INDUSTRY ANALYSIS

Industry Analysis

Industry Analysis

Introduction

The pharmaceutical industry continues to witness major challenges like sluggish prescription trends, EU pricing pressure, intensifying generic competition, pipeline failures and limited late-stage catalysts. The next five years are expected to reflect a significant imbalance between new product introductions and patent losses (Dunn, 2006). This paper summarizes the results of our global pharmaceutical industry analysis and is intended to increase awareness of the general public - investors, policy makers, managers, employees of the companies - about its current developments. The paper has the following major goals:

1) To analyze the current situation, major challenges and the prospects of the pharmaceutical industry;

2) To identify major players of the global pharmaceutical industry and make a comparative analysis of their business practices and financial results;

3) To determine the relative position of the U.S. pharmaceutical companies in the global pharmaceutical industry, as well as to reveal opportunities for further strengthening of their positions.

Growth Forecasts for 2011

According to IMS Health, the global pharmaceutical industry should record growth of 5-7% in 2011 representing sales of approximately $880 billion.

Pharmerging markets, consisting of 17 countries, are slated to grow in the range of 15-17% in 2011, representing sales of $170-$180 billion. China, which is now the third largest market in the world, is expected to grow 25-27% to more than $50 billion in 2011.

As far as developed markets are concerned, Japan is slated to grow 5-7% in 2011. Major European markets like the UK, Germany, France, Italy and Spain are expected to deliver combined growth of 1 3%. A similar growth rate is expected from Canada. The US market, which is expected to retain its position of the single largest pharma market, is slated to grow 3-5% to $320-$330 billion.

Major players of the world pharmaceutical industry

The pharmaceutical industry is a multi-billion dollar industry with about 200 major companies making it up. One company does not control an overwhelming portion of the market share, though the most profitablecompanies control a share in the mid-to-high single digits.

The pharmaceutical industry is characterized by a high level of concentration with fifteen multinational companies dominating the industry. Numbers provided in this table include sales of all subsidiaries and affiliated companies that are consolidated in annual reports of the corresponding companies. In order to facilitate a comparison of different companies revenues of all of them are shown in US dollars; financial data of the companies with headquarters outside of the U.S. was converted ...