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Understanding the Opportunities and Challenges of the Pharmaceutical Industry

Written by Contributor, on 10th Jan 2020. Posted in General

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The success of the pharmaceutical industry is key in developing new treatments and improving the treatment options that are already there, but that’s not the only importance it holds. From an economic point of view, pharmaceuticals are one of the biggest industries in the United States, one that’s expected to reach a total net worth of $1,170 billion by the year 2021 (5.8% Y-O-Y growth). It’s also the largest pharmaceutical industry in the world, having a net worth more than that of the pharmaceutical industries in China and Western Europe combined.

As a result, thousands of people are directly employed in the pharmaceutical business, with millions being indirectly dependent on business associations. Most importantly though, the products developed and manufactured by the segment affect the global population. This is why the pharmaceutical industry is both such a lucrative and challenging segment to handle, especially for smaller businesses with limited resources.

The Huge Opportunity in the United States

China is the second-largest name in global pharmaceuticals (as a single nation) with a market share of 10% (2017), but it’s the United States that holds the number one position with a significant lead of 33% (2017). Keep in mind that more recent analysis suggests the United States most likely owns more than 45% of the global pharmaceutical industry’s market in 2019.

Needless to say, if there was ever a booming sector with tremendous growth opportunities in the US, the pharmaceuticals business is definitely near the top of that list! Unfortunately, there are some impediments for startups to consider first.

Technological Confusion Can Affect Smaller Names in Pharmaceuticals

It’s true that digital technology and mechanical automation has been a huge boon for the pharmaceutical industry globally, but they have also brought in some challenges in the segment as well.

The most prominent of those challenges are mostly faced by the smaller pharmaceutical companies that do not have the infinite resources of a multi-billion-dollar US pharmaceuticals MNC. As a result, they are often left confused and uninformed in regard to where they should spend their limited financial resources to see improvements in productivity, quality, and sales. On the flip side, if they do take the time necessary to educate themselves, modern tech is also what can make them extremely competitive.

For example, the SACF-25 is a semi-automatic capsule filler that requires an operator, but costs less and has the same production capacity as a fully automatic FACF 400. Of course, the full automation of the FACF 400 reduces labor costs, increases productivity and profits in the long run. Therefore, the choice should be based on the following factors.

• If a company has orders/demands to fully utilize the increased productivity, they need full automation

• Startups with limited orders/demands will find the semi-automatic capsule filler to be a better investment

It’s just one example of the many other confusions faced by startups and small pharma companies that want to expand but cannot decide on the right course of action; the confusion of technology is a real issue, although it should be the other way around.

Excipient: Getting the Mix Right is Costly

Another typical issue faced by startups and miniature pharmaceutical manufacturers is that of getting the excipient right. A pharmaceutical excipient refers to the inert fillers within a drug delivery system, which is used to protect the main, active ingredient and increase its bioavailability.

The problem with excipients is that it’s particularly difficult and costly to figure out which excipient will be perfect for which drug/ingredient and in what proportion. For smaller establishments, this can and often does raise the cost of manufacturing significantly, which makes it exceptionally difficult to manufacture and sell their products at a competitive price, without suffering losses, or at least cutting back on profit margins way too much.

In spite of the challenges though, the success and boom are quite evident in the pharmaceutical industry’s opportunities in the US, which overshadows its challenges. The right steps will still need to be taken, of course, but the effort is certainly worth it.

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