| KN24072 |
| KEY NOTE PHARMACEUTICALS INDUSTRY : April 2002 |
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This report covers: Pharmaceutical Industry,UK,prescription-only medicines,over-the-counter pharmaceuticals,NHS funding,regulation,complementary,natural medicines,antibiotic resistance,research and development,
Companies covered include: AstraZeneca PLC,Celltech Group PLC,GlaxoSmithKline PLC,Novartis Consumer Health UK Ltd,Pfizer Group Ltd,Roche Products Ltd,
EXECUTIVE SUMMARY
The pharmaceutical market is one of the most dynamic sectors of the UK and world economies. The industry is highly competitive, and innovative research and development (R&D) is the key to success in the marketplace. Pharmaceutical companies are forced to look continually to the future, and product 'pipelines' are an important measure of a company's continuing viability. According to the Department of Trade & Industry (DTI), 37.7 percent of all UK R&D expenditure is directed towards pharmaceuticals.
However, the development of a new pharmaceutical can take many years, and cost millions of pounds, with no guarantee of success in return for such enormous investment. These factors, together with the highly regulated nature of the marketplace, create high barriers to entry — barriers that are continually rising, owing to the growing costs of R&D and the increasing demands in the marketplace. The result has been a huge increase in the number of collaborations, co-developments and partnerships between companies, creating an increasingly global marketplace, dominated by a number of large players with a marked trend towards global branding. The industry leaders — GlaxoSmithKline, AstraZeneca and Pfizer — are all the products of multiple strategic mergers and acquisitions, which have enabled them to rationalise their activities and extend their geographic coverage in order to capitalise on their products as rapidly and effectively as possible. These three companies effectively dominate the UK pharmaceutical market.
Although the risks in pharmaceutical development are high, the rewards are also high. 'Blockbuster' drugs can generate sales worth billions of pounds, and drugs protected by patent have a number of years to capitalise on their investment, with no risk of competition until the patent lapses — typically after 20 years. In special circumstances, the life of a patent can be extended beyond this.
Some smaller pharmaceutical companies overcome the market barriers by forging strategic partnerships and licensing agreements with larger companies. Others operate in specialist markets, which are unlikely to generate significant competition from the larger pharmaceutical companies. Generic manufacturers bypass the enormous costs of drug development and focus on the manufacture of cheaper off-patent drugs, while drug-delivery companies develop novel delivery methods and formulations to optimise the performance of products, either in partnership with other companies or by using generic drugs in innovative ways.
MARKET SIZE
Key Note estimates that the UK market for pharmaceuticals grew by 6.2 percent in 2001, to a value of £9.31bn.
There are two main sectors in the market: prescription-only medicines and over-the-counter (OTC) pharmaceuticals.
Prescription-only medicines can only be obtained with a prescription from a doctor or certain other healthcare professionals, and can only be dispensed by registered pharmacists, operating from government-licensed premises. These pharmaceuticals are highly regulated and they cannot be promoted directly to consumers/patients. Most of the products in this sector are prescribed through the National Health Service (NHS); the private care market, although growing, is still comparatively small.
Expenditure on pharmaceuticals in the NHS is significant, at around 13 percent of all NHS spending in 2000. The market has grown by between 6 percent and 8.4 percent per year since 1996, in spite of various government initiatives to control expenditure, including the widespread encouragement of generic prescribing. Since the UK is considered to be a medium-priced marketplace, where the prices of pharmaceuticals are generally higher than elsewhere, a significant amount of parallel importing takes place: specialist distributors import products from countries such as France, Greece, Spain and Italy, where prices are lower, repackage them and sell them in the UK at a discount.
Prescription-only medicines constitute by far the larger of the two market sectors, and the number of prescriptions issued on the NHS is rising, increasing by 4.2 percent in England and Wales in 2000. Around 85 percent of the prescriptions dispensed in 2000 were exempt from prescription charges, compared with 60 percent of prescriptions in 1970. Around 71 percent of prescriptions in England and Wales were written generically in 2001, compared with 41 percent in 1991. This is a much higher level of generic prescribing than is seen in any other European country.
In spite of government initiatives to control spending, expenditure on prescription pharmaceuticals will continue to rise. The products will come under increasing scrutiny from the National Institute of Clinical Excellence (NICE) and Health Technology Assessment groups, which will be seeking a demonstration of clear cost benefits.
Over-the-Counter Pharmaceuticals
There are two main product groups in the OTC pharmaceuticals market. Pharmacy-only (P) products do not require a prescription, but they must be sold in a licensed pharmacy, under the supervision of a registered pharmacist. They can also be obtained under prescription. In contrast, General Sales List (GSL) medicines can be obtained from a wide range of retail outlets, with no need for a pharmacist, although the pack sizes and formulations are restricted.
