Strengths of the Pharmaceuticals Industry - Essay Example

Pharmaceuticals industry Name Institution РHАRMАСЕUTIСАLS INDUSTRY Strengths of the industry The Australian pharmaceuticals industry is an important part of the revenue contributors to the country (Peng 2011). It offers many employment opportunities to citizens of the country and has high growth rates among the sectors in the country. It has an extensive research and development sector, which has continued to give the industry focus and rejuvenation from the continued innovations. The Australian pharmaceuticals industry has many strengths, which have all enabled it to be one of the leading exporters of medicine (Maria and Micelli 2009). One of the strengths is its extensive and excellent medical research facilities. The research and development department has enabled Australia to target new markets and produce new medicine in the industry, which are more beneficial to the healing of different diseases. The extensive research and development activities in the industry have enabled the country to minimize on the costs of curing and vaccination against diseases. This is mainly because research and development makes it possible to come up with medicine that is made from locally available raw materials hence cutting on the production costs (Peng 2011). Extensive research and development of the existing medicine has also led to the discovery of better medicine that can heal diseases with fewer doses. The research and development department takes the advantage of being in a strategically positioned location: the equatorial region, which ensures that the department has access to various kinds of plants and animals on which to experiment. Australia is one of the nations with many rare species of animals and plants worldwide. This is due to its positioning in the tropics and offers the industry a good base for improvement and innovation of non-existent medicine and immunization. This sector also gets advantages from the fast approval process, high quality clinical processes, an extensively English speaking population, and high volunteer rates for the experiments. All these enable for tremendous success in the research and development of new medication and improvement on already existing medicine (Zhou 2011). Another strength of the Australian pharmaceuticals industry is the strong and reliable clinical research sector. This sector is mainly concerned with the discovery of new diseases among citizens and the upcoming trends from the treatment of the diseases (Maria and Micelli 2008). This sector is very important to the pharmaceutical industry because it is the eye of the research and development sector and offers them the observations and outcomes from the patients after medication. This department helps in researching on the mutation and trends as observed from the different diseases in the patients, which offers a platform on which research and development of the necessary curative medicine can be done. This sector also identifies new ways of curing diseases and administering medication. It gives alternative methods of curing diseases and analyzing the symptoms of the different diseases. All these give the research and development department a base from which to continue their research on the necessary curative and preventive medicine. The pharmaceuticals sector has been able to develop over 15 clinical research centers from the year 2005 all over the country and has been awarded many grants from the government and well-wishers (Heeks 2006 p. 21). This sector has been given a lot of support from the National Health and Medical Research Council (NHMRC), which funds different projects run by the clinical research sector. The NHMRC has supported the clinical training fellowships with $8.4 million, the clinical career development awards with $8 million, and the clinical practitioner fellowships with $5.7 million. The National Health and Medical Research Council have also supported the development of many clinical research centers all over the country. In 2005, the council supported development of 13 centers and in 2009; it supported building of six more centers (Aswathappa 2008). These developments have enabled this sector to grow into a stable and strong sector, which gives strength to the pharmaceutical industry. The growth of this sector has also enabled for the attraction of investors and collaborators in many activities. One of the examples of this kind of investment is the Translation Oncology Research Collaborative Hub at the Peter MacCallum Cancer Centre, which was funded by Pfizer. Such funding and collaboration further enable for the growth of the industry (Peng 2011). The Australian pharmaceuticals industry is also equipped with specialized expertise in manufacturing and industrial processes. High technology in the processing process and industrial processes enables for quick and easy processing of medicine (Maria and Micelli 2008). The high technology and expertise in manufacturing also enables for cheaper means of producing medicine and better ways of producing quality medicine. Use of simple means and processes of producing medicine enables for production of quality and durable medicine. Such medicine can be kept in storage for longer periods compared to that produced by low technology standards. Use of high expertise in this sector also helps to streamline processes and cut on production costs and production time. Use of less time in production is a great virtue for such a sector, enables for the production of more units within a short period, and enables for more exports. This department also benefits from low taxation from the government, which has enabled for cheap production costs and convenience in the production process. Low and convenient taxes have enabled this sector to cut on costs and expand on the production size, which enables for increased exports (Iain, Chestnut, and Rebecca et. al, 2000). Another strength of the Australian pharmaceutical industry is the development and maturity of the biotechnology sector (Darity 2008). The improvement of this sector has enabled for the improvement in animal and plant analysis diagnosis. Easy diagnosis of plant and animal diseases and analysis of the changes in their metabolic activities has enabled for easy running of the research and development department. The development of this sector is a key factor in the development of the pharmaceutical industry as it supplies information to the research and development department as well as the clinical research department. This is because it gives the necessary information relating to animal and plant biological processes, which is crucial in determining the type of medication to prescribe. The biotechnology sector has experienced a number of mergers and acquisitions, which have enabled for the establishment of large biotechnology companies that help in conducting research and development. Emergence of such biotechnology companies help to increase research and development, which creates competition among the companies. Increased competition leads to more sophisticated and valuable medicine, which