CORPORATE STRATEGY

Corporate Strategy

Alice Lopes

University of Salford

Corporate Strategy

Introduction

The main purpose of this paper is to make an analysis on the changing nature of competition within the global pharmaceutical industry. The paper makes proper use of the key strategy theories, which explores the competition within the global pharmaceutical industry.

Discussion

Research and development department is a very key concept in analysing the competition of the industry. Therefore, for any industry it is necessary that, its research and development department should be feasible. The pharmaceutical industry is comprised of highly risky and expensive research and development department. The research and development (R&D) department of the pharmaceutical industry is lengthy, and the competition is very intense. Along with the high risk, the competition for intellectual property in the pharmaceutical industry is also very high. The intellectual property is the imagination, and creativity of a human mind. The innovations and the competitiveness in the pharmaceutical industry can be better described through the Porter's five forces. According to Porter, there are five threats which a industry can face. These threats for the pharmaceutical industry are mentioned below:

The threat of entry of new competitors (new entrants)

The pharmaceutical industry is facing problems of entry of new competitors. The new competitors are entering in the industry, thus increasing the competitive trend in the market. The pharmaceutical industry is highly regulated with the government regulations. The reason behind the strict regulations is that it is a very risky industry (Johnson, 2002, p. 63). Medicines are very important aspect in saving and destroying the lives of people. Therefore, there is a strict check and balance of government in terms of government regulations.

The threat of Substitutes

The presence of substitute products has become a danger for the pharamaceutical industry, and lowers its profitability and attractivess (Johnson, 2002, p. 63). The biggest substitutes for the prescription drugs is the generics, because it is much cheaper than the prescription drugs. Thus, the competition between the prescription drugs and generics has increased.

The bargaining power of buyers

The purchase power in the pharmaceutical industry is very high. This is because the bargaining power is high. The buyers of the pharmaceutical industry are retailers and the people belonging to all ages. The buyers of the pharmaceutical industry differ with different products (Johnson, 2002, p. 63). The buyers purchase the prescriptions and over the counter drugs only because of the prescribed notes by physicians. The number of drugs available to customers leads towards more choices for them and increases the buying power of customers. This leads to competition because as the buyers have more choices then they have the opportunity to switch towards some other competitor; therefore, all companies struggles towards making the quality products to gain competitive edge.

The bargaining power of suppliers

The relationship between the industry buyers and suppliers is high; therefore, it can be said that the bargaining power of suppliers is high in the pharmaceutical industry. The availability of feasible suppliers is high. The increased supplier power also increases the competition because all the ...