Introduction
Overview of the Industry
The pharmaceutical industry has enjoyed great prosperity as nineteen-ninety-eight marked another stellar year for the industry. Profits stayed in a sharp up-trend as 28 of the 37 stocks in the industry beat the Standard & Poor's 500 Index, which rose by 26.7%. The pharmaceutical industry includes establishments primarily engaged in manufacturing, fabricating, and processing medicinal substances into finished pharmaceuticals for human and veterinary use. Ethical brand name drugs, generic products, and nonprescription or over-the-counter medication constitute the pharmaceutical industry sub-sector.
Strong and consistent growth in the mid-single digits is expected in the global pharmaceutical market over the next 5 years. Worldwide sales are estimated to reach $335 billion in 1999, up from 1998 sales of $310 billion. Key factors driving this projected growth include long life expectancies, strong demographic expansion in older segments of the population, a rising standard of living in developing countries and large untreated populations, such as persons with elevated cholesterol levels. Increases in life expectancies create more health problems. As the world's population ages, the demand for pharmaceuticals increases. The elderly are the single largest group of users of prescription drugs.
Another major factor fueling the continued growth of the industry is the introduction of breakthrough drugs. The new products are especially in the areas of heart disease, cancer, arthritis, diabetes and HIV. Another trend is the development of quality of life products, which help to keep people looking and feeling young.
The pharmaceutical industry has a history of mergers, acquisitions, and buyouts that ...