Abstract:

Some observers have hypothesised that the future growth of the drug industry will be poor; that the drug industry will become the chemical industry of the 1950s ; that the Golden Age is over. We agree that the Golden Age is over, but believe, nevertheless, that the world drug industry will continue to be growing and profitable. We believe that price increases on old products will be more important, while the growth rate of packs and the effect of upgrading may be less so. Profit margins of the industry are largely determined by volume growth, new products, productivity increases, and rates of inflation. We forecast that European inflation will moderate from its recent average of 13% per year. Should it return to the area of 5% per year, we believe that European industry profit margins can be maintained.