...SWOT Analysis in Drug Store Industry Treasure Womack PHL/ 320 July 13, 2015 Howard Kersey SWOT Analysis in Drug Store Industry The drugs store industry has several capabilities. Most consumers have at least the occasional need to shop at a retail drug store. The retail drug store industry consists of neighborhood pharmacies, large drug store chains and supermarkets or general retailers with drug store departments. Competition within the industry is strong as retailers adapt to changing trends in the market and seek to retain customers. Drug stores face several critical issues. Low margins on prescription drugs may push drug stores to expand front store merchandise sales where they compete with discount stores or into related businesses such as Pharmacy Benefit Management. The problem also arises in regulatory pressure to contain drug store prices. The continuing rise in prescription drugs costs has encouraged proposals to control drug prices either through legislation or the formation of large public buyer groups that can negotiate lower prices with drug suppliers. Controls in drug store prices have cut drug store margins. The increase in the number of widely used drugs moving from prescription to over-the-counter (OTC) status proved to be another problematic area for the drug store industry. In the U.S., 106 ingredients in more than 700 widely used medicines have moved from prescription to OTC in the past 30 years; this has completely changed the pharmacy role in categories...
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...Porter’s Five Forces analysis 1) Bargaining power of suppliers Who are suppliers? –chemical companies that manufacture ingredients for the drugs, companies that manufacture any packaging/packaging materials for drugs, employees that supply labour: • Many suppliers available in most cases • Resources supplied not scarce in most cases • Switching cost to another supplier low • Supplied product not typically differentiated • Supplier forward integration not a threat (small supplier cannot take over large drug company) • Customers are large in a consolidated pharma industry (drug industry has been seeing lots of mergers and acquisitions in recent years so drug companies tend to be very large) LOW Power of suppliers based on above. 2) Bargaining power of buyers Who are buyers? In this case buyers would be Doctors and Hospitals (look at the drug industry’s sales force, they service DRs and hospitals, as drugs need to be prescribed, they can’t just be purchased over the counter) • Many small buyers (lots of Doctor’s offices in most areas, maybe a few larger hospitals) • Each purchases a small proportion of industry output • Buyer backward integration not a threat (a Doctor or hospital is not going to take over a drug company) • Relatively few manufacturing firms due to industry consolidation • Few substitutes (alternative medicine, lifestyle changes are possible options in some cases, but if you need drugs for diabetes no real substitute for this outside...
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...51B Industry Overview Competitor Analysis Market Analysis Consumer Insight STP 4P Analysis Recomen dations Business Model • All the players operating in this space are pursuing a marketplace model to sell pharmaceutical drugs. This is due to there being no legal provision for direct online retailing of drugs • These companies carefully curate their local pharmacy partners due to concerns of counterfeit drugs, misuse of customer data, misuse of drugs or poor customer service • For companies that accept orders for non OTC drugs, uploading of prescription slip before ordering is mandatory due to legal reasons General trends • Many companies including HealthKart Plus started out as an online database for comparing medicines or finding their generic substitutes before eventually expanding into an online pharmacy • The rate of expansion is very slow and these companies just operate in a handful of locations • Lot of new companies entering this space in the past 3 years • Organized pharmacy chains just one % of the mammoth Rs 60,000 crores drug retail market • Online pharmacy started 2-3 years back, still in early stages with a few players in the market Lack of well defined regulations • There are no defined regulations related to functioning of online pharmacies in the IT Act 2000 • In addition, companies can face a penalty of upto Rs. 5 Crore if found indulging in irregular activities under the IT Act 2000 • Due to these reasons, this industry has a...
