Designing a Global Strategy for Pharmaceutical Industry Introduction The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals compounds for medical purpose. Pharmaceutical companies produce generic, brand medications and medical devices. The industry is subject to a complex regulatory environment regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs. As per WHO "The 10 largest drugs companies control over one-third of this market, several with sales of more than US$10 billion a year and profit margins of about 30%. Six are based in the United States and four in Europe. Companies currently spend one-third of all sales revenue on marketing their products - roughly twice what they spend on research and development." Product Life Cycle Why Go Global? • Utilize resource and skill pool elsewhere • Cost advantages • Patent and Testing Advantage • Global Application • Development of New technologies such as biotech, pharmacogenomics • New players stealing market shares with generics as patents expire National Competitive Advantage The competitive advantages of pharmaceutical industry are • R&D and innovative capabilities • Marketing and distribution capabilities Firms from US, Germany and Japan are the largest pharmaceutical players. 32 of the the top 50 companies belong to US, Japan and Germany. Understanding what national competitive advantage these three countries possess that makes the biggest players. Other factors such as financial system, government regulation and demand etc add to a company's success. Using Porter's Diamond Model to study this: • Factor Conditions In terms of chemical industry, biotech skills and skilled labor, Germany, US and Japan were the f... ... middle of paper ... ...High Global Environment Transactional Environment Low International Environment Multinational Environment Coordination and Control The big companies are vertically integrated and control every part of the value chain. However, they do get involved in alliances to horizontally outsource. Activities such as clinical trials are almost outsourced. Entry Modes One would like to enter a country with the following different objectives 1. R& D capabilities 2. Raw Material and Production( and low labor cost) 3. Potential Market R& D capabilities Raw Material and Production Potential Market India Brazil US China Egypt Japan Singapore Norway Canada Turkey Indonesia • References: http://apps.who.int/medicinedocs/en/d/Js6160e/5.html http://www.ukessays.com/essays/economics/analysing-porters-diamond-framework-in-modern-industries-economics-essay.php#ixzz2qjLRARqt .
...s: each was licensed to a much larger firm because the originator firm lacked the capability to market the drug. the larger analysis of blockbuster drugs showed that this thread is common across blockbusters that originated with smaller firms. The largest firms appear to hold a significant advantage in commercialization—they are highly effective at extracting the value of innovative drugs . The study suggests some qualified reasons for skepticism that the end of the blockbuster era will bring a major upheaval in the industry. Large firms’ advantage in commercialization suggests that they may maintain their dominant position. Marketing of pharmaceuticals may move from broad-based to targeted approaches, but a company with a broad reach may still have an advantage in identifying markets for niche drugs and commercializing the drugs within those more narrow market
Why are the prices so high? Some critics of the drug companies argue that the larger firms are ripping off the American public, are dishonest and, in some cases, unsafe. On the other hand, there are health care workers such as doctors and their supporters who claim that research and testing for drugs costs money. This supposedly justifies their prices for their products. Also, as an argument to their side, they say that their practice is a benefit to the improvement to mankind. It is a life saving business, but are these prices justified? As one can see, this is a very important issue in medicine today. It affects everyone involved with medicine, which is much of the American public. It also affects the physicians and drug makers.
Threat of new entrants is relatively high. Companies forming alliances are potential rivals. Even if earlier such company was not considered to be a threat, after merging with some research and development company or forming alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is however weakened by significant research and development costs necessary to successfully enter the business. Eli Lilly’s focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new entrants, but other products that form lesser part of company’s sales such as insulin and others are exposed to high threat of new entrants. The need of obtaining certificates and licenses also weakens the threat of new entrants. Discussed above leads to the conclusion that threat of new entrants is medium.
This fact validates the incentive pharmaceutical companies have to get a patent and acquire more power. Pfizer encourages R&D because of the incentives and a desire to obtain patents to receive more profit. Pfizer has to promote itself to be successful, creating a brand image that consumers will trust. If the company can advertise successfully, more consumers will purchase their products. Pfizer must also be generating products efficiently in order to save and use existing resources, while manufacturing their products at low costs to stay competitive....
Estimated annual revenue from U.S. drug trade is more than $3 billion, just short of Fortune 500
The pharmaceutical industry has become a chief player in the marketing of their products. As its leading companies have such a strong presence in Ireland, and the fact that its marketing policies are forced to vary from country to country, I found it to be a very appropriate topic. It is a highly regulated industry, governed by different global statutory bodies, each incorporating different laws, which marketers must be aware of. I discuss how different global legislation can affect marketing strategies, and ultimately sales.
