Despite the augmenting number of mega-mergers and acquisitions in the pharmaceutical industry worldwide, many companies have chosen strategic alliances such as co-promotion deals with other drug makers, licensing agreements to manufacture and/or distribute drugs developed by other firms, and research collaborations with other firms to develop new biotech products. In analyzing alliances in the pharmaceutical industry, we will first introduce general industry characteristics. Then, we will examine specific cases within the framework of the strategic alliance conceptual model (refer to Figure 3.4).
Worldwide sales of pharmaceutical products, both prescriptions and over-thecounter (OTC) medicines, reached $315 billion in 1998—up from $297 billion in 1997 with prescription drugs accounting for approximately 60 percent of sales. 1 The United States accounts for about 40 percent of the total of retail sales worldwide, with Europe at 32 percent, Japan at 24 percent, and other areas accounting for only 4 percent of total sales. 2 In other words, the most important market is a “triad” consisting of the United States, Europe, and Japan. Then, any pharmaceutical company trying to be internationally competitive must have operations or links in this “triad.” Once, Ohmae asserted that the global competitive success of companies depends upon their presence in all markets in the “triad.” 3 For global pharmaceutical firms, it is especially important to have a presence in the U.S. market, which represents the majority of the worldwide