In the aftermath of the COVID-19 pandemic, the development of the pharmaceutical industry became an indispensable issue. At that time, there was a perception that without new treatments, particularly vaccines, the world would remain stuck in a vicious cycle of lockdowns and successive crises. Consequently, pharmaceutical companies became the focus of both governments and the general public during a highly sensitive period, which increased the pressure on major pharmaceutical companies to deliver rapid results.
Over the past four years, global momentum around the pharmaceutical industry has grown, accompanied by the desire of many governments to localize their industries in this vital sector. This move is intended to avoid potential shocks from future pandemics or viruses, as well as to enhance public health and prevent major health crises that could strain national health systems. The era we are currently living in has been dubbed the “Golden Age of Medicine,” marked by the rise of new treatments and the integration of modern technology in the development of new drugs.
Key Indicators
There are several key indicators pointing to the upward trend in the global pharmaceutical industry, which can be summarized as follows:
The U.S. market dominates half of global pharmaceutical sales: In 2023, the U.S. pharmaceutical market accounted for about 51% of the global pharmaceutical market, with total sales estimated at around $678 billion. Emerging markets, including countries like China, Russia, Brazil, and India, accounted for 23% of global sales, while Europe represented about 19% of the global pharmaceutical market, generating approximately $250 billion in the same year.
Growth in global pharmaceutical market revenues: The global pharmaceutical market has seen significant growth in recent years, with total market value estimated at approximately $1.6 trillion in 2023, an increase of over $100 billion compared to 2022. This also represents a massive increase compared to global pharmaceutical market revenues in 2001, which were estimated at just $390 billion.
Pfizer’s dominance in global pharmaceutical revenues: The global pharmaceutical market is generally dominated by several large multinational companies, including the American company Pfizer, which generated revenues of around $58.5 billion in 2023. AbbVie, another American company known primarily for its anti-inflammatory drug Humira, generated approximately $54.3 billion in the same year, followed by the Swiss company Novartis, with revenues of about $45.5 billion.
Increasing global spending on research and development: In 2022, total spending on research and development (R&D) in the pharmaceutical industry was estimated at around $244 billion globally, nearly double the amount spent on R&D in 2012, which was about $137 billion.
Production and development of new biological drugs: As of 2023, numerous new drugs have been developed, with approximately 4,500 new cancer immunotherapy products in development worldwide, along with over 3,600 other cancer drugs in various stages of R&D. In that year, the Center for Drug Evaluation and Research (CDER) approved 55 new drugs, the second-highest number of drug approvals after 2018, which saw about 60 new drugs approved.
Oncology products dominate global pharmaceutical sales: Unlike the two years following the COVID-19 pandemic, vaccines against the virus no longer hold their position as the top pharmaceutical products based on revenue. Instead, oncology drugs and cancer treatments dominated global pharmaceutical sales in 2023, with Merck’s cancer drug Keytruda being the best-selling drug worldwide, generating about $25 billion in revenue in 2023. This type of treatment is expected to see the greatest growth in the coming years, followed by spending on drugs for autoimmune diseases and diabetes.
Germany is the largest exporter of medical products in the European Union: Among EU countries, Germany achieved the highest exports outside the EU in 2023, valued at €62 billion, followed by Belgium (€43 billion) and Ireland (€37 billion), making Germany the largest exporter of medical products outside the EU. This highlights Europe’s interest in playing an increasingly significant role in this vital global market.
Expected growth in global drug use: Global drug use increased by 14% over the past five years, with another 12% increase expected by 2028, bringing annual usage to 3.8 trillion defined daily doses. Drug use in Latin America and Asia is likely to grow faster than in other regions over the next five years.
Potential increase in global drug spending: Over the past five years, global drug spending grew by 35%, and it is expected to increase by 38% by 2028. New branded drugs are likely to contribute $193 billion to this growth, an increase of $40 billion compared to the previous five years.
