Home > Free Essays > Health & Medicine > Pharmacology > Pharmaceuticals Industry Importance
Cite this

Pharmaceuticals Industry Importance Report (Assessment)


Pharmaceutical industry is an industry concerned with the development, production and marketing of curative drugs, which are licensed for use. This industry is easy to operate because with the use of technical knowhow, one can understand the metabolism associated with diseases and pathogens, and with the use of chemistry and biology, manipulation can be done to these pathways.

This is easier to carry out since earlier drug discoveries have been carried out at institutions of higher learning like the universities and research firms and therefore, advancing from the traditional usage of the herbal medicine (Brooks, Weatherston & Wilkinson 2011, p.17). Like the other products, drugs should also be developed to ensure that they are sustained for a reliable medication.

This is usually done to ensure effective formulation, dosing and the safety measures. The research done in these fields require clinical trials after conducting an extensive study. Capital is very essential in conducting product development.This is due to the high cost involved in the maintenance of quality controls, marketing, distribution and the manufacturing process(Hamilton and Webster, 2012, p.12).

In addition, collaborative contracts between research firms and other large pharmaceutical companies such as Global Ventures Limited can be formed to discover the possibility of new drugs. Drug companies are managed like other companies because they deal in the production of commercial goods to ensure the companies’ growth and development. They industry is very risky as compared to the others.

Drug invention and innovation is quite expensive. Of all compounds used by human beings, only a small percentage are finally approved in most states by the government appointed medical institutions and boards, who should endorse the usage of new drugs before they can enter the market.

There are estimated costs that take into account the cost of the most forgone of investing resources, which is usually done many years before the realization of revenues (Dicken 2007, p. 9). They should consider the time value of money. Competition amongst most worldwide companies has led to production of drugs with chemically, which uses the same system of action as an existing and accepted chemical component.

Most competitors usually use the me-too drugs and they avail them at the market since their development is less expensive and less risky as compared to those with the original mechanism of action.

The company will have to look to research team for viable studies that will make the pharmaceutical industrial commodities attract the customers. They should be sponsored and remunerated for example, by supporting their symposium and consultation costs. Journal articles and lecture scripts presented by these academic researchers may actually not be true.

This means that these researchers who have tried to reveal the ethical issues with medical trials or who tried to publish these journals with harmful effects on newly introduced drugs or devising cheaper differentiated drugs should be threatened with law suits by the company(Brooks, Weatherston & Wilkinson 2011, p. 39).

Pharmaceutical industries in the United Kingdom can search for market for its products in overseas countries such as the United States of America. In that particular country, new pharmaceutical goods have to be approved by the administration of food and drugs to ensure safety and effectiveness.

The FDA evaluates this information and if the manufactured goods are seen to have a positive gain to the citizens, authorization to market the merchandise in the country is granted. Another phase of post authorization examination is also frequently required because even the largest medical trials cannot efficiently predict the occurrence of rare negative effects.

In definite instances, its sign may need to be restricted to exact patient groups and in others, this substance is removed from the industry totally; these are the drugs in which their production is guided by specific regulation. These are used for the treatment of some rare diseases.

Global Company Limited should not invest in the production of the orphan drugs. These products are of financial disadvantage in the United States as well as the United Kingdom (Hamilton & Webster 2012, p.40).

According to Hamilton and Webster (2012, p. 40), the production of such should be done only if there are rewards for instance, government reductions in the taxes, waiving the fees and market exclusivity regardless of whether the drug has patent rights or not.

There exist quite a number of schemes, which monitors the industry. These include; off Label Marketing, Best Price Fraud, Good Manufacturing Practice Violations, CME Fraud, Medicaid Price Reporting and Manufactured Compound.

Sitkin and Bowen( 2010, p. 47) argue that a company should make use of strategies such as acquisition, amalgamation and combined marketing to create a deal between them and other companies. This makes the industry achieve large-scale economies in trade. Emphasis should be made to ensure that the company should use commercial stores and pharmacies to make non-instruction sales and marketing of their products.

New methods of marketing have been used in the market since the early 1980’s. The company should use the legal direct-to-consumer media promotion in the FDA management for business. The company ought to conduct electronic marketing and deal directly to the customer rather than use a conventional retailer as middleman. For example, marketing largely through the company’s website should be used.

