Pharmaceuticals are one of Britain's leading manufacturing sectors, bringing in a trade surplus of £3.4 billion in 2004. The value of UK pharmaceutical exports in 2005 was £12, 2 billion, more than £166,000 per employee.  An analysis of the world's top 100 medicines reveals that, after the USA, Britain's pharmaceutical companies' market share is more than all its European competitors combined. 

Within the UK economy, pharmaceuticals are consistently in the top three industrial sectors in terms of trade surplus. The industry is a major employer, with around 73,000 people employed directly, a quarter of them graduates, with about another 250,000 people employed in related industries.  The value added per employee is rising year by year.  The gross output per employee has risen from £12,077 per year in 1975 to £209,685 in 2004. The pharmaceutical market is highly fragmented: only one company has a ten per cent share of the UK market, most of the rest are far smaller. Of the major medicines sold in the UK, around half were developed in British laboratories.

Research and development lies at the heart of the pharmaceutical industry. It invests 30 per cent of its sales in research, and a quarter of the entire research expenditure by the UK manufacturing sector is funded or carried out by the pharmaceutical sector. Research and development expenditure by the pharmaceutical industry in Britain amounts to more than £3 billion, or around £9 million a day.

The pharmaceutical sector is regulated by the Medicines and Healthcare products Regulatory Agency (MHRA).  The MHRA was set up in April 2003 from a merger of the Medicines Control Agency and the Medical Devices Agency.  The MHRA is the government agency which holds responsibility for making sure those medicines and medical devices work and work safely.  All medicines are directly approved by the MHRA which then issues a license.  Manufacturers and distributors are also licensed directly by the MHRA.

Typically for each product that receives a license, hundreds have failed at some stage in research and development. This is why-bringing a new chemical on to the market requires a huge investment from pharmaceutical companies.  UK legislation requires product licenses to be renewed every five years, at which stage all additional data is reviewed by the regulatory authority.