Development Strategy
The United Arab Emirates (UAE) is one of the leading countries interested in enhancing its local pharmaceutical industry in light of increasing healthcare spending. The country’s focus on the pharmaceutical industry can be outlined as follows:
Significant role for the pharmaceutical industry in Abu Dhabi: The pharmaceutical industry in Abu Dhabi has become a major contributor to drug production in the UAE, accounting for about 27% of total production in 2021. The value of pharmaceutical production in Abu Dhabi was approximately $284 million that year. Given the country’s growing interest in this industry, it is expected that registered drugs in the UAE’s pharmaceutical market will account for around 77% of prescribed drugs by 2030.
Abu Dhabi’s adoption of an industrial strategy to support sector competitiveness: An industrial strategy has been developed for Abu Dhabi to support the growth and competitiveness of the pharmaceutical sector. The strategy includes a government investment of AED 10 billion to double the size of the manufacturing sector to AED 172 billion, increase non-oil exports by 148% to AED 178.8 billion, and create 13,600 jobs by 2031. The strategy aims to make Abu Dhabi a regional hub for innovation and manufacturing in the pharmaceutical industry, including the production of essential pharmaceuticals and pharmaceutical preparations, as well as the manufacturing of medical chemical products and herbal medicines.
Mubadala’s acquisition of “Kelix Bio” in the pharmaceutical field: In March 2024, Mubadala Investment Company entered into a final agreement to acquire Kelix Bio, a company specializing in advanced generic medicines in emerging markets, to strengthen the pharmaceutical industry ecosystem in the UAE. Since its establishment in November 2020, Kelix Bio has acquired manufacturing companies in India, Egypt, Malta, and Morocco, and successfully marketed a wide range of pharmaceutical formulations for the treatment of diabetes, cancer, cardiovascular diseases, central nervous system disorders, and more.
Emirati investments in establishing research centers and pharmaceutical factories: The pharmaceutical industry is a key driver of economic growth and industrial diversification in the UAE. Therefore, the country invests heavily in establishing modern research centers and pharmaceutical factories and provides incentives to foreign and local investors in this field, aiming to strengthen the country’s position as a regional hub for the pharmaceutical industry and attract foreign direct investment in this sector.
UAE’s efforts to develop environmentally friendly pharmaceutical industries: The UAE is committed to developing environmentally friendly and sustainable pharmaceutical industries by adopting the latest technologies and innovations in this field, in line with the UAE Vision 2021 and 2030, which aims to achieve sustainable development that balances economic progress and environmental protection.
Increasing focus on research and development of new drugs: Consumer preferences in the UAE’s pharmaceutical market for high-quality, innovative, and effective drugs for treating various diseases, while remaining affordable, have led pharmaceutical companies in the country to invest heavily in R&D to develop innovative drugs that can effectively treat different diseases.
Intensive regulation of the pharmaceutical industry in the UAE: The pharmaceutical market in the UAE is subject to strict regulations and controls, with the government playing a prominent role in regulating the pharmaceutical industry in the country. The government has implemented various initiatives to enhance the development of the pharmaceutical industry and improve healthcare services in the country.
Motives for Interest
Governments’ interest in the pharmaceutical industry and their wide efforts to strengthen their capabilities in this field are driven by several factors, including:
Localizing the industry and reducing dependence on foreign sources: Many countries pay great attention to the pharmaceutical industry for strategic reasons related to the urgent need to reduce dependence on foreign sources for vital treatments. This interest is evident through large government investments in medical infrastructure, supportive government policies, and global partnerships with leading pharmaceutical companies.
Improving health systems and preventing diseases: Countries recognize that developing a local pharmaceutical industry significantly contributes to improving health systems and preventing diseases. Governments aim to ensure the availability of essential and innovative medicines for all citizens and residents and build local capacities in drug manufacturing.
Ensuring rapid and effective response to pandemics: Governments’ efforts to strengthen their pharmaceutical industries are aimed at accelerating their response to pandemics and health emergencies, thereby increasing their ability to protect the health of their populations in critical situations.
