Posted: March 28th, 2021

The main environmental fact…

The main environmental factors affecting the global pharmaceutical industry can be described by the PESTEL analysis. PESTEL analysis is a framework or tool used by marketers to analyses and monitor the macro-environmental factors that have an impact on an organization. PESTLE for pharmaceutical industry would be:Political : The policies including foreign as well as domestic of government have a great effect on the industry innovation as compared to the other factors. To get the attentions of firms due to increase of economic importance, government offers special incentives which are attractive to the industry to globalization. To have a proper control over the manufacturing of medicines and drugs, the government makes stringent rules & policies on manufacturing, selling and usage of drugs.

Economical: The economic factors in a country have a major say in the pharmaceutical policies of a country. The global pharmaceutical industry is effecting due to interest, taxes, inflation and exchange rates which are included in the economic factors of global pharmaceutical industry.

Change in the foreign currency rates makes effects on the exports and imports of drugs. High interest rates discourage investment the industry for firms and stake holders. Research and Development is a lengthy procedure which have also economically effect on the industry. Mergers and diversification allows the industry to enter in new market or develop new drugs.Social: There are many components which come under the Social side like the physical health conditions, the kind of social life live etc.

Change in social life and trends mention new direction for the local and national pharmaceutical industry. In the same way age of the individuals deeply change the dimensions of the industry like the citizen of a community aged more than 60 yeas consumes more drugs than the young people. Recently, the industry gets attraction and become more popular after impact of global diseases.Technological: Technology has always played a very big role in the advancement of the pharmaceutical industries due to the current methods for development and manufacturing of drugs and open new ways of research and invention. The usage of advance technologies automatically impacts the social, economic, and environment of a country. Advance technology in pharmaceutical industries help full to accurate characterize chemical compounds, better control on new enhance scientific methods and their optimization. This helps in decrease of extra time, money and efforts and produce more accurate drugs for specific disease, and decrease all hurdles from research to manufacturing efficiently, reliably, and rapidly.

Environmental: Environment movements are real threats for Pharmaceutical industry as these movements focus on green environments and reduce chemicals and carbon which comes from pharmaceutical industries. It is not being possible to ignore these issues as they are supposed to be practiced under United Nation charter for clean and better environment. if we do focus on three principal strategies to reduce the input of chemicals compounds, carbon, and waste water in to the environment are substitution of complex chemical compounds, advance technical approach, and proper education and training of doctors, retailers and consumers.Legal: Drug safety and its usage is a key function of any government. Pricing policies and product liability laws on pharmaceutical innovation are highly affected. The innovation of pharmaceutical is also affected because of regulation. This cause delay in the market launch of new products and process through lengthy approval time.

2. Porter’s five forces help identify their attractiveness in the industry in terms of the five competitive forces which are:The threat of entry: Barriers to entry are the factors that need to be overcome by the new entrance if they are to compete in the industry. Many pharmaceutical companies are progressing in the market by shifting from traditional business approach to emerging new business approach. The new business technique includes contract research (drug discovery and clinical trials), contract manufacturing and co-marketing alliance.The threat of substitutes: Substitutes are products or services that offer similar benefits to industries products or services by different process. Substitute can reduce demand for a particular product as customers switch to alternatives. The simple risk of substitution puts a cap on the prices that can be charged in an industry.

Generic manufacturers do not incur the high cost involved in research and development and regulatory activities such as FDA approval and clinical trials.The power of the buyers: Buyers are the organizations immediate customers, where buyers are powerful they can demand cheap prices or products improvements liable to reduce profits. When buyers can easily switch between one supplier and another they have strong negotiating position. Pharmaceutical industry has one unique feature that the buyer is different from influencer who is a doctor. The consumer has no option but to buy drug as prescribed by physician. Therefore, the bargaining power of patient is very low.The power of the supplier: Suppliers are those who supply the organizations with what they need to produce the products.

Where just a few producers dominate supply, suppliers have more power over buyers. If it is expensive to move from one supplier to another the buyers become dependent and correspondingly weak.Competitive Rivalry: Due to increasing demand of high-quality drugs, low-to-moderate entry barrier to the new entrant, the presence of a number of large and small firm this market is highly competitive.3. Through this model, Porter classifies five main competitive forces that affect any market and all industries. It is these forces that determine how much competition will exist in a market and consequently the profitability and attractiveness of this market for a company. Through sound corporate strategies, a company will aim to shape these forces to its advantage to strengthen the organizations position in the industry.

For the purpose of this model, industry attractiveness is the overall profitability potential of the industry. An attractive industry will be one where the combined power of the competitive forces will increase profitability potential. While an unattractive industry will be one where the collective impact of the forces will drive down profitability potential. The five competitive forces jointly determine the strength of industry competition and profitability. The strongest force (or forces) rules and should be the focal point of any industry analysis and resulting competitive strategy. Short-term factors that affect competition and profitability should be distinguished from the competitive forces that form the underlying structure of an industry. Although these short-term factors may have some tactical significance, analysis should focus on the industry’s underlying characteristics.

4. The strategic choices made by Pfizer are as follows :Refocus and optimize the patent-protected portfolio.Grow in emerging markets.Invest in Complementary businesses.Instill a culture of innovation and continuous improvement.Drivers behind these choices: Many large pharmaceutical companies were facing their toughest outlook in a decade. The industry had made a tremendous contribution to human well-being, yet was vilified in the media and targeted by governments in their efforts to curb spiraling healthcare costs.

R&D costs had risen sharply, while the product life cycle had shortened. Product approval, pricing and promotion were subject to increasingly onerous regulation, yet free trade allowed wholesalers to extract a large chunk of value from the chain without adding anything back. Pfizer acquired Warner-Lambert, Pharmacia and Wyeth, Even Merck, which had doggedly followed an organic growth strategy, announced a merger with Schering-Plough in March 2009. The pharmaceutical market remains relatively fragmented, with very large numbers of domestic and regional players. However, it has consolidated at the global level, with the top 10 companies holding 43% of the market in 2011. The acquisition of Warner-Lambert gave Pfizer full marketing rights to Lipitor, which Pfizer then built into the world’s best-selling drug.


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