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Review Article



Financial Aspects and the Future of the Pharmaceutical Industry in the United States of America

Jasenko Karamehic, Ognjen Ridic, Goran Ridic, Tomislav Jukic, Jozo Coric, Djemo Subasic, Mirsad Panjeta, Lejla Zunic, Izet Masic.




Abstract

Introduction: The U.S. pharmaceutical industry is defined by the U.S. Census Bureau as “companies engaged in researching, developing, manufacturing and marketing of medicines and biological for human or veterinary use”. Besides its main role in improving human health, the US pharmaceutical industry represents one of the most critical, key decision makers’ lobbying prone and competitive sectors in the economy. The cost in the environment of very limited government price regulation remains one of the major problems fuelling aggregate health care cost inflation. Pharmaceuticals have created huge benefits for public health and economic productivity by the means of saving lives, increasing life expectancy, reducing illness related suffering, preventing surgeries and decreasing hospital stays. Purpose: The goal of this review paper is to show the present conditions and future trends of the pharmaceutical industry in the U.S. Methodology: This paper represents a thorough literature review of the multifaceted sources including: studies, books, peer reviewed journals, U.S. government sources (i.e. U.S. Census Bureau, U.S. Bureau of Economic Analysis, etc.). Discussion: In the thirty years pharmaceutical companies have consistently developed and launched new medicines, bringing hope to sick or – at risk patients. They also usually provide above the average financial returns for its shareholders. U.S. pharmaceutical companies had as their goal to discover blockbuster drugs. Blockbuster drugs are generally defined as drugs that solve medical problems common to hundreds of millions of people and, at the same time generate large sales increases and profits for the pharmaceutical companies. The main approach of these companies includes huge investments in research and development (R&D), innovation, marketing and sales. The trend analysis shows that for the most part the era of blockbuster drugs is nearing an end. Conclusion: Numerous blockbuster drugs will be coming off patent in the next few years, opening the way to generics and eliminating a major source of the industry’s profits. Still, there is plenty of room for improvement in the medications people take while there is no shortage of human suffering to alleviate. It is doubtful whether big pharmaceutical firms will be able to pursue these goals within the old model of developing exclusive new drugs that can be sold further in the future. In the past, medicines for the ailments that were never before addressed, like anti-cholesterol or anti-depression drugs were developed. Currently, and in the future, it is expected that only blockbuster modifications will be developed. This phenomenon is expected to create market saturation, which will significantly reduce profits. The business model that drove the major drug makers’ success is not working anymore. Pharmaceutical companies must create new ways and to bring new ideas. The survivors will be those that market strategies supported by innovative approaches an

Key words: pharmaceutical companies, blockbuster drugs, generic drugs, research and development (R&D), innovation, strategic planning, structural change






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