Marketing Strategy - Analyse Competitive Dynamics in Pharma Industry
Marketing Strategy Use of strategy frameworks to analyse competitive dynamics in the pharmaceutical industry
Graham Leask is a member of the Economics and Strategy Group at Aston University, where he currently teaches Value Based Strategy and Entrepreneurial Strategy to final year and postgraduate students. Graham joined ICI Agrochemicals Research, before entering the pharmaceutical industry, where he worked in marketing and general management roles for several top ten pharmaceutical companies. His most recent role was Strategic Planning Director for Astra Pharmaceuticals, where he was responsible for strategy development, which enabled him to gain first hand experience within the world’s key pharmaceutical markets. His primary research interests include competitive strategy, merger, acquisition and the alignment of strategy to shareholder value creation.
INTRODUCTION
A knowledge of competitive dynamics is generally regarded as an essential starting point for successful strategy formulation.1–3 This paper explores the benefits of strategic group analysis and the technique of strategic mapping, compared with the merits of alternative strategy frameworks for classifying and making sense of competition. The pharmaceutical industry is used to provide an empirical example. This is an industry where a number of characteristics suggest that strategy should matter. First, the pharmaceutical industry is consistently cited as one of the world’s most profitable industries.4 Secondly, the industry spends on average US$700m on each new chemical entity that it produces and a further US$400m on marketing.5 Thirdly, analyst valuations of pharmaceutical companies differ widely, based on current performance and future expectations.6 Fourthly, the long lead time of the industry introduces considerable uncertainty into the outcome of research investment.7 Finally, the erosive effects of patent expiry and the increasing power of buying groups leads to a situation where
Graham Leask
Graham Leask is a member of the Economics and Strategy Group at Aston University, where he currently teaches Value Based Strategy and Entrepreneurial Strategy to final year and postgraduate students. Graham joined ICI Agrochemicals Research, before entering the pharmaceutical industry, where he worked in marketing and general management roles for several top ten pharmaceutical companies. His most recent role was Strategic Planning Director for Astra Pharmaceuticals, where he was responsible for strategy development, which enabled him to gain first hand experience within the world’s key pharmaceutical markets. His primary research interests include competitive strategy, merger, acquisition and the alignment of strategy to shareholder value creation.
INTRODUCTION
A knowledge of competitive dynamics is generally regarded as an essential starting point for successful strategy formulation.1–3 This paper explores the benefits of strategic group analysis and the technique of strategic mapping, compared with the merits of alternative strategy frameworks for classifying and making sense of competition. The pharmaceutical industry is used to provide an empirical example. This is an industry where a number of characteristics suggest that strategy should matter. First, the pharmaceutical industry is consistently cited as one of the world’s most profitable industries.4 Secondly, the industry spends on average US$700m on each new chemical entity that it produces and a further US$400m on marketing.5 Thirdly, analyst valuations of pharmaceutical companies differ widely, based on current performance and future expectations.6 Fourthly, the long lead time of the industry introduces considerable uncertainty into the outcome of research investment.7 Finally, the erosive effects of patent expiry and the increasing power of buying groups leads to a situation where
Graham Leask
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