Patent rights have faced criticism in the developing countries, as they are considered to decrease chances of access to the available medicinal drugs and consequently without the monetary incentive of patent rights; future improvement on the quality of medicines is dispirited.

According to Dicken (2007, p. 17), reconciliation of patents and worldwide access to drugs would need an efficient global policy of discriminating the price. Therefore, Global Limited Company should ensure that pharmaceutical products are patented.

Dicken (2007, p. 17) notes that as a limited company and worldwide operator, there should be a sufficient laid down strategy to ensure that the organization gives back to the community in which it is operating in. This is usually achieved by instituting charitable programs, medicinal discovery and growth efforts, which should regularly be conducted by the company in favor of the community they are operating in.

Moreover, some non-governmental organizations should be conducted to ensure that those that do not normally accept shared donations of medicines are incorporated into the industry. More specifically, they should be encouraged to become reliant on the supplies of medicine because the supplies will not dependent upon profit motivated charities of the company (Sitkin & Bowen 2010, p. 47).

Industry Analysis Document

STUDENT NAME AND ID:
SEMINAR TUTOR NAME:
In this box briefly remind the reader what your chosen industry and product/service is from Task 1. Also state whether you are concentrating on production or sales of the product/service:

Pharmaceutical Industry

This industry deals with production, developing and marketing drugs, which are licensed for use as curative medicine. These drugs are employed in treating some uncommon ailments. Since these diseases are rare, Global Company Limited should not put money in the synthesis these orphan drugs.

These products are of financial disadvantage in the United States as well as the United Kingdom Pharmaceutical industry is easy to operate since with the use of technology, one can understand the metabolism associated with diseases and pathogens and with the use of chemistry and biology, one can manipulate these pathways.

This is easier to carry out since earlier drug discoveries have been carried out at institutions of higher learning like the universities and research firms thus advancing from the traditional practices of using the herbal medicine (Hamilton & Webster 2012, p. 25).

