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The History Of Global Pharmaceutical Industry Business Essay

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 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 and Gilbert, 2003).

Reference:

Chaudry, Peggy & Dacin, Peter (1997): “Strategic Planning in a Regulated Trade

Bloc: The Pharmaceutical Industry in the European Union.”, European Management Journal, 15:6, 686-697.

Blumenthal, D. (2004), "Doctors and drug companies", New England Journal of Medicine, Vol. 351 No.18, pp.1885-90.

European Journal of Pharmaceutical Sciences, Challenges faced by thepharmaceutical industry, K. George Mooney Volume 12, Issue 4, February 2001, Pages 353-359

Global pharmaceuticals, Datamonitor publication, 2008, [accessed online] available at:

www.datamonitor.com

Healy, D. (2003), "In the grip of the python: conflicts at the university-industry interface", Science and Engineering Ethics, Vol. 9 No.1, pp.59-71

James, H. (1993), ‘The world pharmaceutical industry' 4th edition. Chapman and Hall, London, UK

Bátiz-Lazo, B. and Holland, S (June 2001) Strategy and structure of the pharmaceutical

industry, Open University

Katz, D., Caplan, A.L., Merz, J.F. (2003), "All gifts large and small: toward an understanding of the ethics of pharmaceutical industry gift-offering", American Journal of Bioethics, Vol. 3 No.3, pp.39-46.

Offit, P.A. (2005), The Cutter Incident: How America's First Polio Vaccine Led to the Growing Vaccine Crisis, Yale University Press, New Haven, CT,

The Journal of High Technology Management Research, Volume 15, Issue 2, August 2004, Pages 197-214, William W. McCutchen Jr., Paul M. Swamidass

MISG Secretariat (2002), Pharmaceutical Industry Competitiveness Task Force: “One Year On” Report, Ministerial Industry Strategy Group, London, available at:

www.doh.gov.uk /pictf/ pictfonevearon.htm

Floyd, D, (2002), Investment Decisions in Eastern Europe,

Floyd, D, (2002), Investment Decisions in Eastern Europe, European Business Review, Vol 12, No 2.

Yu-Shan Chen, Ke-Chiun Chang .The relationship between a firm's patent quality and its market value — The case of US pharmaceutical industry Technological Forecasting and Social Change, In Press, Corrected Proof, Available online 16 July 2009

R. Barker, M. Darnbrough . The Role of the Pharmaceutical Industry Comprehensive Medicinal Chemistry II, 2007, Chapter 1.14, Pages 527-552

Micheal A. Santoro, Charting a sustainable path for the Twenty-First Centaury pharmaceutical Industry, Cambridge Univeristy Press, Pages 1

Stevens, Mark , Legal and regulatory updates. Gasson, Tony 2009, Vol. 80 Issue 5, p31-32, 2p, Ebsco publications.

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Strengths

Global Market Leader Market leading position brings many benefits to those companies. Generally, they possess good brand...

piolo

eli lilly

Patent Protection Patent protection can help shield a company and their products from competition. This raises the...

Innovative Culture A company with an innovative culture continuously produces new and inventive products. An innovative...

Blockbuster Pipeline Revived blockbuster credentials in recent years for Lyrica, Sutent and Champix. This should fuel...

Research and Development A robust research and development organization can introduce new products and services before...

Top of Form

Bottom of Form

Weaknesses

Low Growth Therapy Markets Entrenchment in low growth therapy area markets such as Cardio Vascular (CV) and Central Nervous...

Co-Marketing Agreement for Pfizer Co-marketing agreements can limit Pfizer’s global presence, because it results in reduced revenue...

Reliance on Few Products The reliance of a company on too few products can increase their risk to any one of their big...

Drug Pipeline Since the majority of future earnings is predicted by the drug pipeline, a weak pipeline displays a...

Unsuccessful Acquisition Business Model Large historical growth came from acquisitions. Future growth is depended on acquisitions, which are...

Top of Form

Bottom of Form

Opportunities

Demographic Trends Favorable demographics favor this market. Health care and peripheral industries will continue to...

Restructuring a Business Streamlining the operations and cutting cost may have positive affect on cash flow and growth. It...

Top of Form

Bottom of Form

Threats

Regulated Business Government regulation increases the risk to the underlying business and thus increases the risk...

Economic Downturn Influencing Purchasing Power of Drugs The economic downturn is influencing consumer's purchasing power, because when customers lose their...

Exposure to Generic Competition Considerable exposure to generic competition could hurt sales and profits for many products and...

International Competition on Rise Higher international competition could decrease profits and hurt revenue growth. Potential negatives...

Pfizer (PFE) SWOT Analysis Profile

Pfizer, Inc. is a global developer and marketer of medicines and pharmaceuticals for various medical conditions in both humans and animals. Some of the companys brand names include Lipitor, Chantix/Champix , Zoloft, Celebrex , and Viagra, among many others. (read full profile)

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.

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