The barrier to entry to the pharmaceutical business is fairly high. Not only is it a pretty heavily regulated field (for damn good reasons), the equipment needed to start a drug company is significant and expensive, and the time between first investment and first payoff can be very long.

Various reasons, including patents. Cost is not a "huge competetive advantage" or literally everything would be produced by other countries with fewer regulations for cheaper. There's plently of protected industries in nearly every country.