Pharma Industry Analysis

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The Pharmaceutical Industry
1. Origins and Evolution
The modern pharmaceutical industry is a highly competitive non-assembled1 global industry. Its origins can be traced back to the nascent chemical industry of the late nineteenth century in the
Upper Rhine Valley near Basel, Switzerland when dyestuffs were found to have antiseptic properties. A host of modern pharmaceutical companies all started out as Rhine-based family dyestuff and chemical companies e.g. Hoffman-La Roche, Sandoz, Ciba-Geigy (the product of a merger between Ciba and Geigy), Novartis2 etc. Most are still going strong today3.
Over time many of these chemical companies moved into the production of pharmaceuticals and other synthetic chemicals and they gradually
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The Social Dimension:
Good health is an important personal and social requirement and the unique role pharmaceutical firms play in meeting society’s need for popular wellbeing cannot be underestimated. In recent times, the impact of various global epidemics e.g. SARS, AIDS etc has also attracted popular and media attention to the industry. The effect of the intense media and political attention has resulted in increasing industry efforts to create and maintain good government-industry-society communications.
Technological Advances:
Modern scientific and technological advances in science is forcing industry players to adapt ever faster to the evolving environments in which they participate. Scientific advancements have also increased the need for increased spending on research and development in order to encourage innovation. Legal Environment:
The pharmaceutical industry is a highly regulated and compliance enforcing industry. As a results there are immense legal, regulatory and compliance overheads which the industry has to absorb. This tends to restrict it’s dynamism but in recent years, government have begun to request industry proposals on regulatory overheads to so as not to discourage innovation in the face of mounting global challenges from external markets.
3. Structural Industry Analysis (Porter’s Five Forces)
This section provides a summary positional analysis of the pharmaceutical industry using
Porter’s Five Forces model (see
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