Pharmacy Presentation

Profile of the Pharmaceutical Industry
By Nancy Schwartz

2 Profile of the Pharmaceutical Industry
Agenda
Pharmaceuticals, biologicals, and the pharmacy
1 Industry Background
2 Characteristics
3 Market in the United States
4 Competitiveness
5 Markets Internationally
6 Trading Environment
7 Shift Toward Generics
8 Pharmacy Role
9 Immunizations
10 Conclusion

INDUSTRY BACKGROUND
Definition and key products

Definition of Industry
Pharmaceutical
The United States pharmaceutical industry is
defined by the Census Bureau as companies
engaged in researching, developing,
manufacturing, and marketing drugs and
biologicals for human or veterinary use.
• “Biotechnology” has been defined by the U.S.
Department of Commerce and the White
House of Science and Technology as a set of
enabling “Technologies that use organisms or
its components to make products; or to modify
plants, animals, and micro-organisms to carry
desired traits.”

Key Products
Drugs and biologicals
Key products of the pharmaceutical industry
Main products are drugs and biologicals, which are substances intended for use in the diagnosis, cure, mitigation, treatment
or prevention of diseases. Chemically-derived drugs are produced in forms such as pills, tablets, capsules, vials, ointments,
powders, solutions, and suspensions.
Biologicals include a wide range of products such as vaccines, therapeutic proteins, blood and blood components, anti-sera,
and tissues.

Codes for pharmaceuticals and biotechnology
NAICS is the standard used by Federal statistical agencies, such as the Census Bureau and the Bureau of Labor Statistics, to
classify business establishments for the purpose of collecting, analyzing, and publishing data related to the U.S. economy.
North American Industry Classification System (NAICS)

CHARACTERISICS
Large, diversified and globalized, the U.S. pharmaceutical industry is one of the most critical sectors in economy

Dimensions of Industry
Employment
May 2010 the industry employed about
416,000 persons at pharmaceutical
manufacturing and biotechnology research
firms.
Manufacturing firms employed 278,000
Biotechnology research employed 138,000
Research and Development
The pharmaceutical industry is a close
second to the computer and electronics
sector.
The pharmaceutical industry reports that
2,950 medicines are in development, up
from 1,800 a decade earlier.

Product Sectors
Originator chemical drug, generics, over-the-counter, active ingredients, excipients, biologicals, and biosimilars
Originally chemically-synthesized drugs
• Are developed as a result of extensive research and development and clinical trials
in both humans and animals prior to being approved by the U.S. Food and Drug
Administration (FDA)
• The originator relies on patents and other forms of intellectual property rights to
justify the investment required to bring a product to market
• The cost of bringing a new drug to market in the U.S. has been estimated from $500
million to more than $2 billion
• One in 1,000 compounds tested makes it to human clinical trials, one out of five
drugs tested in humans is approved, and two out of ten marketed drugs generate
revenues greater than research and development costs.

Generic Drugs
Duplicative copies of brand name drugs
Chemically-synthesized drugs that contain
the same active ingredient, and are
identical in strength, dosage form, and
route of administration.
Once patent has expired, a manufacturer
can produce a generic drug that references
an originator drug that was approved
under the Drugs and Cosmetic Act, as long
as the FDA grans final approval.
Generic drugs are required to have the
same active ingredients, strength, dosage
form, and route of administration as the
brand name products, but generic does
not need to contain the same inactive
ingredients as the brand product.

Over-the-counter drugs are considered by regulators to be safe for
self-diagnosis and self-medication.
In the United States, there are an estimated 100,000 over-the-
counter drug products marketed and sold in a variety of outlets
such as pharmacy, grocery stores, and other retail stores.
Over-the-counter drugs may result due to extensive market use
that enables regulators to determine that the product is safe to
dispense without a prescription.
In addition, the originator may move to apply to have a drug move
to over-the-counter status upon patent expiration.
The Federal Drug Administration (FDA) determines if a drug can be
sold as an over-the-counter medication.
Over-the-Counter
Consumers do not need prescriptions to purchase the drugs

