Pharmaceutical Industry Analysis

Topics: Pharmaceutical industry, Pharmacology, Food and Drug Administration Pages: 6 (1782 words) Published: June 23, 2013
A. Introduction
Pfizer, US pharmaceutical company is one of the largest pharmaceutical companies in the world. Unfortunately, Pfizer faced challenges by macro-environment forces that affect their sales volume decline dramatically in 2011. PESTEL, Porter’s Five Forces and Industry Lift Cycle frameworks to be applied to analysis the broad macro-environment that affected Pfizer in the pharmaceutical industry.

1. PESTEL framework
PESTEL (Appendix I) is classifies into six environmental influences including Political, Economic, Social & Cultural, Technological, Environmental and Legal.

i) Political
* The promotion of pharmaceuticals products in US and patent protection period were direct governed by Food and Drug Administration (FDA). Whereas, self-regulation practiced in New Zealand, UK and Australia are under self-governed by Pharmaceutical Advertising Advisory Board (PAAB) in Canada. Lack of regulatory supervision by PAAB may lead to mis-prescribe to the patients. * The pressure groups of patients and ageing populations (over 65s) on the healthcare systems. They are lacked of medical insurance and unaffordable to the expensive drugs such as cancer medicines. Subsidization on cancer medicines is strongly demanded. * The Government’s focus on reducing the healthcare expenditure because the healthcare and medical system were unable to share the benefits to the pressure groups. * The community groups protest against over safety alerts for drugs and oppose strongly in drug price differentials with other countries. FDA delegated the Institute of Medicine (IOM) to inspect the drug safety and proclaimed 15 safety drugs alerts or revokes for safety reasons. Further, FDA authorized Risk Evaluation and Mitigation Strategies (REMS) to keep track and assure drug safety.

ii) Economic
* Pharmaceutical sales growth is tightly related to the growth of GDP. Economic decline due to GDP per capital drop in the country and caused reduce in tax revenue. * The power of payers in their decision making on drug expenditure increased. * The supremacy medical and scientific in US may be threatened by Asia. Some developing countries such as China and India have developed fast growth economies in their countries. The growth rate in the consumption of middle class populations in the healthcare products provided opportunity in the market. India has desire to become a major source in R&D such as clinical trials whereas China is the third largest in pharmaceuticals industry globally. * The squeeze in the credit finance affects the innovation and debt funding to the biotech industry. Hence, raise capital through M&A.

iii) Social & Cultural
* The increasing in population and ageing populations in US are driving to increase the healthcare costs. * The operating environment was influenced by the US President, Obama’s to encourage and improve healthcare system. Uncertain price pressures increase. * The launched of vaccines to prevent serious diseases are important to the public. Customers are willing to vaccinate and accept special treatment such as stem cell therapy to prolong their personalized healthcare, death rate reduced. * Healthcare benefits extended to employees by organizations to create competitive advantage in the global medical practice. These medical benefits are coverage for the elderly by US government in order to provide well being to the population but price pressure increased. * The pressure on the pharmaceutical industry tends to contribute ethical drugs rather than profit oriented. The patients may not purchase the drugs without prescription. * The expectation of patients on being well-informed in drugs information was increased.

iv) Technological
* Since the pharmaceutical industry is a high risk business in the competitive market. The R&D process of time on drugs takes 10-15 years to obtain an approval by FDA. *...
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