The Global Pharmaceutical Industry

Topics: Pharmaceutical industry, Generic drug, Barriers to entry Pages: 10 (2741 words) Published: October 17, 2011
Strategic Management

Student name:Thivhilelililio Mkojiholo

Assignment Title:The Global Pharmaceutical Industry

Date:2011 August 20

Table of content
Contents Page
2.Pestel analysis of the global pharmaceutical industries5-6 3.Drivers for change in the future of pharmaceutical7
4.Five forces analysis on the global pharmaceutical industry8-10 5.Threats to a big pharmaceutical company11

The pharmaceutical industry
According to (Johnson et al, 2008:56) the pharmaceutical industry can be traced to the late nineteenth century. It develops, produces drugs for use as medications. The pharmaceutical companies are allowed to deal in generic and or brand medications and medical devices. According to the Wikipedia the industry is are subject to a variety of laws and regulations regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs. This industry has made huge contribution to human well-being. The industry has seen significant changes in the recent years with the introduction of many regulations to regulate the industry in part to protect the users and in part to control the rising cost which the industry was synonymous for which resulted in the industry lacking the public and the political support to fight off the many regulation that were coming its way (Johnson et al, 2008:56). Wikipedia also stated that the pharmaceutical industry is very risky because to develop a drug it requires huge investments and out of the thousands discovered compounds, only one might become an approved drug for sale with the failure rate very high and very difficult to get return on investment.

Question 1
PESTEL framework
According to Morrison & Daniels (2011) PESTLE analysis is often used as a generic 'orientation' tool to find out where an organisation or product is, in the context of what is happening outside that will at some point affect what is happening inside an organisation. They added that PESTLE analysis is in effect an audit of an organization’s environmental influences with the purpose of using this information to guide strategic decision-making because to help make decisions and to plan for future events, organisation need to understand the wider economic environments in which they operate so that they can conducting a strategic analysis and take advantage to maximize the opportunities and minimize the threats to the organisation or the industry. The assumption is that if the organisation is able to audit its current environment and assess potential changes, it will be better placed than its competitors to respond to changes (Morrison & Daniels, 2011). According to Johnson et al (2008:55) pestel stands for political, economical, social, technological, environmental and legal. POLITICAL

Pestel highlights the role of governments (Johnson, Scholes & Whittington, 2008:55). There is now growing political focus and pressure on healthcare authorities across the world. This means that governments will be looking for savings across the board. Some of the questions the industry should ask are: What pressures will be put on pricing? What services will be cut? Will the same selection of drugs be available to everyone? (Shaw January - 19 – 2011) ECONOMICAL

It refers to the macro-economic factors such as the exchange rates, business cycles and differential economic growth rates around the world (Johnson, Scholes & Whittington, 2008:55). SOCIAL
Include changing cultures and demographics, e.g. ageing populations in many western countries (Johnson, Scholes & Whittington, 2008:55) TECHNOLOGICAL
Refers to International technological breakthroughs, new technologies create new products and new processes, innovation such as the internet, nanotechnology or the rise of composite materials (Johnson, Scholes & Whittington, 2008:55 ENVIRONMENTAL

It stands for...
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