YO U R LO G O12 Profile of the Pharmaceutical Industry
Pharmaceutical Substances
Active Pharmaceutical Ingredients (APIs) and Excipients
Active Pharmaceutical Ingredients
Medication, in dosage form, is composed of active pharmaceutical ingredients and excipients. APIs
are the ingredients that make drugs effective.
Excipients
Excipients are the inert substances that give a medication its form, such as cornstarch or sterile
water and serve as a delivery vehicle to transport the active ingredient to the site in the body
where the drug is intended to exert its action.
APIs and Excipients must meet standards
Established by the pharmaceutical standards-setting bodies (e.g. pharmacopeias)
Including purity, toxicity, and absorption rates.

Biologicals and Biosimilars
Biotech drugs
Biologicals
• Referred to as “biotech” drugs, “large-molecule weight” drugs or
“biopharmaceuticals”.
• Biological drugs are derived from living material (human, animal, microorganism, or
plant).
• Are vastly larger and more complex in structure, and thus are difficult to characterize
well.
Biologicals
• Are versions of biological products that reference the originator product in
applications submitted for marketing approval to a regulatory body.
• Healthcare reform legislation in March 2010 has the FDA authorized to approve
biosimilars, or follow-on versions of biologic drugs that were approved.

MARKET IN THE UNITED STATES

U.S. Market Size
Domestic Environment
The Orphan Drug Act in
1983 allows manufacturers
that develop drugs used to
treat diseases that affect
less than 200,000 people in
the U.S. to obtain market
exclusivity for seven years
following FDA approval and
tax credit.
Regulatory Environment
The FDA regulates the
testing, approval, production
and marketing of drugs and
biologics. Other
organizations that develop
drug quality and registration
standards include the U.S.
Pharmacopoeia, ICH, and
World Health Organization.
Import Safety
The U.S. drug supply is
considered one of the safest in
the world, the globalization of
the pharmaceutical supply
chain has increased
challgenges for the FDA and
manufacturers in ensuring that
imported ingredients and
finished dosage drugs meet
safety and efficacy standards.
Healthcare Financiing
The healthcare reform law has
a significant impact on the
pharmaceutical industry by
both expanding the pool of
insured potential consumers
by 32 million people over the
next decade and by requiring
manufacturers that participate
in Medicaid and Medicare to
shoulder some of the costs.
Research & Development
Incentives

COMPETITIVENESS
Top ten pharmaceutical companies are multinational and historically based in the U.S. and Western Europe

COMPANY
REVENUES
($ billions)
HEADQUARTERS
Pfizer 57.0 United States
Merck 39.0 United States
Novartis 38.5 Switzerland
Sanofi-Aventis 35.5 France
GlaxoSmithKline 35.0 United Kingdom
AstraZeneca 34.4 United Kingdom
Roche 32.8 Switzerland
Johnson & Johnson 26.8 United States
Eli Lilly 20.3 United States
Bristol-Myers Squibb 18.8 United States
Top 10 Pharmaceutical Companies, World - 2009
Drug manufacturers are adjusting to a more competitive environment by diversifying into biologicals, vaccines, branded generics, over-the-
counter medicines, and personal care products.

MARKET INTERNATIONALLY
The world pharmaceutical market in 2009 was estimated at $837 billion, according to IMS Health, a leading provider of
pharmaceutical industry data.
35.9%
31.5%
12.7%
11.3%
U.S. Europe Asia, Africa, Australia Japan
$300.3 billionUnited States
Europe $263.9 billion
Asia, Africa, Australia $106.6 billion
Japan $95 billion

YO U R LO G O19 Profile of the Pharmaceutical Industry
TRADING ENVIRONMENT
Foreign markets are critical to the U.S. pharmaceutical industry, with some multinational firms generating 40% of revenues
or higher from overseas sales.
U.S. Trade Patterns
In 2009, pharmaceutical exports from the U.S. were about
$46 billion and imports were $82.5 billion, resulting in a
negative trade balance of $35.5 billion. The largest U.S.
trading partners in 2009 were the European Union, Canada,
and Japan. The top 10 export destinations took ¾ of U.S.
shipments. Ireland accounted for about 1/6 of U.S.
pharmaceutical imports.
Several global trends are expected to increase
pharmaceutical consumption: world population growth,
higher disposable incomes, an increase in the aged
population with an associated rise in chronic diseases,
greater government outlays for healthcare, and increased
consumer demand for more effective medications.
BA
C
D
Trade
Impediments
Market
Opportunities
International
Trade

