The Pharmaceutical Industry in New Zealand

The pharmaceutical industry consists of firms that develop, patent, and distribute
drugs. Although there are not significant production economies in this industry,
there are important economies in research and development.

Pharmaceutical products used in New Zealand may have been processed in this
country or overseas. Many of the large international pharmaceutical companies had
in the past their own manufacturing plants in New Zealand but due to the
economic reforms that have been enacted over the last 10-12 years the majority of
those plants have been closed down. The only ones remaining are those that are
principally involved in the manufacture of generic products for sale in the
domestic market or for export.

Manufacturing companies that remain in New Zealand are:

Douglas Pharmaceuticals
Pacific Pharmaceuticals
Apotex
Stevens Chem Industries

Product differentiation exists, because firms often sell branded products. Firms
compete in research and development. However, once a product is developed and
patented, competition is significantly reduced. Recently, the increased availability
of generic, non-branded drugs has threatened the profitability of some drug lines.
Once an effective drug is developed, there are usually few, if any, alternatives to
that drug. Drugs are manufactured from commodity chemicals usually available
from numerous suppliers. Major customers include doctors and patients. Recently,
increased costs have led the government and insurance companies to pressure drug
companies to reduce their prices.