Get to Know Pharma Basics

Learning Objectives 

After completing this unit, you’ll be able to:

• Define the pharmaceutical industry’s role in healthcare and life sciences.
• Identify the main business objectives of pharmaceutical companies.
• Define key terms and regulations in the pharmaceutical sector.

The healthcare industry information we share in this module applies mainly to the United States. Keep in mind that healthcare experiences around the world may differ vastly.

The Pharmacist is In

If you’re lucky, you might find a 24-hour pharmacy open when you need medicine to reduce your raging fever at 2 a.m. But even if you rely on your corner grocer to stock a pain reliever, you still benefit from the pharmaceutical industry. 

Pharmaceutical manufacturers belong to a sector of the healthcare industry known as life sciences. Life sciences focus on research and manufacturing of drugs and devices used to provide healthcare.

Pharmaceutical companies are one of the five healthcare industry sectors:

• Providers
• Payers
• Pharmaceuticals
• MedTech
• Public Sector health

For an overview of the primary aims, trends, and sectors in healthcare, review the Healthcare and Life Sciences Industry: Quick Look in Trailhead.

Here, we decipher the sometimes messy handwriting on the prescription pad and learn about the pharmaceutical—or pharma—sector.

Let’s see where pharma can help our friend, Alvin, a dog walker who walks several dogs at a time. One day, he gets tangled in the leashes as they chase a squirrel across the street. He breaks his leg. The moment he gets his medication, he enters the world of pharma. 

Pharmacies have been around for centuries, yet the definition of pharmaceuticals hasn’t really changed. It’s a healthcare sector dedicated to discovering, developing, manufacturing, and marketing drugs in order to prevent, treat, or cure disease. 

Modern pharmaceutical manufacturers use scientific knowledge and research to develop preventative drugs like vaccines, curative drugs like antibiotics and chronic care medicine for conditions like heart disease or diabetes. 

A drug, also called a medication, goes through a long lifecycle before it gets on the market. Here are the stages it travels.

1. Research and Development (R&D): Research is the scientific investigative undertaking that results in the discovery of a new drug. Development is when these findings are used to produce the drug, which is then tested in clinical trials.
2. Clinical trials: Carefully conducted clinical trials are performed on healthy volunteers to determine if a treatment works, is safe, and is more effective than an existing treatment.
3. Regulatory review: In the US, findings from clinical trials are submitted for review by the Food and Drug Administration (FDA) to approve or deny the drug for sale.
4. Commercial marketing and sales: A new drug launches on the market with marketing campaigns targeted to physicians and patients, while pharma sales reps educate physicians on the new drug and how to prescribe it.

Once a drug gets to the commercial stage, the payers, providers, and patients get involved. These are a pharma company's key customers or stakeholders, but more on that later. First, let’s talk about the pharmaceutical sector’s main objectives.

What Pharmaceutical Companies Care About

Every department in a pharmaceutical company aims to align with one or both of these objectives.

• Provide the most effective and safest drug on the market.
• Increase revenue and shareholder value.

R&D: Manage the Drug Pipeline

In the R&D stage, the pharma sector’s main objective is to discover new medications for certain diseases. The more drugs in this discovery and development phase, the better, because most drugs don’t end up being effective or aren’t safe enough. The various drugs in different stages in R&D are called the drug pipeline or the R&D pipeline. Pharma companies call a new drug in R&D an NME, or a new molecular entity.

Pharma companies don’t want to clog drug pipelines up with trial drugs that have little chance of success. They want drug compounds that:

• Target specific patient populations that need them.
• Work better than what's currently on the market or are entirely new.
• Have a good chance of FDA approval.

Hundreds of millions, if not billions, of dollars are at stake here. It’s vital to assess risk and filter out drugs that may not be effective or safe and thus will probably not get approved. This is good news for patients, as it means the drugs’ safety and effectiveness are essential to the R&D teams. 

Clinical trials and regulatory reviews: Reduce cost and time to market

It can take decades and enormous budgets to get a drug approved. Pharma wants to reduce that time and those budgets. How? Simplify clinical trials and get the right patients into trials faster, improve communication and collaboration across trial sites, and collect better data more quickly and efficiently.

Commercial sales: Engage with providers and support patients

Once a drug is approved, pharma’s objective is to make sure that it’s readily available to patients who would benefit from it. To do this, they educate physicians on the drug’s benefits, side effects, and other important details. They have to convince payers to pay and encourage patients to request a specific drug to take. Special programs are available to help insured patients with co-payments and rebates, medication adherence, and more. They also help patients access drugs.

Pharmaceutical Terms

Let’s learn some common terms used in the pharma sector as we accompany Alvin on a trip to the doctor’s office. Alvin lives in California, so some of the terms he encounters are specific to the US.

That’s not the last word for pharma terms, but it’s a good start. Next, let’s learn about the pharma marketplace as we identify products, customers, and trends.