Pharmaceutical Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,900 pharmaceutical manufacturers in the US are engaged in researching, developing, manufacturing and marketing chemically-derived drugs and biologicals for human or veterinary use. A few large, multinational firms dominate the industry; but there are also a large number of smaller start-up or development firms, particularly in the biotech segment.
Competition From Generic Products
Branded prescription drugs face competitive challenges from generic pharmaceutical manufacturers.
Expanded Managed Care Influence
Managed Care Organizations (MCOs), Medicaid, and other government agencies continue to seek price discounts on or increased rebates for pharmaceuticals.
Industry size & Structure
An average pharmaceutical manufacturer generates about $118 million in annual revenue and has about 159 employees.
- The pharmaceutical manufacturing industry consists of about 1,900 companies with $233 billion in sales and 312,600 employees.
- A few large, multinational firms dominate the industry, but there is also a large number of smaller, start-up, or development firms, particularly in the biotech segment.
- Large pharmaceutical manufacturers include Pfizer, Merck, Johnson & Johnson, Eli Lilly, and Bristol-Myers Squibb.
- The states with the highest number of pharmaceutical manufacturers are California, New Jersey, New York, Florida and Texas.
- The largest concentration of biotech firms are in California, Texas, Pennsylvania, Massachusetts, and Wisconsin.
Industry Forecast
Pharmaceutical Manufacturers Industry Growth
Recent Developments
Mar 2, 2023 - Proposal Would Tighten Telehealth Prescription Rules
- New rules proposed by the Biden administration would require patients to have an in-person medical evaluation before being prescribed controlled substance medications by their doctors. Federal regulators had relaxed pre-pandemic rules mandating that doctors evaluate patients in person before prescribing any controlled substances. The new rule proposals from the Drug Enforcement Agency would require an in-person appointment before any Schedule II medications, a classification reserved for the strongest drugs, may be prescribed. Prescriptions for other potentially addictive drugs – to help with pain or sleep, for example – could be prescribed via telehealth but a patient would need an in-person evaluation before obtaining a refill. Patients would still be able to get medications like antibiotics or birth control prescribed to them via telehealth.
- US Senator Elizabeth Warren called on the Federal Trade Commission (FTC) to closely examine two pending "Big Pharma" mergers: Amgen’s buyout of rare disease drugmaker Horizon Therapeutics and Indivior’s acquisition of Opiant and its nasal opioid overdose portfolio. Warren noted that recent decades have seen “extensive consolidation” of the pharmaceutical industry. She points out that some 60 dominant companies have been reduced to 10 between 1995 and 2015. This in turn has spurred higher prices and “decreased innovation,” the senator claims. Federal Trade Commission officials unveiled in 2021 a sweeping review of their approach to biopharma merger and acquisition scrutiny. FTC Commissioner Rebecca Kelly Slaughter cited “skyrocketing” drug costs and allegations of anticompetitive conduct in the industry as a driver of the review and said that the agency planned an "aggressive" review of proposed mergers.
- A proposal introduced in the US Senate would repeal the Inflation Reduction Act’s Medicare prescription drug negotiation policy. The Protecting Drug Innovation Act would also remove the rebates that drug companies would have to pay if their prices rise faster than the rate of inflation and reverse a provision that would cap seniors’ out-of-pocket costs at $2,000 per year. Senator James Lankford, one of the two senators who introduced the measure, maintained that any prescription drug price reforms should take on industry players like the middlemen that make money from the gaps in the list and net prices of drugs. “The ongoing issues with pharmacy benefit managers, the drug pricing middlemen, were also not addressed in the Democrats’ bill. We need more drug options, not less. We need more competition, not price controls. We need innovation, not stagnation,” he said.
- The Inflation Reduction Act of 2022 empowers the federal government to negotiate prices of certain drugs for the first time starting in 2023. Experts say that language in the law barring judicial review of how Medicare determines which drugs are eligible for negotiation will make any challenge tricky. Potential avenues for lawsuits will include invoking the US Constitution, particularly the Due Process and Takings clause, legal experts say. Any lawsuit could delay implementation of the negotiations while increasing leverage through political bargaining, according to Thomas Miller, a senior fellow at the American Enterprise Institute. “Stalling until better political winds blow in another direction is a frequent last-resort gambit,” he said. The pharmaceutical industry, which largely opposes the negotiation provisions, will have to wait until the Department of Health and Human Services issues regulations to implement the law before it can sue the agency. The act imposes inflation rebates on drug manufacturers for products reimbursed under Medicare Parts B and D if the price of those products increases faster than inflation. Changes to the Medicare Part D benefit design will cap beneficiary annual out-of-pocket spending at $2,000 beginning in 2025, with new discount obligations for pharmaceutical manufacturers. The Act imposes a price cap (referred to as a “maximum fair price”) beginning in 2026 for a fixed number of drugs reimbursed under the Medicare Parts B and D programs following a process described in the Act as a “negotiation.” The Act will reduce drug spending by $288 billion over a 10-year period, according to the Congressional Budget Office.
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