Pharmacy Presentation

Profile of the Pharmaceutical IndustryBy Nancy Schwartz

2 Profile of the Pharmaceutical Industry

AgendaPharmaceuticals, biologicals, and the pharmacy

1 Industry Background

2 Characteristics

3 Market in the United States

4 Competitiveness

5 Markets Internationally

6 Trading Environment

7 Shift Toward Generics

8 Pharmacy Role

9 Immunizations

10 Conclusion


INDUSTRY BACKGROUNDDefinition and key products


Definition of IndustryPharmaceutical

The United States pharmaceutical industry is defined by the Census Bureau as companies engaged in researching, developing, manufacturing, and marketing drugs and biologicals for human or veterinary use.

• “Biotechnology” has been defined by the U.S. Department of Commerce and the White House of Science and Technology as a set of enabling “Technologies that use organisms or its components to make products; or to modify plants, animals, and micro-organisms to carry desired traits.”


Key ProductsDrugs and biologicals

Key products of the pharmaceutical industryMain products are drugs and biologicals, which are substances intended for use in the diagnosis, cure, mitigation, treatment or prevention of diseases. Chemically-derived drugs are produced in forms such as pills, tablets, capsules, vials, ointments, powders, solutions, and suspensions. Biologicals include a wide range of products such as vaccines, therapeutic proteins, blood and blood components, anti-sera, and tissues.


Codes for pharmaceuticals and biotechnologyNAICS is the standard used by Federal statistical agencies, such as the Census Bureau and the Bureau of Labor Statistics, to classify business establishments for the purpose of collecting, analyzing, and publishing data related to the U.S. economy.

North American Industry Classification System (NAICS)


CHARACTERISICSLarge, diversified and globalized, the U.S. pharmaceutical industry is one of the most critical sectors in economy


Dimensions of Industry

EmploymentMay 2010 the industry employed about 416,000 persons at pharmaceutical manufacturing and biotechnology research firms.

Manufacturing firms employed 278,000

Biotechnology research employed 138,000

Research and DevelopmentThe pharmaceutical industry is a close second to the computer and electronics sector.

The pharmaceutical industry reports that 2,950 medicines are in development, up from 1,800 a decade earlier.


Product SectorsOriginator chemical drug, generics, over-the-counter, active ingredients, excipients, biologicals, and biosimilars

Originally chemically-synthesized drugs

• Are developed as a result of extensive research and development and clinical trials in both humans and animals prior to being approved by the U.S. Food and Drug Administration (FDA)

• The originator relies on patents and other forms of intellectual property rights to justify the investment required to bring a product to market

• The cost of bringing a new drug to market in the U.S. has been estimated from $500 million to more than $2 billion

• One in 1,000 compounds tested makes it to human clinical trials, one out of five drugs tested in humans is approved, and two out of ten marketed drugs generate revenues greater than research and development costs.


Generic Drugs Duplicative copies of brand name drugs

Chemically-synthesized drugs that contain the same active ingredient, and are identical in strength, dosage form, and route of administration.

Once patent has expired, a manufacturer can produce a generic drug that references an originator drug that was approved under the Drugs and Cosmetic Act, as long as the FDA grans final approval.

Generic drugs are required to have the same active ingredients, strength, dosage form, and route of administration as the brand name products, but generic does not need to contain the same inactive ingredients as the brand product.


Over-the-counter drugs are considered by regulators to be safe for self-diagnosis and self-medication.

In the United States, there are an estimated 100,000 over-the-counter drug products marketed and sold in a variety of outlets such as pharmacy, grocery stores, and other retail stores.

Over-the-counter drugs may result due to extensive market use that enables regulators to determine that the product is safe to dispense without a prescription.

In addition, the originator may move to apply to have a drug move to over-the-counter status upon patent expiration.

The Federal Drug Administration (FDA) determines if a drug can be sold as an over-the-counter medication.