will fetch more revenue for the industry (Jovanovic 2011). The biotechnology sector has also been boosted by the NIS, which has put more focus on the small biotechnology companies with a view of improving their performance. Smaller biotechnology companies were issued with quality projects top pursue. The NIS also ensures that biotechnology companies are formed on good science and that they have stable commercial prospects and low technical risks. All these ensure development and improvement in the biotechnology companies, which improves the pharmaceutical industry (Juntunen 2004 p. 3650). According to the porter’s diamond theory, an industries success depends on factor conditions, which are the production factors such as skilled labor, technological levels, and infrastructure (Mann, Kumar and Mann 2009). In addition to this, Porter states that the progress of an industry is determined by demand conditions, which include the market demand and necessity levels of the products. The related supporting industries also play an important role in the development of an industry as stated by the porter’s diamond model (Mann, Kumar and Mann 2009). These include all the supplying, distributing, or intermediary industries associated with the activities of an industry. From Porter’s diamond model, the firm structure, strategy, and rivalry also play an important role in the development of an industry (Nisipeanu 2013). From the above analysis of the conditions surrounding the Australian pharmaceutical industry, the industry has all the factor conditions that can lead it to have a competitive advantage in the market (Systems Thinking and Process Dynamics for Marketing Systems organizaqtion 2008 p. 267). The industry is equipped with good strategies as given by the research council and enough support from the government. The industry is also equipped with good development strategies, which has enabled for an increase in the biotechnology companies and research and development facilities. In addition to this, medicinal products are increasing in demand due to the emergence of different and sophisticated diseases, which require quick medication. High demands have propelled the industry to have increased revenues and profits. Australian industries are all competing to stabilize in the unstable economy and therefore offer their best services and products, which have enabled the pharmaceuticals industry to have easy access to raw materials, funds, and transportation of their products. In general, the Australian pharmaceuticals industry is well positioned for increased competitive advantage in the market (Zhou 2011). Opportunities in the industry’s market The Australian pharmaceuticals industry has a number of opportunities in the market, which can help it achieve a better competitive advantage in the market. One of the opportunities in the pharmaceutical industry is a shift in the production models where the industry is supposed to move from blockbuster goods and focus more on diversified goods, which focus on evidence-based and personalized treatment. Existence of the wide range of products will ensure that the industry meets the needs of every specialized individual in the market. Expansion of the lines of production will also enable the existence of drugs that can serve multiple purposes treatment. This is because the different combinations and innovations of medicine will lead to medicine that can tackle different illnesses differently. It can lead to improved medicine, which can be more beneficial to patients than the already established medicine (Doğan B. and İ. F. 2012 p. 450). Another opportunity in the pharmaceutical industry is the emergence of new markets (Nisipeanu 2013). Such emerging markets like China and Asia can lead to better revenues and profits. In this case, the industry is supposed to establish an extensive and stable market base in such markets before they are invaded by many pharmaceutical industries. According to Mar Fladrich who is the managing manager of the Australia and New Zealand arm of AstraZeneca, there has been a stable increase in the demand of respiratory products from Asia. He stated that the industry was forced to use up to $100 million to install new distribution lines in order to keep up with the building demand in the regions. The industry is, therefore, supposed to put more focus in such new markets and invest more in order to increase the revenues and profits. The industry is expected to faces internal and global increase in demand for their products of up to 12 to 15 percent annually from now to 2020. This is according to Dr. Brendan Shaw who is the chief executive officer of Medicines Australia. In addition to this, the Dr. Shaw sates the specific brand that is popular in the emergent markets; the Kangaroo brand. This offers a better position for the production of the required product in large quantities (Franklin and Fredericks 2003 p. 141). Another opportunity for the Australian pharmaceuticals industry is the presence of high populations in Australia having a complex and diverse background of inherited diseases. This offers a home advantage against external companies in selling of the medicine. In this case, the industry is supposed to put in place strategies that will ensure that all diseases and symptoms running in all the generations in Australia have been identified (Nisipeanu 2013). This will help to keep a good record of all the mutations and changes in the symptoms, development and changes in the diseases structure. This will enable for the innovation of different medicine that will help cure or prevent the diseases. Another opportunity in the industry is the well-equipped research and device companies. The government is supposed to ensure that these companies and the skilled employees are put to maximum use to yield better results. Ensuring effective use of the companies will ensure that there is constant innovations and discovery in the nature of the diseases and their appropriate treatment. This can also lead to preventive medicine rather than the common curative medicine. Such companies include Telectronics, Universal Biosensors, Resmed, Sunshine Heart, and Cochlear (Davies and P. E. 2000 p. 1996). According to the new trade theory, industries with high fixed costs are supposed to specialize in order to increase outputs and enhance economies of scale. The theory also states that such an industry can have high learning outcomes and can exhibit savings on costs through learning by doing process. From this argument, Australian pharmaceutical industry is expected to increase outputs and save on costs when it concentrates on producing products for their emergent market segments. This is mainly because the new market segments will necessitate specialization in producing the kangaroo brand and trying of different marketing strategies that will lead to high revenues and profits (Jovanovic 2011). In relation to the Porters diamond model, an industry needs high demand, good firm strategies, and good factor conditions in order to have a good competitive advantage in the market (Smit 2010). From this analysis, it is evident that