The global pharmaceutical industry

THE GLOBAL PHARMACEUTICAL INDUSTRY

INTRODUCTION
According to Hunter s. Thomas "you can turn your back on person, but never turn your back on a drug, especially
when it's waving a razor sharp hunting." The global pharmaceutical industry had done tremendous contribution to
mankind, but now pharmaceutical companies are facing tough time in a decade. The case is broken in to different
parts which is emphasized on how internal and external factors affecting the industry firstly, the main environmental
forces currently affecting the industry through PEST analysis. Secondly, the implications of the changes in business
environment that is internal factors through porter's five force theory. Finally, the use and limitations of the tools
applied to solve case are discussed.

ORIGIN AND EVOLUTION

The present pharmaceutical industries are non-assembled and more of competitive but it had emerged in early 19th
century in the Rhine valley near Basel Switzerland where dyestuffs were found to have antiseptic properties.
Companies like Hoffman-la rochy, Sandoz, Novartis are all started as Rhine based family dyestuff and chemical
companies, which are still doing tremendous business even to day. Slowly these chemical companies started making
pharmaceuticals and synthetic chemicals and evolved as global players. In early 1940's the industry showed drastic
changes such as introduction of penicillin and other drugs. In 1960's industry growing rapidly with the setting up of
R&D not only this economies prospered by the spending on health care in same period. In 1970's industry showed
major development but a strong regulatory controls also came into existence with this development, and this
regulatory controls had removed the rule of permanent patent to some fixed period which resulted in birth of branded
generics.

ENVIRONMENTAL FORCES EFFECTING

PHARMACEUTICAL INDUSTRY
The scan of external macro environment in which the firm operates can be expressed in terms

P- POLITICAL
E-ECONOMICAL
S-SOCIAL
T-TECHNOLOGY
POLITICAL FACTORS AFFECTING THE SECTOR
Political factors includes government regulations and legal issues defines both formal and informal rules under which
firm operates some example like tax policy, trade restrictions and tariffs, political stability. Political arena has huge
influence up on the regulations of business and the spending power of consumers and other business. Over many
years the pharmaceuticals industry has increased political attentions because of increase in recognitions of the
economic important of healthcare as a component of social welfare . It takes 10-15 years on average to experiment
drug to travel from lab to patient consumption, as patent protection is fixed that is only 20 years but companies has to
spend 15 years on experiments by the time it reaches to the market the patent will be almost comes to expired and
which will result in birth of generic medicines which has exactly same ingredients as of branded drugs but shows
huge difference in price, because the generic brand does not spend on clinical trials so the entry of generic are the
major impact on pharmacy industry because of the legal policy set by political forces example in us 84% of sales had
been dropped in 12 weeks by Allegra hay fever treatment because of expiry of patent in 2006. Another major problem
affecting the industry in many countries are monophony which means only one powerful purchaser who are
government. Since 1980 government around the world attracting pharmaceuticals as a politically easy target in their
effort to control l in increasing health care expenditure like price and reimbursement controls and also the industry
loosed both public and political support to resist this change. In 1990 the effect of economic recession had lead to fall
in tax revenue, the government forever changing cost containment plans had become operations of the company
unstable in European market which is highly fragmented, moreover the expansion of EU had provided many
opportunities but it also raised new challenges from generics and low priced imports.

ECONOMIC FACTORS AFFECTING THE SECTOR

Economic factors affect the purchasing power of potential customers and the firms cost of capital examples like
economic growth, interest rates and exchange rates. The government price control is a major challenge to the
industry in the form of parallel trade. Parallel trade is nothing but free movement of the product across the Europe
with out any trade barriers which will affect the local manufacture because the distributor will buy drugs in low price
markets and export them to high price markets example buying the product from manufacture in Poland and
exporting them to Ireland. The exchange rates and currency problem is also one of the major issue for example
Canada has inflexible pricing and reimbursement criteria, where USA does not have price controls as a results the
price drug in America is high compare to Canada which leads to damage of brand image in consumers mind for
example price of Lipitor is 3.20/pill in USA where in Canada which is 1.89/pill for same drug. Not only this, the growth
of pharmaceutical market is aligned with GDP growth. As R&D productivity is declined and development times were
lengthened, as clinical trials are becoming more complex and costly there was sharp rise in R&D expenditure.

