Pharmaceutical industry expenditure

Poliak (1998) has estimated the cost of R D for the pharmaceutical industry to be about 16 % of the expenditure for new drugs. For intermediates this percentage is certainly lower but still significant. 

Critics of the pharmaceutical industry as it operates in major industrialized countries base their evaluations in large part on four highs (1) high R D cost, (2) high marketing expenditures, (3) high prices, and (4) high profits. 

Rarely in the pharmaceutical industry is a new plant built to accommodate a new process or product It may happen in the petrochemical industry, where economies of scale mean that product-specific plants are designed from scratch and then continuously de-bottlenecked over a number of years to increase and optimize productivity, but it is not the case in the pharmaceutical industry, where the number of types of unit operations in use is generally fairly small and fixed. Within a multi-purpose chemical plant commonly found in the batch chemical industry, it is common practice for process designers to make do with what is available on a given site to avoid capital expenditure and plant shut-down for modifications. 

Yet, as explained in the preceding chapter [1], the immediate prospects for the pharmaceutical industry are fairly bleak While the expenditures for research and development continue to rise almost exponentially, the outcome in terms of new successful drugs has shown a clear tendency to decline, and today the development costs for a single dmg can easily run into the one billion Euro bracket Moreover, two out of three drugs fail in the last phase of the development process, at a stage where enormous investments in time and money have already been made. 

In recent years, the pharmaceutical industry has come under increasing pressure to reduce the time as well as the expenditure for the discovery and development of... 

The use of e-marketing in the pharmaceutical industry is still in its infancy and is subject to increasing regulations. E-detailing is used widely in the United States and increasingly in Europe, to provide doctors with secure online medical and product information. In 2001, six pharmaceutical companies out of 40 in the United States and 19 products out of 94 represented 80% of online advertising expenditure (Worah and Bimbrahw). 

Drug discovery is a long, arduous, and expensive process. It was estimated that the total expenditure for research and development in the U.S. pharmaceutical industries... 

The effectiveness of various measures to contain expenditure on medicines in the UK can only be assessed in the context of the situation in other European Union countries. Table 21.1 gives data for the total expenditure on health care as a percentage of gross domestic product (GDP), expenditure on medicines as a percentage of total healthcare spend, the national pharmaceutical industry s research and development expenditure in euro-millions, the general price index and the medicines price index nationally compared to a European price of 100, and the national pharmaceutical consumption per capita expressed as defined daily doses (DDD). These comparisons are based on OECD Health Data 2000. 

Governments are increasingly worried about the rise in health care expenditure. The pharmaceutical industry would say that drugs provide the best possible value within that system and permit treatment at home of patients who would otherwise be costing much more in hospital. Drugs... 

---