| IMS
HEALTH data show that the last few years of consolidation
in the global pharmaceutical industry have had a huge
effect on the list of ten leading pharmaceutical companies
in the world. Not only that, it has resulted in a
substantially higher share of the world's pharmaceutical
market being dominated by those ten companies.
In 1990, the sales of the leading ten pharmaceutical
companies accounted for just 28% of the global pharmaceutical
market. Ten years on, that proportion is over 45%
and accelerating. In the past three years alone, merger
and acquisition activity has meant that the leading
ten companies' global market share has leapt from
36% in 1998 to 45% in 2000. What has driven this change,
and which companies have been the winners and losers?
Top
Ten Companies' Share of Global Pharmaceutical
Market, 1990-2000
|
Source: World
Review (1990-2000)
The early 1990s were relatively quiet in terms of
M&A activity and, consequently, the combined market
share of the ten leading companies was stable, at
27-28%. Then in 1994, Roche (Switzerland), which had
steadily made its way into the top ten in the previous
four years, acquired Syntex (USA), and American Home
Products (AHP, USA) acquired Cyanamid (USA). The top
ten companies now accounted for over 30% of the market
for the first time.
This was followed a year later by Hoechst's (Germany)
acquisition of Marion Merrell Dow (USA) (itself a
merger between Marion and Dow's pharmaceutical subsidiary,
Merrell Dow) and the formation of Glaxo Wellcome (UK),
in part to defend against the patent expiry of Zantac.
1996 brought the formation of Novartis (Switzerland)
via the merger of the two Swiss companies, Ciba-Geigy
and Sandoz, to form what was then the world's largest
pharmaceutical company.
| Top
Ten Global Pharmaceutical Companies, 1990
| Company
|
Nationality
|
1990
Global Market Share (%) |
1989-90
Growth (%) |
| Merck
& Co |
USA
|
3.8
|
16
|
| BMS
|
USA
|
3.5
|
10
|
| Glaxo
|
UK
|
3.3
|
17
|
| SB
|
UK
|
2.9
|
10
|
| Ciba-Geigy
|
Switzerland
|
2.8
|
7
|
| AHP
|
USA
|
2.6
|
9
|
| Hoechst
|
Germany
|
2.6
|
10
|
| J&J
|
USA
|
2.5
|
14
|
| Lilly
|
USA
|
2.2
|
20
|
| Bayer
|
Germany
|
2.2
|
11
|
| Top
10 |
n/a
|
28.4
|
12
|
| Global
Market |
n/a
|
100.0
|
10
|
|
Source:
World Review, 1990
After a quiet period between 1996 and 1998, when the
top ten's market share stabilised at around 34-36%,
Roche re-entered the M&A arena, acquiring the pharmaceuticals/diagnostics
group Boehringer Mannheim (Germany) in early 1998.
Since 1998 the market share of the leading ten companies
has accelerated dramatically, driven by some of the
largest mergers and acquisitions ever. Two large European
mergers in 1999 kick-started the most recent round
of consolidation, with Astra (Sweden) and Zeneca (UK)
merging to form AstraZeneca (UK), and Hoechst Marion
Roussel (Germany) linking up with Rhone-Poulenc Rorer
(France) to form Aventis (France). This activity pushed
the top ten's global market share to almost 40%. Then
two megadeals, Pfizer's December 1999 acquisition
of Warner-Lambert and the recently completed GlaxoSmithKline
merger, pushed the mark to over 45%.
| Top
Ten Global Pharmaceutical Companies, 2000
| Company
|
Nationality
|
2000
Global Market Share (%) |
1999-2000
Growth (%) |
| Pfizer
|
USA
|
7.1
|
11
|
| GlaxoSmithKline
|
UK
|
6.9
|
9
|
| Merck
& Co |
USA
|
5.1
|
14
|
| AstraZeneca
|
UK
|
4.4
|
7
|
| BMS
|
USA
|
4.1
|
9
|
| Novartis
|
Switzerland
|
3.9
|
3
|
| J&J
|
USA
|
3.9
|
11
|
| Aventis
|
France
|
3.6
|
0
|
| Pharmacia
|
USA
|
3.2
|
11
|
| AHP
|
USA
|
3.0
|
9
|
| Top
10 |
n/a
|
45.2
|
9
|
| Global
Market |
n/a
|
100.0
|
7
|
|
Source:
World Review, 2001
US
Winners, European Losers?
