Pharmaceutical Industry Analysis

Most people living in the developed world have entered a pharmacy or purchased medication at some point In their lives. Today the pharmaceutical Industry is one of the biggest Industries In the united States. The Industry experienced a rapid growth rate (in the double digits) in the late 20th century which has now dropped into the single digits (Mullions, 2007). The global demand is driven by factors such as a worldwide increase in elderly population and a rising quality of life in developing nations.

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Time Magazine listed Generic Pharmaceutical Manufacturing as one of the pop ten fastest growing industries in the United States for 2012. (Mathews, 2012) Due to the Inherently volatile nature of the Industry, It Is necessary for companies to constantly adapt through the constant development of effective strategy. Today pharmaceutical companies must not only address finances, but social, legal, and environmental issues as well. In this paper the top ten issues companies face in pharmaceuticals are discussed.

They are addressed in an order of descending importance as follows; legal issues, environmental issues, and social issues. When ordering these categories I put myself in the mindset of a potential company investor. Investors are vital to a company’s survival and a potential stockholder Is primarily Interested In the finances of the company, and Its future prospects. Therefore legal action takes precedence above other issues. Legal: Legal issues are most important because a violation of law oftentimes harms a company the most financially.

The top 20 pharmaceutical legal cases in history account for over 1 6 billion dollars in recovery. (Bringing, 2012) The violation of legal requirements is more common and typically results in much graver consequences Han an environmental or social wrong. There are a plethora of areas In which a pharmaceutical company could Inadvertently break the law. The top Issues a company could encounter include the filing of false claims, the provision of marketing bias to health professionals, drug lobbying, and illegal marketing of antispasmodic drugs.

This is just the tip of the iceberg when it comes to legal problems pharmaceutical companies may encounter by either chance or design. Within the pharmaceutical industry legal Issues involving the filing of false claims are the most common. Over 2. Billion dollars were recovered In 2010 under the False Claims Act (Bringing, 2012). False claims are filed when a pharmaceutical company charges an insurance company for drugs the patient never received. This practice can save a company thousands of dollars, and can be an easy crime to inadvertently commit if procedures are not strictly followed.

However, evading the law ultimately costs companies more money than they save if they are caught. It is important for companies to be aware of this law, so they can avoid the consequences of breaking It. Drug marketing and lobbying have also become popular In the past decades. I addressed them simultaneously because they are directly linked and legal cases oftentimes address them together. Recently, there has been some controversy over the legality of both practices. Pharmaceutical representatives attempt to convince doctors and health representatives of the superiority of their product.

However, it is easy to present with bias and present illegitimate Information unjustly favoring their product, but inexcusable to attempt to sway medical professionals for monetary gain. A successful company will be aware of the danger of bias, and steer clear of it. Antispasmodic drugs are currently the top-selling prescription medication in the United States of America. The demand for them seems to be ever increasing and with the increase in demand has come an increase in health care fraud. For this reason, nearly every pharmaceutical company offers antispasmodics.

In the past giants such as Eli Lilly and Company have been convicted of promoting antispasmodic drugs for uses that the Food and Drug Administration (FDA) have not approved. This false advertising results in lawsuits, harm to customers, and a ruined reputation. The drug n question is usually removed from the market as well. In 2009 Eli Lilly and Co paid a criminal fine of $515 million for false advertising of its drug Zappers (Shah, 2012). In this case, the financial burden and negative publicity from this fine was far worse than it would have been to simply advertise truthfully.

Environmental: While the increasing growth of the pharmaceutical sector is beneficial in an economic and medical sense, it perpetuates a greater threat to the environment. Previously the amount of pollution caused by corporations has shown a direct relationship with the growth of that corporation. Companies working to change this have repeatedly encountered three major environmental issues; generation of harmful air emissions, wastewater, and other residual wastes during the process of developing and selling drugs and other pharmaceuticals.

In order to be successful, a company must analyze the importance of each issue to society, and address them respectively. I addressed environmental issues after legal issues primarily due to the recent green movement. In the public eye, environmental issues are becoming increasingly important and an environmental violation of public standards could also have dictatorship events on a company’s reputation and sales. Companies that show concrete, quantitative values measuring pollution can effectively prove it decreases. The easiest measured form of pollution is wastewater.

Wastewater is defined as “any water that has been adversely affected in quality by anthropogenic influence” (Berry, 2000) Wastewater oftentimes contains contaminants which can be leaked into important water sources, thereby exposing the public to harmful substances and harming ecosystems. The business problem lies in the fact that wastewater is produced during key developmental drug processes. Specifically, the chemical synthesis process involving the individual steps of reaction, separation, purification, and drying, results in wastewater containing harmful waste.

