Pharma Industry Strategy Analysis

 Strategy

 Assignment

 1

What

 are

 the

 main

 barriers

 to

 entry

 in

 the

 pharmaceutical

 industry?

  Capital

 Advantage

Big

  pharmaceutical

  companies

  have

  an

  advantage

  in

  financial

  resources

  and

  ability

  to

  conduct

 lengthy

 drug

 development

 trials,

 hire

 large

 number

 of

 staff

 for

 sales

 and

 marketing

  and

 the

 fund

 for

 litigation

 against

 competitors.

 These

 factors

 make

 it

 harder

 for

 companies

  without

 a

 large

 and

 cheap

 capital

 base

 to

 enter

 the

 industry.

  Present

 companies

 possess

 a

 wealth

 of

 intellectual

 capital

 including

 the

 ability

 to

 retain

 top

  scientists

  and

  researchers,

  present

  knowledge

  database

  on

  diseases

  and

  the

  network

  of

  medical

  professionals

  who

  are

  already

  their

  clients.1

  These

  factors

  increase

  the

  additional

  capital

 required

 by

 new

 entrants

 and

 act

 as

 significant

 barriers

 to

 entry.

  Economies

 of

 Scale

  Considering

  how

  the

  pharmaceutical

  industry

  takes

  a

  lot

  of

  money,

  time

  and

  marketing

  efforts

  to

  develop

  and

  release

  new

  drugs,

  big

  pharmaceutical

  companies

  have

  obtained

  an

  advantage

 of

 economies

 of

 scale

 through

 consolidation.

  While

 the

 industry

 have

 started

 to

 show

 a

 shift

 into

 outsourcing

 of

 certain

 drug

 development

  functions

  through

  clinical

  research

  organizations

  (CRO),

  the...