Industry Analysis of the Pharmaceutical Industry

In: Business and Management

Submitted By Peter8888
Words 1934
Pages 8
Corporate Development Strategies
Faculty 02 – Economics and Business Administration
Johann Wolfgang Goethe-University Frankfurt

Industry analysis of the pharmaceutical industry
Written assignment

Submitted by:

Heiko Kreuz, 4897736, s5706079@stud.uni-frankfurt.de
Janine Seelinger, 4896818, s1010710@stud.uni-frankfurt.de
Dana Winkler, 4497800, s1099437@stud.uni-frankfurt.de

Supervisor:
Prof. Dr. Lars Schweizer

November 6, 2015

Table of contents
1

Introduction...........................................................................................................................1

2

Theoretical framework of Porter’s Five Forces ........................................................1

3

Industry analysis by means of Porter’s Five Forces ................................................2
3.1 Competitive rivalry ................................................................................................... 2
3.2 Bargaining power of suppliers.................................................................................. 2
3.3 Bargaining power of buyers ..................................................................................... 2
3.4 Threat of substitutes ................................................................................................. 3
3.5 Threat of new entrants .............................................................................................. 3
3.6 The regulators ........................................................................................................... 4

4

Conclusion ..............................................................................................................................4

II

1 Introduction
The pharmaceutical industry has provided for over USD 980 billion in worldwide revenue in
2014 (Statista 2015) and has up to today been…...

Similar Documents

An Overview of the Uk Pharmaceutical Industry

...An Overview of the UK Pharmaceutical Industry The Pharmaceutical Industry in the UK is the second largest contributor to Gross Domestic Product behind Financial Services. There are several very big players in the UK with GlaxoWelcome & SmithKline Beecham who merged in January 2000 to become Glaxo SmithKline and AstraZeneca being the two largest UK based companies. Almost all the other major pharmaceutical companies operating in the UK have undergone or are in the process of undergoing mergers and acquisitions, including AstraZeneca, Pfizer and Warner Lambert, Shire and Roberts, and Celltech with Chiroscience and Medeva. The UK pharmaceutical market is a successful, research-driven, high-technology industry. The UK market is dynamic and increasingly competitive and, it ranks third after Germany and Switzerland in the global pharmaceutical industry rankings in terms of trade balance. According to the Association of the British Pharmaceutical Industry (Abpi), the industry employs around 75,000 people, of whom over 25% are graduates. Introduction to AstraZeneca AstraZeneca is one of the world’s leading pharmaceutical companies, with a major presence in the UK. Their business is focused on providing innovative, effective medicines that make a real difference in important areas of healthcare. Other facilities in the UK include research and development, sales and marketing and manufacturing. In 2008 AstraZeneca’s total contribution to wealth creation was £4.1 billion...

Words: 1059 - Pages: 5

Pestel Analysis of Pharmaceutical Industry

...A SWOT analysis identifies and assesses the strengths, weaknesses, opportunities and threats an organization faces. A SWOT analysis of the pharmaceutical industry illustrates to upper management what the industry is excelling in, what improvements need to be made, where growth is possible and what preemptive measures need to be taken to protect shareholder or company value. Strengths • The strengths of the pharmaceutical industry’s SWOT analysis document the internal industry components that are providing value, quality goods and services and overall excellence. The internal industry components can include physical resources, human capital or features the industry can control. For example, the pharmaceutical industry’s strengths could include low operating overhead, firm fiscal management, low staff turnover, high return on investment (ROI), state-of-the-art laboratory equipment and an experienced research staff. Weaknesses • The weaknesses of the pharmaceutical industry’s SWOT analysis document the internal industry components that are not providing significant added value or are in need of improvement. The internal industry components can include physical resources, human capital or features the industry can control. For example, the pharmaceutical industry’s weaknesses could include high-risk business modeling, disengaged Board of Directors, dated medical equipment, poor branding, low staff morale or diseconomies of scale. • Sponsored Links o viral clearance......

