Astra Zeneca
A look at a key feature of Astra Zeneca business
The pharmaceutical industry is renowned for its reliance on long-term research and development of new products. The vital concern for public safety drives the extensive development time required before a new drug or treatment is licenced for use. Different regulations apply in different markets. But once a new pharmaceutical product is launched, the rewards for its success can be massive; a look at the sales figures for AstraZeneca's most popular drug demonstrates this point.
What happens though when the supply of new products dries up? Of course this would mean disaster for companies who have invested so heavily in new product development.
Is the industry facing such a dire outlook?
Well, the new product 'pipeline' as it's called in the industry, appears to be under some pressure.
- In 2001, the US Food and Drug Administration (FDA) licences fewer new drugs than in any of the previous five years. This, despite the doubling of research and development expenditure by the industry since 1997.
- Between 1997 and 2001, 12 drugs with potential sales of some $11 billion were withdrawn from the market on safety grounds.
- Within the next five years, the US patents on thirty-five drugs will expire. These drugs have generated over $70 billion globally.
- In addition to there being fewer new drugs in the 'pipeline', none of those expected to be launched is expected to generate sales in line with the current top sellers.
But there is an ethical dimension to this industry perspective. In 2001, drugs companies made $5 billion in sales of HIV drugs. With 40 million people globally affected by HIV/AIDS, the pharmaceutical industry stands accused of abusing their patents in developing countries. These protect companies from losing sales to firms making cheaper 'copies' of products that were developed over many years (at great cost.)
Thirty-nine pharmaceutical companies were prepared to take action in the courts in South Africa in 2001 to fight a law there aimed at providing low-cost versions of branded AIDS drugs. Faced with protests in both the developing world and rich countries, the companies dropped their case.