Document Type

Journal Article


In 2006 the global pharmaceutical market was worth an estimated US$643 billion (IMS 2007a)—a sum equivalent to 84 per cent of Australia’s GDP for that year. The ten largest pharmaceutical corporations collectively accounted for over US$282 billion (Consumers International 2007). However, the astronomical growth of the market during the 1980s and 90s has slowed dramatically and today big pharma is in big trouble. To a large extent the difficult financial outlook for the big firms is an effect of their dependence on ‘blockbuster’ drugs—usually defined as drugs generating more than $1 billion in annual sales. For instance, the world’s biggest selling drug is Pfizer’s anti-cholesterol treatment Lipitor, which alone generates nearly $13 billion of that company’s revenue and over 40 per cent of its profits (Consumers International 2007). But between 2008 and 2012 patent protection on a number of blockbuster drugs will expire and cheap generics will put an end to the monopoly profits earned by these products. Meanwhile, during the last decade the development of new drugs has slowed markedly and there are few candidate blockbusters in the pipeline. One industry analyst estimates that just between 2010 and 2011, big pharma will lose 28 per cent of current sales (Herper 2007). A recent report by the consultancy group Accenture calculates that up to $1 trillion of 'enterprise value' (which measures future profitability) has been wiped out as investors have lost faith in the industry's future profitability. In response to poor share performance the world’s largest drug firm, Pfizer, announced a restructuring program in January 2007 that cuts 10,000 jobs (one tenth of its global workforce) and closes five research centres and several manufacturing facilities (‘Billion Dollar Pills’ 2007). Industry analysts now identify the most promising growth prospects with emerging markets (or ‘pharmerging markets’ in industry jargon), with China, Brazil, Mexico, South Korea, India, Turkey and Russia identified as the countries with the most sales growth potential in the near future (IMS 2007b).