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...TEACHING NOTES The Global Pharmaceutical Industry Sarah Holland (Manchester Business School) and Bernardo Bátiz-Lazo (London South Bank University) 1. Introduction The case describes how the prescription pharmaceutical industry has changed since its modern beginnings in the early 1950s. The various forces affecting the competitive environment of the industry are discussed in terms of origins, immediate past and immediate future (2004 onwards). As a result, the note provides insights into the evolution of barriers to enter and exit the industry for prescription pharmaceuticals, while aiming to help students to recognise how to set boundaries for an industry. This is a detailed industry note on the “ethical” pharmaceutical industry which provides an opportunity to analyse key success factors of major players. The note centres on a descriptive overview of the predominant issues in the three major Triad market areas: the US, Europe and Japan (although major issues in emerging markets are also mentioned). The note covers the overall industry environment with in-depth discussion of the driving forces in the industry such as globalisation (in particular global regulatory issues, changing world demographics and worldwide pricing disparities); development of new technology; the importance of time to market; and amalgamations. The case also examines issues around corporate social responsibility. 2. Position of the Case The pharmaceutical industry case study lends itself to: • assessing...
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...PHARMACEUTICAL INDUSTRY : SWALLOWING A BETTER PILL 1. INTRODUCTION The global pharmaceutical industry is a multinational industry that develops, manufactures, and sells drugs licensed for the treatment. Pharmaceutical companies can sell generic or patent medicines. Health products of the pharmaceutical industry is very often found on the market in the world so that makes the brand of the pharmaceutical industry they are known in the world because of the many products sold are certainly many benefits. As we know there are many companies working in this field. Among the companies that are well known, namely Bayer Healthcare, Johnson & Johnson, Pfizer, Novartis, Hoffmann-La Roche, GlaxoSmithKline, Sanofi-Aventis and many more. The names of these companies are not necessarily familiar to the public. Among the names of global pharmaceutical companies are already very well known, many of which are based in United States. With reasonable price, not too expensive or cheap and very easy to find. Medicinal products from global pharmaceutical companies to be very favorite countries in the world. But of course if explored further, something will have positive and negative, strengths and weaknesses also have external influences whether it be an opportunity or a threat. In this paper will explain a little about the SWOT analysis of the global pharmaceutical companies along with solutions and recommendations. 2. SWOT Analysis SWOT analysis is the analysis of situations...
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...balThe global pharmaceutical industry THE GLOBAL PHARMACEUTICAL INDUSTRY INTRODUCTION According to Hunter s. Thomas "you can turn your back on person, but never turn your back on a drug, especially when it's waving a razor sharp hunting." The global pharmaceutical industry had done tremendous contribution to mankind, but now pharmaceutical companies are facing tough time in a decade. The case is broken in to different parts which is emphasized on how internal and external factors affecting the industry firstly, the main environmental forces currently affecting the industry through PEST analysis. Secondly, the implications of the changes in business environment that is internal factors through porter's five force theory. Finally, the use and limitations of the tools applied to solve case are discussed. ORIGIN AND EVOLUTION The present pharmaceutical industries are non-assembled and more of competitive but it had emerged in early 19th century in the Rhine valley near Basel Switzerland where dyestuffs were found to have antiseptic properties. Companies like Hoffman-la rochy, Sandoz, Novartis are all started as Rhine based family dyestuff and chemical companies, which are still doing tremendous business even to day. Slowly these chemical companies started making pharmaceuticals and synthetic chemicals and evolved as global players. In early 1940's the industry showed drastic changes such as introduction of penicillin and other drugs. In 1960's industry growing rapidly with the...
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...strategic decision that Lilly now has to make is how to move forward. The Indian pharmaceutical industry has witnessed some significant changes and it seems that the business goals of both companies have diverged as well. Situation Overview Thus far it appears that Eli Lilly’s decision to enter the Indian market has been a wise one. It has enjoyed a successful partnership with Ranbaxy, which has also allowed its brands to gain recognition within the local market. Considering other metrics, including sales growth, access to new distributors and innovative product development, the JV has proven to be successful as well. Both parties agree that the JV has proven mutually beneficial, however circumstances have changed considerably since the venture was first initiated. Ranbaxy has expanded its own operations internationally and expanded its global reach through various acquisitions. In addition, the business strategies of both firms have taken a divergent direction. Lilly would like to continue to focus on the development of its patented global drugs, through innovation and discovery. On the other hand, Ranbaxy believes that its opportunity lies in offering generic drugs to the local market and increasing its presence abroad. Ranbaxy has signaled an intention to sell its stake in the JV if the opportunity were to arise. External/Industry Analysis The Indian pharmaceutical industry has been known for its lack of patent protection in the past. After signing GATT and becoming...
