The knowledge content in OECD economies has intensified over the last two decades (OECD 2001). As a sector of strategic importance for social welfare, the pharmaceutical
industry has attracted considerable research energy. However, there has been insufficient attention given to the industry in macroeconomics; only fragments of the big picture are recorded. Several studies also point to a trend towards concentration of business activity in the USA away from Europe. We seek to gain more comprehensive view of the
industry. The evidence presented here highlights the diversity of OECD countries and the rise of a few centres of excellence in the 1990s. The paper also reviews the performance of the Australian industry and compares it with other OECD countries.