Environmental Factors Affecting Pharmaceutical Industry and Implications of Changing Business Environments

Economic: Globalization of the pharmaceutical industry is an exciting opportunity to have research and development done at cheaper prices in other countries. However, this could be a double edged sword for companies because it is easy for other countries, such as India, to produce generic versions of the drug in bulk.

2. Patent related and Generic Competition: The developed countries like US and Europe have strong patent protection laws which gives a lot of benefits for the pharmaceutical companies. But, the patent

U.S. based companies hold rights to most of the world’s rights on new medicines and holds thousands of new products currently being developed. As of 2012, the industry helps support almost 3.4 million jobs in the U.S. economy. It is also one of the most heavily R&D based industries in the world. In the United States, the environment for pharmaceuticals is much friendlier than other countries around the world in terms of pricing ability and regulations. Both the Pharmaceutical and Biotechnology industries have experienced significant growth in the past year with year-over-year increases of 13.02% and 34.69% respectively. It is an even more striking when looking at the past five years considering both have beat out the S&P 500 with pharmaceuticals increasing an additional 31.44% and the biotechnology sector besting an astonishing 269.3% more return than the

U. S. citizens pay the highest prescription drug prices in the world. This is an injustice that must be corrected. The "U.S. forbids the import of prescription drugs by anyone other than the original U.S. manufacturer, and even then only when the drugs meet all the approval requirements of the U.S. Food and Drug Administration (FDA)" (Barlett & Steele, 2004). Prescription drug prices are outrageously high in the United States because of the influence of advertising on consumer purchasing, the misleading statements by pharmaceutical companies about the cost of research and development of new drugs, the manipulation of patent laws, the antiquated laws regarding importation of

Five of the top ten pharmaceutical companies are located in the United States and the other five are European companies, all of these companies combined, employ approximately 787,000 people. The ranking of the following pharmaceutical companies are based on

Today pharmaceutical industry is worth 300 billion dollars and controls a majority of the money market. It is an industry that today is in very close ties with the FDA. The FDA has lost face because it is now to closely linked with big pharmaceutical companies. It is more beneficial and profitable for ‘Big Pharma’ to have more unhealthy people because that would mean more drug sales. Mercola, Joseph, Dr. "Exposing the Truth Behind FDA Approval and Guidance."

But this is not necessarily true. Western governments are usually generous about funding drug industry research. These governments also allow the drug companies to market discoveries and new drugs that are produced in government and university laboratories. The most expensive aspect of producing a drug is the pre-clinical research, which is performed by the government and universities, not the drug companies.

The pharmaceutical industry continues to be a major driver of trend. While demand for medicine rapidly increases in emerging economies, a growing number of consumers are also analyzing the economic performance of different medicines. These events will heighten the challenges the

Recently, there has been a debate about the high prescription drug prices in the United States. Accounting for 9.7% of the national health expenditure, $329.2 billion was spent on prescription medications ($931 per person) in 2011 (Linton, 2014). So what exactly is the average American getting with their $931? Well, because there is an extraordinary amount of time, effort, and energy that goes into creating, manufacturing, and distributing a new drug, it’s no wonder the prices are so high. But what other costs are folded into the prices of your prescribed medications? This review looks beyond just the research and development costs needed to take a new drug from idea to shelf by examining several journals and other credible, secondary sources, to shed some light on how much pharmaceutical companies are spending to develop, advertise, and sell their drugs.

Economic - Exchange Rates, costs of pharmaceutical product sourced out with the European Union (EU). If Sterling is weak in relation to the US Dollar, the cost of purchasing pharmaceutical products could be greater and cause a reduction in spend elsewhere in the organisation. Currently, five of the World’s top ten pharmaceutical companies are US- based.

The cost of new medical drugs seems to be accepted by many people who use them. These pharmaceutical companies increase their profits more and more each year because many people assume that it does cost a lot of money for research and development. Where in reality, they are only spending about 15% of their profit margins on research and development alone. A huge percentage of these drugs are actually tested in other countries where people are more willing to do trials with these drugs because they cannot afford them. Not only are there more people who are more willing to try them, but also there is less regulation and oversight when it comes to testing. Conducting these clinical trials overseas not only saves

Drug prices are set by pharmaceutical companies to cover research and development costs. While R&D costs clearly need to be covered, markets in developed countries already pay for most R&D of new products. Because of this, it makes moral and economical sense to establish a two-tiered pricing system; for R&D costs to be paid for by developed countries, allowing significantly reduced prices to be charged in developing countries.

In pharma industry the raw materials mainly consist of organic chemicals. The need of different organic chemicals depends on the chemical formulae of drug. Pharmaceutical industry depends on various different organic chemicals for the production of end drugs. The chemical industry itself is very competitive and also very fragmented because their products (organic chemicals) are standardized and steps to produce them are also standardized. The chemicals used in pharma industry are commodity as pharmaceutical companies do production on economies of scale to lower the cost. The suppliers have low bargaining power because companies can switch to a new supplier without incurring a high cost. But there is a threat from supplier if it decides to go for forward integration and become a pharma industry

Yes, there is an impact on the pharmaceutical company, like those in the US as a result of differential prices between that country and other nations.

This report provides an analytical strategic review of the global pharmaceutical industry; its origin, evolution,