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...drive the pharmaceutical industry with a brief insight into how these levers impact the key players and decisions in the sector. The report will also relate the key drivers of the industry to the pharmaceutical industry in Ireland and how it is facing these global challenges. Historically, the sector was dominated by large scale bulk compound manufacture but this has evolved into a diverse range of complex technologies and treatments. In order to elaborate/detail on how this influences the strategy of individual organisations, we will highlight some of the activities of Glaxo-Smithkline (GSK) and how this company has evolved to adapt to the dynamic nature...
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...CVS Web Strategy Case Analysis Brandon Matthews 9/30/2009 1 Overview Introduction Consumer Value Stores, better known as CVS opened its doors in 1963 as a health and beauty supply store in Massachusetts. Since then it has evolved to one of the largest retail pharmacy chains in North America. In 1999, CVS was faced with a new business strategy. It appeared that there was a lot of traffic on Wall Street involving online pharmacies. The consumer and stakeholder demand for a strategic web presence for companies, with no exception of pharmacy giants like CVS, pressured the executives to implement a business strategy of incorporating its pharmaceutical retail services with the web. Helena Foulkes, Vice President of Marketing at CVS, was charged with ensuring that this new business strategy succeeded. CVS acquired a web company, Soma.com whose entire business strategy was similar to what CVS was attempting to achieve. Foulkes was faced with critical strategic challenges in transforming their new Information Technology (IT) initiative, Soma.com, to CVS.com. In this paper, we will introduce the retail pharmacy industry and its protagonists, achieve a bird’s eye view of CVS’s organizational structure, understand who CVS’s customers and competitors are, introduce the term Alignment Link in terms of overall strategy, implement the SWOT analysis tool to gauge CVS...
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...The Global Pharmaceutical Industry: Conduct an external analysis Introduction The pharmaceutical industry is described by high levels of risky and lengthy R&D process, tough competition for intellectual property, tighter government regulations and powerful pressures on buying power. (Johnson, 2006) In 2011, several blockbuster drugs patent like Lipitor will expire, possibly endangering the revenues of the pharmaceutical industry for the next three to five years. On the global level, the historical supremacy of the US was being challenged with the highest market growth rates recorded in emerging markets. The industry more than ever need to get a handle on the slippery business by offering a true step change in strategy. This case study will critically analyse the Global Pharmaceutical Industry with PESTEL, Porter’s five forces, SWOT analysis and plausible views of industry in the future. PESTLE PESTLE analysis used to help organisation to understand in depth that what is the current status of the organisation and the external factors which are effecting. It also helps to the Management to make strategy for the future and overcome the weak areas of the organization. PESTLE is comprises of political, Economical, Social, Technological, Legal and Environmental factors. Political The both policies (domestic and foreign) of government have a great effect on the industry innovation as compare to the other factors. To get the attentions of firms due to increase the economic...
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...prescription drugs affect the demand and supply of other products 3 Formulate a reason why the elasticity of demand is an important consideration 4 Provide two (2) examples of increasing-cost industries in your state and propose 4 Suggest how, under certain conditions, a perfectly competitive market 5 Use at least three (3) quality resources in this assignment 6 References. 7 1. Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis. During the twenty-five years experience of the Navy, they taught only two solutions to an individual’s alcohol abuse problem, education, and treatment. Alcohol abuse can be cure, and there are treatment facilities to help get their life back on track. The four element of the economic way of thinking would be Market forces, rational behavior, Opportunity Cost, Cost Benefit Analysis. According to Pettinger (2008), “The aim is to find patterns and use this to predict likely outcomes. In the real world, it is often difficult to model behavior because there are so many different variables”. (Para. 3) That is the therapy. 2. Analyze how prescription drugs affect the demand and supply of other products and services in this country. With these types of illness and injuries in the world today, there is a major demand for prescription drug. In most cases, some individual’s needs for drugs may be short...