Words: 393 - Pages: 2

Industry Analysis for Canadian Pharmaceutical (Prescription Drug) Industry

...Porter’s Five Forces analysis 1) Bargaining power of suppliers Who are suppliers? –chemical companies that manufacture ingredients for the drugs, companies that manufacture any packaging/packaging materials for drugs, employees that supply labour: • Many suppliers available in most cases • Resources supplied not scarce in most cases • Switching cost to another supplier low • Supplied product not typically differentiated • Supplier forward integration not a threat (small supplier cannot take over large drug company) • Customers are large in a consolidated pharma industry (drug industry has been seeing lots of mergers and acquisitions in recent years so drug companies tend to be very large) LOW Power of suppliers based on above. 2) Bargaining power of buyers Who are buyers? In this case buyers would be Doctors and Hospitals (look at the drug industry’s sales force, they service DRs and hospitals, as drugs need to be prescribed, they can’t just be purchased over the counter) • Many small buyers (lots of Doctor’s offices in most areas, maybe a few larger hospitals) • Each purchases a small proportion of industry output • Buyer backward integration not a threat (a Doctor or hospital is not going to take over a drug company) • Relatively few manufacturing firms due to industry consolidation • Few substitutes (alternative medicine, lifestyle changes are possible options in some cases, but if you need drugs for diabetes no real substitute for this outside...

Words: 611 - Pages: 3

The Global Pharmaceutical Industry: Conduct an External Analysis

...The Global Pharmaceutical Industry: Conduct an external analysis Introduction The pharmaceutical industry is described by high levels of risky and lengthy R&D process, tough competition for intellectual property, tighter government regulations and powerful pressures on buying power. (Johnson, 2006) In 2011, several blockbuster drugs patent like Lipitor will expire, possibly endangering the revenues of the pharmaceutical industry for the next three to five years. On the global level, the historical supremacy of the US was being challenged with the highest market growth rates recorded in emerging markets. The industry more than ever need to get a handle on the slippery business by offering a true step change in strategy. This case study will critically analyse the Global Pharmaceutical Industry with PESTEL, Porter’s five forces, SWOT analysis and plausible views of industry in the future. PESTLE PESTLE analysis used to help organisation to understand in depth that what is the current status of the organisation and the external factors which are effecting. It also helps to the Management to make strategy for the future and overcome the weak areas of the organization. PESTLE is comprises of political, Economical, Social, Technological, Legal and Environmental factors. Political The both policies (domestic and foreign) of government have a great effect on the industry innovation as compare to the other factors. To get the attentions of firms due to increase the......

Words: 2635 - Pages: 11

Economics of the Pharmaceutical Industry

...------------------------------------------------- Economics of the Pharmaceutical Industry Some of the factors affecting Supply in the Pharmaceutical Industry September 18, 2013 MBA BATcH 8 Prepared by: Amel Mohamed, Muna Abbas & Wafaa Gaafer September 18, 2013 MBA BATcH 8 Prepared by: Amel Mohamed, Muna Abbas & Wafaa Gaafer The well-being of the pharmaceutical industry is dependent largely on the economy. It is also a heavily regulated industry. Drugs are evaluated for safety, efficiency, and manufacturing quality as a condition of market access, and promotional messages must adhere to approved product characteristics. Drug prices also are regulated in most countries with national health insurance systems. The main factor that affects the industry is employment because a majority of Sudanese receive health insurance through their employers. Other economic factors such as the number of people who are uninsured or underinsured, performance and industry structure, the effects of regulation on prices, availability and utilization of drugs and productivity as well as the government stimulus plans also affects the industry. Unemployment Paramount to any industry is the number of people who are unemployed. In the first decade of the 20th century, this became a major political issue in the United States. Unemployment affects the pharmaceutical industry in two major ways. First, people who do not have jobs usually do not have the funds to buy the......

Words: 683 - Pages: 3

The Global Pharmaceutical Industry

...Q1. Identify the main environment forces currently affecting the pharmaceutical industry. PESTLE analysis is used to help the organization to understand what is the current status of the organization and the external factors that are affecting it, whereas this also helps the management of the organizations to overcome the weak areas organizations by implementing the strategy for the future. Political The policies of the government had a great effect on the regulations and legal issues that defines both formal and informal rules for the industries innovations as compared to the other factors in the form of “parallel trade” as the attention of the industry was an increase in the economic importance’s where the government offered incentives that encouraged the industry to globalization as they focused on pharmaceutical industry to handle the challenges of price control, monopoly and trade. Overtime this led to a wide disparity in prices that exposed the industry to sensationalist newspaper headlines and consumer backlash. Economic The sales in the pharmaceutical related closer to the GDP due to the effect in interest, taxes, inflation and exchange rates that layered down the established market growth in emerging the market for the power of the payers as decision makers. The change that could also affect the foreign currency can also affect the export and imports of the drugs. Patents in other countries pay a lot for the proportion of drug cots themselves that leads to...