The OTC market accounts for a comparatively small share of UK spending on pharmaceuticals, but the value of the market has been growing, encouraged by the Government's desire to ease pressure on the NHS, along with efforts by the pharmaceutical companies to extend the life cycles of their products. However, recent years have seen a slowdown in new product launches in the OTC market, and the abolition of Resale Price Maintenance (RPM) in 2001 resulted in a flurry of discounting and special offers that contributed to a reduction in market growth.
Nevertheless, the prospects for market growth are good, as the vast majority of the population is in favour of, and practises, self-medication. As yet, there have been no signs of the mass closures of small community pharmacies predicted by the industry when RPM was abolished, although the trend towards pharmacies joining large retail chains is continuing.
According to BMRB International's 2001 Target Group Index (TGI) survey, the most common minor ailments suffered by UK consumers are colds and headaches. The most commonly used OTC products are analgesics, followed by cold and flu treatments.
An exclusive survey commissioned by Key Note for this Review indicated that the UK population is most concerned about the high costs of OTC products and high NHS prescription charges. The OTC market is seeing more competitive pricing, but NHS funding will remain under pressure for the foreseeable future, and prescription charges are rising still further. Accordingly, the long-term prospects for the OTC market are likely to improve.
THE FUTURE
Although there has been significant consolidation in the UK pharmaceutical industry, following the mergers that created GlaxoSmithKline, AstraZeneca, Pfizer and Celltech, expenditure on R&D continues to grow, with companies developing comprehensive pipelines of promising new products. With the increasing globalisation of the industry, there is a possibility that operations may relocate abroad, but the UK industry is currently extremely buoyant, and, with the majority of sales by UK manufacturers being made overseas, it will remain a significant contributor to the UK economy.
Key Note forecasts that the total UK market for pharmaceuticals will grow by 6.7 percent to 7.7 percent per year between 2002 and 2006. The highest levels of growth are expected to be seen in prescription-only medicines.
TABLE OF CONTENTS
| Pharmaceutical Industry (UK) Market Review |
| Apr-02 |
| Executive Summary |
| THE MARKETPLACE |
| MARKET SIZE |
| Prescription-Only Medicines |
| Over-the-Counter Pharmaceuticals |
| THE FUTURE |
| 1. Market Overview |
| MARKET DEFINITION |
| Prescription-Only Medicines |
| Over-the-Counter Pharmaceuticals |
| MARKET SIZE |
| Table 1.1: The UK Market for Pharmaceuticals by Value (£m), 1996-2001 |
| Prescription-Only Medicines |
| Over-the-Counter Pharmaceuticals |
| INDUSTRY STRUCTURE |
| Industry Concentration |
| Employment |
| Distribution |
| Full-Line Wholesalers |
| Short-Line Wholesalers |
| Specialist Distributors (Parallel Traders) |
| Mail Order and Direct Distribution |
| Industry Regulation |
| The Medicines Act (1996 and 1971) |
| Key Trade Associations |
| Association of the British Pharmaceutical Industry |
| British Association of European Pharmaceutical Distributors |
| National Pharmaceutical Association |
| Proprietary Association of Great Britain |
| Royal Pharmaceutical Society of Great Britain |
| BUYING BEHAVIOUR |
| Demographics |
| Table 1.2: Breakdown of the UK Population (million and percent), 1951-2026 |
| Causes of Death |
| Table 1.3: Number of Deaths in England and Wales by Cause, 2000 |
| Common Complaints |
| Table 1.4: Penetration of Common Medical Complaints ( percent of adults), 2001 |
| Key Note Research |
| KEY TRENDS AND PROSPECTS |
| PEST ANALYSIS |
| Political Factors |
| NHS Funding |
| Government Health Initiatives and the National Framework |
| Regulation |
| Mutual Recognition |
| Pricing Policies |
| Economic Factors |
| Government Funding |
| Parallel Importing |
| Costs of Drug Development and Meeting Regulatory Requirements |
| The Over-the-Counter Market |
| Social Factors |
| Demographics |
| Healthcare Awareness |
| Complementary or Natural Medicine |
| Brand Loyalty |
| Technological Factors |
| Drug Discovery and Screening Technologies |
