|
|
|
|
|
|
|
I. Challenges Faced by the Pharmaceutical Industry |
|
|
|
|
|
|
|
|
Global economic pressures and access to advanced technologies in the 90s have spawned a revolution in how business is being conducted throughout the world. Changes in the pharmaceutical industry are the epitome of this fact. |
|
|
|
|
|
|
|
|
Public concern about the rapidly escalating costs of health care, particularly in the USA and Europe, reached a fever pitch in the early years of this decade. Prescription drugs, a highly visible component of health care expenditures, came under especially heavy attack. Consequently, the five largest pharmaceutical markets in the world grew by only 38% in 1992 [1] compared to a +10% growth historically (see Table 1). Similar sluggish performance was registered in 1993 and 1994, with Germany and Italy actually experiencing a market size reduction [2,3]. |
|
|
|
|
|
|
|
|
Legislation in Europe in 1993 required pharmaceutical price cuts of 2.5% for three of the next five years in the UK, reductions of 5% in France, and an equivalent amount in Germany on products that are exempt from reference pricing, while Spain and Portugal demanded a 3% reduction, and Denmark and Norway introduced reference pricing. Meanwhile in Italy, 700 products were removed from the reimbursement list [4]. In the United States, the proposed legislation for Health Care Reform in 1993, though not passed, projected sales losses of 11%, industry tax rates greater than 55% of pretax income, with the total cost of the legislation equating to 25% of the industry's R & D investment [5]. |
|
|
|
|
|
|
|
|
Not only has the industry encountered pressures on sales revenue, it has also recognized major increases in R & D expenses [6] as shown in Table 2. The growing complexity of product development and the demands of regulatory agencies have contributed substantially to these increases. According to the Boston Consulting Group, the average number of patients in clinical trials per New Drug Application has almost tripled from 1321 in 19811984 compared |
|
|
|
|
| Table 1 Five Leading National Pharmaceutical Markets, 1992 | | Market | | | | | United States | | | | | Japan | | | | | Germany | | | | | France | | | | | Italy | | | | | Source: Ref. [1]. |
|
|
|