SOCIAL CULTURAL FACTORS AFFECTING THE

SECTOR
Social factors includes the demographic and cultural aspects of the external macro environment these factors effects
customers needs and the size of potential markets, some social factors include health consciousness, population
growth rate, age distribution, emphasis on safety and carrier attitudes. ageing populations are creating pressure on
healthcare funding systems as over 65 consumes four times more than that of below 65 which leads to more
expensive technology solutions and increase in patient expectations had created an unsustainable situation to the
industry. Some countries cannot enjoy universal coverage system and latest treatments because they are not funded
by the insurance companies like USA which can afford latest technology but cannot share the benefits because of
increasing populations in different parts of the world. In developed countries consumer are benefited by the insurance
and can afford ethical drugs but the countries who cannot afford to ethical drugs are switching to generic to save
coast which pressuring pharmacists to substitute generic drug as the first choice, patented drugs are only used if
generic drug fails. The OTC(over the counter) comprise of 20% of market which may purchase without prescription
specially OTC is more in developing countries and also for these the patented drug companies has introduce disease
management initiatives to attack the challenges from generic. Some consumer does not want to use
biopharmaceuticals because they genetically done.

TECHNOLOGICAL FACTORS AFFECTING THE

INDUSTRY
Technological factors can lower barriers to entry, reduce minimum efficient production levels and influence
outsourcing decisions. Some of the technological factors includes R&D activity, technology incentivise and rate of
technology change. the technology is an competitive advantage to the companies and success of R&D lays in team
working, knowledge management and close relation with external flexible and some indicates lean and flexible
operations and out sourcing is a gate way of success not only these there are many questions raised that the
investment on R&D is could not sustain for example in 2005 there are nearly 650 cancers drugs in development. The
utilization of technology is very expensive because it includes latest instruments which is possible only for developed
countries to use technology because they are funded by insurance companies and product developed by this
technology cannot afford in developing countries because of its huge investment.

THE IMPLICATIONS OF THE CHANGING BUSINESS

ENVIRONMENT OF THE PHARMACEUTICAL
INDUSTRY
Porter's five force model

"The porter's model is an outside in business unit strategy tool used to know value of industrial structure. The
competitive force analysis is made by the identification of five fundamental competitive forces."(12MANAGE:2009)

POTENTIAL ENTRANCE
The threat of new entry is low in this sector because companies has to spend huge amount to produce a product, so
investment for the capital is very huge and its as to follow many rules and regulations set up by the government and
to maintain the standard which where set is very difficult for new companies which want to enter into market. More
over it is very risky business because it takes 10-15 years for new market to come into market and nobody is sure
about the success of the products and patent time is also limited.
POTENTIAL SUPPLIER
Bargaining power of supplier is low because there are only few suppliers because the suppliers in this industry are
different from other industries as ingredients used to make drugs are chemicals so the suppliers are chemical
industries. It is very difficult for the suppliers to sustain in the market because if they increase their price the company
may change supplier who supply raw materials comparatively low price compare to existing one and industry is not
key customer group to the supplier. Brand image, role of quality, service of supplier is not considered by the industry.

POTENTIAL BUYERS
Bargaining power of buyer is high because main buyers are generally government and the companies that is
monophony and companies cannot go against them and they can only sell the product to government the other side
of the buyer are consumers who's buying power is also high because of substitute available in markets and brand
loyalty is low in consumers.

