|
Pharmaceuticals is a knowledge based, technology intensive industry that is uniquely placed to develop and commercialise the outcomes of Australia’s long term investment in medical research.
The Australian pharmaceuticals industry comprises bio-medical research, biotechnology firms, originator and generic medicines companies and service related segments including wholesaling and distribution. The industry employed about 40,000 people in 2006-07, spent around $860 million on research and development in 2006-07, and turned over around $18 billion in 2006-07, and exported around $3.9 billion in the 2007-08 Financial Year. There are around 155 separate firms listed as suppliers to the Pharmaceuticals Benefits Scheme (PBS).
The Australian market for human use pharmaceuticals is small in the context of global demand. While the PBS allows for universal access to prescription products, the size of the population means that sales are small.
Australia's population represents 0.3 per cent of the world yet consumes around one per cent of total global pharmaceuticals sales. This means that in 2008 Australia was the 15th largest pharmaceuticals market by sales, while being ranked 52nd, in mid-2007, on population.
The expenditure on the PBS by Government has doubled over the last 7 years, from $3.2 billion in 1999-2000 to $6.4 billion (excluding patient contributions) in 2006-07.
In 2006-07, the largest firm by PBS sales was Pfizer. Its sales represent 16.4 per cent of the value of total sales made to the PBS. The top 10 suppliers contributed almost 68 per cent of the value of total sales made to the PBS. Alphapharm is the largest firm by number of prescriptions on the PBS (accounting for 15.8 per cent of all prescriptions dispensed under the PBS). The top 10 firms by the number of prescriptions account for a total of around 70 per cent of total prescriptions written. These data suggest that the Australian market is serviced by a variety of suppliers which is consistent with the global industry structure.
Australian industry developments have gained worldwide recognition. They include:
- The development of the drug naglazyme for the treatment of rare disease mucopolysaccharidosis VI from technologies pioneered at the South Australian Women's and Children's Hospital;
- Developments in discovering the Gardasil vaccine for Human Papilloma Virus through a partnership between Merck Sharp and Dohme and CSL;
- Australian biotechnology company Cytopia's $274 million deal with Novartis to develop orally active, small molecule therapeutics targeting JAK3 kinase for the prevention of transplant rejection and the treatment of multiple indications in autoimmune diseases such as rheumatoid arthritis;
- The development by Biota Holdings of the flu drug Relenza; and
- The growth of the Institute of Drug Technology (IDT), Australia’s key manufacturer of active ingredients. IDT signed a contract with Pfizer in 2004 for the development and production of a new drug candidate.
The Department encourages the development of an internationally competitive pharmaceuticals industry with policies which enhance the operating environment for the industry by:
- Providing policy advice to the Minister for Innovation, Industry, Science and Research (Innovation) on developments in the global pharmaceuticals industry and how they might impact on the Australian operating environment;
- Providing Secretariat support to the joint industry and Ministerial Pharmaceutical Industry Working Group;
- Providing Secretariat support to the Pharmaceuticals Industry Strategy Group, a high level taskforce of industry and union leaders who will develop a proposal to increase pharmaceuticals R&D, clinical trials and manufacturing in Australia.
- Supporting the Department of Innovation representative in the Pharmaceutical Benefits Pricing Authority’s (PBPA) work on the pricing of pharmaceuticals for the PBS; and
- Working with key industry stakeholders including the Pharmaceuticals Industry Council.
An Australian Government R&D investment program for the pharmaceuticals industry started in July 2004 – the Pharmaceuticals Partnerships Program (P3). For more information see the P3 Fact Sheet.
Global Context
The pharmaceuticals industry spans a spectrum of activity from the technology intensive R&D segment associated with innovative drugs through to the production of generic and over-the-counter medicines. The industry is dominated by horizontally and vertically integrated multinational entities and is more research intensive than most other industries.
Worldwide industry sales are projected to grow strongly at 7 per cent per annum over the next five years. Espicom Business Intelligence estimate that the annual sales of pharmaceuticals will reach US$892.6 billion in 2008 and project it will reach US$1,247.7 billion in 2013. The markets driving this change will be:
• Central/Eastern Europe, with 9.5 per cent growth per annum;
• The Americas, with 8.4 per cent growth per annum;
• Middle East and Africa, with 6.4 per cent growth per annum;
• Asia/Pacific, with 5.5 per cent growth per annum; and
• Western Europe, with 5.0 per cent growth per annum.
In 2006 the 10 largest pharmaceuticals firms accounted for 46 per cent of global sales.
These data show that the global market for drugs is large and growing, that pharmaceuticals industry sales are concentrated in developed countries, that half of all sales are made by the top 10 global companies, but that there is still a reasonable degree of international competition at an industry level.
Industry R&D activity
Developing a new drug is expensive. Current estimates of the full cost of bringing a new chemical or biological entity to market start around €560 million (approx A$930 million) and are worth as much as US$1.3 billion although other estimates are higher. Longer development and approval times, larger and more complex clinical trials, increased expenditures on new technologies, and shifts in product portfolios towards riskier, more expensive therapeutic categories have contributed to a real increase in the development costs.
Globally pharmaceuticals R&D is rising. Expenditure is around US$58.8 billion per annum for American owned firms and new American owned firms in the United States. Over the past two decades, the percentage of sales allocated to R&D has increased from 11.9 per cent in 1980 to an estimated 18 per cent in 2006 (for American owned firms). The number of products in development and the number of firms doing R&D are both rising; however R&D productivity is falling.
Industry currently spends around $860 million per annum on R&D in Australia.
However, with 0.3 per cent of the world’s population, Australia produces three per cent of global medical research and has six Nobel laureates in medicine:
- Howard Florey (1945: development of penicillin);
- Frank Burnet (1960: research on organ transplantation);
- John Eccles (1963: research on the transmission of nerve impulses);
- Peter Doherty (1996: discoveries concerning the specificity of the cell mediated immune defence); and
- Barry Marshall and J. Robin Warren (2005: discovery of the bacterium Helicobacter pylori and its role in gastritis and peptic ulcer disease).
This is in large part due to the importance the Government places on investing in Australian scientific research.
An enduring feature of the Australian innovation system is the relatively high proportion of government expenditure on R&D. In the health and medical area, this funding is allocated through a variety of R&D providers and there is considerable interaction between these entities. The bulk of the funding is provided through:
- National Health and Medical Research Council
- Specialised research institutes, eg. Baker, Garvan, Queensland Institute of Medical Research
- Universities
- Commonwealth Scientific and Industrial Research Organisation
- Hospitals, and
- Cooperative Research Centres
Follow the links below for information on:
For enquiries regarding this website or further information on the pharmaceuticals industry please contact:
Pharmaceuticals and Medical Technology Section
Department of Innovation, Industry, Science and Research
GPO Box 9839
Canberra ACT 2601
AUSTRALIA
Tel: +61 2 6213 6597
email |