Companies in this industry manufacture and process pharmaceutical products. Major companies include Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, Merck & Co, and Pfizer (all based in the US), as well as AstraZeneca (UK), Bayer (Germany), GlaxoSmithKline (UK), Novartis (Switzerland), Roche Holding (Switzerland), and Sanofi (France).
Annual worldwide revenue from pharmaceutical manufacturing is more than $1 trillion and is expected to grow to about $1.4 trillion by 2020, according to market intelligence firm IMS Health. Worldwide spending on medicines is increasing due to economic growth in developing nations and the rising cost of specialty drugs. The US and the EU remain the largest importers of pharmaceuticals, but manufacturers are targeting emerging economies for growth.
The US pharmaceutical manufacturing industry includes about 1,700 companies with combined annual revenue of about $200 billion.
Demand for pharmaceuticals is driven by the desire to cure illness and disease. The profitability of individual companies depends on their ability to discover and market new drugs. Large companies benefit from their economies of scale in research, manufacturing, and marketing. Small companies can compete effectively by specializing in drugs that target one or two specific ailments and by partnering with larger drug makers. The US industry is highly concentrated: the 50 largest companies account for about 80% of revenue.
The pharmaceutical manufacturing industry is marked by rapid advances in scientific knowledge that produce ever-more effective medicines. The traditional drug manufacturing industry increasingly overlaps with the biotechnology...