1- Derive three opportunities and three threats for GSK by first making the PESTEL analysis of the macro-environment surrounding the pharmaceutical industry. (9 points)
* PESTEL analysis of the pharmaceutical industry:
Political: Since the creation of healthcare insurance, companies have to conform themselves to two kinds of systems: 1) The universal system applied for example in France, with less demand in new technologies. 2) The very selective anglo-saxon system which is looking for high technologies, excluding people who can pay for treatments. As we know the industry have to work on growing political focus on healthcare. Indeed, global governments are looking for healthcare savings especially in this time of economic crisis. Furthermore, as the European Union is trying to harmonize healthcare between its 27 members, pharmaceutical companies will have to introduce reference in pricing and to deal with increasing pressure on pricing.
Economic: Due to the context of global economic crisis, the main threat for the industry stands in the reluctance of consumers to spend on healthcare. Like most of the sectors, pharmaceutical industry copes with a reduction in its growth, even if the market perspectives are positive. To emphasize: pharmaceutical growth is following the GDP growth.
Social: As the over-65’s consume 4 time more than other citizens, the aged population represents an opportunity for the pharmaceutical companies which will have to respond to increasing demand from this part of the population. Moreover, patients are more and more aware of treatments and diseases and are expecting more transparency about drugs and price policy. Thus, the companies will have to face with pressure on customer service. Eventually, the market is likely to grow with increasing health concerns like the obesity issue which has become crucial in Western countries for the past decade.
Legal: The market lives with many regulatory and legislative restrictions, particularly about ethics. Companies also tackle with the issue of intellectual property rights and the generic drugs. Moreover, they have to cope with the increase of trial within patients are involved. Eventually, it’s hard to rationalize the market because of the two-system organization of the demand.
Environmental: As the global environmental agenda is growing up, pharmaceutical companies have the opportunity to include eco-objectives within their strategy and create Corporate Social Responsibility programs. Indeed, the recent world community awareness permits to companies anxious to respect even more the environment to improve their corporate image.
Technological: Thanks to new technologies, the pharmaceutical industry has many digital opportunities concerning treatments or communication with patients. It allows direct to patient advertising and requires responsive service facilities. Furthermore, companies will go on focusing on new technologies like the biotechnologies. the macro-environment surrounding the pharmaceutical industry. PESTELEXAMPLES
•Harmonization of healthcare systems across Europe
•Pressure from government regarding companies that try to make savings on the production of healthcare products Ethical pharmaceutical companies want to reduce the ratio of the cost structure allowed to manufacturing of goods as it represent 25% and increase the ratio of sales and marketing.
•Global Economic crisis
•Mergers and acquisition have become common practice in many industries •Reduction in the average income
•Population changes: aging, increase in obesity in western countries/ under nutrition in developing countries, etc. •Customers are better informed (internet, etc.)
•Emerging markets are becoming more and more important
•Differences between health insurance owners inside a country and between different countries (access to...