The industry boasts huge companies fifteen of the world's 100 most valuable firms are drug manufacturers but it remains extremely fragmented with the largest firm commanding barely 5 percent of the global market. Research by AT Kearney, the US consultancy, suggests that companies that have merged in the past decade have had lower economic returns than those that did not. However, analysts say these companies would have done worse had they not merged. The drive for size will force European and US firms together in spite of big cultural differences. The merger between Sweden's Pharmacia and Upjohn of the US got off to a disastrous start, but the companies have turned round the business and recently sprung a bid for Monsanto, the US drug and food group.
European companies face a tougher challenge than do their American rivals.
The US is the world's biggest and fastest-growing market, and Americans consume twice as many pills as Europeans do. European firms, by contrast, are still overdependent on their smaller domestic markets. Only half of Germany's 1,000-plus drug companies have more than 100 workers. Europe needs to undergo massive consolidation to prevent the US dominating the drug business in the coming decade. Companies have to devote an increasing slice of their revenues on research and development to produce new drugs to replace expiring patents.