Industry Definition According to the Encyclopedia of Global Industries, the Pharmaceutical Preparation Manufacturing industry can be defined as an industry that produces products or means for human and veterinary treatment. There two main segments of products in the pharmaceutical industry: pharmaceutical preparations and therapies. Pharmaceutical preparations include prescription or “ethical” drugs— products geared towards dental, medical, or veterinary professions, as well as “over-the-counter” drugs which are sold to the general public. The Encyclopedia of Global Industries also includes “therapies derived from the genetic engineering or related biotechnology processes,” within the scope of the pharmaceutical industry (Pharmaceuticals). The geographic focus of our report will be mostly on the pharmaceutical industry within the United States. Industry Performance In this section we will touch on the different aspects of financial performance within the pharmaceutical industry and companies within this industry. There will be graphical representation accompanied by interpretation of the graphs. The graphs will be further analyzed in the STEP analysis section. Within Figure 1 an upward trend in the stock of the pharmaceutical industry can be seen. Although there are small dips here and there, an overall assumption can be made that investor optimism within the pharmaceutical industry is healthily thriving. Figure 1, S&P 500 Pharmaceutical Stock Index To prove that there are similar upward trends between the different markets, Figure 2 is a compilation/ comparison of the pharmaceutical stock index in different markets. Figure 2, Pharmaceutical Stock Index (market comparisons) Figure 3, Industry Total S... ... middle of paper ... ...t is also likely that the pharmaceutical industry will experience a major shift towards selling directly to patients. This will rely heavily on the need to cut costs because of lowered profit margins with generic drugs as explained above. Key Success Factors The key success factors in the pharmaceutical preparation manufacturing industry has relied on the heavy focus on R&D in developing new drugs, obtaining patents for these drugs, and then sales with high profit margins to cover the costs of the patented drugs. In the future of the pharmaceutical preparation manufacturing industry, success will depend on the ability to manufacture affordable products by keeping costs low throughout the entire supply chain. Key factors will include responsive supply chains, the transition to direct sales, focus on cost driven sales, as well as influence in e-commerce.
...ll help the company in selling generic drugs and provide affordable medications to its customer base.
... (2013) IMS health study points to a declining cost curve for U.S. medicines in 2012 Retrieved from http://www.imshealth.com/portal/site/ims/menuitem.d248e29c86589c9c30e81c033208c22a/?vgnextoid=8659cf4add48e310VgnVCM10000076192ca2RCRD&vgnextchannel=437879d7f269e210VgnVCM10000071812ca2RCRD&vgnextfmt=default
Lehman, Bruce. 2003. “The Pharmaceutical Industry and the Patent System”. International Intellectual Property Institute. Pages 1-14.
In 2000, Rich Kender, Vice President of Financial Evaluation and Analysis at Merck & Company was discussing the opportunity of investing in licensing, manufacturing and marketing of Davanrik, a drug originally developed to treat depression by LAB Pharmaceuticals. LAB proposed to sell the right of all the future profit made from the successful launch of Davanrik at the cost of an initial fee, royalty payments and additional payments as the drug completed each stage of the approval process. Merck & Company's organizational goal is to constantly refresh it's company's drug development portfolio and reach as many customers as possible during the patented time. So there was not only the potential of financial gain or quantitative aspect of the offer, but also the qualitative value which will be added by getting better positioning in the risky pharmaceuticals industry.
Prescription drug prices rose three times faster than inflation in the decade between 1981 and 1991, making the pharmaceutical industry the nation's most profitable business. Prescription drugs even exceeded the rapidly rising inflation rate for all other medical services. They now represent at least 10% of all the medical costs in the United States.1
An Analysis of GlaxoSmithKline The business that I have done research into is GlaxoSmithKline. This company is a globalised research-based pharmaceutical public limited company. Its ownership structure has changed a great deal since the original company was first established in 1715. Originally a pharmacy, the company has expanded, merged with and taken over other companies over the decades.
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 paper analyzes the main economic indicators related specifically to one of the largest pharmaceutical companies, Pfizer, Inc., such as overall performance, revenue, net income, research and development, cost and expenses. There are certain economic indicators that do not apply to individual companies, but influence their economic forecasts. Such factors as inflation and unemployment rate pertain to an industry or region and such factors as political instability or any major economic conditions will affect the market analyses even if they are not economic indicators. There are many more factors that affect economic predictions and their detailed analyses are presented at http://www.economic-indicators.com, a web site for tracking the US economy. Overall performance is always one of the most important indicators of economic activity and every financial report starts with results of annual performance.
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....
For a drug to get to market it must go through several stages of research and development (Abbott and Vernon). Starting with discovery research, preclinical testing on animals, three phases of clinical trials on humans, and finally FDA (Food and Drug Administration) approval (Abbott and Vernon). Out of several thousands of drugs only a few will make it to the FDA approval stage (Abbott and Vernon). Testing is a highly regulated, time consuming, and expensive process. From beginning to end the process can take fifteen years and less than one of five compounds will make it to market where it is still not guaranteed to succeed (Abbott and
Other companies cannot replicate the drug and therefore they are forced to either wait until the patent expires or they must find an alternative drug that carries out the same purpose.... ... middle of paper ... ... It is clear to see that there are many pros and cons to patents in the pharmaceutical industry.
Many new players entered the market copying the same techniques for growth as Teva to capture a significant market share by offering low prices due to their low cost strategies. The entry of these players made the industry intense with tough competition, low profit margins and collapsed prices. The segment of drug industry where Teva had to come up with innovative drugs demands to invest high capital on R&D that was in billions for a single drug could potentially lower the growth and revenues for Teva and could push the company into serious trouble. Analysis To build some effective and real world alternatives and recommendations to Teva Pharmaceuticals, we will conduct the following analysis to understand the external and internal situation of the company. Internal and External Analysis SWOT Analysis (Exhibit 1) Strengths:
Due to longer life expectancy and the rapid increase of the world’s population, the pharmaceutical industry is becoming increasingly important. The problem of aging population and high healthcare cost is particularly serious in Japan. This essay will focus on a Japanese drug maker – Takeda Pharmaceutical Company Limited (Takeda, the company). First, in order to provide background information, the current business model and relevant information of Takeda will be outlined and analysed based on financial data and the company’s annual reports. Second, the essay will examine the most significant challenges that the company has faced over the past five years, including the cause and effect behind this challenges. Finally, the discussion will be looking at the pharmaceutical industry as a whole, exploring the merger and acquisition activities of large pharmaceutical firms in the world, i.e. Big Pharma.
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.
Over the years the company has survived by focusing on its internal development in addition to a series of mergers, acquisitions, and corporate restructurings. Being a pharmaceutical company, the entire population is impacted: patients, physicians, employees, hospitals, and investors are some of the most important stakeholders. We first began our analysis of Novartis by evaluating the company’s strategic direction. Novartis’ mission statement is to care and to cure. They are a company that wants to discover, develop, and successfully market innovative products to prevent and cure disease, to ease suffering, and to enhance the quality of life.