AN AGEING, wealthy population and government subsidies: you would think the Australian pharmaceutical industry would be grinning.
But although Australia's listed pharmaceutical wholesalers API and Sigma had a rollicking year - up 81 per cent and 36 per cent, respectively - hundreds of job losses were confirmed in the final months of last year from drug companies Pfizer Australia, GlaxoSmithKline, Eli Lilly and MSD Australia.
The cuts came as the federal government sought to cut soaring health costs and as global blockbuster drugs such as cholesterol treatments came off patent to face stiffer competition from generic manufacturers.
Brendan Shaw, the chief executive of industry body Medicines Australia, recently noted that the pharmaceutical benefits scheme - which subsidises Australians' cost of medicines - has soared from a $173 million annual cost to the government to $9 billion.
But since its inception in 1972, patient contributions to the PBS have remained at about 0.1 per cent of gross domestic product, Dr Shaw said in a speech last year.
Beyond the local market, the industry is pinning its hope on the growth of Australia's neighbours. According to the Bureau of Statistics, medicinal and pharmaceutical products accounted for more than $4 billion in exports in the year to June 2012, up from $3.74 billion in 2011 fiscal year.
And forecasting firm IMS Health has predicted global spending on medicines would reach $1 trillion this year, driven by emerging markets including China, India and Thailand, Dr Shaw said.
"Economies like China are growing rapidly, their middle classes are growing rapidly, and those middle classes will be demanding health care products and services like medicines to keep them healthy," he said.
"In the Australian prescription medicines industry we've seen the knock-on effect of these changes already, such as AstraZeneca's decision to keep its Sydney manufacturing plant open, and actually expand it, to meet the rising demand for asthma and COPD [chronic obstructive pulmonary disease] medicines in China.
"And we've seen GSK choose to expand its Melbourne plant, in part to respond to growing production opportunities in Asia."
Recent financial accounts show Eli Lilly reported a $12.78 million profit in 2011, down from $16.37 million the previous year, due to "zero sales growth" and increasing operating costs.
Profit at Pfizer Australia Holdings and its controlled entities fell to $61.15 million for the year to November 30, 2011, from $72.6 million.