Pharmaceutical Technology's Third Annual Manufacturers' Rankings reveal several important trends reflected by the pharmaceutical industry's sales growth, manufacturing activity, and acquisitions in 2007 and 2008. Big Pharma continues to invest heavily in biologics by expanding production capacity and acquiring technology platforms. Companies are strengthening their pipelines through acquisitions of both biologics and select small-molecule drug candidates. Also, several major pharmaceutical companies are restructuring to reduce costs across their supply chains.
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The impetus behind this activity is clear: the rate of growth in the pharmaceutical industry continues to slow. The global pharmaceutical market increased 6.4% (as measured in constant US dollars) to $712 billion in 2007, according to IMS Health. This growth rate was down from the 7.1% rate achieved in 2006, when the global market reached $649 billion. Last year also marked the fourth consecutive year of single-digit revenue growth (see Table I). The North American market, which accounted for 45.9% of the global market in 2007, increased only 4.2% to $304.5 billion, and the European market increased 6.7% to $206.2 billion, according to IMS Health. Growth in emerging markets was robust, although these gains were from a small base (see story, "A Reality Check on Emerging Markets").
Table I: Global pharmaceutical sales
Big Pharma's investment activity
Table II outlines the rankings of the top 50 pharmaceutical companies by 2007 pharmaceutical sales, and a review of the top companies shows several major restructuring programs and a continued push to biologics.
Pfizer (New York) is continuing its multiyear strategy of manufacturing network rationalization and supply-chain optimization. Since the Pharmacia integration began in 2003, Pfizer has reduced the number of its manufacturing plants from 93 four years ago to 57, as of Mar. 31, 2008. This reduction reflects the acquisition of seven plants and the sites sold in 2006 as part of Johnson & Johnson's (New Brunswick, NJ) $16.6-billion acquisition of Pfizer's consumer healthcare business. By the end of 2009, Pfizer plans to reduce the number of its manufacturing plants to 43. This reduction will represent a 50% decrease in plants and a 35% decrease in manufacturing employees compared with 2003 levels.
Table II: Top 50 pharmaceutical companies (Rankings 1–20)
Pfizer is also rationalizing capacity based on its decision to exit the development and commercialization of its inhaled insulin product "Exubera" for which the company took a one-time pretax charge of $2.8 billion in October 2007. Pfizer plans to sell the Frankfurt, Germany, plant that manufactured the product. Pfizer had jointly owned the plant with Sanofi-Aventis (Paris) and wholly acquired the plant in 2006 as part of Pfizer's acquisition of the rights to manufacture and sell Exubera. By mid-2009, Pfizer plans to close its Terre Haute, Indiana, manufacturing plant. The plant manufactured Exubera.
As part of its research and development (R&D) productivity initiative, Pfizer announced in January 2007 the closure of six R&D facilities. As of Mar. 30, 2008, the company had closed R&D facilities in Mumbai, India, and Plymouth Township, Michigan. The company also has significantly scaled back operations in Ann Arbor and Kalamazoo, Michigan; Nagoya, Japan; and Amboise, France.