This Chapter starts with the introduction of pharmaceutical industry with its origin and phases of development

This Chapter starts with the introduction of pharmaceutical industry with its origin and phases of development. The industry got underway in earnest from the 1950s, due to the development of systematic scientific approaches, understanding of human biology and sophisticated manufacturing techniques. This chapter also emphasize on world pharmaceutical market and its revenue structure. The next section describe about world pharmaceutical production & sales, 90 percent of the world production located in a few high-income countries. In Figure 1.2, production values of the global pharmaceutical industry from 2006-2012 have been displayed. Figure 1.3, shows the share of global market based on sales. The projected growth of the world pharmaceutical market by region from 2009-2014 have been displayed in this chapter.
The next section of this chapter emphasize on research and development expenditure in pharmaceutical global market. The larger companies in the industry in general and multinational sector in particular are highly research and development intensive. The data on global trade in pharmaceutical industry have been discussed in this chapter.
1.2 ORIGIN AND PHASES
The first known drugstore was opened by Arabian pharmacists in Baghdad in 754, and many more soon began operating throughout the medieval and eventually medieval Europe. By the 19th century, many of the drugstores in Europe and North America had eventually developed into larger pharmaceutical companies. Most of today’s major pharmaceutical companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed. Switzerland, Germany and Italy had particularly strong industries, with the UK, US, Belgium and the Netherlands following suit.
Legislation was enacted to test and approve drugs and to require appropriate labeling. Prescription and non-prescription drugs became legally distinguished from one another as the pharmaceutical industry matured. The industry got underway in earnest from the 1950s, due to the development of systematic scientific approaches, understanding of human biology (including DNA) and sophisticated manufacturing techniques. Numerous new drugs were developed during the 1950s and mass-produced and marketed through the 1960s. These included the first oral contraceptive, “The Pill”, Cortisone, blood pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine (Thorazine), Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium (diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most prescribed drug in history, prior to controversy over dependency and habituation. Attempts were made to increase regulation and to limit financial links between companies and prescribing physicians, including by the relatively new U.S. Food and Drug Administration (FDA). Such calls increased in the 1960s after the thalidomide tragedy came to light, in which the use of a new anti-emetic in pregnant women caused severe birth defects. In 1964, the World Medical Association issued its Declaration of Helsinki, which set standards for clinical research and demanded that subjects give their informed consent before enrolling in an experiment. Pharmaceutical companies became required to prove efficacy in clinical trials before marketing drugs. Cancer drugs were a feature of the 1970s. From 1978, India took over as the primary center of pharmaceutical production without patent protection.
As a result of introduction and success of penicillin in the early forties and the relative success of other innovative drugs, research and development (R;D) became a major thrust area of the pharmaceutical industry. The industry expanded rapidly in the sixties, benefiting from new discoveries. In the 1960s attempts were made by the U.S. Food and Drug Administration (FDA) to increase regulation of pharmaceutical industries and to limit financial links between companies and prescribing physicians. In 1964, after the thalidomide tragedy (in which the use of a new tranquilizer in pregnant women caused severe birth defects in the new born child), the World Medical Association set standards for clinical research. Pharmaceutical companies were required to prove efficacy and safety of the drug in clinical trials before marketing them. Tighter regulatory controls were introduced in the seventies. The new regulations revoked permanent patents and established fixed periods on patent protection for branded products. As a result industries flourished by producing generic products and they started earning huge profits, because generic manufacturers do not incur the cost of drug discovery.
1.3 WORLD PHARMACEUTICAL MARKET
The global pharmaceutical industry revenue is forecasted to reach an estimated $1,226.0 billion by 2018, with good growth over the next five years (2013-2018). The industry is expected to register growth led by aging population, changing lifestyles, hectic daily activities, unhealthy eating habits, increasing incidence of chronic diseases across the entire global population providing growth opportunities for the industry players. The market will increase at a compound annual growth rate (CAGR) of 3–6% during the next five years, slowing from the 6.2% annual growth rate that occurred during the past five years. Absolute global-spending growth is expected to be $210–240 billion between 2011 and 2015 compared with $251 billion between 2006 and 2010. Removing the effect of exchange-rate fluctuations, absolute global-spending growth will be $230–250 billion on a constant dollar basis compared with $228 billion in the previous five years. For purposes of this analysis, the pharmaceutical market includes all types of biopharmaceuticals, including biologics, over-the-counter drugs, and traditional medicines distributed and administered through regulated delivery systems, such as pharmacies, hospitals, clinics, physician offices, and mail order. Spending figures are reported at ex-manufacturer estimates that do not reflect off-invoice discounts and rebates.
“The future level of spending on medicines has striking implications for healthcare systems and policy makers across the developed and emerging