POTENTIAL SUBSTITUTES
Threat of substitutes is high in this industries, there are many substitute products in market like generics, branded
generics, biopharmaceuticals as they are very cheap compare to the branded drugs as discussed earlier that
branded drugs will consider only when generic drugs fails. And import of drugs from china and India which are
produce very cheaply compare to local producers.

COMPETITIVE RIVALRY
Competitive rivalry is high in this sector because advantage gained by the first mover advantages (patent). As market
is getting saturating companies are going global which means world wide launches, global branding and heavy
investment in promotion as shorter product life cycle and to gain competitive advantage. In spite of taking care during
launching the industry is still faces tough time from generic drugs and not only this merges and acquisitions as one of
the major cause for competitive rivalry.

SWOT ANALYSIS OF PHARMACEUTICALS

"Swot analysis provide information that is helpful in matching firm resources and capabilities to the competitive
environment in which it operates."(QUICKMBA: 2007)

S-STRENGTH
W-WEAKNESS
O-OPPORTUNITIES
T-THREATS

The environmental factors internal are strength and weakness and external are threats and opportunities.
STRENGTHS
Patent is one of the major strength in this sector of industry which has strong brand names such as Pfizer,
GlaxoSmithKline, Merck, Johnson and Johnson, Novartis.
The above mentioned companies have good reputations among the consumers
The sector have cost advantages from propriety know-how
This sector company have exclusive access to high grade natural recourses
The sector has favourable access to distribution networks

WEAKNESS
Patent is consider as strength of this sector but due to limited time for patent had become its weakness.
The products from this sector have side effects.
The products take long time in development such as clinical trials which takes 10-15 years.
It involves high cost structures such as investment on R&D, advertising.
One of the major weaknesses is regulatory and legal issues by FDA.

OPPORTUNIITIES
Human needs are unfulfilled, so this unfulfilled needs are the opportunities for develop new products.
The arrival of new technology as technology keeps on changing time by time.
The removal of internal barrier like free movements of goods within EUROPEAN UNION.
Due to pressure from big branded companies as this sector contributes major share to economy due to there
pressure loosening of regulations may be happen in future.

THREATS
Generics are the major threat to this sector
The shift in customers taste away from the firm's products, customer in this sector does not have particular brand.
Availability of huge range of substitutes in markets
Entry barriers to some countries
Parallel trade is also one of the major threat to this industry.

USES AND LIMITATIONS OF TOOLS

PEST USE
Pest analysis looks at the external environment and good tool to understand big picture of the environment in which
business operates. And it will allow companies to take opportunities and reduces threat of a company which they are
facing. Pest analysis provide further plan to a company to develop if strategic plan is done correctly. With the pest
analysis companies can see longer horizontal time and able to differentiate opportunities and threats and also help
companies to look outside environment and what are the potential forces which going to affect. Pest is a mnemonic
standing for political, economic, social and technology which are use to brain storm the characteristics of a industry
and can draw conclusion as the significant forces of change operating with in it. More over it is useful to avoid taking
actions which results in failure, it is very useful especially in starting new products because it will avoid assumptions
and make to adopt quickly the reality of the new environment, it is straightforward and easy to adopt, broad
categories covering major environmental factors and will provide more data about influence.

LIMITATIONS
It is not a set of rigid compartment to store ideas more over pest analysis does not analyse all the details in the
external environments like markets, share holder, creditors, supra-national bodies, pressure groups and labour
markets.

PORTER'S FIVE FORCE USE

Porter's five forces theory is valuable contribution to study competition it give important information in three aspects.

STATICAL ANALYSIS:
It determine industrial attractiveness and gives an over view of profitability, this model helps in entry and exit
questioning a market segment and used to compare influence of competitor forces and influence of competitors .

DYNAMICAL ANALYSIS:
It helps to understand potential future attractiveness of the industry.

ANALYSIS OF OPTIONS:
The knowledge and power of five forces help company to develop options to improve position of the company which
results in new strategic direction like new differentiation for competitive products of strategic partnerships.

