Finance

Analysis of Pharmaceutical Industry

The key market players of the pharmaceutical industry are the companies originating from USA, Japan, Europe, China, and Brazil. The medicines manufactured by the leading pharmaceutical companies are prevalent across the globe. The USA is regarded as the world’s largest market of pharmaceutical and is also the world leader in the Biopharmaceutical research. 80 Percent of the research and development in pharmaceuticals is conducted in the laboratories of USA (Select USA, 2013). However, the USA is largely dependent on the import of generic drugs and 40 percent of the pharmaceutical is consumed in USA (Select USA, 2013). It is believed that the present market situation of Biologic, over the counter (OTC), and generic drugs reflect the potential of the pharmaceutical market (U.S. Bureau of Labor Statistics, 2011). As per the reports of the House of Commons, the UK around 650 million prescriptions is prescribed by the general practitioners of the United Kingdom (UK) itself (House of Commons, 2005). The National Health Service which is one of the leading medical organizations of UK sells medicines worth £7 billion every year and 80 percent of these medicines are manufactured by branded companies (House of Commons, 2005). In the UK the pharmaceuticals industry is regarded to be the most profitable sector after Finance and Tourism. Majority of the pharmaceutical company’s revenue is generated from the USA because it is the world’s largest free pricing market for pharmaceuticals. Marketing Environment Analysis The marketing environment analysis will help us in identifying the factors that affect the company directly and indirectly. The macro environmental factors affect the activities of the company directly and the micro environmental factors affect the activities of the company indirectly. The micro environmental factors constitute environmental factors like suppliers, distributors, competitors etc. The macro environmental factors constitute of demographic, economic, socio-cultural, political, physical and legal factors. The PEST analysis will be instrumental in determining the external threats and opportunities faced by the pharmaceutical industry in the USA. Political Factors Department of Health The US department of health is a government body which regularly monitors the activities of the pharmaceutical companies. The main task of this government body is to scrutinize the license, clinical trials etc of the pharmaceutical companies. Economic The medicines manufactured and sold by the pharmaceutical companies are expensive because these companies incur a huge amount of research and development costs. Post-recession majority of the established pharmaceutical companies have closed down their research sites because the cost of research and development is too high and the profit earned by these companies is minuscule (The Guardian, 2013). It is observed that most of the pharmaceutical companies are incurring losses due to the current economic slowdown (Gallagher, 2012). The sales of the medicines in the USA are largely influenced by the ageing population and the increasing obesity among the youth. Although, post-recession the purchasing power of the common people has reduced the demand for the medicines .drugs has not reduced to a large extent.

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