Words: 1567 - Pages: 7

Global Pharmaceutical Industry

...balThe global pharmaceutical industry THE GLOBAL PHARMACEUTICAL INDUSTRY INTRODUCTION According to Hunter s. Thomas "you can turn your back on person, but never turn your back on a drug, especially when it's waving a razor sharp hunting." The global pharmaceutical industry had done tremendous contribution to mankind, but now pharmaceutical companies are facing tough time in a decade. The case is broken in to different parts which is emphasized on how internal and external factors affecting the industry firstly, the main environmental forces currently affecting the industry through PEST analysis. Secondly, the implications of the changes in business environment that is internal factors through porter's five force theory. Finally, the use and limitations of the tools applied to solve case are discussed. ORIGIN AND EVOLUTION The present pharmaceutical industries are non-assembled and more of competitive but it had emerged in early 19th century in the Rhine valley near Basel Switzerland where dyestuffs were found to have antiseptic properties. Companies like Hoffman-la rochy, Sandoz, Novartis are all started as Rhine based family dyestuff and chemical companies, which are still doing tremendous business even to day. Slowly these chemical companies started making pharmaceuticals and synthetic chemicals and evolved as global players. In early 1940's the industry showed drastic changes such as introduction of penicillin and other drugs. In 1960's industry growing rapidly......

Words: 2941 - Pages: 12

Ceo Compensation in the Pharmaceutical Industry

...different CEO from Pharmaceutical Industry. Pfizer Merck & Co Bristol-Myers Squibb Vertex 2012 Revenue $59B $47B $21B $1.5B 2011 Revenue $65B $48B $19B $1.0B CEO Read Frazier Andreotti Leiden Base $1.75M $1.5M $1.6M $1.0M Annual Incentive $3.4M $2.5M $3.8M $2.1M Annual LT Incentive (Stock and Stock Options) $12.9M $7.1M $10.9M $2.5M Perks/Other $175k $0.06M $808k $0.01M Vested/Exercised Shares $5.6M Approx. Total $25M $11.1M $17.2M $5.7M According to the Proxy statements, both Pfizer and Mereck have approximately 90% of their compensation as variable, based on company performance. The large discontinuity between the two companies is mostly due to the vested or exercised shares of Pfizer’s Ian Read. Excluding this amount, the companies’ compensation plans are generally aligned with their comparable sizes and company performance. Pfizer offered the largest incentive-based payout to it’s CEO in 2012, justified by the company exceeding two of three performance metrics despite key patent losses and the leadership Read showed throughout the year. Merck ranked their CEO performance as high in a tough environment, but due to a low internal scorecard results and shareholder return rankings Frazier was awarded a lower amount of variable compensation than in 2011. Overall, both of these industry leaders seem to have incentive programs aligned with company and shareholder performance. Bristol-Meyers Squibb (BMS) stands as the odd-company-out in our analysis. ......

Words: 1322 - Pages: 6

Industry Trends for the Pharmaceutical Industry

...Industry Trends According to Standard and Poor’s industry service, in the past few years, the pharmaceutical industry has been subjected to heightened competition from generic drugmakers, unprecedented pricing pressure from payers, and hard-to-control inflation in research and development budgets. Furthermore, the  industry has been experiencing a decline in R&D productivity, with a lack of innovative new products being launched in recent years. The industry has suffered due to these problems in 2010, however, improvements in early-stage product pipelines in certain fields, such as cancer and diabetes, show positive long-term potential. Major cost-cutting initiatives, including sales and marketing overhauls and the reorganization of R&D operations, have been introduced as a response to the industry's concerns. New products, as well as an aging population, also provide another indication that the industry has a promising future. 1. Emerging Markets Drive Growth With markets in major developed nations being stagnant or only showing modest growth, pharmaceutical manufacturers are focusing on global emerging markets to provide momentum for industry growth over the coming years. Projections show that these markets will account for over two-fifths of global GDP, and 80% of the world's population by 2015. With respect to the pharmaceutical industry, observers have forecast that emerging markets will drive up to 90% of the sector's growth through 2020. Based on IMS...