| Antibiotic Resistance |
| Research and Development |
| A GLOBAL PERSPECTIVE |
| Table 1.5: The Global Market for Pharmaceuticals by Country by Value ( percent), 2001 |
| 2. Key Note Consumer Research |
| INTRODUCTION |
| COMMON CONCERNS |
| Table 2.1: Common Concerns About Pharmaceuticals by Sex ( percent of respondents), February 2002 |
| High Prices of Over-the-Counter Drugs |
| Table 2.2: I Am Concerned About the High Prices of Over-the-Counter Drugs ( percent of respondents), February 2002 |
| High Prescription Charges |
| Table 2.3: I Am Concerned About High Prescription Charges ( percent of respondents), February 2002 |
| Delays for Appointments with GPs |
| Table 2.4: I Am Concerned About Delays for Appointments with GPs ( percent of respondents), February 2002 |
| The Effects of Prescribed Drugs |
| Table 2.5: I Am Concerned About the Effects of Prescribed Drugs ( percent of respondents), February 2002 |
| Lack of Information on Drugs |
| Table 2.6: I Am Concerned About the Lack of Information on Drugs ( percent of respondents), February 2002 |
| The Side Effects of Natural Medicine |
| Table 2.7: I Am Concerned About the Side Effects of Natural Medicine ( percent of respondents), February 2002 |
| The Side Effects of Natural Remedies |
| Table 2.8: I Am Concerned About the Side Effects of Natural Remedies ( percent of respondents), February 2002 |
| CONSUMER ATTITUDES |
| Table 2.9: Consumer Attitudes to Pharmaceuticals by Sex ( percent of respondents), February 2002 |
| Treat Minor Injuries Myself |
| Table 2.10: I Treat Minor Injuries Myself ( percent of respondents), February 2002 |
| When I’m Ill, I Consult my GP |
| Table 2.11: When I’m Ill, I Consult my GP ( percent of respondents), February 2002 |
| When I’m Ill, I Make my Lifestyle Healthier |
| Table 2.12: When I’m Ill, I Make my Lifestyle Healthier ( percent of respondents), February 2002 |
| When I’m Ill, I Seek Advice Direct from the NHS |
| Table 2.13: When I’m Ill, I Seek Advice Direct from the NHS ( percent of respondents), February 2002 |
| Prefer Branded Medicines to Unbranded Substitutes |
| Table 2.14: I Prefer Well-Known Branded Medicines to Cheaper Unbranded Substitutes ( percent of respondents), February 2002 |
| When I’m Ill, I Seek Advice from my Friends and Family |
| Table 2.15: When I’m Ill, I Seek Advice from my Friends and Family ( percent of respondents), February 2002 |
| When I’m Ill, I Use Natural Remedies |
| Table 2.16: When I’m Ill, I Use Natural Remedies ( percent of respondents), February 2002 |
| I Would Pay for a Doctor’s Appointment |
| Table 2.17: I Would Be Happy to Pay a Nominal Fee for a Doctor’s Appointment ( percent of respondents), February 2002 |
| Uncomfortable Taking Prescribed Medicine |
| Table 2.18: I Feel Uncomfortable Taking Medicine Prescribed by Healthcare Professionals ( percent of respondents), February 2002 |
| 3. Competitor Analysis |
| THE RESEARCH AND DEVELOPMENT PROCESS |
| THE PHARMACEUTICAL MARKETPLACE |
| MAJOR PLAYERS |
| AstraZeneca PLC |
| Table 3.1: AstraZeneca PLC — Leading Pharmaceutical Brands by Major Therapeutic Area, 2001 |
| Table 3.2: AstraZeneca PLC — Top Five Products by Sales Revenue ($m), 2001 |
| Table 3.3: AstraZeneca PLC — Sales by Major Therapeutic Area ($m), 2001 |
| Celltech Group PLC |
| Table 3.4: Celltech Group PLC — Leading Pharmaceutical Brands by Major Therapeutic Area, 2001 |
| GlaxoSmithKline PLC |
| Table 3.5: GlaxoSmithKline PLC — Leading Brands of Prescription-Only Medicines by Major Therapeutic Area, 2000/2001 |
| Table 3.6: GlaxoSmithKline PLC — Leading Brands of Over-the-Counter Pharmaceuticals by Major Therapeutic Area, 2000/2001 |
| Table 3.7: GlaxoSmithKline PLC — Sales of Prescription-Only Medicines by Major Therapeutic Area (£m and percent), 2000 |
| Novartis Consumer Health UK Ltd |
| Pfizer Group Ltd |
| Table 3.8: Pfizer Incorporated — Leading Brands of Prescription-Only Medicines by Major Therapeutic Area, 2001 |
| Table 3.9: Pfizer Incorporated — Top Five Products by Sales Revenue ($m), 2000 |
| Table 3.10: Pfizer Incorporated — Leading Brands of Over-the-Counter Pharmaceuticals by Major Therapeutic Area, 2001 |
| Roche Products Ltd |
| Other Companies |
| 4. Prescription-Only Medicines |
| INTRODUCTION |
| KEY TRENDS |
| Use of Pharmaceuticals |
| Prescribing Trends |
| Generic Prescribing |
