| SIC Codes: | 2833 2834 2835 |
| NAICS Codes: | 325411 325412 325413 |
The US pharmaceutical manufacturing industry includes about 1,500 companies with combined annual revenue of about $200 billion. Major companies include Abbott, Bristol-Myers Squibb, Eli Lilly, Johnson & Johnson, and Pfizer. The US industry is highly concentrated: the 50 largest companies account for more than 80 percent of revenue.
Demand for pharmaceuticals is driven by the desire to cure illness and disease. The profitability of individual companies depends on their ability to discover and market new drugs. Large companies benefit from their economies of scale in research, manufacturing, and marketing. Small companies can compete effectively by specializing in drugs that target one or two specific ailments. The industry is capital-intensive: average annual revenue per worker is about $800,000.
Drugs are chemicals with beneficial biological activity. Modern drug development is an outgrowth of recent research into the specific causes of illness and disease, coupled with advances in chemistry and industrial technology that allow scientists to manufacture chemicals to improve these conditions. The explosion of scientific knowledge about human biology in the past 40 years, and in particular, the discovery that the chemistry of proteins is involved in many illnesses and diseases, has provided a wide array of protein "targets" for drugs to act on.
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