The pharmaceutical industry is concentrated in the US and Europe, and the 10 biggest drug companies are located in those regions. Check out this pharmaceutical industry overview.
- Why Consider Investing in Pharmaceutical Stocks?
- Investing in Pharmaceutical Companies: What You Need to Know
- Pharmaceutical Industry Overview: Top International Regions for Drug Companies
- 5 Biggest Pharmaceutical Companies
- 5 Top Pharmaceutical ETFs
Looking for a pharmaceutical industry overview? Let’s start with the world’s biggest pharmaceutical markets, the US and Europe.
Most of the biggest pharma companies on Pharmaceutical Technology’s list of the 10 top pharmaceutical companies by market share are located in those two regions.
Areas like China and India have seen growth in recent years, but when it comes to the life sciences space — particularly the pharma industry — the US and Europe remain on top for consumption and development. That’s due to potent capital opportunities and demand for products and devices.
In these two locations, healthy and transparent systems allow public pharma companies to bring their products to market after proper vetting, and patents protect novel candidates and treatments for serious diseases. With that in mind, here the Investing News Network provides a pharmaceutical industry overview, breaking down the two top pharmaceutical regions.
Pharmaceutical industry overview: US
The US dominates the pharma market and trends, both in demand and drug development. In terms of pharmaceutical drugs, pricing remains a constant topic of debate in the country. According to STAT, prescription drug spending in the nation is estimated to add up to US$600 billion by 2023, up from an estimated US$500 billion in 2019.
Four of the top 10 drug companies on Pharmaceutical Technology’s list are headquartered in the US — Johnson & Johnson (NYSE:JNJ) ranks number one, Pfizer (NYSE:PFE) holds the number two spot, Merck (NYSE:MRK) comes in at number five and AbbVie (NYSE:ABBV) is in the eighth spot.
In terms of breakthrough medicinal products, in 2018 the US Food and Drug Administration’s (FDA) Center for Drug Evaluation and Research approved a record 59 novel pharmaceutical products. Most of the products were for rare diseases, including the first drug to treat smallpox and the first treatment for hypophosphatemia. The first cannabidiol-based drug was also approved by the regulatory agency.
In 2019, 48 novel medicines were approved by the FDA, the second highest figure in the last decade. A notable 42 percent of the approvals were for first-in-class drugs, including for postpartum depression and bladder cancer. Forty-four percent of the novel drug approvals were for rare diseases, such as tenosynovial giant cell tumor, a rare condition involving non-cancerous tumors around joint areas.
As of late 2020, a total of 42 novel medicines had been approved, including one, remdesivir, for the treatment of COVID-19.
The US is the world’s leader in pharmaceutical sector research and development (R&D), and since 1980, R&D efforts in the country have grown significantly, rising from US$2 billion to US$64.3 billion as of 2019. Similarly, the country is host to roughly 106,000 registered studies and 19,000 recruiting clinical studies.
US biopharmaceutical companies directly provide jobs to more than 810,000 Americans and indirectly support the jobs of 3.5 million Americans. Overall, the economic output of this work was valued at approximately US$1.2 trillion in 2014, making pharmaceutical manufacturing one of the most important sectors of the US economy. By 2026, it’s expected that the healthcare sector at large will comprise 19.7 percent of the US economy.
A strong intellectual property system that rewards innovation and the improvement of current treatments ensures a supportive pharmaceutical market for public companies, according to a report from the International Trade Administration. “The United States attracts the majority of global venture capital investments in start-up biopharmaceutical enterprises,” the document states.
Pharmaceutical industry overview: Europe
Three of the top 10 drug manufacturers on Pharmaceutical Technology’s list are enterprises headquartered in Europe: Switzerland is home to the number three and number four drug makers on the list, Roche (SW:ROG,OTCQX:RHHBY) and Novartis (NYSE:NVS,OTC Pink:NVSEF); the seventh spot is held by France’s Sanofi (NYSE:SNY,OTC Pink:SNYNF).
Evaluate Pharma forecasts that Roche “will be the leading prescription drug company in 2026 with forecast sales of US$61 billion.”
Europe represents the second largest pharmaceutical market in the world and was valued at US$219.9 billion in 2019. The European pharmaceutical market is expected to grow at a compound annual growth rate of 4.5 percent between 2019 and 2027.
Among the geographic markets, Europe is the number one exporter of pharmaceutical drugs, with shipments in 2019 totaling US$317.1 billion, or 80.7 percent of the global total. The countries experiencing the most growth in terms of pharma exports since 2015 are Denmark (up 485.1 percent), the Netherlands (up 60 percent), Italy (up 47.3 percent) and Switzerland (up 38.2 percent).
Europe is known for innovation as well, and there are many products in the R&D stages right now. One of the latest breakthrough innovations to come out of the region is Zolgensma (onasemnogene abeparvovec), a gene therapy for spinal muscular atrophy developed by Novartis.
Pharmaceutical industry overview: Global outlook
While the US and Europe are the frontrunners in the global pharmaceutical market, total prescription drug sales worldwide are projected to reach nearly US$1.4 trillion by 2026, according to Evaluate Pharma, “with orphan drugs and oncology products continuing to be high-performing segments.”
Oncology leads the pack in pharmaceutical R&D investment with a projected spend of US$82 billion in 2020. That’s expected to result in 152 novel FDA approvals in the next few years, as well as US$311 billion in drug sales in 2026. In that year, Evaluate Pharma expects that Merck’s cancer drug Keytruda will be the top-selling drug worldwide with US$24.9 billion in sales.
This is an updated version of an article first published by the Investing News Network in 2015.
Don’t forget to follow us @INN_LifeScience for real-time news updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.