The pharmaceutical industry is focused on the research, development, marketing, and distribution – for profit – of diagnostics, vaccines, and therapeutics for the prevention of disease. Most commonly in the context of human healthcare. The drugs can be custom or "brand" medications – as well as generic or "copies"/"knockoffs" of brand medications that have lost patent protection. Drug discovery is the process by which potential drugs are discovered or designed. In the past, most drugs have been discovered either by isolating the active ingredient from traditional remedies or by serendipitous discovery. A great deal of early-stage drug discovery has traditionally been carried out by universities and research institutions.
These products are now all subject to laws and regulations regarding the patenting, testing and marketing of drugs by the USFDA and the equivalent EU organizations.
Most of today's "major" pharmaceutical ("big pharma") companies were founded in the late 19th and early 20th centuries. Key discoveries of the 1920s and 1930s, such as insulin and penicillin, became mass-manufactured and distributed. Switzerland, Germany, and Italy had particularly strong industries, with the UK and US following suit. The industry continued underway in earnest from the 1950s, due to the development of systematic scientific approaches, understanding of human biology and sophisticated manufacturing techniques.
Numerous new drugs were developed during the 1950s and mass-produced and marketed through the 1960s. These included the first oral contraceptive, "The Pill", Cortisone, blood-pressure drugs and other heart medications. MAO Inhibitors, chlorpromazine (Thorazine), Haldol (Haloperidol) and the tranquilizers ushered in the age of psychiatric medication. Valium (diazepam), discovered in 1960, was marketed from 1963 and rapidly became the most prescribed drug in history, prior to controversy over dependency and habituation.
Attempts were made to increase regulation and to limit financial links companies and prescribing physicians, including by the relatively new USFDA. Such calls increased in the 1960s after the thalidomide tragedy came to light. The World Medical Association issued its Declaration of Helsinki, which set standards for clinical research and demanded that subjects give their informed consent before enrolling in an experiment.
Pharmaceutical companies became required to prove efficacy in clinical trials before marketing drugs. Cancer drugs were a feature of the 1970s. The industry remained relatively small scale until the 1970s when it began to expand at a greater rate. Legislation allowing for strong patents, to cover both the process of manufacture and marketing of the specific products, came into force in most countries.
The pharmaceutical industry entered the 1980s pressured by economics and a host of new regulations, both safety and environmental, but also transformed by new DNA chemistries and new technologies for analysis and computation. Drugs for heart disease and for AIDS were a feature of the 1980s, involving challenges to regulatory bodies and a faster approval process.
By the mid-1980s, small biotechnology firms (see other section "biotechnology") were struggling for survival, which led to the formation of mutually beneficial partnerships with large pharmaceutical companies and a host of corporate buyouts of the smaller firms. Related note: "biopharmaceuticals" are defined as any drug produced using biotechnology processes or procedures.
A new business atmosphere became institutionalized in the 1990s, characterized by mergers and takeovers, and by a dramatic increase in the use of contract research organizations for clinical development and even for basic R&D. The pharmaceutical industry confronted a new business climate and new regulations, born in part from dealing with world market forces and protests by activists in developing countries. Animal Rights activism was also a problem.
Drug development progressed from a hit-and-miss approach to rational drug discovery in both laboratory design and natural-product surveys. There are now more than 200 major pharmaceutical companies, jointly said to be more profitable than almost any other industry, and employing more political lobbyists than any other industry. Advances in biotechnology and the human genome project promise ever more sophisticated, and possibly more individualized, medications.