Industry/Product Checklist Comments Source of Evidence (Reference)
Socio economic requirements The project considers the economy’s life expectancy, GDP, literacy and employment levels. Personal security and freedom from panic of harms and the degree of participation in the civil community Sitkin, A & Bowen, N 2010,International business: challenges and choices, Oxford University Press, London.
Potential market size The local market is the main target for the company’s products. The company has also a long-term plan to market the products internationally. Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.
GDP The company aims at achieving a nominal GDP relevant to that of the country’s economy. Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.
Population size/growth The company’s target is to provide drugs to at least two thirds of the population size. Wall, S, Minocha, S & Rees, B 2010,.International business, 3 edn, FT Prentice Hall, London.
Population structure for example ageing It ensures supply of medicine to all countries considering the different ages of the individuals in those markets. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment, Prentice Hall, New York.
Purchasing power (GDP per head) Purchasing power parity is to be determined by the income generated by each individual. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Future Potential (economic growth) This is to use the strategies such as acquisition, merging and co-marketing to ensure that there is a deal between the company and other companies to enjoy large-scale economies. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment,Prentice Hall, New York.
Are high literacy rates required? The company will have to use researchers for detailed studies that will make our industrial products marketable. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
.
Availability of skilled labor important This is important in order to understand the metabolism associated with diseases and pathogens and with the use of chemistry and biology, one can manipulate these pathways. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Alternatively, is abundance of cheap labor more important? Emphasis are made to ensure that the stores and pharmacies are the main non-instruction sales agents for the company’s products. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment,Prentice Hall, New York.
Demand/buyer characteristics
Does your product sustain or require:
A mass market Yes. This will ensure that the products will reach more customers, attain high sales volume at low prices. This ensures profit maximization of the firm. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment,Prentice Hall, New York.
A niche market Low production of orphan drugs will be done and as result they will invest less in the niche market. The company will enjoy the benefits derived from the government subsidies. Morrison, J 2006, The international business environment: global and local market places in a changing world, Palgrave, Basingstoke.
Affluent buyers The products will be readily availed to the potential customers for easy access at affordable prices. This will be affected by proper distribution of the products. Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.
Buyers with modest purchasing power .
Government contracts or big corporate orders The production of orphan drugs will be done only if there are rewards like the government deductions in the taxes, waiving the fees and market exclusivity regardless of whether the drug has patent rights or not. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment,Prentice Hall, New York.
Any special distribution requirements e.g. proximity of ports, malls, mass retail outlets International marketing by the company is done directly to the customer rather than passing through a conventional retailer who acts as intermediary; for example, marketing largely through the company’s website (e-commerce). Dicken, P 2007, Global shift: mapping the changing contours of the world economy, 5 edn,Paul Chapman, London.
Are there any particular social or cultural factors, which might influence the consumer? Social factors-age, education and income disparities.
Cultural factors- secularism and individualism, taboos and beliefs.
Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Are there any potential ethical issues that you need to take account of? As a limited company and worldwide operator, there should be a sufficient plant to ensure that the organization gives back to the community it is operating in. This is usually achieved by instituting charitable programs and medicinal discovery & growth efforts, which should regularly be conducted by the company. Dicken, P 2007, Global shift: mapping the changing contours of the world economy, 5 edn,Paul Chapman, London.
Is demand for the product sensitive to recession? Does it do well or badly in recession? Yes. The demand for the commodity will drastically go down since there are limited resources to purchase the drugs. Likewise, the production cost is very high and as a result, the prices are high. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Is demand for the product income elastic?
(Do people purchase more of it when their incomes are rising). Is it a luxury or a necessity or neither?
This is a necessity. People do purchase the product once they demand it for instance, during illness or outbreak of a disease. Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment,Prentice Hall, New York.
At what stage of the product life cycle is it? New, growth, mature, decline? The new stage.It is the stage of idea generation. Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.
Do buyers of the product show high levels of brand loyalty or are they readily able & willing to buy substitute products? Wall
Does the product have to be produced close to the consumer? This is not necessary since it is a perishable commodity and has an expiry period. This period accommodates the time taken for transporting the commodity. Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.
Is after sales service important for the product? Yes. For a middleman, it is significant to transport the drugs under the ideal conditions of temperature and package. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Barriers To Entry: Obstacles Facing New Entrants into the Market
Does the product require a high level of financing to get off the ground? Capital is very essential in conducting product development.This is due to the cost involved in the maintenance of quality controls, marketing and distribution and the manufacturing process. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
Is production of the product labor or capital intensive Capital intensive Morrison, J 2006,The international business environment: global and local market places in a changing world,Palgrave, Basingstoke.
Are economies of scale important in the industry? Does the company have to attain a very large size to compete? Yes. Competition among most worldwide companies has led to the production of drugs with chemical compounds using the same mechanism as that of existing chemical unit. Wall, S Minocha, S & Rees, B 2010,International business, 3 edn, FT Prentice Hall, London.
Might existing companies retaliate against a newcomer? Yes. This is economically done since most competitors usually use the me-too drugs and they avail them at the market since their product development is less expensive and less risky as compared to those with original mechanism of action. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
Do companies in the industry face protectionist policies in the kind of countries they expand into? Yes. This is due to the sensitive nature of the product. It cannot be left on the hands of the private sector without regulation Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.
Supply Issues
Are there any critical raw materials or other inputs that are necessary for this product? Yes. There should be chemicals present and presence of herbal plants, which are also used in the production of pharmaceuticals. Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.
Does the product rely on Just In Time methods of production? No. The commodity is used often and its demand in the market is inelastic. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
Can materials/components be sourced from many countries? Yes. This is because the raw materials can be found in different parts of the world since vegetation is varied and is found on different areas of the world. Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.
Do companies in this industry rely on a few big suppliers or many small ones? Who has the greatest bargaining power: companies in the industry or their suppliers? Few big supplies. The suppliers have the greatest bargaining power since they are the ones possessing the raw materials. Morrison, J 2006,The international business environment: global and local market places in a changing world,Palgrave, Basingstoke.
The Importance of Technology
Does the product need high levels of technology for production? Yes. This is because the invention and innovation of drugs require great research to ensure that new methods of production are learnt and also improved quality of the drugs. Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.
Is it a high tech consumer product? Yes. It involves technology to mix the chemicals. It is also essential in marketing of the products. Quick, A 2007, Encyclopedia of global industries, 4 edn, Gale Research, Detroit.
Does it require high spending on Research & Development? The researches in these fields require clinical trials after conducting an extensive study (Dicken, p. 2007, p. 12). Capital is very essential in conducting product development thus more expensive. Dicken, P 2007, Global shift: mapping the changing contours of the world economy, 5 edn,Paul Chapman, London.
Does it require highly skilled technical workers? Yes, especially from a medical research institutes. In addition, technology is needed to promote the marketing of the products and record keeping. Quick, A 2007, Encyclopedia of global industries, 4 edn, Gale Research, Detroit
Competitors
What type of market structure is the industry? Oligopoly or other? Oligopoly-the market domination is by a few members in the market. They set the prices for their products. There are a few entries and exits to the market. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
Who are the main competitors? Do they operate in global markets? A few companies on the global market. Research firms in the united kingdom, Asia and Europe. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
Are the main competitors Multinational Corporations? How large are they? Yes. They are especially from the Europe, Asia and America. Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.
.
How do companies compete?
Price competition
Non price competition (brands, advertising, innovation of new products; etc)
Cartels
Price wars
They mainly concentrate on the market share they held worldwide. Economies of scale are very vital in price competition. On price competition includes the after sale services, innovation and promotion strategies. Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.
Other Important Factors
These may be related to other PESTLE influences and will vary from industry to industry
Continued next page
Speculation and expectations- these are integral parts of the fiscal system. Where customers, investors and political leaders believe the financial system will go in the future periods gives an impact of how people conduct the business today. Dicken, P 2007, Global shift: mapping the changing contours of the world economy, 5 edn,Paul Chapman, London.

