Pharmaceuticals Manufacture

Brief Excerpt from Industry Overview Chapter:

The US pharmaceuticals manufacture industry includes about 1,500 companies with combined annual revenue of about $200 billion. Major companies include Abbott, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, and Pfizer. The industry is highly concentrated: the 50 largest companies account for more than 80 percent of revenue.

COMPETITIVE LANDSCAPE

Demand for pharmaceutical manufacture 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. The industry is capital-intensive: average annual revenue per worker is about $750,000.

The pharmaceutical manufacture 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 industry, which is a source of many new medical treatments. To a large extent, traditional drug manufacturers are becoming development and marketing companies that acquire new drugs from smaller research companies.

PRODUCTS, OPERATIONS & TECHNOLOGY

Drugs are chemicals with beneficial biological activity. Modern drug development is an outgrowth of recent research into the specific causes of illness and disease, coupled with advances in chemistry and industrial technology that allow scientists to manufacture chemicals to improve these conditions. The explosion of scientific knowledge about human biology in the past 40 years, and in particular, the...