Pharmaceutical, health and R&D Pharmaceutical, health and R&D

“The pharmaceuticals industry is one of the world’s leading knowledge-based industries and is currently being heavily impacted by the biotechnology revolution that is changing the nature of the products it creates and the business models it uses” - Allen Consulting Group p. 10

South Australia is a small market within a small market, so local sales will never drive Pharmaceuticals to headquarter here based on volume. But increasingly, pharmaceutical companies operate as integrated global businesses, where R&D can be located in centres close to research capability and markets that are suited to speedy trials, and a friendly regulatory environment.

Economic factors that inform decisions on the location of R&D and production facilities include;

  • availability of key factors of production and other specialised resources (such as high quality local science capability and a strong clinical research base);
  • costs of production;
  • ability to achieve necessary quality standards;
  • reliability of supply; and
  • access to key end user markets 67.

Australia’s pharmaceuticals sector employs around 40,000 people (with one-third in manufacturing), accounting for $22bn in turn over in 2009-10.

Australia’s pharmaceuticals sector employs around 40,000 people (with one-third in manufacturing), accounting for $22bn in turn over in 2009-10.

In order to remain competitive, pharmaceutical companies need to be constantly innovating. This makes them lead customers for knowledge-intensive R&D. And expenditure on R&D is rising. The leading global pharmaceutical companies can direct up to 18{b3f3ab30bfbc37f44c5ec52aafa3916e1bf58e388181e9dceb89dcec0575e596} of turnover to R&D, and employ large numbers of highly qualified researchers 68.

In Australia, the sector spent over $1bn on research and development in 2008-09 and exported more than $4bn in the 2009-10 financial year69, with strong growth projected in global sales.

What’s more, the demand for R&D to support the development of pharmaceutical products extends over a long period. The development of a new drug can range between 10-15 years from discovery, through pre clinical and clinical trials, to regulatory review and manufacturing. Further still, research by the Pharmaceutical Research and Manufacturers of America shows that for every one new drug approved for sale, around 5,000-10,000 experimental compounds have been considered; costing around US$1.7bn for each new drug.

The pharmaceutical sector relies on a set of skills and capabilities that include;

-developing research
-product development
-manufacturing and production
-marketing, sales and industry engagement
-healthcare services70

Riding the knowledge frontier

Given their position at the forefront of science, medicine and technology means pharmaceutical companies help accelerate innovation in the sectors, companies and individuals they embrace. Innovation streams include;

-bio informatics; creating databases of biological information, 3 dimensional modeling and computer-aided design and impact assessment of new drugs
-automation and robotics; the rise of automation in the development of drug compounds has accelerated the rate at which testing and matching takes place

-Molecular targeting; involving the design of drugs that specifically target molecular pathways without disrupting the normal function of cells and tissues, allowing less toxic and more efective treatments to be delivered

-Nanotech; microscopic nanoparticles are able to target cells or tumours at the site of the infection or disease, without afecting healthy cells

-Personalised medicine; involves the design of drugs or treatments tailored to an individuals’ gene sequence which can include prevention programs, nutrition or protective drug therapies71.