Words: 2026 - Pages: 9

Analysis of Indian Pharmaceutical Industry

...5) Chapter 1: Economic Analysis 7 6) Chapter 2: Industry Analysis 9 * Industry Life Cycle * Porters 5 Forces * SWOT * PESTLE * Correlation 7) Chapter 3: Company Analysis 24 * Company Profiles (10 Companies) * Financial Ratio Analysis * DCF Valuation * Valuation Shares 8) Conclusion 74 9) Bibliography 76 RESEARCH OBJECTIVES Research Project Topic: “Analysis and Valuation of the Indian Pharma Sector” The research objectives of this specialization project are: 1) Identifying the key indicators of the Global Pharma Industry 2) Understand and analyze the Indian Pharma Industry and identify the prominent players. 3) To examine the trends in the pharma industry 4) Fundamental and Technical Analyses of the Top 10 pharma companies in India. The main objective of this study is: 1) Valuation of the Top 10 Pharma companies 2) Finding the correct share price of the company 3) Making investment decision of- Buying, Selling or Holding the stocks of the respective pharma company. EXECUTIVE SUMMARY * Global Pharma Industry is likely to grow at a......

Words: 11741 - Pages: 47

Global Pharmaceutical Industry

...The primary focus of this essay is the analysis of the global pharmaceutical industry and the substantially significant factors that shape this industry; the industry is primarily defined by very few yet critically influential factors; these consist of: governing bodies, the role of corporate social responsibility, and the emphasis put on the industry and firms by the Research and Development process. The most consequential factor placing emphasis on the industry is the governing body, with it being the legislative body and largest purchaser of the industry exclusive of the USA creates a strategic dilemma for the corporations in terms of profit maximization. Patent limitation, regulatory controls, price or reimbursement controls and extensive safety legislations are methods adopted by the government to legislate control and limitations over the industry. These legislations construct a paradigm that the main objective behind the intervention is to keep medicinal costs low as the majority of the population i.e. under 18’s, over 65’s and people primarily on benefits, medical costs are paid for by the government and with the ageing population the expenditure is ever increasing hence the various limitations. Being the legislative body and the largest purchaser gives the government various types of buyer control; the case study implies that the industry is a “monopsony”, giving the corporations very little bargaining power in terms of profit maximization and can often alter the......

Words: 867 - Pages: 4

Pharmaceutical Industry

...threats for Pharmaceutical industry as these movements focus on green environments and reduce chemicals and carbon which comes from pharmaceutical industries. It is not being possible to ignore these issues as they are supposed to be practiced under United Nation charter for clean and better environment. For example Pfizer is a well reputed British Pharmaceutical company which has aims to save the environment as much as possible from chemicals, waste water which includes active pharmaceutical ingredients mixture of different compounds and carbon which comes from their pharmaceutical industries. Different strategies could be used to reduce carbon and chemical waste from drugs for human environment, like proper consumption ,good way of savages for hospitals waste water like advance waste water treatment technology, private house hold expire drugs, training and education of medical professionals to reduce over prescription, and public education and awareness. These strategies could be help full for save green house environment from drugs. In conclusion if we do focus on three principal strategies to reduce the input of chemicals compounds, carbon, and waste water in to the environment are substitution of complex chemical compounds, advance technical approach, and proper education and training of doctors, retailers and consumers. (Klaus Kümmerer, 2009) Social The social life, physical activities and level of health of a community affects the pharmaceutical industry. Change......

Words: 1468 - Pages: 6

Porter Analysis for Pharmaceutical Industry in Palestine

...Porter’s Analysis: Pharmaceutical Industry | Submitted to Dr. Grace Khoury | By: Asem Masri. Student No. 1125420 | 11/6/2014 | 1. Contents Introduction 1 Porter’s Five Forces Analysis 1 Threat of new entrants 1 Rivalry among existing firms 2 Threat of substitute products 2 Bargaining power of buyers 3 Bargaining power of suppliers 4 Relative Power of other stakeholders 4 Conclusion 5 References 5 Introduction The pharmaceutical industry in Palestine is one of the most profitable industries, with the Palestinian companies owning 55% and 30% market share of the private and public sectors respectively, and high potential of growth even more, in a market estimated at around USD 100 million. All these companies mostly reproduce generics that are seen as commodities rather than differentiated, and highly depend on preferred agreements with pharmacies, doctors, hospitals and medical centers to serve both as their marketing and distribution channels. All operating firms in the industry are publicly traded companies, are highly controlled and regulated, depend heavily on technology and require vast financial resources. Because of the large size , high complexity and vast financial requirements of the industry, it won’t be a straight forward task to decide on whether this industry is attractive to enter or not, without performing proper STEEP and industry analysis. In this case, we will focus on performing pharmaceutical industry analysis using......

