Case Study the Pharmaceutical Industry

Drawing on the five forces model, explain why the pharmaceutical industry has historically been a very profitable?

A. Rivalry among competing firms I. Patent protected medicine allows prating monopoly it. In pharmaceutical industry they have several strong competition compete again few rather than more companies

b. Threat of substitute product I. Very costly to introduce a new drugs it. So many medicines protect by patent law, all competitors can make countered drugs who have almost some quality

c. Bargaining power of buyer ( low bargaining power of buyers) I. Market leader enjoy monopoly pricing ii. Medicine emergency drugs they have to use

d. Bargaining power of suppliers I. They have to satisfy the manufactured and compete with other supplier to remain in the industry because they are bargaining power

e. Threat of new entrants I. There are high cost and risks associated with developing new drugs and bringing it to market as out of every 5000 compounds tested in the laboratory by a drug company, only one of these ultimately make it to the market.

2. After 2002, profitability of the industry, measured by ROCCO , started to decline. Why do you think this occurred? The many aspects contribute to the decrease in profit of the drug industry , firstly politicians are trying to put price control on prescriptions drug which affect the profit of the drug producing industry. Secondly , it s the loss to “generic drug ” company when their drug patent expired. The creator company will no longer be the only one produces the drug, and have to compete with generic version drug which similar formula but offered at much cheaper price.

For example, Pfizer is the company who holds a 20 years patent protection of Lipton , a very high demand ,popular drug that generate them great profit . With the patent, Pfizer is the only company who allowed to produce it and can sell at high price. Once their patent expired , which in 2010 ,other company and firm will allow to produce it in similar formula or generic version at much cheaper price. It will make affect the price and profit of the company heavily. Read Bayonne packaging case study review

Thirdly , the industry is under scrutiny and studies showing that even with FDA approved drug can caused some serious side effect included hear attack , which affect the sale and trust in consumer and industry such as two drugs Vision and Baxter ,were pull out of the market in 2004.

3. What are the prospect for the industry going forward? What are the opportunities, and what are the threats ? What must pharmaceutical firms do to exploit the opportunities and counter the threats? This industry research and new discoveries, new inventions that will patented as their medicine under the appropriate authorities.

Research done for them for healing and prevention in the future flocked and profitable for the pharmaceutical industry. Makes it one of the industry to thrive. It is not in drug but includes the Case Study the Pharmaceutical Industry By Parliamentarians biotechnology industry, medical technicians, pharmacists, for medical training. In globalization, LSI offer assistance to other countries in the help of medication, retirement and medical care that encourages opportunities for industry to produce quality products, prices and reduces future, working with the government to improve the health of the community in his country.

Industry owe it to the people and therefore should be paid by way of discharging its social responsibility in a way which is meaningful and beneficial to the poor who can not afford expensive drugs and suffering from the particular disease. Threats can be addressed by educating future about hygiene, dangers of drug duplicates, etc.. Make them aware that prevention is better than cure