Using PEST-L analysis to prepare for strategic plans in taking advantage of opportnities in the external environment and addressing eminent threats, one understands that the consumers of the pharmaceutical industry are patients who need the drugs and medications to address various health concerns. As the prices of medicines were highly dependent on the amount, level and extent of research and development, consumers have no control nor say on the strategies involving prices. As shown in the chart on one of the branded prescription drugs marketed in the U.S., when compared to other areas around the world, the chart would reveal that the price of Lipitor was highest in the U.S.. Buyer power, is therefore considered restricted and limited as it is highly dependent of the prices dictated by drug manufacturers. In addition, the demographic profile of consumers affect and influence strategies designed by drug manufacturers as these profiles affect the demand and purchase of the products. As disclosed from the case, ageing population significantly affect the stragies designed since consumers from this age range more frequently buy drugs than those from the younger age ranges. Therefore, aside from considering the prices of this drugs to ensure that they could be afforded by the older generation, strategies would also consider the media by which products are advertised and promoted; the availability of substitutes, as emphasized in Porter’s threat of substitutes; and the manner by which these products are distributed and made available to the consumers.
Political factors could be closely evaluated using the PEST-L analysis where laws and regulations impact on the industry’s operations and performance; as well as in the development of strategies. As the industry was characterized to be “subjected to rigorous regulatory scrutiny” (Holland, 2010, p. 548), the length required for clinical trials to ensure safety and security of consumers are considerably long. Further, the patent protection of 20 years also influence strategies of manufacturers of pharmaceutical drugs since upon expiry, the threat of entry from generic drug manufacturers rise and significantly affect the level of sustained demand and consumer purchase. Legal factors encompass laws in terms of government controls on pricing and the extensive efforts taken into consideration from discovery and clinical trials to approval and final marketing. The imposition of parallel trade strategies in response to price control have influenced the global pharmaceutical industry in terms of protecting not only drug manufacturers but moreso the consumers who get to evaluate significant price differentials as drugs could be sourced from other low priced markets. The implication for this is that international health organizations, like the World Health Organization, must monitor and address pricing strategies of global pharmaceutical companies to ensure uniform standards and benefits are accorded on a universal perspective. In an article written by Shah (2010), the author clearly cited Stiglitz work which
The paper describes the global pharmaceutical industry as dynamic, evolving and characterized by “the highly risky and lengthy R&D process, intense competition for intellectual property, stringent government regulation and powerful purchaser pressures”…
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.
Porter’s Five Forces that explain environmental factors affecting operations of business entities include threats of entrants, degree of rivalry amongst the existing firms, bargaining power of suppliers, bargaining power of buyers, and closeness of substitute products.
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.
While every person in this world is entitled to the means to sustain life and be free from infirmity, not everybody has access to it due to the dictates of politics, economics or technological development. The formulation and production of medications is not an easy task.
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).
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.
ights (TRIPS) of the World Trade Organisation (WTO), pharmaceutical patents will limit or hamper movement of medical technologies and medicines worldwide (Sampat 2010). Commercial firms are at present forcefully demanding for intellectual property securities in LDCs, numerous of
According to the author, the production of a drug in this industry involves testing to eliminate any chances of dangerous or life-threatening side effects in the final product. The Food and Drug Administration of the US Government tests and approves all pharmaceutical products in America before such products reach the pharmaceutical market.
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