The Pharmaceutical Industry: Key success factors High profit after launching the product: Before a pharmaceutical company establishes a new product it takes them a lot time and work. The whole project, from the beginning until the end, where the medicine can be launched can last about 12 years. But once the drug is on marked the producing company has very high margins. On average, a Blockbuster drug is for about eight years on the marked and each year it has revenues in the range of one billion US$. That means, that the producing company has with one Blockbuster drug in eight years about eight billion US$. High demand: There is not only a demand for all kind of drugs, there is a strong need for some of them. Another very important reason is the fact, that in some countries, the healthy system is passed into private hands. That turns the medical health care to a luxury good. People with less money, stay in the normal public insurance system. Those who have a higher income can change to the private health care system. If you are in this private system, doctors prescribe very expensive drugs and provide you with a better service, because they make more money with it. (Example from Germany) Demographic reasons: Strict legalizations Before you bring a drug on the marked, it has to be legal approved by government organizations. But before the drugs can be approved companies have to start developing. That takes them a lot time and over all a high amount of money before they know, that there product will be really approved. The research and development costs in this industry are very high. The fact that companies have to invest such a high amount of money is a big risk for them. Those companies that have already established some successful drugs have advantages against smaller companies. You need money and time, which smaller and new companies probably not always have. So once you are an established and successful company in this
