The Global Pharmaceutical Industry

The global pharmaceutical industry
1. Identify the main environmental forces currently affecting the global pharmaceutical industry.

The PESTEL analysis can be used to identify the main environmental forces for the industry:

Political
• Stringent government regulation and powerful purchaser pressures.
• Governments around the world focused on pharmaceuticals as a politically easy target in efforts to control rising healthcare expenditure.
• Inter-country pricing disparities.

Economic
• European free trade agreements.

Social
• Ageing populations create pressure on healthcare systems.
• Epidemic or chronic diseases (e.g. obesity).
• More expectations from the consumer.
• Payers choosing generic drugs for first-line treatment of common ailments.

Technological
• Impact of internet on traditional business models.
• Impact of genetic research on industry.

Environmental
• Increasing standards and requirements for environmental protection are becoming more stringent because of industry operations.

Legal
• Legislation was enacted to set a fixed period on patent protection.
• Rigorous regulatory scrutiny governed by legislation.

2. Use scenario planning techniques to consider the various environmental influences which may affect the global pharmaceutical industry in the future.
The external environment of the pharmaceutical industry is extremely dynamic. Customers are better informed about the product and its contents, so the customer has more requirements. The requirements cause competition between the drug brands, so the customer has the benefit of it because prizes are lower.

3. How relevant is the Five-Forces Framework map to identify environmental forces affecting the global pharmaceutical industry?
The Five-Forces Framework is relevant for the pharmaceutical industry. The Framework is relevant to most of the organizations and the five forces are equal to each other. It can provide a useful starting point for strategic analysis



Bibliography: Johnson, G., Whittington, R. and Scholes, K. 2008. Exploring strategy. 8th edition, London: Financial Times Prentice Hall.

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