Moreover, porter's five force models gives systematic and structured analysis of market structure and competitive
situation, this model is applicable universal such as particular company, market segment and industries.

LIMITATIONS
Care should be taken while using this model such as never under estimate the important of current strength of the
company. The model design for analyzing individual business strategies and it will not support the interdependence
and synergy with portfolio of larger corporate. If we look from the theoretical side the model does not show possibility
that an industry could be attractive because some companies in it. More over some times it may be possible to create
complete new markets instead of selecting from existing one and also some people argued that environments which
are characterized by rapid, systemic and quick changes require more flexible, dynamic approach for strategy
formations.

SWOT ANALYSIS USE

The name it self say it is used to identify company's strengths, weakness, opportunities and threats. And use to
formulate strategies the analysis usefulness of SWOT is not limited to profit seeking organizations. It is used in
decision making situation when a desired end -state has been defined, and it is used in pre crisis planning and
prevention and also used to in creating a recommendation during a viability study

LIMITATIONS
It has ability to over simplify the situation by dividing the firms environmental factors into categories in which they may
not fit. The classifications of some factors as strength or weakness, or as opportunities or threats is some what
peculiar

CONCLUSION
The pharmaceutical industry made tremendous contribution to man kind but, the industry is facing tough time in this
decade. Yet it is targeted by government, media in spite of huge investment on R&D and the product life is getting
shorter. Free trade, parallel trade and exchange rate are moreover the birth of generics, creating major problems to
the industry. Niche areas getting crowded creating price pressure, but the presence of global expertise firms like
Pfizer, Merck will stand as global opportunities. The industry more than ever needs to get a handle on the slippery
business of scientific creativity and provided it critics with indisputable evidence of its value.

Global Pharmaceutical Industry

Introduction
The Global Pharmaceutical Industry is one of the multinational industries which gained a high
cycle of growth especially in 1960s and the industry is in high risk, regulated and driven by
lengthy R&D expenditures. The industry can be different in medicinal chemical, biological,
ethical, proprietary product and private formula manufactures by their backgrounds and
operation sectors and does not cover consumer or animal healthcare. In 2008 total revenue of
global pharmaceutical industry was $615.1 billion and expected to reach $734 billion at the end
of 2013. United States, Europe and Japan are the largest pharmaceutical market. The report
critically analyse the Global Pharmaceutical Industry, importance and growth with the expect of
internal and external environment analysis, plausible views of industry in the future and moral
values. (Global pharmaceutical).

A: identification of the main environmental forces currently affecting the pharmaceutical industry.

PESTLE
PESTLE analysis used to help organisation to understand in depth that what is the current
status of the organisation and the external factors which are effecting. It also helps to the
Management to make strategy for the future and overcome the weak areas of the organization.
PESTLE is comprises of political, Economical, Social, Technological, Legal and Environmental
factors. (Author)
Political

The both policies (domestic and foreign) of government have a great effect on the industry
innovation as compare to the other factors. To get the attentions of firms due to increase the
economic importance, government offer special incentives which encourage to the industry to
globalisation. For example GSK increase their operations in Singapore due to low taxes and
others government support. Same like, United States purchase more than 45% of drugs, the
main reason is to allow foreign industry to compete with local which may help to low prices and
reduce health budget. (David Floyd, 2008)

From 1980 governments focused on pharmaceutical industry to handle the challenges of price
control, monopoly and trade. For example in the European countries like Spain, Portugal,
France and Italy the pharmaceutical market is cheap and thus these countries are used to ship
their products to UK, Germany and Sweden for high price market. In US the price of
pharmaceutical goods are high as compared to neighbour's country Canada due to the lake of
price control. Like in US Lipitor (cloistral medicine) were sold with $3.20 per pill in 2003 as that
of $1.89 per pill in Canada. (Sarah Holland Jul 2004 )

Environment
Environment movements are real threats for Pharmaceutical industry as these movements
focus on green environments and reduce chemicals and carbon which comes from
pharmaceutical industries. It is not being possible to ignore these issues as they are supposed
to be practiced under United Nation charter for clean and better environment. For example
Pfizer is a well reputed British Pharmaceutical company which has aims to save the
environment as much as possible from chemicals, waste water which includes active
pharmaceutical ingredients mixture of different compounds and carbon which comes from their
pharmaceutical industries.

