The Competitive Status of the U.S. Pharmaceutical Industry The Influences of Technology in Determining International Industrial Competitive Advantage (1983) / Chapter Skim
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1. Overview of U.S. Pharmaceutical Industry
1. Overview of U.S. Pharmaceutical Industry
Pages 7-20
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From page 7... ...
On the basis of this innovation, American firms were prey dominant in world markets during the period 1950 to 1960, accounting for a large majority of research expenditures and new products, over half of world pharmaceutical production, and one third of international trade in medicinals. American preeminence persisted, though in attenuated degree, through the 1960s.
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From page 8... ...
Our own Sharp and Dohme catalog did not carry a single exclusive prescription medicine. We had a broad range of fluids, ointments, and extracts, as did other firms, but we placed heavy emphasis on biological medicines as well.
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From page 9... ...
At the outset of the 1 950s, pharmaceutical competition remained largely national in scope, with the significant exception of the Swiss multinationals. Economic linkages among the various national pharmaceutical industries were largely confined to international trade, and even then were relatively unimportant.
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From page 10... ...
In general, the choice between licensing and multinational investment depended on the breadth of a firm's product line. American and Swiss firms that enjoyed a surge in the number of new patented drugs during the 1 950s and 1 960s were able to spread the substantial overhead costs of direct foreign investment over the several drugs distributed abroad by their firms, making direct investment relatively less burdensome.
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From page 11... ...
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From page 12... ...
Proprietary drugs are thu s characterized by high advertising intensity but a very low research intensity. Sales of proprietary drugs have grown at a markedly slower rate than other pharmaceutical sales and currently comprise less than 15 percent of total industry sales, as can be s een in Table 1-4.
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From page 13... ...
The second constraint is, of course, that pharmaceutical innovation is a highly uncertain process that does not predictably yield therapeutically, let alone commercially, important products. Numerous firms have expended substantial funds for pharmaceutical RED without development of a commercially successful product.
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From page 14... ...
In short, competitive advantage in sales of patented drugs, by far the most financially lucrative segment of the modern pharmaceutical industry, depends crucially on the ability of the firm to produce a slow but steady stream of commercially successful new products through industrial innovation. BENEFITS AND RISKS 0= TECHNICAL CHANGE Th e rapid introduction of novel and complex products in any industry presents both social benefits and social costs.
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From page 15... ...
Surgery, radiotherapy, and diagnostic tests are all important, but the ability of health care providers to alter health outcome - -Dr. Walsh McDermott's "decisive technology"- - epends primarily on drugs.
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From page 16... ...
New drugs and vaccines developed since the 1920s have also been strikingly effective against typhoid, whooping cough, poliomyelitis, measles, diphtheria, and tetanus; more recently great advances have been made in hormonal drugs, antihypertension drugs, antihistamines, anticoagulants, antipsychotic drugs, and antidepressants.7 Tables 1-7 and 1-8 illustrate the continuing influence of pharmaceutical products in lessened incidences of disease and death in the United States.8 These statistics provide documentation for the impact of ethical drugs on public health, but only few data are available to quantify the additional importance of pharmaceuticals for private health. These private health benefits are often of considerable importance: the effects of antiinflammatory agents on the functional capacity of arthritis patients, the implications of antianxiety and antidepressive drugs for patient quality of life, the cost savings of cimetidine in treatment of peptic ulcers.
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From page 17... ...
pharmaceutical firms caused by these reforms is an explicitly and appropriately secondary reason for their adoption. One important point, however, should be made: any balanced and appropriate policies toward the pharmaceutical industry should seek to sustain a large and rapid flow of truly safe and significant new drugs from American firms.
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From page 18... ...
While the LDC concerns and the WHO responses are of significance from the standpoints of world public health and international politics, the fact remains that LDC markets account for only a small minority of world ethical drug sales and virtually none of new drug intro
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From page 19... ...
4. In recent years the growth of prescription drug sales has markedly slowed, largely due to the decreased frequency of new drug introductions.
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From page 20... ...
9. For a brief discussion of the nature and significance of private health benefits, see William Hubbard, "Defining the Role of Medicinals in Health," presentation to the Tenth IFPM A Assembly, October 1980.
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