The Global Pharmaceutical Industry: Swallowing a Bitter Pill Essay

836 Words May 30th, 2013 4 Pages
The Global Pharmaceutical Industry: Swallowing a Bitter Pill
The case describes the evolution of the pharmaceutical industry and its strategic environment. Attention is drawn to environmental pressures from regulators and payers. Key forces driving the industry are discussed, including addressing unmet medical needs, the importance of innovation and time to market, and globalisation. The case illustrates how an increasingly hostile environment, combined with a decline in R&D productivity, led to waves of job losses, and sparked a fresh round of consolidation. On the global level, the historical supremacy of the US was challenged with the highest market growth rates recorded in the emerging markets.

Q1. Identify the main
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Environmental – Emphasis on sustainability by investors and employees.
Legal – Increased regulatory focus on drug safety, industry sales and marketing practices; growth in liability claims particularly in the US.
A key trend that students should highlight is the increased emphasis on cost-containment and value-for-money.

Q2. Apply the Five-Forces framework and identify the importance of different environments forces affecting the global pharmaceutical industry.
Students are expected to address all aspects of a five forces analysis, and discuss how these forces have changed over time. Illustrative points are given here, but this is by no means exhaustive.
Threat of new entrants – The industry has historically had high barriers to entry, but these are dramatically lowered at patent expiry with generic entrants. Generic companies such as Teva and Dr Reddy’s are emerging as major global players with ambitions in the innovative sector. A greater focus on premium priced niche products for high unmet disease could facilitate entry by biotech companies.
Power of buyers – Historically, buyers were highly fragmented medical practitioners, but now buying power is increasingly concentrated in a small number of payers with a major impact on market dynamics.
Power of substitutes – Increased emphasis on generics being ‘good enough’ for common conditions and shrinking use of branded innovative drugs. Bio-similars will substitute for
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