Different strategies could be used to reduce carbon and chemical waste from drugs for human
environment, like proper consumption ,good way of savages for hospitals waste water like
advance waste water treatment technology, private house hold expire drugs, training and
education of medical professionals to reduce over prescription, and public education and
awareness. These strategies could be help full for save green house environment from drugs.

In conclusion if we do focus on three principal strategies to reduce the input of chemicals

compounds, carbon, and waste water in to the environment are substitution of complex
chemical compounds, advance technical approach, and proper education and training of
doctors, retailers and consumers. (Klaus Kümmerer, 2009)

Social
The social life, physical activities and level of health of a community affects the pharmaceutical
industry. Change in social life and trends mention new direction for the local and national
pharmaceutical industry. In the same way age of the individuals deeply change the dimensions
of the industry like the citizen of a community aged more than 60 yeas consumes more drugs
than the young people. Recently, the industry gets attraction and become more popularafter
impact of global diseases e.g. SARS, AIDS, because of media and government attention.
(Micheal A. Santoro, Date not available)

Technology:
Technology plays a vital role in to pharmaceutical industries according to current state of art
methods for development and manufacturing of drugs and open new ways of research and
invention. The usage of advance technologies automatically impact on social, economic, and
environment. Advance technology in pharmaceutical industries help full to accurate characterize
chemical compounds, better control on new enhance scientific methods and their optimization.
Which decrease extra time, money and efforts and produce more accurate drugs for specific
disease, and decrease all hurdles from research to manufacturing efficiently, reliably, and
rapidly. (Troy Shinbrot, Benjamin J. Glasser, 2002)

Economy
Currently the pharmaceutical industry is less affected as compare to other manufacturing
industries and until 2011 the industry is ideal for foreign direct investment growth. (World
investment prospect survey, 2009). Despite this, in 2002 slow economy growth put the pressure
on the EU market and restricts it to 8%. The global pharmaceutical industry is effecting due to
interest, taxes, inflation and exchange rates which are included in the economic factors of global
pharmaceutical industry. Change in the foreign currency rates makes affects on the exports and
imports of drugs. High interest rates discourage investment the industry for firms and stake
holders. Research and Development is a lengthy procedure which have also economically effect
on the industry. Mergers and diversification allows the industry to enter in new market or
develop new drugs. In 1996 two big companies, Swiss giants Ciba and Sandoz, merged one
company called Novartis and attempted to cut R&D costs (James H. Taggart, 1993)

Legal
Undoubtedly pharmaceutical industry is a highly regulated and patent law. Pricing policies and
product liability laws on pharmaceutical innovation are highly affected. The innovation of
pharmaceutical is also affected because of regulation. Which cause delaying the market launch
of new products and process through lengthy approval time. In United States the greater
restrictions of regulation is evidence to delay in the local market of demanding new drugs. In
1989, 18 of the 23 new drugs introduced and approved for marketing in other countries while in
US received their first marketing. (Stevens, Mark, 2009)

Furthermore the World Trade Organisation introduced new rules for copyright protection which
later overcome the problem of fake production and allowed some relaxation of exporting the
Aids drugs to Africa. In 1995, with mutual understanding many countries made different
changes in their “National Laws Governing” IPR which directly impact on pharmaceutical
industry. (James, H, 1993)

SWOT
Swot analysis in pharmaceutical industry provide a crystal clear scenario about on coming
threats to this industry , scope of pharmaceutical industry its opportunities , advantages and
provide summary analysis of strategic planning model and weakness areas including draw
backs ,hurdles related to this industry.

