The Global Pharmaceutical Industry

1. The Global Pharmaceutical Industry Sabena Ahmad IvetaSmincakova Dawn Bradbury

2. Porter’s Five Forces Framework Johnson et al, (2006), Exploring Corporate Strategy, 7th Ed, Essex: Pearson Education Limited, p.80

3. Introduction • Application of the framework at strategic business unit level (diversity in operation and marketing) • Understanding the connections between competitive forces and the key drivers in the macro-environment is essential • Forces are not independent of each other • Competitive behaviour may be concerned with disrupting these forces Johnson et al, (2006), Exploring Corporate Strategy, 7th Ed, Essex: Pearson Education Limited, p.79-80

4. The Threat Of Entry • Depends on the extent to which there are barriers to entry • Barriers entry include: • Economies of scale • The capital requirement of entry • Access to supply or distribution channels • Customers or suppliers loyalty • Experience • Expected retaliation • Legislation of government action • Differentiation

5. The Threat of Substitutes • Forms of substitution: • Products-for-products substitution • Substitution of need • Generic substitution

6. The Power of Buyers & Suppliers • Buyer power depends on: • Concentration of buyers • The cost of switching • Threat of the supplier being acquired by the buyer • Supplier power depends on: • Concentration of suppliers • The switching cost from one supplier to another • Possibility of the supplier competing directly

7. Competitive Rivalry • Factors affecting rivalry: • The extent of balance between competitors • Industry growths rates • High fixed costs • High exist barriers • Differentiation