Pharmaceutical Industry Analysis

Abstract

Pharmaceuticals is a very complex industry where competitors of genetic and ethical companies constantly are at war to stay afloat. This industry is at a constant dynamic transition, therefor making it extremely difficult for new comers to break into this industry. Pharmaceutical companies must be innovative and give little to no room for others to come in the industry to create competition. In this research we will be depicting it with Porter’s Five Forces Model. Evaluating the supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry. As well as analyzing the attractiveness of the pharmaceutical industry.

Threat of Entry of New Potential Competitors (LOW)

Entry to a new industry is difficult on its own, but high barriers in the pharmaceutical industry can make it hard for someone to set afloat a venture. Once one has overcome these obstacles, those same barriers can keep other competitors at bay.

Problems that company can encounter while trying to enter this industry are: financial issues, government regulatory laws, high cost due to R&D. There are many struggles that the new company must overcome like the process and the discovery of new drugs, the high expense of manufacturing and development; in addition to being approved by the Food and Drug Association (FDA). The laborious process of developing a new drug, being approved by the FDA and having it out on the market, this did not made certain that there would be good results. Marketing and sales are a great part of expenditure companies undergo, promoting and selling their drugs takes a large sum of time and money.

Government has a huge impact on new comers because of the patents place on new drugs. As of 1989 patents lasted 17 years, now they have raised it to 20 years. Companies would gain a great advantage over their competitors and literally hindering their rivals from manufacturing any type of drugs with the same chemical...