Threats
The infrastructure of pharmaceutical industries is very different compare to other major
Industries. Pharmaceutical approaching techniques state way comes in to open market
environment. The influences of government in shape of pricing and legislation - individual
consumers and whole sellers' free choice directly interact with this industry.

The most of new drugs approvals and launches has decreased in the past decade, making it
hard to make awesome income with these government strategies to decrease health care
expenditures gives more threats in pharmaceutical industry. Over the next few years the
pharmaceutical industries could be face Series downturn about of patent expiry. Drugs which
are contributing 17 to pharmaceutical sales in 2008 lose patent Protection between now and
2012. (K. George Mooney, 2001)

Weakness
There are multiple examples of weakness associated with pharmaceutical industries. Some are
highlights below, for example association of funding and results. Pharmaceutical company
funding of clinical trials is strictly linked with published results favouring those companies'
interests. This is an important issue which should be solved and is major weakness of
Pharmaceutical industry.

Another weakness in pharmaceutical industry is shortage of supply and demand of men power
in industry and output from universities. There is need to collaboration and partnership between
pharmaceutical industries, education institutes, and government to deal with the shortfall the
challenge comes from balancing education in basic science with training in the emerging areas
of science and technology. (R. Barker, M. Darnbrough, 2007)

Strengths
The pharmaceutical industry is one of the most productive and profitable industrial sectors.
Therefore, effective intellectual property protections play a vital role to maintain innovation and
research for products development. Study shows that USA & UK pharmaceutical industry is one
of the most power and successful industry sectors in the world. The main reasons behind is
commitment in to R&D sector. That's in turn give sustainable and competitive advantage for
more promising growth in industry and its development. Intellectual property protection is a
basic strength for the success of the pharmaceutical industry. The pharmaceutical industry is so
dependent on the patent protection, because only through strict enforceable patent protection
drug companies can generate sufficient revenues. However patent protection is beneficial to
inventions in the pharmaceutical industry. (Yu-Shan Chen, Ke-Chiun Chang, 2009)

Opportunities
Regardless of threats there is vast majority of opportunities with the help of different alliances,
pharmaceutical industry can bring amazing resources and capabilities to compete threats and
weakness' which is now a day's industry is trying to coping. New partnerships brings industry in
to new market , deal with better trading , better economy opportunities , reducing cost ,and help
to develop new inventions and research to compete market .

One of the most important reasons for making external alliances is state of the art technologies
for new products, invention and research which individual companies couldn't handle and
develop by their selves from internal resources. (William W. McCutchen Jr., Paul M.
Swamidass, 2004).

B: Scenario planning for Global pharmaceutical industry

Scenario planning methods used for nature and impact of the most certain and important driving
forces our world; it is a process that encourages knowledge exchange and mutual
understanding of the central issues for the future of the business.

The demand is increasing for new drugs as the population rises and their medical support need
increases.

The process of the pharmaceutical industry can vary but the end result must be an action plan
for each scenario with the following:

o Environmental scan

o Scenario options

o Financial projections

o Action plan describing how the scenario would be implemented

Features of Scenario planning and effects.

Advantages.
· Multiple scenarios and diverse outcomes.

· It includes various input source and helps in discussing with all the participants.

Disadvantages
· Doesn't quantify the value of possible actions and lack structuring futures.

· Non rational procedures for determining the future.

Over the next few years, patent expirations will represent lost revenue of between $25 billion
and $50 billion which will spur strategic alliances between R&D and generic
companies. The industry, experts say, will see a move to specialty products to fill unmet needs
and a shift from a treatment and/or cure approach to prevention while pressure to bring product
costs down will likely determine which products prevail in the marketplace. (Caribbean
Business, MARCH 19. 2009)'

Relationship Management and transportation: It is very important to ensure that there is

transparency along the entire value chain and especially in the Pharmaceutical industry as it
has become a Global industry. It is also very important to maintain the customer trust and also
managing the good relations with the entire stakeholder.

