Competition in the pharmaceutical industry centers around the discovery and development of important new drug therapies. Therefore, the pharmaceutical industry requires sophisticated manufacturing techniques and intensive, high-cost R&D, as seen by the trends in the top 25 countries exporting these kinds of goods. These countries are predominantly advanced, developed economies.

In 1985, the top 20 also included countries such as the former Yugoslavia, Poland, and Hungary. However, as seen in their low and relatively insignificant export numbers, the exporting countries that really mattered were still limited to the US and EU.

Since then, international competition in pharmaceutical innovation has markedly increased, showing extreme growth in the industry. Countries of the EU and the US continue to dominate, with the early pioneers of the industry (Switzerland, Germany, UK, and USA) still in the lead. However, with the expanse of R&D and higher-level manufacturing to developing nations, Japan, China, India, and even Ireland have shown significant growth in this industry.

Also, as discussed in the Shifts in the Industry section, an increasing amount of outsourcing to small, low-cost producers in these developing nations has led to a growing amount of pharmaceutical activity there. According to Forbes magazine, in 2005, sales in the US and the other nine top markets grew 5.7% while the emerging markets in China, Russia, South Korea, and Mexico saw sales grow 81%.

Source: World Trade Analyzer

The percentage of growth in the former leaders has been sluggish over the past two decades, while countries like Ireland and the Benelux nations have experienced significant growth. This could be due to a slowdown in R&D innovation or an expiry of patents on major products, which allows generics to enter the market and drive prices down.

If these former pioneers wish to remain competitive, they need to expand the development of new drugs. Otherwise, they will face a continuing of the intensified competition from developing nations that has appeared over the last decade. As outsourcing investment in drug discovery and product development grows, emerging countries will gain more technical knowledge and become potential competitors to the established pharmaceutical giants. Also, as major patents expire and generic companies in countries like Israel and India enter these markets, there will be increasing competition from emerging economies on the former pioneer nations.

On the whole, the industry has grown significantly, with all the top 20 countries experiencing positive growth and continuing upward. It is one of the highest-profit industries in the world, and with the expanse in new medications and in the demand for alternative medications and nutritional supplements, it has grown and changed considerably since 1985.

However, the incredible growth experienced by the industry in the 1990s is now slowing. The forecast for the future is for a deceleration in growth until at least 2011: from 2002-2006 the compound annual growth rate (CAGR) was 6.6%, but from 2006-2011 it is supposed to fall to 4.8%.

Sources
"Global Pharmaceuticals." Datamonitor. 27 Mar 2007
<http://www.datamonitor.com>.

"Pharmaceutical Industry." Standard & Poor's. 24 Mar. 2007
<http://www.netadvantage.standardandpoors.com>.

Herper, Matthew and Peter Kang. "The World's Ten Best-Selling Drugs." Forbes. 27 Mar 2007
<http://www.forbes.com/home/sciencesandmedicine/2006/03/21/pfizer-merck-amgen-cx_mh_pk_0321topdrugs.html>.

World Trade Analyzer