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...|EPS 2009 (E): $3.86 | |52 Week Low: $28.62 | | [pic] Executive Summary As analysts we were called upon to enact our due diligence in dealing with the proposed purchase of Eli Lilly common stock. We performed various analyses, which included strategy analysis, fundamental analysis, valuation, and risk assessment. Our absolute valuation calculation shows that Eli Lilly is slightly undervalued however; our relative valuation calculation shows that Eli Lilly is fairly valued. We decided to use the relative valuation recommendation because of the risk that is involved in the industry today. Current risk factors that are threatening Eli Lilly are the FDA approval process, patent expirations, pipeline concerns, the purchase of Imclone and how it will be integrated into the company, and finally the ongoing recession. Eli Lilly currently has drugs pending FDA approval, notably Effient, a...
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...5) Chapter 1: Economic Analysis 7 6) Chapter 2: Industry Analysis 9 * Industry Life Cycle * Porters 5 Forces * SWOT * PESTLE * Correlation 7) Chapter 3: Company Analysis 24 * Company Profiles (10 Companies) * Financial Ratio Analysis * DCF Valuation * Valuation Shares 8) Conclusion 74 9) Bibliography 76 RESEARCH OBJECTIVES Research Project Topic: “Analysis and Valuation of the Indian Pharma Sector” The research objectives of this specialization project are: 1) Identifying the key indicators of the Global Pharma Industry 2) Understand and analyze the Indian Pharma Industry and identify the prominent players. 3) To examine the trends in the pharma industry 4) Fundamental and Technical Analyses of the Top 10 pharma companies in India. The main objective of this study is: 1) Valuation of the Top 10 Pharma companies 2) Finding the correct share price of the company 3) Making investment decision of- Buying, Selling or Holding the stocks of the respective pharma company. EXECUTIVE SUMMARY * Global Pharma Industry is likely to grow at a CAGR...
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...Executive Summary The following analysis of Merck and Company was to thoroughly examine a drug licensing opportunity with LAB Pharmaceuticals, a small pharmaceutical firm. This firm has offered to allow Merck and Company rights to further development of the drug called Davanrik. The analysis includes calculations of probability and decision trees using the Microsoft program Excel. It is assumed that given probabilities are correct, however sensitivity analyses were conducted to show the overall effect of cost and probability changes. Risk was also considered as a major factor in this analysis. It has been determined that Merck & Company should accept the offer from LAB Pharmaceuticals because of the predicted revenue. The relative risk involved with this project is high; however, it has been determined to be part of the nature of the pharmaceutical industry and previous drug development endeavors. Background The nature of the pharmaceutical industry includes a variety of factors. Three of these factors will be described. First, development of a drug can take several decades and therefore pharmaceutical companies incur large research and development expenses with no revenue in return. Because of this, larger pharmaceutical companies that have sufficient capital have typically dominated the drug market. Merck & Co., Inc, a global research-driven pharmaceutical company, has been able to achieve substantial returns to capital by discovering, developing, manufacturing and marketing...
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...The Global Pharmaceutical Industry Case Analysis This case by Sarah Holland and Bernardo Bátiz-Lazostudies studies the evolution of the ethical pharmaceutical industry and analyses the various forces affecting the discovery, development, production, distribution and marketing of prescription drugs. The authors further analyses the critical issues of corporate social responsibility in the industry and the strategies being followed by major pharmaceutical companies and the challenges and opportunities for the future. This case bases its research to find evidence to support or disprove findings of a report published in the Gardiner by analysts at the investment bank of Dresdner Kleinwort Wasserstein which claimed that the world's major drugs companies are operating a business model that is unsustainable and rapidly running out of steam. On the surface however, the pharmaceuticals business seems like the epitome of a modern, mature industry that has found a comfortable way to make profits by the billion. According to the case large pharmaceuticals companies are currently facing the most challenging times since a decade. Even though the industry has made tremendous contributions to human well-being, its roles and actions are still criticized by the media and under constant scrutiny by national governments in their efforts to reduce expenditure in healthcare. Stringent laws and regulations have come in action which has made product approval, pricing and promotions costlier...
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