A tool for enhancing health diplomacy: The COVID-19 pandemic revealed the role of strong pharmaceutical industries in some countries and the readiness of many countries for emergencies, in enhancing their health diplomacy. Since then, countries have used the pharmaceutical industry as a tool to enhance their international influence through health diplomacy by providing medical assistance and donating drugs and vaccines to other countries. This demonstrates their commitment to global health, supports their international image, and helps build strong strategic alliances and partnerships.
The contribution of the pharmaceutical industry to the global economy: In addition to the substantial revenues of the global pharmaceutical industry, this vital sector significantly contributes to providing millions of job opportunities annually. Furthermore, investments by some countries in this industry often contribute to notable economic growth in leading countries in the industry, thanks to high export revenues from drugs.
The role of the pharmaceutical industry as a key driver of scientific research: The industry plays a significant role in enhancing research and development, as many global companies invest heavily in developing new treatments for various diseases. This helps accelerate the discovery of new drugs and contributes to saving lives, improving the quality of life, and addressing emerging health challenges.
Developing Environmentally Friendly and Sustainable Pharmaceutical Industries: In line with the global goal of achieving net-zero carbon emissions, both governments and pharmaceutical companies are moving towards producing and developing environmentally friendly and sustainable pharmaceutical industries. This is being done by adopting the latest technologies and innovations in this field, including the use of clean manufacturing techniques, effective waste management, and ensuring the sustainable use of resources.
Reduction in Drug Production Costs: Over the past few years, major developments in pharmaceutical research and development (R&D) have begun to change the landscape of R&D. There is an increasing number of pharmaceutical manufacturers keen to develop their R&D capabilities by engaging with clinical research organizations (CROs) and contract research organizations (CROs), which has significantly contributed to lowering drug production costs.
Demographic Shifts Driving Increased Health Spending: Many countries are facing significant social and economic challenges due to a combination of rapidly aging populations and declining birth rates. For example, public health spending in Switzerland is expected to increase by 30% by 2050 due to the high costs of long-term care. Meanwhile, countries like South Korea and China, among others, are already grappling with the economic impacts of a declining working-age population that contributes to the taxes needed to fund elderly care services. These changes underscore the urgent need to invest in prevention and “healthy living” care, by increasing investment in the pharmaceutical industry to reduce future healthcare costs.
Ongoing Challenges
Pharmaceutical companies face a number of complex challenges that affect various aspects of production, distribution, and innovation. These include the long time required for research and development, which can take decades to discover a new drug. Additionally, pharmaceutical companies need significant investments in research and clinical trials to yield results. On the other hand, the high cost of developing and producing drugs presents a major dilemma, creating pressure on pharmaceutical companies to provide affordable medications, especially in developing countries.
Furthermore, global interest in the pharmaceutical industry has led to intense competition among pharmaceutical companies, particularly those that produce generic drugs, which offer cheaper alternatives to branded drugs. This, in turn, creates financial and commercial pressures on pharmaceutical companies and significantly affects the profit margins of companies that produce original branded drugs.
Moreover, the issue of counterfeit drugs poses a significant threat to patient health and the reputation of manufacturers, necessitating strict government oversight to ensure drug safety. The spread of such drugs could erode trust in the healthcare systems of affected countries. Lastly, the industry faces pressures to reduce its environmental impact, including the management of chemical waste generated from production processes, which forces both companies and governments to strive towards adopting environmentally sustainable pharmaceutical industries.
Overall, various factors have motivated many countries around the world to enhance their pharmaceutical industries, increase spending on research and development in this vital field, work towards environmentally sustainable pharmaceutical products, and leverage modern technologies in discovering new drugs to treat complex diseases. The industry is expected to witness further efforts by governments and companies over the next five years, positively impacting the global pharmaceutical market’s revenue and its contribution to the global economy.
However, this growth necessitates addressing industry challenges positively, by adopting flexible and innovative strategies from companies in the field, as well as close collaboration with governments and health institutions to optimally meet the requirements of health systems in different countries.