Over-the-CounterConsumers do not need prescriptions to purchase the drugs

Y O U R L O G O12 Profile of the Pharmaceutical Industry

Pharmaceutical SubstancesActive Pharmaceutical Ingredients (APIs) and Excipients

Active Pharmaceutical IngredientsMedication, in dosage form, is composed of active pharmaceutical ingredients and excipients. APIs are the ingredients that make drugs effective.

ExcipientsExcipients are the inert substances that give a medication its form, such as cornstarch or sterile water and serve as a delivery vehicle to transport the active ingredient to the site in the body where the drug is intended to exert its action.

APIs and Excipients must meet standardsEstablished by the pharmaceutical standards-setting bodies (e.g. pharmacopeias)Including purity, toxicity, and absorption rates.


Biologicals and BiosimilarsBiotech drugs

Biologicals• Referred to as “biotech” drugs, “large-molecule weight” drugs or “biopharmaceuticals”.

• Biological drugs are derived from living material (human, animal, microorganism, or plant).

• Are vastly larger and more complex in structure, and thus are difficult to characterize well.

Biologicals• Are versions of biological products that reference the originator product in applications

submitted for marketing approval to a regulatory body.

• Healthcare reform legislation in March 2010 has the FDA authorized to approve biosimilars, or follow-on versions of biologic drugs that were approved.


MARKET IN THE UNITED STATES


U.S. Market SizeDomestic Environment

The Orphan Drug Act in 1983 allows manufacturers that develop drugs used to treat diseases that affect less than 200,000 people in the U.S. to obtain market exclusivity for seven years following FDA approval and tax credit.

Regulatory Environment

The FDA regulates the testing, approval, production and marketing of drugs and biologics. Other organizations that develop drug quality and registration standards include the U.S. Pharmacopoeia, ICH, and World Health Organization.

Import SafetyThe U.S. drug supply is considered one of the safest in the world, the globalization of the pharmaceutical supply chain has increased challgenges for the FDA and manufacturers in ensuring that imported ingredients and finished dosage drugs meet safety and efficacy standards.

Healthcare FinanciingThe healthcare reform law has a significant impact on the pharmaceutical industry by both expanding the pool of insured potential consumers by 32 million people over the next decade and by requiring manufacturers that participate in Medicaid and Medicare to shoulder some of the costs.

Research & Development Incentives


COMPETITIVENESSTop ten pharmaceutical companies are multinational and historically based in the U.S. and Western Europe


COMPANY REVENUES ($ billions) HEADQUARTERS

Pfizer 57.0 United States

Merck 39.0 United States

Novartis 38.5 Switzerland

Sanofi-Aventis 35.5 France

GlaxoSmithKline 35.0 United Kingdom

AstraZeneca 34.4 United Kingdom

Roche 32.8 Switzerland

Johnson & Johnson 26.8 United States

Eli Lilly 20.3 United States

Bristol-Myers Squibb 18.8 United States

Top 10 Pharmaceutical Companies, World - 2009Drug manufacturers are adjusting to a more competitive environment by diversifying into biologicals, vaccines, branded generics, over-the-counter medicines, and personal care products.


MARKET INTERNATIONALLYThe world pharmaceutical market in 2009 was estimated at $837 billion, according to IMS Health, a leading provider of pharmaceutical industry data.

35.9%

31.5%

12.7%

11.3%

U.S. Europe Asia, Africa, Australia Japan

$300.3 billionUnited States

Europe $263.9 billion

Asia, Africa, Australia $106.6 billion

Japan $95 billion

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TRADING ENVIRONMENTForeign markets are critical to the U.S. pharmaceutical industry, with some multinational firms generating 40% of revenues or higher from overseas sales.

