In this paper authors give an overview of the development of the pharmaceutical industry in former Yugoslavia and Serbia in the period 1990-2013. The aim is to examine whether pharmaceutical industry, which was largely fragmented at the beginning of 90’s, after a decade of privatization and restructuring had come to consolidation. In this paper we review the essentials of the pharmaceutical industry as well as key trends in that industry. In addition, there has been analyzed the privatization process in the pharmaceutical sector, as well as the outcomes of these privatizations. There was also presented the market distribution with market shares of the largest manufacturers of drugs and medical products, and trends that have shaped the market structure of the pharmaceutical industry in the analyzed period. In conclusion we can say that foreign owned pharmaceutical companies, as compared to domestic companies record higher and above average levels of profitability indicators. This indicates that there is a need for another round of restructuring in public owned companies in Serbia.