The roots of today’s pharmaceutical industry actually lie in the ancient pharmacologies and apothecaries that provided little more than traditional medicinal solutions as far back as the early middle ages, with few if any guarantees at all. But the modern pharmaceutical industry as we know it today really does have its seeds in the second half of the nineteenth century. The advances in penicillin and other chemical cures for diseases such as smallpox, measles, and even influenza helped to revolutionize how medicine was conducted. But this was only the beginning. Modern drug discovery and subsequent development have led to the creation of a wealth of new pharmaceuticals – or, to put it more bluntly, drugs.
What drives the pharma industry? And why is it that pharmaceutical products are now available in such numbers that it has become synonymous with the American dream? The pharmaceutical industry is driven by the need to treat disease – to keep people healthy and able to work. It’s also fueled by the need to generate billions of dollars in revenue annually, which fuels the company growth as well.
Beyond these core reasons, however, the pharma business is also impacted by other factors such as demand, economics, and competition. Demand drives the amount of money spent by consumers, which in turn drives the economy. Economically, demand is driven by overall inflation and economic situation. In other words, people want more of everything. The pharma industry, like the food industry, is no exception. As a result, pharma companies need to continually develop products that will appeal to a greater range of consumers in order to sustain healthy revenues in the long run.
Beyond these core issues is the issue of competition, which can become a very real and very potent force for pharma revenues. There are many other issues that can affect pharmaceuticals, including pricing, marketing, distribution, reimbursement, licensing, policies and guidelines, and regulations. As a result, it is important to consider pharma strategies that will address each of these areas individually in order to address potential threats and increase opportunities for development of new products.
One of the issues that all pharmaceuticals face in the developing world is access to resources and healthcare. Developing countries can be a major source of new medicines, but developing countries have limited financial resources. In the United States, a similar situation arose when Canada’s pharmaceuticals became less focused on research and development and started promoting drugs through the creation of small generic drugs. Generic drugs are not subject to the same patent protection standards as patented drugs are, so generic drugs companies can move quickly to bring products to the market and sometimes meet the demands of a new hepatitis treatment before the other patented drugs have even had a chance to receive a fair shake from the medical community.
Other problems facing the pharmaceutical industry include the impact of price increases on research and development. The pharmaceutical industry has developed multiple mechanisms for dealing with exogenous factors, such as price hikes, which can negatively affect research and development budgets. A great deal of pharmaceutical company R&D is spent on developing drugs that can treat only some of the diseases that affect a specific population. As a result, pharmaceuticals spend more on research and development than they do on marketing, and the result is that the products developed by pharmaceutical companies do not reach the market until they are well-marketed, often years after they have been approved for human use.