Strategy & Structure of the Pharmaceutical Industry
The pharmaceutical industry produces a variety of products, ranging from over-the-counter (OTC) medication to more sophisticated treatments and therapies. Globally, the industry is dominated by a relatively small number of large companies (also known as Big Pharma). These organizations are highly dependent on scientific innovations and effective marketing strategies to remain competitive in the market.
Other People Are Reading
-
Industry Structure
-
The consolidation of pharmaceutical companies in the early 1980s gave birth to some of the largest companies in the world, such as GlaxoSmithKline of the United Kingdom and Novartis of Switzerland. These developments have created a global trend toward oligopoly in the industry. The industry has also experienced considerable structural changes such as the growth of the generic drugs market.
Industry Growth
-
Sales in the industry are expected to grow at a compound annual growth rate (CAGR) of 4 percent to 7 percent through 2013. The biggest growth is occurring in Asia where the industry is expected to grow at rate of 12 percent until 2012. In the long run, emerging markets such as China and Brazil offer the best growth opportunities.
-
Branding Strategy
-
To maintain its competitive edge and develop revenues, pharmaceutical companies employ global branding strategies to develop brand equity and increase the awareness of their brands. Pharmaceutical companies also use patents to protect their products and brands.
Internationalization Strategy
-
Internationalization is one way pharmaceutical companies can develop new markets. As North American and European markets become mature, pharmaceutical companies are seeking to penetrate emerging markets to develop revenues. For instance, Pfizer is planning to further penetrate markets in Latin America and Asia to take advantage of a growing middle class in those regions of the world.
Research and Development Strategy
-
The industry is highly dependent on research and development (R&D) to survive. Some Big Pharma companies have shifted their R&D strategies from in-house development to licensing smaller biotechnology companies to develop their products. This enables Big Pharma to focus on their key strengths such as marketing, distribution and sales.
-
References
- Crama et al (2007), "Research and Development Project Valuation and Licensing Negotiations at Phytopharm plc." Interfaces, Vol. 37, No. 5, September--October, pp. 472--487
- Pharmaceutical Market Trends 2010
- Corporate Strategies in Consumer Health 2010
- Federal Trade Commission, The Pharmaceutical Industry
Resources
- Photo Credit Stock pictures of drugs and pharmaceutical image by Albert Lozano from Fotolia.com global warming image by Brian Tomlinson from Fotolia.com
