Executive Summary
The UK market for prescribed pharmaceuticals was valued at £4.75bn in
1995, and was estimated to be worth £5.32bn in 1996. This market is
dominated by the National Health Service (NHS), with private prescriptions
accounting for only around 2% of the market.
The total pharmaceuticals market is divided into two categories, these being
prescription-only medicine (POM) products and over-the-counter (OTC)
pharmaceuticals. Prescribed pharmaceuticals can only be obtained with a
doctor's prescription. The market for prescribed pharmaceuticals can be
segmented according to the category of therapeutic usage, occupied by a
product. By value, the largest of these sectors is comprised of products acting
on the cardiovascular system.
A number of diverse factors impact on the performance of the prescribed
pharmaceuticals market. Among the most important of these is Government policy
on healthcare, and the level of public funding on this sector of the NHS. In
recent years, the Government has implemented a number of initiatives, aimed at
reducing NHS expenditure on pharmaceuticals.
Expenditure on research also plays an important role in the industry's
performance. The UK-based pharmaceutical industry is at the forefront of such
research, spending £2bn per year on research and development. In
proportion to the industry's overall turnover, expenditure on research and
development (R&D) was equivalent to 16.8% of gross output in 1995. Barriers
to entry are high, due to the costs of R&D.
During the mid-1990s, the market has seen a period of intense corporate
activity, in terms of mergers and acquisitions. The most important of these was
Glaxo PLC's purchase of Wellcome PLC for £9.1bn in 1995. The formation of
Glaxo Wellcome PLC created the world's largest pharmaceutical company. Glaxo
Wellcome leads the pharmaceuticals market in five of the major global markets
-- the US, the UK, Spain, Australia and the Netherlands.
Future Government policy on healthcare expenditure is difficult to predict,
until after the forthcoming General Election. If no further major reforms are
made to public expenditure on the NHS, the prescribed pharmaceuticals market is
predicted to perform well in the foreseeable future.
Twelfth Edition 1997
Edited by Louis Barfe
ISBN 1-85765-675-X
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