10. Collis, David, and Troy Smith. "Strategy in the Twenty-First Century Pharmaceutical Industry:Merck&Co. and Pfizer Inc." Harvard Business School, 2007: 8-12.
According to Pires de Carvalho, a local working requirement, is against Article XX(j) of the GATT and the lack of sufficient domestic supply can be satisfied by importation. Nevertheless, Pires de Carvalho ignores the very important facts that transnational pharmaceutical companies may disregard small markets and pharmaceutical products are highly regulated by national health agencies. Sometimes deficient supply would possibly happen in certain areas as drugs are not as free as other goods and services flowing in the global market.
With the pharmaceutical industry constantly changing, it makes it very important for a company to analyze the macro environment. The first force is political; right now that pharmaceutical industry is greatly affected by politicians due to changes in health care structure, healthcare platforms, and partnerships with certain pharmaceutical companies. Within the next three to five years as politicians rotate we can foresee the political force being an even greater impact on the industry. The next force is economic. For the now we feel that the pharmaceutical industry is greatly affected by the economic force as people have more spendable income and will be more likely to purchase brand name drugs. As income dwindles, some poor individuals may be unable to purchase even generic drugs. Within the next three to five years since we are coming out of a recession, we will see consumer spending increase and the demand for the highest quality of medicines increase. The economic force will greatly impact the pharmaceutical industry for some time. The next force of the macro environment is the social force. The social force greatly affects the industry since we have begun to focus on preventative health care and detection recently. Moving forward we expect the trend of preventative health care and our tendency to change our health habits will prompt the pharmaceutical industry to deliver new and innovative products. The fourth force is technological; right now the pharmaceutical industry is greatly impacted by changes in technology, and will continue to be affected for years to come. The next force, ecological, somewhat affects the industry. Events like natural disasters, plagues, and other mass causalities can greatly affect the pharmaceutic...
PROBLEM STATEMENT Teva Pharmaceuticals, the first multinational pharmaceutical company in Israel, has become a successful global giant in the industry of generic drugs. After experiencing a long period of success and growth in the generic drug industry against some big western pharmaceuticals, the company had acquired many well known pharmaceutical companies and had achieved its goal of $1 billion. theory seemed to be in trouble in building a new strategy and vision to compete with the rapidly growing generic industry. They confronted two big issues as key hurdles in their way.
The Indian pharmaceutical industry enjoys certain advantages, which include low cost of innovation and capital expenditure, and strong domestic support in production, from raw material requirements to finished goods. The competitive structure of the pharmaceutical industry was being redefined due to the threat of new entrants, intense price competition, entry of large players, and new regulations and rules as well as a shift in focus. In addition, the partnerships between pharmaceutical and biotechnology companies were growing rapidly. The global pharmaceutical market is undergoing rapid transformation. There has been a dramatic shift towards emerging markets as western markets slow down.
Pharma which is derived from the word ‘drug’ in Modern Greek, which is also a part of pharmacology is a branch of medicine and biology that is concerned with the study of drug action. A drug can be broadly defined as a man-made, endogenous or natural substance. Pharmacy is the techniques and science of preparing and dispensing the drugs studied, and created by pharmacologists. It connects chemical science with health studies to ensure effective, but safe use of pharmaceutical drugs.
The essence of competitive strategy for a company is to find a position in its industry where it can best cope with Porters Five Forces or can influence them in its favour. Once the forces (suppliers, buyers, substitutes, potential entrants and rivalry), and their underlying drivers have been diagnosed, a company is in a position to identify its strengths and weaknesses relative to the industry norms (Grant, 2013). This helps a company’s positioning so that its capabilities provide the best defense against the existing array of competitive forces, influence the balance of the forces or anticipate and respond to shifts in competitive balance before rivals recognise it. Not all industries have equal potential. They differ fundamentally in their ultimate profit potential as the collective strength of the forces of competition differs. High growth industries tend to present better growth opportunities. Successful fast-growth businesses scan the environment to identify new threats as they emerge, taking a broad view of internal and external risk issues. Slow growth industries lead to an intense competition for market share, price competition, advertising battles, and hence reduced profitability.
Pharmaceutical patents are patents for inventions within the pharmaceutical industry. Patents give exclusive rights to an invention for a product or a process of making a product [1]. There are many aspects to patents in the pharmaceutical industry that are both pros and cons; it just depends on what industry you are in. Pharmaceutical companies take out patents so they can regulate the market and restrict competition from other companies. By obtaining patents, pharmaceutical companies also attract investment.