Disease Control.” PRNewswire, September 28, 2012. “Japan Pharmaceutical Industry and Forecast: Focus on OTC and Prescription Drugs Market.” PRLog, February 5, 2012 Jayakumar, P, B. "A Bitter Pill for Drug Makers?" Business World, October 20, 2012. Kahn, Jonathan, Race in a Bottle: The Story of BiDil and Racialized Medicine in a Post-Genomic Age." New York: Columbia University Press, December 2012. "New Generics Headed for Marketplace." PRLog press release, September 16, 2011 “The Pharmaceutical Industry and Global Health." International Federation of Pharmaceutical Manufacturers and Associations, 2013. Available from ifpma.org. Pierson, Ransdell. "Generics Seen Cutting into Drug Sales Growth Through 2016.” Reuters, July 12, 2012. Rickwood, Sarah. “Redefining the Blockbuster Model: Why the $1 Billion Entry Point Is No Longer Sufficient." Pharmaphorum, September 11, 2012. Sampson, D. Kyle, and Brian J. Wesoloski. "Drug Manufacturing or Pharmacy Compounding? Court Limits FDA's Authority to Regulate Pharmacy Compounding." Contract Pharma, July 18, 2012. Available from www.contractpharma.com. Schneider, Erin, and Brian Hutchinson. "Beyond Borders: New Growth and Direction for Japan's Pharmaceutical Industry." National Bureau of Asian Research, January 25, 2012. Available from www.nbar.org Shobert, Benjamin. "A China Headache for World's Big Pharma Companies." CNBC, July 12, 2012 Available from www.cnbc.com "Top-Line Market Data." IMS Health, October 15, 2012. Available from www.imshealth.com. "Value of the Industry." European Federation of Pharmaceutical Industries and Associations, October 15, 2012. Available from www efpia.eu/value-industry. Wechsler, uJill. "FDA User-Fee Legislation Sets Stage for Change." Pharmaceutical Technology, August 2, 2012. Source Ci iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin ryrans ‘siness Insights: Essentials "Pharmaceuticals." Encyclopedia of Global industries. Farmington Hills, MI: Gale, 2014. Business Insights: Essentials. Web. 1 Mar. 2015. URL http://bi.galegroup.com/essentials/article/GALE%7C12501600036/a2b2 1d5b20c97f1a4ee1cc786e5a75e7? usnysl_ce_onehm Document Number: GALE|I2501600036 i) CENGAGE ** Learning iti gale ch ore scoala nates serialsartcle/GALE%7C250 160000022 1SSA2OCGTt adee cc 7AGeSA7Se7 Auerys!_ce_enetin ne