the Australian pharmaceuticals industry has a lot of potential for increasing its competitive advantage in the market. This is from the increase in demand from the new market segments and presence of a high population that has diverse diseases in the country. In addition to this, the industry has good research and development companies together with good product development companies, which can all lead to a better and improved industry (Grant and Obispo 1991 p. 540). Threats facing the industry On the other hand, the pharmaceuticals industry in Australia also has a number of threats in the market which it needs to overcome. One of the threats in the industry is the globalization trends in the market and competition from small scale and private investors. Globalization will cause the industry to lose control over their activities and the value chain process. Lack of proper control of industry activities and value chain can lead to losses and eventual collapse of an industry (Smit 2010). This is because globalization will introduce new business partners who will come with new management and operation trends, which might not be good for the market. In addition to this, globalization influences rapid growth of small-scale companies all over to world, which can lead to increased market competition. Increased competition in the market will lead to low revenues and profits, which is a big threat to companies. In this case, the industry is supposed to come up with strategies that will limit control of the industry activities by partner companies from other countries. The industry is also supposed to increase its activities in terms of research and development to ensure that they have new medicine in the market to compete favorably with the small-scale upcoming companies (Jovanovic 2011). In addition to this, the industry is facing a lot of competition from developing countries, which have high populations and native patient treatment. The presence of a population with diverse backgrounds helps the research and development industry to have a large sample from which to experiment for the different diseases and treatment (Mathews 1990 p. 326). This offers the department a good platform on which they can amass knowledge about the trends of different diseases, which leads to innovations. Such countries have high chances to innovate new medicine in the market, which poses a threat to the Australian pharmaceuticals industry. Such countries also have cheaper means of conducting later stage clinical trials, which boosts the research and development department activities. In addition to this, such countries have a wider market for sale of their medical products due to the high population. They therefore pose a big challenge to the Australian industry because this will reduce the market share. As a survival strategy, the industry is supposed to form mergers and acquisition with such upcoming companies in the developing countries. The industry can also form new companies in such potential countries and cover such markets before other companies invade the regions (Zhou 2011). Another threat to the industry is the increase in charges for ethics approval and increase in the overhead costs. These affect the industry in terms of cost competitiveness and leads to low profits and less production units. This increase in running costs has also caused the industry to expand to new markets where the tax and legal costs are low to enable for competitive advantage (Frank, Clark and Perkins et. al., 1996). This expansion is healthy to the industry but also has disadvantages to both the country and the industry. In this case, the industry will not enjoy the home advantage and will incur high transportation costs. For better performance of this industry, the government is supposed to reduce the tax rates and legal payments to favorable costs. This will help the industry to compete favorably in the market, which will lead to better revenues and profits from the international markets. Increased revenues improve a countries gross national product and hence the economy of the country (Greve 2009 p. 20). Another challenge that is facing the Australian pharmaceuticals industry is the emergence of new diseases like AIDS, SARS, and influenza strains (Frederking 2010). Such occurrences pose a challenge to the industry to look into diseases occurring over time and concerning the changes in climatic conditions. From the emergence of these diseases, it is also evident that the industry needs to adapt rapid drug development and approval processes. The industry is supposed to do away with the current system that takes up to 10 years for drug development and approval. This will lead to better service to the market, as they will avail medicine as soon as it is required. This will help the industry to increase its competitive advantage and its image in the market (Smit 2010). Another threat to the industry is the shift in trends of dealing with medication from treatment medication to prevention medication. This poses a challenge to the industry to focus on prevention medicine rather than curative medicine. This, therefore, requires innovations and production processes that will help to come up with preventives rather than curatives. In addition to this, the government and many humanitarian organizations are turning to improving peoples’ living standards and prevent spread of disease over large populations. This is a big challenge to the industry, as it will necessitate production of products that target prevention and sanitation. The emergence of these trends is challenging to the industry in terms of innovation of new products and medicine. In this case, the industry is supposed to change their strategies and focus more on preventive medicine rather than curatives. This will ensure that they maintain their market share and even increase it in the international markets (Zhou 2011). For continued competitive advantage in the market, the industry is supposed to identify high population developing countries in which to invest in terms of research and development as well as the manufacturing process. This will give it the advantage of getting participation from the population and access to a wide market in the region. The industry is also supposed to do localization in global markets, which requires the establishment of companies in competitive countries. This will enable the company to learn more about the market trends in the foreign country and learn new strategies for research and overall running of the business in such market segments (Partners creating wealth organization 2013). In addition to this, the industry is supposed to engage in more mergers and acquisitions especially in countries posing more competition globally. This will help the industry to gain new skills and strategies for analyzing and managing market trends. The industry is also supposed to take on new technology that will reduce on the production costs and ensure high production rates (Albino 2002 p. 330). References Albino, V., 2002. Competitive Advantage of Geographical Clusters. 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