Words: 1927 - Pages: 8

Pestel Analysis of Pharmaceutical Industry

...elimination by rats. J. Pharm. Sci. 68:803-5 70. Galinsky, R. E., Levy, G. 1979. Effect of N-acetylcysteine on the pharmacoki­ netics of acetaminophen m rats. Life Sci. 25:693-700 71. Slattery, J. T., Levy, G. 1977. Reduc­ tion of acetaminophen toxicity by Chem. Pathol Pharmacol 18:167-70 72. Mitchell, I. R. 1977. Host snsceptibility and acetaminophen liver injury. Ann. Intern. Med. 87:377-78 73. Prescott, L. F., Newton, R. W., Swain­ son, C. P., Wright, N., Forrest, A. R. W., Matthew, H. 1974. Successful treat­ ment of severe paracetamol overdosage with cysteamine. Lancet 1:588-92 74. Gazzard, B. G., Hughes, R. D., Wid­ dop, B., Goulding, R., Davis, M., Wil­ liams, R. 1977. Early prediction of the outcome of a paracetamol overdose based on an analysis of 163 patients. Postgrad. Med. J. 53:243-47 75. Prescott, L. F. 1978. Prevention of hepatic necrosis following paracetamol overdosage. Health Bull 36:204-12 76. Rumack, B. H., Matthew, H. 1975. Acetaminophen poisoning and toxicity. Pediatrics 55:871-76 77. Stewart, M. I., Adriaenssens, P. I., Iar­ vie, D. R., Prescott, L. F. 1979. Inap­ propriate methods for the emergency determination of plasma paracetamol. Ann. Clin. Biochem. 16:89-95 78. Dordoni, B., Willson, R. A., Thomp­ son, R. P. H., Williams, R. 1973. Re­ duction of absorption of paracetamol by activated charcoal and cholestyramine: a possible therapeutic measure. Brit. Med. J. 3:86-87 79. Levy, G., Houston, J. B. 1976. Effect of activated charcoal on acetaminophen......

Words: 7818 - Pages: 32

Pharmaceutical Industries

...INTERNSHIP REPORT ON TRAINING AND DEVELOPMENT PRACTICES OF INCEPTA PHARMACEUTICALS LTD. Submitted To: Mr. Shamim Ehsanul Haque Senior Lecturer BRAC Business School Submitted By: Nusrat Jahan Trisha ID – 09204115 BRAC Business School TABLE OF CONTENTS Title Page No Part- Ι Letter of Transmittals 5 Acknowledgement 6 Executive Summary 7 Part- ΙΙ Introductory Part 08-19 1.0 Introduction 09 1.1 Rationale of the Study 10 1.2 Objectives of the Study 11 2.0 Company overview 12-19 2.1 Profile of Incepta Pharmaceuticals Ltd. 12 2.2 History of IPL 12-13 2.3 Vision of IPL 13 2.4 Mission of IPL 13 2.5 Incepta Pharmaceuticals Ltd. at Glance 14 2.6 Divisions & Departments of IPL. 15 2.7 Organizational Hierarchy of IPL 16 2 2.8 Growth Rate of IPL 17 2.9 Products of IPL 18 2.10 CSR of IPL 19 ACTIVITIES UNDERTAKEN 20-37 3.1 Overview of HR practices in Incepta Pharmaceuticals Ltd. 21 3.1.1 Discussion about HRM 21 3.1.2 Functional area of HRM in Large Organization 21-22 3.1.3 Incepta Functional area of HRM 22-24 3.2 Overview of Training and Development Function of Incepta 25-44 3.2.1 Training Defined 25 3.2.2 Development 25 3.2.3 Importance of Training and Development 26 3.2.4 Review of Training function of Incepta 27 3.2.5 Types of training 28 3.2.6 Incepta Behaviors 29 3.2.7 Employee......

Words: 9658 - Pages: 39