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Although the pharmaceutical industry is comparatively small in terms of contribution to national output, employment, income generation or exports, it nevertheless attracts a great deal of attention from consumers and policy-makers alike because of the implications the production of pharmaceuticals has for the supply of medicines and the size of national health care budgets. This work attempts to identify the important stylized facts dominating the pharmaceutical industry in the European Union, evaluates its strengths and weaknesses, compares it with its competitors in the US and Japan, and offers a critical approach as to the implications from potential harmonization in the field of pharmaceuticals.