The Global Pharmaceutical Industry

1196 Words Jan 22nd, 2008 5 Pages
The Global Pharmaceutical Industry

In the pharmaceutical industry market segments can be found depending on the criteria used. For example, geographically there are three main market segments (the Triad accounting for 80% and with the strongest growth): The United States of America, Europe and Japan with the main future segment being the least developed countries. Another way of classifying the market segments that the pharmaceutical industries face is by those products directed to primary care (those used by office based practitioners) and specialist products (those used by hospitals).
This industry includes quite a few distinguished strategic groups. The ethical drugs are those which are prescribed as opposed to OTC (over the
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Therefore a major key driver of change is the globalisation of the world 's economy.
Porters five forces framework helps identify the sources of competition in an industry or sector. In the pharmaceutical industry many barriers to entry exist thus reducing the risk of new competitors. Such barriers could be the patents on blockbuster drugs, the organisational infrastructure needed to deliver a new drug, consumer loyalty to ethical drugs and heavy R&D costs followed by low manufacturing and unit costs achieved by economies of scale and finally the need of differentiating a drug from an already established one in the market.
The risk of substitutes has increased in the last years due to the development of biotech drugs, OTC drugs and generics. Generics just copy what already exists in the market and as they don 't face R&D costs, their prices are much lower offering the same value as ethical drugs. OTC drugs have been developed in which no prescriptions are needed and most of the consumers can obtain them.
Once the patent expires the cost of switching from one drug to another (from ethical to generic) is low for the consumer thus giving them more consumer power. Also, consumers are becoming more demanding allowing new strategic gaps to appear such as drugs to combat cancer or Alzheimer or lifestyle conditions such as obesity or hair loss.
The suppliers are obtaining more power as more
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