Case Study The global pharmaceutical industry Coursework

Case Study The global pharmaceutical industry - Coursework Example Consequently, the pharmaceutical market acquired some remarkable character. Management was in the hands of medical practitioners while patients and payers had little awareness or authority. Thus, medical practitioners were inconsiderate to the costs however receptive to the sales endeavors of individual agents. This made possible several 'me too' drugs to realize significant profits on investment. It resulted in imitating well-known medicines that cut R&D risk considerably, while the market- place was exposed to products offering slight advantages for example a more suitable dosage type or fewer side effects, although with much the same beneficial effect. There were two major developments in the 1970s in the pharmaceutical industry. Firstly, the Thalidomide tragedy in sickness caused birth defects, initiated much tighter regulatory rules on clinical trials. Secondly, laws were endorsed to establish a permanent period on patent protection - usually 20 years from first report as a research invention. This produced the emergence of 'generic' drugs. Generics however have precisely the same dynamic constituents as the original brand, and vie on price. The influence of generic application is exemplified by Bristol Myers Squibb's brand Glucophage, a cure for diabetes, which produced US sales of $2.1bn in 2001. After the termination of the patent in January 2002, brand sales fell to $69m for the first quarter. Generics legislation had a significant influence on the industry, providing motivation for improvement and for a competitive market. The time during which R&D costs could be recouped was drastically curtailed, putting upward pressure o n prices. The introduction of generics, however, was very beneficial for society: valuable medicines became extremely cheap. Indeed, health economists have estimated that the social returns from pharmaceutical R&D exceed that appropriated by firms by at least 50 to 100 per cent. By the end of the 1970s generic entrants and more stringent controls on clinical trials had led to substantial increases in R&D spending. Pharmaceutical Industry Environmental Forces: An Introduction The pharmaceutical industry is remarkable in that a number of countries of the world are dependent on a 'monopsony' - there is in fact only one dominant buyer i.e. the government. In the 1980s, governments all