U.S. Trade PatternsIn 2009, pharmaceutical exports from the U.S. were about $46 billion and imports were $82.5 billion, resulting in a negative trade balance of $35.5 billion. The largest U.S. trading partners in 2009 were the European Union, Canada, and Japan. The top 10 export destinations took ¾ of U.S. shipments. Ireland accounted for about 1/6 of U.S. pharmaceutical imports.Several global trends are expected to increase pharmaceutical consumption: world population growth, higher disposable incomes, an increase in the aged population with an associated rise in chronic diseases, greater government outlays for healthcare, and increased consumer demand for more effective medications.

BA

C

D

Trade Impediments

Market Opportunities

International Trade


SHIFT TOWARD GENERICSThe U.S. relies on a strong generic pharmaceutical industry in order to keep the cost of prescription drugs from rising, which in turn affects national health care expenditures.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

10

20

30

40

50

60

70

80

90

50 54

58 6366 70

73 78

8182

83

4037

3328

25 23 2016

14 12 11

Generic Brand


PHARMACY ROLES


Team IntroductionPharmaceutical industry roles

Pharmacist Pharmacy TechnicianUnder pharmacist supervision, supply medicines to patients,

whether on prescription or over the counter. Provide

information to patients and other healthcare professionals.

RepresentativeA key link between

pharmaceutical companies and healthcare professionals. Responsibilities include

increasing awareness of the use of pharmaceutical products.

ManufactuerPharmaceutical products play

an important role in healthcare. Medicines are among the most effective way to alleviate and

cure disease.

Responsibilities include a range of care for patients, from dispensing medications to

monitoring patient health and progress to maximize their

response to the medication.


ImmunizationsAvailable at pharmacy locations


Types of ImmunizationsThese are some immunizations that may be available at local pharmacies and administered by a pharmacist

1 Flu (Influenza) - Seasonal

2 Td (Tetanus, Diphtheria)

3 Tdap (Whooping Cough)

4 Meningitis (Meningococcal)

5 Pneumonia (pneumococcal)

6 Chickenpox (Varicella)

7 HPV (Human Papillomavirus)

8 Hepatitis A

9 Hepatitis B

10 MMR (Measles, Mumps, and Rubella)

11 Polio

12 Shingles (Herpes Zoster)


CONCLUSIONPharmaceutical industry

Millions of dollars are invested in the research, development, and marketing of drugs. Manufacturers avail themselves of patent-protection provision s to receive a reasonable return on investment. At the same time, the lower costs makes the drug more affordable.

With the passage of time, generic drugs enter the market and competition affects prices, which helps reduce the cost of drug therapy for millions.

Reductions in the cost of drug therapy can be further supplemented during follow-up with physicians and pharmacists.

The U.S. pharmaceutical industry is one of the most critical and competitive sectors of the economy. Research and development of new drugs is the linchpin to its survival. The U.S. continues to restructure operations and diversify into biologicals, generics and OTCs to replace sales from drugs being lost to patent expirations, while reducing its cost structure.

Shifts in Generic Drug Market Reduction of Costs Restructure and Diversity


Thank you!Any Questions?


ReferencesBureau of Census, “Statistics of U.S. Businesses: NAICS 3254” (2007)

C. Adams and V. Brantner, “Estimating the Cost of New Drug Development: Is It Really $802 Million?”Health Affairs. March/April 2006; Pharmaceutical Research and Manufacturers of America, “Pharmaceutical Profile 2010,” pg 27.

IMS Health, Press release: “Global Pharmaceutical Market Growth of 5 to 8 percent annually through 2014,” 4/20/10

PhRMA, “Pharmaceutical Industry Profile 2010,” pg. 2

Somnath Pal (2013). Shifts in the Generic-Drug Market: Trends and Causes. U.S. Pharmacist. Jamaica. NY. Retrieved from https://www.uspharmacist.com/article/shifts-in-the-generic-drug-market-trends-and-causes

The Statistical Portal (2016). Proportion of branded versus generic drug prescriptions dispensed in the United States from 2005 to 2015. Retrieved from https://www.statista.com/statistics/205042/proportion-of-brand- to-generic-prescriptions-dispensed/

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