Each step is necessary and therefore cannot be eliminated. Companies such as Johnson and Johnson can and have taken steps to filter the waste and ensure that the wastewater does not contain toxins such as overly high pH levels or significant concentrations of biochemical and chemical oxygen and suspended solids. If a company adheres to the public standards, or sets higher standards for themselves it will help to preserve the lane, enjoy a good reputation, and provide for their future. The generation of harmful air emissions is another environmental issue that pharmaceutical companies deal with daily.

The most serious air pollutants generated in this industry are VOCE emissions and acid gases (Berry, 2000). These emissions come from reactor vents, valves, and centrifuges. Many of the reasons companies cleanse their wastewater. I listed air pollution as less important than wastewater because the process of air purification is significantly lengthier and more expensive therefore less feasible for startup companies to implement. Environmental issues trump social issues in my mind because all environmental harm impacts every individual indirectly.

Pollution is a far greater crime against society than many problems that are actually categorized as social issues. The Earth belongs to society and the damage to it impacts us all. Residual waste is generated by every corporation that requires specific material inputs. It is an unavoidable fact of business that certain pieces of equipment are left over at the end of the day. The issue posed before a pharmaceutical company is how to properly dispose of the waste. A good cycling process can actually cut costs as well, benefiting the company’s reputation and finances.

This issue was listed as least important environmentally due to the relative ease with which it can be corrected. Recycling is well-known and relatively cheap to implement compared to other cleanup processes. Pharmaceutical companies are held to high standards environmentally because they belong to a health industry and therefore are expected to comprehend the negative health effects of pollution. Addressing environmental issues also premeditatedly avoids conflict in legal and social areas. By practicing business in an CEO-friendly way, corporations follow the law and practice corporate social responsibility.

The challenge before these companies is to reduce the level of pollution they create, not instantaneously eliminate it. Social: The growing public demand for corporate social responsibility has recently brought social issues to the forefront of the business world. In the pharmaceutical industry the major issues address ethics. Ethical conflicts within the areas of drug testing/ research, patent procedures and the unavailability of drugs in developing nations oftentimes occur. Much of a pharmaceutical company’s revenue results from the sale of new drugs that originate in the research and development department.

Companies will outsource certain medical tests to countries far removed from the developed world to save money. In these countries proper medical standards are not upheld, and tests have been administered on humans without their knowledge. Companies have also acted irresponsibly through the administration of tests with voluntary consent but failure to inform subjects about risks. It is when actions such as these occur that drug testing becomes a social issue with relevance to pharmaceuticals. It is important that companies remain informed about this issue so they can avoid potential pitfalls as they conduct their business.

Not only are these practices unethical in that they harm individuals, they also compromise the faith the public stakes in a company. A disillusioned public will cause numerous problems for a company, possibly culminating a loss of customer base due to a disapproval of the company’s lack of social conscience. Due to the severity of the consequences, this is the most important social issue for pharmaceuticals. Patent protection laws exist in the United States in order to provide incentive for nannies to invest in research and development. This makes good business sense but causes negative social impacts.

Until a product becomes available in generic available at a lower price is about 20 years, a significant number of people suffer from an inability to purchase this product during this time. This is currently recognized as a necessary trade off of the industry, but companies are expected to use the money they earn for social good. This way they counteract some of the damage done by the long waiting period. Many people, most of them in tropical countries of the Third World, die of preventable, curable diseases…. Malaria, tuberculosis, acute lower-respiratory infections-?in 1998, these claimed 6. Million lives. People died because the drugs to treat those illnesses are nonexistent or are no longer effective. They died because it doesn’t pay to keep them alive. ” This statement was made by Ken Silversides in his 1999 article Millions for Vicarage, Pennies for the Poor. Silversides is an American freelance writer from New York who writes for Harpers magazine. In this article, Silversides comments on the ironic contrast between the overabundance of prescription drugs in the developed world and the scarcity thereof in still developing nations.

Due to the recent emphasis on the importance of corporate social responsibility it has become the role of pharmaceutical companies to assume responsibility for those without access to their products. It is vital that a company addresses this issue to succeed because their competitors are already involved in distributing discounted prescription to lower income individuals. To remain competitive a startup company will have to implement similar programs. While social issues are serious, they are the least pressing of these three categories.

Everyday investors may or may not believe it is the business’s role to address social issues, but they will typically believe in a green business motto and abiding by the law. All of these legal, environmental, and social issues need to be addressed by any company with hopes for success in the pharmaceutical industry. Prior to entry into the market, companies should be aware of how each major competitor addresses these issues as well the public stance on each topic. After extensive research, they can then develop and implement a strategy geared for success. References Berry, M. (2000).