Global Value Chains: Main Segments, Recent Trends, Value Added, and Profits
International Trade Patterns: The Shifting Geography of the Industry
Political Determinants: Governments and Trade Agreements that Affect the Industry
Social and Environmental Factors: The Growing Emergence of Global Standards
Most of the world's top pharmaceutical companies were founded in the late 19th, early 20th centuries. In the beginning, the major global players were Switzerland, Germany, Italy, UK, and US. After the mid-20th century, the industry has been very highly regulated by regulatory agents such as the FDA and international accords such as the Declaration of Helsinki in 1964. Drug companies are required to complete a series of monitored clinical trials to determine the efficacy of their product before they are able to bring them to market.
In the 1970s, the industry began to increase at a much faster rate, and soon pharmaceutical companies were moving from relatively small scale productions to large, complex vertical organizations. This was due largely to increased patent protection. When this happened, the industry became a lot more concentrated.
In recent decades, the pharmaceutical industry has been one of the most profitable industries in America and around the globe. For some time up until 2003, Fortune magazine ranked the industry and the number one most profitable in America. Now, the magazine ranks the industry fifth in profitability.
Sales growth continues to be much stronger when compared to most other manufacturing industries, but with rates in the mid-single digits, this is a decline from its success in the 1990s with rates in the mid-teens.