Summary of Essential and Desirable Characteristics to be Considered when Launching the Product

Essential Characteristics:

  • Ensure a well clear product idea (which is whereby product line design comes into the play).
  • Provide the organization with proper background information on its goods and goals.
  • Conduct essential patent rights research and apply for new ones as needed.
  • Have the process of manufacturing in place and be ready to go, either within or through outsourcing.
  • Ensure a formal a business plan in action that defines support of the project.
  • Determine who will endorse the promotion or advertising strategy that the organization creates (the fewer individuals communicating with the business, the better).
  • Ensure that there is proper timing for the instigation.

Desirable Characteristics:

  • Determine the enterprise’s customers
  • Analyze the major firms’ products and services.
  • Understand the major competitors.
  • Identify the firm’s basic technology.
  • Understand the firm’s commitments towards economic goals such as profitability, growth and survival.
  • Understand the firm’s basic philosophies such as reliefs, core values and aspirations.
  • It is good to understand the organizations major strengths and the self-concept.
  • Understand the industry’s image
  • Understand the business attitude towards its employees.

Doing Pharmaceutical Business in India

In India, one can boost the pharmaceuticals industry with biotechnology. Doing business in this country will ensure that there are proper strategies and easy management of sales, marketing and even fair competition with the other similar industries in the country. Unlike in the other countries of the world, the dissimilarity between pharmaceuticals biotechnology remains literally defined in India.

In this country, biologics and the large molecular drugs are more expensive than the small-molecule ones. Therefore, India hopes to remove them from the market in biogenetics and venture in the manufacturing of drugs that meet their capabilities (Dicken 2007, p. 22).

Most firms in the biotechnology industry in the country are very small and generate small amounts of revenue. This makes it easy for the Global Venture Limited Company to effectively compete in the market since it can enjoy the large-scale economies (Sitkin & Bowen 2010, p. 51).

In this nation, the market is mostly monopoly with well-established countries having an upper hand. Companies are both dependent on government support and venture capital markets for financial support because none can be commercially feasible in future.

This opens the opportunity for the United Kingdom companies to invest in the country since it can conquer competition and deliver quality products and services given its health financial position. Various analysts have found out that the publicity around the biotech sector reflects that of the IT.

Colleges are available in the country to assist scholars who are willing to benefit from the growing industry. India’s biotech industry can be used to provide most of the students with employment opportunities in future, if a potential company can invest in the country.

The government gives much support to the industry and this government reductions in the taxes, waiving the fees and market exclusivity regardless of whether the drug has patent rights or not. It has established a department since the year 1986 under the ministry of science and technology. In collaboration with other state organizations, it has offered a number of dispensations to promote the industrial growth.

The minister launched a program to provide tax levies and grants for biotech investments and businesses seeking to develop and establish themselves (Brooks, Weatherston & Wilkinson 2011, p. 59).This widely attracts investment to the country because of the government support whereby it has removed obligatory licensing. Hundred percent of foreign direct investment is allowed in India.

