The Global Pharmaceutical industry: Swallowing a bitter pill’ Case Study Institution Date Introduction Amongst strategic tools commonly applied in enhancing business operations is the Porter’s Five Forces framework. Porter’s Five Forces framework is a strategic tool that assists in identifying environmental factors that affect operations of business entities within their industry…
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Generally, the global pharmaceutical industry recovered after the World War II due to the stable economical, social, cultural, and political environment. During this period, immense R&D was attained, which has been very critical in enhancing effectiveness and efficiency in treating various diseases and ailments. Nonetheless, there have been many changes such as competition for patents and other intellectual rights over innovated and invented treatment methods. What’s more, technological development has created a new environment for operations of firms within the pharmaceutical industry. Hence, there is need to identify environment factors affecting operations of pharmaceutical firms whilst focusing on the past as well as the future industry. Porter’s Five Forces of Global Pharmaceutical Industry Threats of New Entrants There are many and high barriers that prevent new entrants into the global pharmaceutical industry. One of the many and high barriers is the high costs and capital required for R&D. Contemporary environment has been highly characterized with increased drug resistance. Therefore, in order to come up with highly effective and efficient drugs, firms within the global pharmaceutical industry must engage in serious and intensive R&D. ...
Economies of scale are other high barriers to new entrants. The existing pharmaceutical firms within the industry enjoy significant economies of scale that include easy accessibility to not only financial assistance but also to market. For instance, the new entrants must engage in serious promotional activities in order to attract consumers of their products. Such promotional activities are very costly hence prevent new entrants. Conclusion: The threat of new entrants therefore is LOW given the many barriers existing within the global pharmaceutical industry. Bargaining Power of Buyers (MEDIUM) Buyers or consumers of products from pharmaceutical industry are individuals, wholesale chemists, retail chemists, hospitals, and other health care organizations that wish to conduct specific research such as CDC/KEMRI. Unlike individuals, wholesale chemists, hospitals, and other health care organizations buy drugs from pharmaceutical industry in bulk. In this perspective, a bigger proportion of consumers directly have powers to influence the prices of drugs produced by pharmaceutical firms. Therefore, such organizations or consumers exert pressure on pharmaceutical firms to check prices of their products. On the other perspective, individuals or regular patients have low bargaining power given the proportion of drugs they buy from pharmaceutical firms in relation to wholesale chemists, hospitals, and other health care organizations (Holland, 2010). Introduction of generic drugs have also affected the pricing of original drugs hence consumers of original drugs are losing bargaining power on the relevant prices. In this case, the high bargaining power of wholesale chemists, hospitals, and other health
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According to Ahlstrom and Bruton the effects of the forces analyzed in the Five-Forces Framework are differentiated in the pharmaceutical industry because of the following reason: the profits of this industry are likely to be continuously increased, a phenomenon which is not common in other industries.
All of these have potential impacts on each industry sector. It is the point of the proponent to find out whether these forces differ in each industry sector. Furthermore, the proponent discusses the status of each sector based on the industry life-cycle model.
The essay "the global pharmaceutical industry" aims to integrate appropriate theory to critically analyse the macro-environmental factors that have influenced the development of the global pharmaceutical industry during the period of the case.Macro-environmental factors are socio- cultural, political, legal, environmental, economic and technological.
The brief background information refreshes one’s perspectives on the underlying framework that characterizes the global pharmaceutical industry is its dynamism and continually evolving nature with “the highly risky and lengthy R&D process, intense competition for intellectual property, stringent government regulation and powerful purchaser pressures” (Holland, 2010, p.
The Global Pharmaceutical Industry: Swallowing A Bitter Pill Name: Institution: Innovativeness in high tech is of importance in the pharmaceutical industry in the sense that it facilitates Value creation in the industry. Innovativeness also contributes to maintenance of a company’s competitive advantage (Johnston, Whittington and Scholes, 2011, p.5).
The strategy clock presents eight possible strategies in four quadrants that are determined by price and unity axes. These strategies are low price and low value, low price, hybrids, differentiation, focused differentiation, higher prices and higher value, and low values and standard prices (Cadogan, 2009).
The study will describe how internal and external environment forces have affected the industry. In order to determine the issues, PESTEL Analysis and Porter’s Five Force Analysis have been implemented in the study. This strategic framework will determine the industry’s internal strengths, weaknesses and external opportunities, threats.
It is noted that this industry has embarked upon financial profits since 1998 onwards. The scope of this industry includes "manufacturing, fabricating, and processing medicinal substances into finished pharmaceuticals for human and veterinary use" (Sarah, 2004).
Due to the every increasing cost and expenses that adversely affected the company's profit margin, even though the company was having substantial increase in turnover and revenues, the management decided to launch a workforce reduction program in the year 2003.
The recent medical history include; Prostatiem 2011, tiredness+reccurent falls, alzheimer’s, rhabdomyolysis, left frontal lobc CVA, dementia, parkinson but no diabetes, kidney disease, temperature of 36, respiratory rat of 97% and blood pressure of 139/80.
1 Pages(250 words)Case Study
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