The American Pharmaceutical Industry

Market Overview

  • Market Size and Value as of 2014

    • Total worth: 377 billion USD

    • Leading business: Pfizer with 33% market share

  • Market Size and Value as of 2024

    • Total worth: 630.30 billion USD

    • Leading business: Oncology Drugs with 31% market share

    • Doubling of industry worth due to societal trends and increased demand for medicine, notably influenced by Covid-19.

Distribution Channels

  • World Courier is arguably the largest global distributor of medicine, with multiple distribution centers in the U.S.

  • Distribution is further supported by local care centers and General Practitioners (GPs) facilitating access to prescription medicine.

Price Elasticity and Income Elasticity of Demand

  • Price Elasticity of Demand (PED)

    • Demand for medicine is inelastic; few alternatives exist.

    • High healthcare costs in the U.S. allow large companies to profit significantly.

  • Income Elasticity of Demand (YED)

    • A rise in income correlates with higher medicine consumption, although high costs lead to avoidance of emergency services and prescription medicines.

Case Study: Purdue Pharma

  • Market Position

    • Operates within the pharmaceutical market and is one of the largest companies known as part of 'Big Pharma'

    • Facing bankruptcy due to scandals and lawsuits.

Marketing and Advertising Strategies

  • Sales representatives marketed OxyContin as a product "to start with and to stay with."

  • Purdue implemented a campaign to counter stigma from prior opioid drug issues, funding research to downplay addiction concerns.

  • Consequently, many users became addicted, suffering from withdrawal between doses.

Legislative Actions

  • The FDA approved OxyContin, leading to a significant lawsuit for misleading claims regarding its efficacy.

  • Purdue Pharma faced a lawsuit of $600 million for misbranding.

  • In 2019, Purdue declared bankruptcy and settled with 24 states and DC for $4.3 billion in March 2021.

  • 2024 Update: A Supreme Court ruling has challenged the bankruptcy deal protections for the Sackler family related to the opioid crisis.