Pharmaceutical Companies
business of Pharmaceutical companies:-
Pharmaceutical companies are not especially big in terms of revenues, but they are very profitable. For instance, in
2001, Pfizer was ranked 127th in the world on total revenue (US$32·2 billion) but 7th in terms of profit.29 The pharmaceutical industry is the most profitable business sector, with an average 16·2% profit, ahead of financial companies (11·6%) and beverages (10%).30 However, net income growth has declined, and growth in the value of drug stocks has been reversed in the past year.31
In 2000, the global market value of prescription drugs sold by leading companies exceeded US$320 billion, a rise of 11% over the previous year.32 Over 46% of the market value was from sales in North America.32 Until recently drug company shares consistently outperformed market indices (table 1). By February, 2001, Pfizer, had become the 18th largest market entity, bigger than the listed domestic equity markets of many countries, including
South Africa and South Korea.33
Mergers of pharmaceutical companies have been common, and the number of major international manufacturers is predicted to fall from over 30 to around
12 in the next 10 years.34 The main point of mergers seems to be to replenish depleted product pipelines, cut costs
(including research and promotion), and maintain growth and profitability, rather than to reduce prices to customers
(see also article by Abraham, published in The Lancet on
Nov 9, p 1498).
The net profits of the industry generally exceed the amounts that are spent on research and development
(table 1). Average claimed expenditure on research and development by major companies was 16% of their revenue in 2000 (table 1). According to the
Pharmaceutical Research and Manufacturers Association of America, this is substantially higher than for other industry sectors, which spend on average 4% (9% in the case of the software industry).35 However, most controversy surrounds the
Pharmaceutical companies are not especially big in terms of revenues, but they are very profitable. For instance, in
2001, Pfizer was ranked 127th in the world on total revenue (US$32·2 billion) but 7th in terms of profit.29 The pharmaceutical industry is the most profitable business sector, with an average 16·2% profit, ahead of financial companies (11·6%) and beverages (10%).30 However, net income growth has declined, and growth in the value of drug stocks has been reversed in the past year.31
In 2000, the global market value of prescription drugs sold by leading companies exceeded US$320 billion, a rise of 11% over the previous year.32 Over 46% of the market value was from sales in North America.32 Until recently drug company shares consistently outperformed market indices (table 1). By February, 2001, Pfizer, had become the 18th largest market entity, bigger than the listed domestic equity markets of many countries, including
South Africa and South Korea.33
Mergers of pharmaceutical companies have been common, and the number of major international manufacturers is predicted to fall from over 30 to around
12 in the next 10 years.34 The main point of mergers seems to be to replenish depleted product pipelines, cut costs
(including research and promotion), and maintain growth and profitability, rather than to reduce prices to customers
(see also article by Abraham, published in The Lancet on
Nov 9, p 1498).
The net profits of the industry generally exceed the amounts that are spent on research and development
(table 1). Average claimed expenditure on research and development by major companies was 16% of their revenue in 2000 (table 1). According to the
Pharmaceutical Research and Manufacturers Association of America, this is substantially higher than for other industry sectors, which spend on average 4% (9% in the case of the software industry).35 However, most controversy surrounds the