The pharmaceutical industry plays a vital role in societies worldwide to help people live longer and healthier lives. It is a multi billion dollar industry that has contributed to the increase in life expectancy for men and women across the globe, has provided much needed vaccines and reduced pain and suffering, all while striving to eradicate and eliminate diseases.
Pharmaceutical companies have long boosted the global economy and have driven medical progress by researching, developing and bringing new medicines that improve health and quality of life for patients. The COVID-19 pandemic showed how the industry’s major companies can ramp up and accelerate research, development, production and distribution to deliver when the world most needs it.
The industry has reached unprecedented heights in the last number of years so this article will look to dive into the huge figures behind the growth.
Research & Development
The pharmaceutical industry is one of the most research-intensive industries globally, with companies investing significant amounts in research and development (R&D) to discover and develop new drugs. According to a report by the Tufts Center for the Study of Drug Development, the average cost of developing a new drug is approximately $2.6 billion.
It takes roughly around 10-15 years from the discovery of a new drug to its approval by regulatory authorities. This timeline can of course vary widely depending on the complexity of the drug and the success of the clinical trials. It goes without saying that is a huge undertaking.
In 2021 the pharmaceutical industry invested an estimated $45.13 billion in R&D in Europe. It directly employs some 840,000 people and generates about three times more employment indirectly – upstream and downstream – than it does directly according to a 2019 PWC report.
There is rapid growth in the market and research environment in emerging economies such as Brazil, China and India, leading to a gradual migration of economic and research activities from Europe to these fast-growing markets. A big shift has taken place in China in particular as the amount invested by its pharmaceutical industry in R&D has risen exponentially in the last 10 years.
With the advancement of Artificial Intelligence in drug development it offers intriguing possibilities for pharma with spending expected to be $3bn by 2025. Tens of millions could be saved every year with AI finding new efficiencies in the drug development processes and challenging the very low success rate in drug discovery, where just 10% of candidates make it into clinical development.
Exports
In the table above the figures for pharma exports in European countries are shown with Germany, Switzerland and Ireland leading the pack. Interestingly Ireland performs the best when it comes to trade balance with Switzerland and Germany falling in behind.
Sales
The world pharmaceutical (prescription) market is worth an estimated $1.48 trillion. The North American market (USA & Canada) remained the world’s largest market with a 49.1% share, well ahead of Europe, China and Japan. China has become a major player in the market although the projected pharmaceutical sales show that the established markets of North America and Europe will still be leading the way in 2025.
The pharmaceutical industry is a massive and complex sector that plays a crucial role in the healthcare industry. While it is highly profitable, it also faces significant challenges, including rising healthcare costs and increasing competition from generic drugs. Nonetheless, the industry continues to evolve and innovate, bringing new and improved drugs to market and driving progress in the field of medicine.
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