SHIFT TOWARD GENERICS
The U.S. relies on a strong generic pharmaceutical industry in order to keep the cost of prescription drugs from
rising, which in turn affects national health care expenditures.
50
54
58
63
66
70
73
78
81 82 83
40
37
33
28
25 23
20
16
14 12 11
0
10
20
30
40
50
60
70
80
90
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Generic Brand

PHARMACY ROLES

Team Introduction
Pharmaceutical industry roles
Pharmacist Pharmacy Technician
Under pharmacist supervision,
supply medicines to patients,
whether on prescription or
over the counter. Provide
information to patients and
other healthcare professionals.
Representative
A key link between
pharmaceutical companies and
healthcare professionals.
Responsibilities include
increasing awareness of the use
of pharmaceutical products.
Manufactuer
Pharmaceutical products play
an important role in healthcare.
Medicines are among the most
effective way to alleviate and
cure disease.
Responsibilities include a range
of care for patients, from
dispensing medications to
monitoring patient health and
progress to maximize their
response to the medication.

Immunizations
Available at pharmacy locations

Types of Immunizations
These are some immunizations that may be available at local pharmacies and administered by a pharmacist
1 Flu (Influenza) - Seasonal
2 Td (Tetanus, Diphtheria)
3 Tdap (Whooping Cough)
4 Meningitis (Meningococcal)
5 Pneumonia (pneumococcal)
6 Chickenpox (Varicella)
7 HPV (Human Papillomavirus)
8 Hepatitis A
9 Hepatitis B
10 MMR (Measles, Mumps, and Rubella)
11 Polio
12 Shingles (Herpes Zoster)

CONCLUSION
Pharmaceutical industry
Millions of dollars are invested in the
research, development, and marketing
of drugs. Manufacturers avail themselves
of patent-protection provision s to
receive a reasonable return on
investment. At the same time, the lower
costs makes the drug more affordable.
With the passage of time, generic drugs
enter the market and competition affects
prices, which helps reduce the cost of drug
therapy for millions.
Reductions in the cost of drug therapy can
be further supplemented during follow-up
with physicians and pharmacists.
The U.S. pharmaceutical industry is one of
the most critical and competitive sectors of
the economy. Research and development
of new drugs is the linchpin to its survival.
The U.S. continues to restructure
operations and diversify into biologicals,
generics and OTCs to replace sales from
drugs being lost to patent expirations, while
reducing its cost structure.
Shifts in Generic Drug Market Reduction of Costs Restructure and Diversity

Thank you!
Any Questions?

References
Bureau of Census, “Statistics of U.S. Businesses: NAICS 3254” (2007)
C. Adams and V. Brantner, “Estimating the Cost of New Drug Development: Is It Really $802 Million?”
Health Affairs. March/April 2006; Pharmaceutical Research and Manufacturers of America, “Pharmaceutical
Profile 2010,” pg 27.
IMS Health, Press release: “Global Pharmaceutical Market Growth of 5 to 8 percent annually through 2014,”
4/20/10
PhRMA, “Pharmaceutical Industry Profile 2010,” pg. 2
Somnath Pal (2013). Shifts in the Generic-Drug Market: Trends and Causes. U.S. Pharmacist. Jamaica. NY.
Retrieved from https://www.uspharmacist.com/article/shifts-in-the-generic-drug-market-trends-and-causes
The Statistical Portal (2016). Proportion of branded versus generic drug prescriptions dispensed in the United
States from 2005 to 2015. Retrieved from https://www.statista.com/statistics/205042/proportion-of-brand-
to-generic-prescriptions-dispensed/

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