Gsk a Merger Too Far

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Case study C: GSK, a merger too far?

1- Derive three opportunities and three threats for GSK by first making the PESTEL analysis of the macro-environment surrounding the pharmaceutical industry. (9 points)

* PESTEL analysis of the pharmaceutical industry:

Political: Since the creation of healthcare insurance, companies have to conform themselves to two kinds of systems:
1) The universal system applied for example in France, with less demand in new technologies.
2) The very selective anglo-saxon system which is looking for high technologies, excluding people who can pay for treatments.
As we know the industry have to work on growing political focus on healthcare. Indeed, global governments are looking for healthcare savings
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Threats :
The pharmaceutical industry is one of the most competitive industry in the world. Mergers, generics and better medicines are responsible for this situation. GSK has done further mergers, which help the company being more and more influential. But in this competitive environment, mergers are not sufficient. Indeed, generic products and new drugs that are considered better are getting more popular and tend to be more appreciated by the customers. GSK should thus think about its product range in order to fit the market demand.

Law regulation:
The controls, restrictions and pressures are really important in pharmaceutical organization in many countries such as France, USA, Japan, etc. Some governments are directly involved in the price control of pharmaceuticals products. It is impossible to foresee whether controls, regulations or buyers’ pressure will increase, or if new controls or regulations will be created in any area where GSK is present. The pricing strategy is actually essential, especially in the pharmaceutical industry, as it is a budget that cannot be cut down by customers. People belonging to lower class will always prefer
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