C. Identification of implication of changing business environment on pharmaceutical firms

“Drug discovery companies are experiencing many important transformations, which have
contributed to the uncertainty of their competitive business environment. The uncertainty is
underlined by the abundance of players within the industry.”

(Chaudry & Dacin 1997, p. 696).

Focus and Cost: Pharmaceutical industry should review all their processes to stay competitive.
A strong focus on Business and on core business activities. it is the need to have strong focus
of developing processes which can be suitable for using across multiple manufacturing sites.

Following are the some of the points which are interlinked and have an impact of decision
making process, business practices and behaviour patterns.

· Slower and more bureaucratic regulatory procedures:

· Demographic development leads to pressures for medical cost containment:

· Regional integration:

· New directions for organizing health care:

· Rise of patient as consumer:

· Introduction of new innovative technologies:

· Shorter effective product patent life:

· Centralization in drug licensing decisions

D: Prevalence of ‘ethical stance' in the pharmaceutical industry and its strategic implications.

In 1958 the shortage of polio vaccine and negligence in the law of Cutter pharmaceutical were
main ethical challenges. Meanwhile the issues of marketing practices, pricing and clinical study
has grown up to till date (Offit, 2005). Physicians' prescription changes the drug sales efforts
and marketing of drug companies. (Katz 2003, Blumenthal 2004

As studied has shown that the drug safety and pricing were the two main ethical issues
increased during 2004-2005 and observed with 114 times of drug safety which was followed by
89 times of pricing. According to the (USA today, 2005) report, 27.6 % price of 115 brand were
increased in four years which raised the question regarding public perception towards waste
advertisement and cost of R&D. Even in United State, pharmaceutical firms were involved in
pricing and marketing crimes and had to pay more than one billion dollars fine in 2003

The legalisation of importation and reimportation can be factor of drug price was another issue
identified many times in Canada. Through reimportation the prescription cost can be cut for
patients and helpful to control the healthcare budgets. (Flaherty an

The Glbal Phamaceutical Industry

In: Business and Management
The Glbal Phamaceutical Industry

Student Name : Singh, R.

: Hariram, E.
: Marimuthu, V.K.

Student Number : 20054057

: 20101233
: 19852274

Assignment Title : The Global Pharmaceutical Industry.

Date : 10 March 2012

Programme : BTECH-MANAGEMENT IV

Question 1
Identify the main environmental forces currently affecting the global pharmaceutical industry?

PESTEL analysis of the global pharmaceutical industry:

Political
* Governments set stringent regulation and is a powerful purchaser.
* Governments around the world focus on pharmaceuticals as a politically easy target in their efforts to control rising health care
expenditure.
* Inter-country pricing disparities.
Economic
* European free trade agreements.
* Deregulation of market to allow foreign drugs to compete.
Social
* Ageing population puts pressure on healthcare systems.
* Epidemic of chronic diseases.
 * Rising consumer expectations.
* Payers choosing generic drugs for first-line treatment of common ailments.
Technological
* Increase productivity, decrease costs and develop new treatment modalities to enhance profitability.
* Impact of Internet on traditional business models.
* Impact of genetic research on industry.
Environmental
* Industry operations are becoming more stringent with increasing standards and requirements for environmental protection.
Legal
* Rigorous regulatory scrutiny governed by legislation.
* Legislation enacted to set a fixed period on patent expiry.

Question 2
Use scenario planning techniques to consider the various environmental influences which may affect the global pharmaceutical
industry in the future?

Key drivers for change:

* Scientific advances leading to new drug discovery processes and greater targeting of treatments.
* Continued mergers and acquisitions leading to more rapid concentration in the industry or vertical integration.
*...