However, the success of some of the merged companies
has been mixed, with some flourishing while others
have lost market share to their rivals. In general,
the US-based companies have steadily increased market
share, whether they have merged or not. This reflects
the unparalleled growth of the US market in the 1990s.
IMS HEALTH data show that the US
pharmaceutical market was around the same size
as the European market at the start of the decade
but has since grown to twice its size. Since, despite
the global nature of the pharmaceutical industry,
most pharmaceutical companies' sales are generated
in their domestic markets, the US companies have benefited
most from this expansion.
In addition, an analysis of IMS HEALTH's Pharmaceutical
Company Profiles series shows that US pharmaceutical
companies have historically operated as pure healthcare
groups, in contrast to many of their European rivals,
which have often been part of larger chemical conglomerates.
The focus on healthcare of the US groups has no doubt
helped to drive market share growth.
Pfizer has been particularly successful over the past
decade, with its market share almost doubling. In
1990, Pfizer was the 14th largest pharmaceutical company
in the world, and Warner-Lambert was 21st. Neither
had a single product in the top ten worldwide.
In 2000, in contrast, Pfizer had become the largest
pharmaceutical company in the world and had eight
products with sales of over $1 billion, with four
of them (Lipitor, Norvasc, Zoloft and Celebrex, which
is co-promoted with Pharmacia) in the global top ten.
According to the latest IMS HEALTH Pfizer
Company Profile, "The Pfizer/Warner combination is
a powerhouse... the merged company is considered to
have the ability to remain at the top of the drug
industry."
Merck & Co, Bristol-Myers Squibb (BMS) and Johnson
& Johnson (J&J) are other US-based companies that
have successfully expanded their share of the global
market since 1990. In their case, however, this growth
has been achieved without entering into a major merger
or acquisition. Similarly to Pfizer, Merck increased
its market share primarily through the organic growth
of its cardiovascular franchise, particularly Zocor.
BMS, in contrast, saw growth from a variety of drugs
throughout its portfolio, including Pravachol, Plavix,
Glucophage and Taxol. Similarly, J&J had a variety
of products, such as Risperdal, Prepulsid and Erypo,
which drove growth in the 1990s. J&J has recently
become more active in the M&A sphere, with the acquisition
of the leading US biotechnology company Centocor in
1999 and its proposed acquisition of the US drug delivery
company, Alza, due to complete in the third quarter
of 2001.
Change
in Global Market Share of Top Ten Pharmaceutical
Companies, 1990-2000
|
Source:
World Review, 2001 Note: In the case of merged companies,
pro forma sales have been used to calculate market
share
For the Europe-based companies, success in the 1990s
has been mixed. Out of the global top ten, only AstraZeneca
of the European companies has achieved an increase
in pro forma market share, and this is largely due
to the success of Prilosec (omeprazole) in the USA.
With Prilosec due to lose patent protection in the
all-important US market very shortly, AstraZeneca
is under pressure to make its next generation of potential
blockbusters
a success.
However, the company is bullish about its future prospects.
In the latest IMS HEALTH AstraZeneca
Company Profile, CEO Tom McKillop says, "We are extremely
confident... we have the third largest salesforce
in the USA - AstraZeneca reckons that, yes, it will
successfully market these blockbusters."
Most European companies have relied on M&A activity
(particularly Aventis) simply to maintain their positions.
Even GlaxoSmithKline, the closest challenger to Pfizer
for the top position, holds a smaller share of the
global market than did its main constituent parts
(Glaxo, Wellcome and SmithKline Beecham) in 1990.
The other European companies in the top ten, Novartis
and Aventis, also hold a smaller share of the global
pharmaceutical market than did their antecedent companies
in 1990.
Of the top ten pharmaceutical companies in 1990, eight
were still present in the top ten in 2000, but half
of those (all the European firms), were there as part
of companies formed due to one or more mergers or
acquisitions. Those dropping out of the top ten between
1990 and 2000 included the chemicals group, Bayer,
which has followed an organic growth strategy for
its pharmaceutical business. However, Bayer has launched
just one significant product (the quinolone antibiotic
Ciprobay) since the 1975 launch of Adalat, and it
is now ranked 15th in the world.
The M&A activity seen in the latter half of the 1990s
was driven by the need for the major European companies
to keep up with their faster growing US rivals. It
remains to be seen whether, in the approaching age
of biotechnology, the vast marketing muscle and R&D
budgets created by these mergers will enable the Europeans
to last the pace. |
