Pharmaceutical Industry

Topics: Pharmacology, GlaxoSmithKline, Pharmaceutical industry Pages: 15 (2862 words) Published: May 19, 2013

Table of Contents

Introduction to Global Pharmaceutical Industry3
Chapter 1 – External Environment3
1.1 PESTEL Analysis3
1.2 Key Drivers5
1.3 Porter’s five forces6
1.4 Industry Attractiveness9
2.1Value Chain10
2.2 Core Competences13
2.3 Resources13
2.4 Financial Analysis14
2.5 Strength and Weaknesses15
2.6 Culture at GSK16
Chapter 3- Summary17
3.1 SWOT Matrix17

Introduction to Global Pharmaceutical Industry

Pharmaceutical industry is one of the major industries in the world which grows with the technology, R&D and new market strategies. Environmental changes are the key factors for the pharmaceutical companies to survive in the industry. Both micro and macro environment are more important which gives an idea about the internal and external factors of the challenging world. The macro environment consist of broader environmental factors that impact on all organizations in the industry. PESTEL analysis gives an overview of vast range in the external environment, while key drivers make to focus on important factors which lead to scenarios that help to change the strategies of an organization according to the industrial changes. Therefore following PESTEL analysis, key drivers and industrial attractiveness gives an idea about the macro environment of overall pharmaceutical industry.

Chapter 1 – External Environment

1.1 PESTEL Analysis


The governments in all the countries pressure on healthcare authorities over the world and focus more on reducing the healthcare expenses. And it maintains stringent regulations as well as trade barriers which affect more to the pharmaceutical industry for import and export drugs. The political pressure towards the industry becomes a threat and it effect more on pricing healthcare products.

Ex: president Obama’s proposal to reduce the government expenses towards the drugs taken by low income seniors and shown that it will save more than $150 billion over the next decade.

In addition to this some countries in Europe and USA undergoes harmonization which will give arise to reference pricing and exposing prices across the globe. In some countries such as Australia, USA, Europe keep monitoring promotional claims that are consistent with data and government agencies such as Food and Drug Administration (FDA) in USA examine all purity, stability, tolerability, efficiency and safety of a new agent. Therefore political influence is more for the pharmaceutical industry and some of its decisions make harshly critical for pharmaceutical companies to sustain.


Pharmaceutical industry has to face more economical difficulties due to the global economic crisis and government pressure on reducing the healthcare expenses. Pharmaceutical companies have to spend more of their capital for their R&D development. A cost of developing a new drug will be very high and it is estimated over $1 billion and time taken by new drug to travel towards the customer will be 10 to 15 years. Even market penetration will delay due to the negotiations with bodies such as National Institute for clinical excellence (NICE) in UK. Due to ‘High Compression Marketing’ launches which involve near simultaneous worldwide will create a high investment for promotion. Even though the aging population grows, more pressure will be put on pricing as a result of reducing individual disposal income. Stakeholders also put on pressure which results more mergers and acquisitions. In addition to this, pharmaceutical companies have to undertake consumer oriented marketing and to get secure approval while switching from ethical medicines to Over the Counter (OTC) medicines.


In Social aspect aging population gives long range of threats and opportunities to the industry, but...

References: o Nicole Gray, (2006). Changing Landscapes: World Top 50 Pharmaceutical Companies, [online], Available at: [Accessed 23rd March 2013]
= 13,692/13815 = 16167/15010
= 0.99109 (year 2012) = 1.07708 (year 2011)
= 20913/ (1349+652+20913) =17243/ (1387+3370+17243)
= 0.91267 (year 2012) = 0.78377 (year 2011)
➢ Earnings per Share
= 92.9p (year 2012) = 104.6p (year 2011)
➢ Return on Capital Employed (ROCE)=Operating Profit/ Capital employed
=7392/ (1349+653+20913) =7807/(1387+3370+17243)
=32.259% (year 2012) =35.486% (year 2011)
➢ Operating profit margin=Operating Profit/Sales Revenue x 100%
= (7392/26431) x100 = (7807/27387) x100
= 27.967% (year 2012) =28.5062% (year 2011)
=1.2438 (year 2012) = 1.6024 (year 2011)
➢ Gross Profit Ratio= Gross Profit/Sales Revenue x100
= (18537/26431) x100 = (19739/27387) x100
= 70.13% (year 2012) = 72.074% (year 2011)
=26431/22914 = 27387/22000
= 1.15348 (year 2012) = 1.24486 (year 2011)
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