Strategic Analysis of the Pharmaceutical Industry free essay sample

The pharmaceutical industry is today still one of the most inventive, innovative and lucrative of the so-called  »high-tech « industries; however, we may say that the pharmaceutical industry has been adapting itself more and more to strategic market trends and market demands. Further strategic development of the world pharmaceutical industry shows clearly its consolidation, concentration and strong market orientation. The pharmaceutical industry today, with no doubt, unites one of the biggest potentials of all mankind.Development of a brand new drug is estimated to need an investment of more than $1. 2 billion and takes more than 12 years to bring it as a finished, legally registered and approved product to the market place (Pharma Strategy Group, 2005). This is, at the same time, a very complex, comprehensive and highly risky job with no final guarantee that the potential new product might succeed on the market and bring back revenues. If a pharmaceutical company wants to achieve market success with a brand new product, it needs to invest strongly into marketing and sales activities. We will write a custom essay sample on Strategic Analysis of the Pharmaceutical Industry or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Thus, by no surprise, we may conclude that basic research and development (RD), together with marketing and sales activities are two of the most important operative and even more strategic priorities of the world pharmaceutical industry. Here, the biggest investments of the pharmaceutical industry are put by all means. Having analysed these figures, we have found that the biggest, inventive world pharmaceutical companies invest, on average, approximately 16% of their sales into RD and even more, about 26% or more into marketing and sales activities (Kesic, 2006).However, these ratios, especially the one of RD investment, are even higher with the specialists, like biotechnology and pharmacogenomic companies, and much lower with the generic pharmaceutical companies (Kesic, 2006). As mentioned, the world pharmaceutical industry is structurally not unique, as pharmaceutical companies 60 Management, Vol. 14, 2009, 1, pp. 59-76 D. Kesic: Strategic analysis of the world pharmaceutical industry differ according to their basic mission, performance and strategic development.We can define three different groups of the world pharmaceutical companies: pharmaceutical companies which primarily work on basic research, development and marketing and sales of brand new, inventive, original pharmaceutical products (called originators); pharmaceutical companies which primarily work on development and sales of generic products (called generic producers); and pharmaceutical companies which primarily work on basic research and development of biotechnology and pharmacogenomic products and technologies of new delivery systems (called specialists).We need to shortly illustrate the size of the world pharmaceutical market. The world pharmaceutical market has been growing steadily in the last years. In 2005, it posted total sales of $602 billion and a growth rate of 10%. The fastest growing world markets and regions are the markets of China, Central and Eastern Europe (Russia, Poland, Romania) and certain markets of Latin America (Brazil, Mexico, Chile). Nevertheless, it is estimated that the world pharmaceutical market will grow by an average of 7% CAGR (Compounded Annual Growth Rate) till the year 2010 (Pharma Strategy Group, 2005).