Pharmaceutical industry expenditure on the up

Edited by the Engineeringtalk editorial team Nov 24, 2003

The long-term prospect for the pharmaceutical industry looks good.

Capital spending in the pharmaceutical industry is driven primarily by new drug development, along with pressure to maintain financial performance, shorten time-to-market, and improve quality.

Drug makers are also investing in the technologies and infrastructures necessary to achieve and demonstrate compliance with current and future regulatory requirements.

The long-term prospect for the pharmaceutical industry looks good.

"Today, the future of the pharmaceutical industry is probably matched by no other industry in the world.

The 21st century may well be characterised as the century of pharmaceuticals and biomedicines", according to Asish Ghosh, author of ARC's "Pharmaceutical industry plant-level expenditures worldwide outlook".

The pharmaceutical industry is still a low volume, high-margin business, but this is gradually changing as the industry begins to face pressures for which many drug manufacturers are ill prepared.

These pressures are driven by weak development pipelines, crowding of therapeutic categories, new generic competition, new FDA responses, increasing socio-political price pressures, and new drug delivery systems requirements.

The most consistently profitable drug companies will be those that succeed in shortening development times and terminating unpromising drugs earlier in the development cycle.

The US Food and Drug Administration (FDA) has traditionally led the pack with its strict policing of the industry and the move to electronic records and signatures.

Compliance with regulations will become even more expensive with the introduction of new European Union legislations.

The USA, Japan, and Europe are the key markets for the international pharmaceutical industry and make up the great majority of global pharmaceutical sales.

However, during the last decade there have been major differences in the manner in which the healthcare systems in these countries have developed.

This has affected the way in which pharmaceutical companies invest in R and D in these regions.

The pharmaceutical industry believes that its ability to discover and develop innovative new drugs depends on the competitive nature of the markets in which it operates and the availability of scientific talent.

The recent WTO agreement regarding the manufacture of drugs under patent for use in developing countries will accelerate the growth of drug manufacturing in both developed and developing countries for export to underdeveloped regions of the world.

In many countries, law controls the prices of pharmaceutical products.

Governments may also influence the prices of pharmaceutical products through their control of national healthcare organisations, which may bear a large part of the cost of supplying such products to consumers.

In some countries, such as France and Japan, the prices of individual products are regulated.

In the UK, prices are controlled by reference to limits upon the overall profitability, measured by the rate of return on capital employed, of sales of products supplied under the National Health Service.

In the USA, debate over the reform of the healthcare system has also resulted in an increased focus on pricing.