The Global Pharmaceutical Industry

Answer 1:

The pharmaceutical industry overall has been in a stringent situation over the past two decades, owing to a lot of reasons; however, for the sake of this case study, we shall analyze the environmental factors effecting the industry through a PESTEL framework.

Political forces:

1. Governments usually impose strict regulation measures for all players in the pharmaceutical industry which further prolongs the research and development process, in turn, delaying the launch of innovative new medicines. Such measures came in to practice as governments are generally the biggest consumers for the pharmaceutical industry and in the earlier years, they didn’t have much knowledge or influence over how the industry set prices or manufactured the goods. However, as a result of strict measures in place, medical practitioners are more considerate when setting prices. One example of this would be the FDA in the U.S.

2. From 1980 onwards, governments introduced several price or reimbursement control methods, which the industry had to follow.

3. Government price controls created another challenge for the industry in the form of parallel trade, specially in the EU, wherein countries would source drugs in low-price markets and ship them to high-price markets, pocketing the difference.

4. At the same time, the governments are also taking measures to promote R&D in the pharmaceutical industry by investing in universities and science parks, for example, the Chinese government. The U.S. government should soon follow these actions in order to maintain their dominance over the global pharmaceutical industry, specially, in the field of R&D.

5. The U.S. government proposed healthcare reforms in 2008 which still hangs pending in the U.S.Congress. If the bill is passed, it would mean that all Americans will receive healthcare coverage from the government, further making the U.S. government the biggest consumer of pharmaceutical goods globally. The...