| Expansion of Prescribing Responsibility |
| Consolidation in the Pharmaceutical Industry |
| Electronic Transmission of Prescriptions |
| MARKET SIZE |
| Table 4.1: The British Market for Prescription-Only Medicines by Value (£m), 1996-2001 |
| Table 4.2: Number of Prescription Items Dispensed in England and Wales by Major Therapeutic Area and Net Ingredient Cost (million and £m), 2000 |
| MARKET STRUCTURE |
| Number of Pharmacies |
| Table 4.3: The Number of Registered Retail Pharmacies in England and Wales, 1996/1997-2000/2001 |
| Regulation and Control |
| Medicines Control Agency |
| National Institute for Clinical Excellence |
| Pharmacy Registration |
| NHS Payments and Hours of Opening |
| Prescription Pricing Authority |
| MAJOR PLAYERS |
| Table 4.4: Selected Major Mergers and Acquisitions in the Pharmaceutical Industry, 1995-2001 |
| Table 4.5: The Top Ten Pharmaceutical Companies in the UK by Expenditure on Research and Development (£m), 2000/2001 |
| Table 4.6: The UK’s Leading Research-Based Pharmaceutical Companies by Turnover (£m and $m), 2000/2001 |
| Advertising and Promotion |
| BUYING BEHAVIOUR |
| Generic versus Branded Pharmaceuticals |
| Pharmaceutical Pricing Controls |
| Pharmaceutical Price Regulation Scheme |
| Drug Tariff |
| Discount Clawback |
| NHS Supplies and Purchasing Agency |
| FORECASTS 2002 TO 2006 |
| Table 4.7: The Forecast British Market for Prescription-Only Medicines by Value (£m), 2002-2006 |
| 5. Over-the-Counter Pharmaceuticals |
| INTRODUCTION |
| KEY TRENDS |
| Growth in Self Treatment |
| Alternative Medicine |
| Combination Remedies |
| Supermarket Sales |
| The Role of Pharmacists |
| MARKET SIZE |
| Table 5.1: The UK Market for Over-the-Counter Pharmaceuticals by Value (£m), 1996-2001 |
| Table 5.2: The UK Market for Over-the-Counter Pharmaceuticals by Major Therapeutic Area by Value ( percent), 2000 |
| MARKET STRUCTURE |
| Resale Price Maintenance |
| MAJOR PLAYERS |
| Table 5.3: Selected Major Pharmaceutical Companies and Their Leading Over-the-Counter Brands, 2001 |
| Advertising and Promotion |
| Table 5.4: Main-Media Expenditure on Pharmaceuticals by Major Therapeutic Area and Brand (£000), 2000 and 2001 |
| BUYING BEHAVIOUR |
| Table 5.5: Penetration of Over-the-Counter Pharmaceuticals by Major Therapeutic Group ( percent of adults), 2001 |
| Headache Remedies and Analgesics |
| Table 5.6: Penetration and Frequency of Use of Headache Remedies and Analgesics by Socio-Demographic Group ( percent of adults), 2001 |
| Cold and Flu Remedies |
| Table 5.7: Penetration and Frequency of Use of Cold and Flu Remedies by Socio-Demographic Group ( percent of adults), 2001 |
| Sore-Throat Remedies |
| Table 5.8: Penetration and Frequency of Use of Sore-Throat Remedies by Socio-Demographic Group ( percent of adults), 2001 |
| Indigestion/Heartburn and Stomach Remedies |
| Table 5.9: Penetration and Frequency of Use of Indigestion/Heartburn and Stomach Remedies by Socio-Demographic Group ( percent of adults), 2001 |
| Cough Mixtures |
| Table 5.10: Penetration and Frequency of Use of Cough Mixtures by Socio-Demographic Group ( percent of adults), 2001 |
| Rubs and Rheumatism Remedies |
| Table 5.11: Penetration and Frequency of Use of Rubs and Rheumatism Remedies by Socio-Demographic Group ( percent of adults), 2001 |
| Hay-Fever Remedies |
| Table 5.12: Penetration and Frequency of Use of Hay-Fever Remedies by Socio-Demographic Group ( percent of adults), 2001 |
| Laxatives and Salts |
| Table 5.13: Penetration and Frequency of Use of Laxatives and Salts by Socio-Demographic Group ( percent of adults), 2001 |
| FORECASTS 2002 TO 2006 |
| Table 5.14: The Forecast UK Market for Over-the-Counter Pharmaceuticals by Value (£m), 2002-2006 |
| 6. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 7. The Future |
| FORECASTS 2002 TO 2006 |
| Table 7.1: The Forecast UK Market for Pharmaceuticals by Value (£m), 2002-2006 |
| Prescription-Only Medicines |
| Over-the-Counter Pharmaceuticals |
| FUTURE TRENDS |
| 8. Further Sources |
| Associations |
| Periodicals |
| Directories |
| General Sources |
| Bonnier Information Sources |
| Government Publications |
| Other Sources |
| Key Note Research |
| Back to Pharmaceutical Industry (UK) Market Review |
| Legal Notices |
Text © 2002 Key Note
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