Comparing Global Pharmaceutical Markets: US, UK, and China
While contributing to the more significant global pharmaceutical market, the US, the UK, and China each have unique pharmaceutical markets managed by their respective regulatory organizations.
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- As the COVID-19 pandemic has progressed over the last three years, the global pharmaceutical landscape has had to evolve to keep up with growing demands. While the worldwide landscape has continued to change and grow, so have the individual markets of each country. The United States, a leader in the global pharmaceutical market, competes with multiple other countries, including the United Kingdom and China. Understanding the basics of and comparing these markets may help emerging pharmaceutical companies decide where to station their headquarters.
According to Statista, the global pharmaceutical industry had an annual revenue of $1.42 trillion in 2021. The US has been a significant player as the industry has grown dramatically, fueled by the aging population and the COVID-19 pandemic. Alongside the US, China’s pharmaceutical market has grown alongside its economy, holding a more significant global stake. However, better-established North American and European markets are expected to lead the way through 2025.
United States
The US pharmaceutical industry dominates the global pharmaceutical market, accounting for roughly 50% of the global pharmaceutical sales revenue. According to an article published by Zippia, the US pharmaceutical industry generated $550 billion in revenue in 2021, accounting for 48% of the global pharmaceutical market as of 2020.
Statista suggests that five of the top ten leading pharmaceutical companies were based in the US as of 2021, including Pfizer, AbbVie, Johnson & Johnson, Bristol Myers Squibb, and Merck & Co. AbbVie alone generated $55 billion in 2021. The pharmaceutical industry has created nearly 4 million jobs in the US, with over 800,000 jobs directly in the industry and almost 3.2 million indirect and induced jobs.
Regulation, Research, and Development
The Food and Drug Administration is responsible for regulating the pharmaceutical industry, approving drugs, and reviewing clinical trial data in the US. On average, the FDA approves 12% of drugs submitted for clinical testing annually, an estimated 38 drugs yearly. The clinical trial process in the US is quite rigorous, resulting in additional spending on research and development.
In the US, pharmaceutical companies spent over 20% of their revenue on additional research and development, amounting to $102 billion spent on research and development in 2021. Many experts estimate this number will continue to grow, driven by the desire for new COVID-19 vaccines and treatments.
Consumer Spending
One of the critical problems that the United States pharmaceutical industry faces is extraordinarily high drug costs. Globally, the US has the highest price of prescription drugs, exacerbated by pharmaceutical patents and workarounds by pharmaceutical companies. Furthermore, 2021 data estimates that the US dispenses nearly 4.7 billion prescriptions yearly. According to the HHS, the US Healthcare system spent over $600 billion on prescription drugs in 2021, not accounting for rebates.
As of 2021, Americans had spent nearly $577 billion on medicine, with a projected increase to over $605 billion in 2025. Each household in the US spends an average of $442 on over-the-counter medications each year.
China
According to an article published in China Briefing, the Chinese biopharmaceutical market has grown drastically in the past few years, with a 200% increase in market capitalization between 2016 and 2020. As of 2019, the Chinese healthcare industry was valued at $900 billion and is expected to grow to $2.3 trillion by 2030. As part of the healthcare market, the biopharmaceutical market was valued at $47.6 billion in 2020 and is expected to grow to $111.76 billion by 2025. Even with the drastic growth in the past few years, the Chinese pharmaceutical market is only a fraction of the US pharmaceutical market
Currently, the Chinese pharmaceutical sector is comprised of roughly 5,000 small and medium manufacturers. As of May 2022, Sinopharm Group, Shanghai Pharmaceuticals, and Jointown Pharmaceutical Group were the top three Chinese pharmaceutical companies according to a Forbes ranking.
Some experts believe this fragmented nature helps reduce overall spending on research and development. While there are some benefits to a pharmaceutical industry made up of smaller manufacturers, experts believe the industry will see increased competition and consolidation in the coming years, driven partly by regulatory reforms.
Regulation, Research, and Development
In China, the National Medical Product Administration (NMPA), formerly known as the China Food and Drug Administration (CFDA) — which is overseen by the State Administration of Market Regulation (SAMR) — functions as the primary regulatory agency for the pharmaceutical industry. Like the US FDA, the NMPA controls which pharmaceutical products are approved and can go to market.
In a study published by Therapeutic Innovation and Regulatory Science, researchers noted that in the decade between 2011 and 2021, the NMPA approved 353 new drugs, 220 small molecules, 86 biologics, and 47 vaccines. Data suggests that the approval of many new drugs in 2021 was a record high; however, typically, the organization approves fewer drugs than the US FDA annually, partially due to longer regulatory review times.
According to an article published by the China Project, on average, the research and development cycle in China is over 12 years and can cost an average of $2.6 billion.
Consumer Spending
According to a consumer market insights report by Statista, China generates the most over-the-counter revenue, accounting for $29.36 million of the $145.3 billion in global revenue.
Digestive and metabolic drugs and systemic anti-infective drugs account for 14% of the Chinese pharmaceutical market. Cardiovascular and central nervous system drugs each account for slightly less at 13% each. In the Chinese pharmaceutical market, patent and generic drugs account for relatively similar market shares at 56% and 44%, respectively.
United Kingdom
According to the Association of the British Pharmaceutical Industry (ABPI), the UK pharmaceutical industry employed roughly 66,000 individuals in 2020. Throughout the same year, the country launched nearly 70 COVID-19 trials.
The ABPI notes that the annual turnover of the pharmaceutical industry in the UK is roughly $50.21 billion. According to Statista, the UK pharmaceutical market accounts for 2.6% of the global pharmaceutical market, with nearly 7000 manufacturers and developers as of 2020. AstraZeneca and GlaxoSmithKline are the two largest drug manufacturing companies in the United Kingdom.
Regulation, Research, and Development
In the United Kingdom, the Medicines and Health Products Regulatory Agency (MHRA) is the principal regulatory agency for pharmaceutical products, functioning similarly to the FDA. According to an article in the Guardian, in 2021, the MHRA only approved 35 new drugs, less than the US at 52 new approvals. Sources attribute the low number of approvals to Brexit, which marked the UK leaving the European Union and having to develop its regulatory standards.
On average, the UK spends $6.7 billion on research and development costs each year. Additionally, the UK Parliament has announced that research and development spending is expected to increase to $24.7 billion. Regardless of growth, this spending is significantly less than the US spends on research and development.
Consumer Spending
Statista says people in the UK spent $13.57 billion on pharmaceutical products in 2021. A significant portion of that spending was allocated to over-the-counter pain relief medications, which saw a 5.2% rise in sales. Despite the increase in over-the-counter pharmaceutical expenditure, the UK still spends significantly less on healthcare than the US.
