PHARMACEUTICAL MARKETING

Pharmaceutical Marketing

Pharmaceutical Marketing

Introduction

The pharmaceutical industry is an important sector in the worldwide economy and it has a crucial role. It is discovering, developing, manufacturing and distributing quality medicines. Innovation in research and development (R&D) has controlled threatening diseases, improved life quality and increased the average life expectancy during the past few decades.

It is important to define the products of the industry. In this paper, they include the pharmaceutical products and pharmaceutical preparations which can be segmented into two categories, the prescription-only medicines and over-the-counter (OTC) medicines which can be bought without prescription.

The Business Communications Company (BCC) states that the world pharmaceutical industry stood at $541.0 billion in 2002, with 8% year-on-year growth. It has mainly been driven by the increasing role of substitutes-generic pharmaceuticals threat, the threat of new entrants-emergence of bio-pharmaceuticals and genome revolution, the increasing buyer power, the increasing health awareness amongst patients, the development in outsourcing but also the changing world demographics (increasing aging population) and the stringent regulatory environment.

This paper is about the emerging marketing issues in the pharmaceutical industry. It analyses the main external and internal factors that influence the industry. The main external factors are the competition, the government, the demographic trends, the customers, the technology and the counterfeit. The internal factors are the resources, research and development (R&D), the patent, the production (with the outsourcing and the packaging), the distribution and the communication.

External factors

The competition

An analysis

The level of competition can be overviewed thanks to the 5 forces of Porter. The main results are:

Figure 1 - Porter's 5 forces

The main competitors

The main competitors come from the USA, the UK, France and Switzerland. . The American firms have more than half of the market share in the prescription-only medicines (67%) followed by the UK 20%.

The future trend in the structure of the industry

The pharmaceutical industry is highly fragmented: there are thousands of small firms around the world (specialised firms concentrating on one or two sections of the value chain with only several hundred which are research-based) and integrated pharmaceutical firms (whose activities are the R&D and the production, marketing and sales). Due to the high competition, the trend in the global pharmaceutical industry is the increased consolidation. It has already intensified to create large companies. For instance Pfizer's acquired Pharmacia in July 2002. Consolidation enables to share the costs in R&D, marketing, to face the loss in sales due to the patent expiries, to plug the gaps in the pipeline and to diversify the market. Mintel (2003) states that 'this trend is expected to continue and industry sources suggest that within the next few years, this will result in the pharmaceutical industry being dominated by five or six major players globally.'

The government

The government regulations are very strict in every country as life of people depends on this industry. It controls all the medicines, prescription-only and OTC. Companies have to obtain the Product Licence for the different products as all medicines have to be safe and effective before being marketed and ...