The pharmaceutical industry pressured by economics ND some new regulation from government for safety In ass’s, The current business model of pharmaceutical industry is moving to a highly complex. The technology assists to discover and develop of human knowledge. The distribution system of development and management is complex and high costly with some huge size of companies. All pharmaceutical companies have been bullet up their strategies to get the competitive advantage to take over their competitor. For the following sections, It will use PESTLE and Porters Five Forces to review the pharmaceutical industry.
PESTLE -Political In this industry, the companies must corporate with government. When they have a new concept to develop a new product, they have to do a lot of research in the market & government. At least government would not reject the products when finished. The management must have some connection with the government or senator to keep a good relationship with them. In the other way, government may have requested them to develop a new pill/vaccine to confront the disease/virus; they have to coordinate with government. Economic In past few years, the global economy has yet to shake out the fall from the crisis of 008. US / Japan / Euro will still lead the growing of global economy on coming years. And It predicts the China will overtake the EURO on 2013. Those countries are the major market of global pharmaceutical. The profit of this industry will not fall in the future and seems they would focus on new market like China, Brazil, and Russia etc. -Social Ageing population’s problem happen In many countries Like Japan, It pressured the healthcare system of government, but it is the commercial potential on those market.
Because the people which over-ass’s will spend more money on medical and they are ailing to pay more to get a greater treatment. -Technological Innovation is most important in pharmaceutical industry; companies need to invest the cost of pharmacy’s R&D is extremely high and times were lengthening. -Environmental Pharmacy is a traditional business, a stable environment can be provide a good stage for pharmaceutical industry, otherwise it may increase the risk and cannot ensure the long-term growing and profitability of pharmaceutical companies. Legal Normally, companies should follow the government’s law and restriction. Before the reduction, they would check the product is obeying the law. If the products may reject by law / government, they may not take this risk when process. Porter’s Five Forces -Bargaining Power of Suppliers Most of pharmaceutical companies are increasing to use out-sourcing for their products; it can be reducing the cost of raw materials. -Bargaining Power of Buyers The main buyer is government; usually they use policy to increase the competitor.
For example, they import a new product to compete with old product, and then the company must decrease the price to maintain the market share. -Threat of New Entrants In pharmaceutical industry, a new entrant is hard to enter this business. Because they must input a lot of money and long lead time for new drugs, the cost of R&D is high and the sales volume can be cover their cost. -Threat of Substitutes If the product is generics, it would be easy to have substitutes, but it is not the main threat of corporate.
In the future, Biotechnology may be more successful on genomics market; it may substitute some parts of pharmaceutical industry. -Intensity of Competitive Rivalry Some industry would merger and become a rich and profitable industry. They will get he most of market share and reduce the cost of R&D. [pick] Development In the first stage, companies input very high investment of research and development in their products. There are no income and profit in this stage. They will test the products in the patient and get approval from government.
Launch The product is going to manufacturing after the development. Companies can get a little profit but cost still very high, due they need to spend a lot of money build up the sales volume, e. G. Promotion. Growth The costs were reduced due to the economies of scale. Sales volume is increasing significantly and profitability is rising. There are new entrants in establishing market. Maturity In this stage, the sales volume is going to peak, cost are lower due to the large production volume. Companies can get a maximum profit of this stage.
Decline Sales volume is declining due to some competitor in the market. Profit and price is going down, companies must try to maintain or increase the market share. Conclusion All of the pharmaceutical companies are trying to increase their market share, revenue and profitability. In coming years, pharmaceutical industry must input more source on technological development to maintain their competitive advantage over their rivals; or some companies will collaboration to reduce the cost of R&D.
