Biotechnology: Industry Analysis

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  • Topic: Drug development, Pharmacology, Biotechnology
  • Pages : 17 (4913 words )
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  • Published : July 15, 2012
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Industry Analysis Assignment
Define the industry

The biotechnologynology industry as described by the Standard and Poor’s is both a product and a service. Their category includes biotechnology drug developers and marketers, diagnostic companies, firms in agricultural biotechnologynology and animal health, entities that produce instruments, suppliers for drug research and global biotechnology issues trading on U.S. stock markets. Biotechnologynology is focused under the “biochemical science to large-scale production, for the purpose of modifying human health, food supplies, or the environment.” The biotechnologynology industry involves alteration of genetic material. Biotechnologynology’s larger focus involves production of medication and research that involves new and improved drugs. The industry itself can be very profitable but as you will discover there are many factors that involve becoming a major player.

Product Value Chain
The biotechnologynology industry has many raw material suppliers that function within the industry but also marketers and research companies as well. Research and development is critical to the success of a drug developer. In 2000, Ernst and Young estimated that the public firms spent 10.2 billion dollars on research and development. Research can be done on or off-site for the drug developers. Once a drug has been approved by the FDA, companies such as Scios, which was recently bought out by Johnson and Johnson, will market the new product. In some cases, developers of new medications or biological advancements utilize outside companies to market for them so that to concentrate resources elsewhere.

Industry Scope Chart
The scope for the biotechnologynology industry is biochemical science for improvements in a variety of categories that I previously mentioned. The narrow scope of this industry is the agricultural, pharmaceutical and animal health sectors which are the main focus of biotechnologynology. The mid-range scope involves products offered within the industry sectors. Lastly, the broad range focuses on specific substitutes to the products and services offered in the biotechnologynology industry. As the chart reveals, there are many alternatives to modern medicine. All pose a fraction of threat to the survivability of the biotechnology firms, but as sales have shown, it is nothing significant. The substitutes pose more of a threat to smaller companies that don’t have as high of sales as the top ten do.

Identify the players

The rivals in biotechnologynology are the 330 publicly traded firms that the Standard and Poor analysis has mentioned. The top five companies are the big rivals to each other in the drug-development sector.

Buyers, Suppliers, Substitutes and Complementors
The direct buyers are the distributors, pharmacies and hospitals and the final buyers are patients and farmers. The suppliers to the biotechnologynology industry are vast and include, research, labor, marketers, instruments, chemicals, venture capital, research supplies, and advertising. Substitutes consist of generic brands, forms of therapy, natural medicine, hypnosis, vitamins, religion, organic farming and holistic medicine. Complementors are instruments that administer drugs such as saline solution, injection needles and other specialized equipment. Farming equipment and special tools used for genetic engineering are also complementors.

Strategic Group Map and Mobility Barriers
We have chosen our strategic groups to be up and coming smaller firms and the five largest firms within the biotechnologynology industry. The top five companies controlled forty-one percent of the industry last year, equating to 15.1 billion dollars in sales. This creates a big mobility barrier for smaller companies to enter their territory. Without entering the industry with an economy of...
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