The major challenge facing the sector in its growth is due to lack of enough funds, particularly for businesses that are new in the market. The most accessible sources of financing are grants from central government and the venture capitalists.

Grants from government are not easily secured, and because of the luxurious and uncertain nature of the research, the investors become reluctant in investing in firms, which does not deal with commercial production.

This means that these researchers who have tried to reveal the ethical issues with medical trials or who tried to publish these journals with harmful effects on newly introduced drugs or devising cheaper differentiated drugs should be threatened with law suits by the company. India should solve its financial problems by attraction of overseas investments and partners.

Before the potential investors venture into the industry, significant sums in the production process, however, there is the need to have better systematic and financial responsibility (Hamilton and Webster, p. 2012, p.39). India is gradually aiming towards these objectives, but they will take some time before achieving the standards of other international investors.

India also lacks qualified employees to work in these biotech firms. This is because the ambitious sound-minded students compete for the information technology courses and other courses but the country is not capable of granting the students opportunities for employment.

A student in India aspiring to do research activity in biotechnology needs to study for 7 to 10 years in the university. While considering this as a major problem, it pulls up the cost in a country whereby the competitive advantage is based mainly on cheap and high quality labor (Dicken 2007, p. 31).

According to Brooks, Weatherston and Wilkinson (2011, p. 78), the production of such should be done only if there are rewards like the government cuttings on payable taxes, relinquishing some fees and market exceptionality in spite of whether the medicine has exclusive rights or not.

As a limited company and worldwide operator, there should be sufficient laid down strategy to ensure that the organization gives back to the community in which it is operating. This is usually achieved by instituting charitable programs, medicinal discovery and growth efforts, which should regularly be conducted by the company in favor of the community they are operating in.

Moreover, some non-governmental organizations should be contacted to ensure that those that do not normally accept shared donations of medicines are incorporated into the industry. Hundred percent of foreign direct investment is allowed in India.

While not much has been done about that, the central government addresses the difficulty of sophisticated but unskilled candidates in its planned biotechnology development map.

This arrangement suggests that there should be creation of a national duty force to work in conjunction with the business firms in modification of the core curriculum for the graduates in science and technology to suit market needs. The plans of the government also stated the desire to increase the figure of PhD awards that were given by the department per year (Brooks, Weatherston & Wilkinson 2011, p. 79).

List of References

Brooks, I, Weatherston, J & Wilkinson, G 2011, The international business environment, Prentice Hall, New York.

Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.

Daniels, J, Radebaugh, L & Sullivan, D 2009, International business, 12 edn, FT Prentice Hall, London.

Dicken, P 2007, Global shift: mapping the changing contours of the world economy, 5 edn, Paul Chapman, London.

Hamilton, L & Webster, P 2012, The international business environment, 22 edn, Oxford University Press, London.

Morrison, J 2006, The international business environment: global and local market places in a changing world, Palgrave, Basingstoke.

Quick, A 2007, Encyclopedia of global industries, 4 edn, Gale Research, Detroit.

Sitkin, A & Bowen, N 2010, International business: challenges and choices, Oxford University Press, London.

Wall, S, Minocha, S & Rees, B 2010,.International business, 3 edn, FT Prentice Hall, London.

This assessment on Pharmaceuticals Industry Importance was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

Need a custom Assessment sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

301 certified writers online

GET WRITING HELP
Cite This paper

Select a url citation style:

Reference

IvyPanda. (2019, June 14). Pharmaceuticals Industry Importance. Retrieved from https://ivypanda.com/essays/pharmaceuticals-industry-importance/

Work Cited

"Pharmaceuticals Industry Importance." IvyPanda, 14 June 2019, ivypanda.com/essays/pharmaceuticals-industry-importance/.

1. IvyPanda. "Pharmaceuticals Industry Importance." June 14, 2019. https://ivypanda.com/essays/pharmaceuticals-industry-importance/.


Bibliography


IvyPanda. "Pharmaceuticals Industry Importance." June 14, 2019. https://ivypanda.com/essays/pharmaceuticals-industry-importance/.

References

IvyPanda. 2019. "Pharmaceuticals Industry Importance." June 14, 2019. https://ivypanda.com/essays/pharmaceuticals-industry-importance/.

References

IvyPanda. (2019) 'Pharmaceuticals Industry Importance'. 14 June.

More related papers