Pharmaceutical Industry Overview

The pharmaceutical industry in the United States is the largest in the world. The projections of the pharmaceutical industry in the United States are an estimated "$343.1 billion in 2012 resulting in a 1.8% or more growth rate”, (BMI, 2012, para.2).  It is important to recognize that “branded products account for a large portion of the market”, (BMI, 2012, para.6). As exhibited in the SWOT analysis there are low restrictions on pricing, allowing for higher prices to be charged. The market reached a state of stagnation as what occurs in saturated markets. There is also a strong research and development base, however this is very costly. (BMI, 2012).

What is interesting is the state of stagnation that the industry is currently facing; argumentatively this should lead us to focus on the innovation of research and development. This industry has the potential for innovation due to the constant and complementary advancement in medicinal science. (BMI, 2012). The prolonged time it takes to research and develop the drugs is costly in terms of overheads as well as variable costs. An option that should be investigated further is of outsourcing research and development, which could potentially lead to lower overhead costs and faster distribution of the drugs, allowing it to reach the consumer faster. An important factor to consider since the marketing is conducted directly from the manufacturer to the consumer. (BMI, 2012). What needs to be addressed is how reliable will the outsourcing be? Will it affect the credibility of the companies who chose to outsource or will it revolutionize the pharmaceutical industry? The multi-national industry could overcome the stagnant atmosphere by offshoring research and development. Could such an innovation be problematic due to certain legislations or because of some medically untreatable diseases such as the obesity epidemic in the United States? (BMI, 2012). Despite the restricted room for growth in the current state of the industry, it is stable, due to the high demand of prescription drugs, which ideally contributes to innovation. Interestingly, Abbott Laboratories has already managed to penetrate the personalized medicine market, which would thrive in terns of innovation of research and development, (BMI Global marketing strategy, 2012).

  

                                                  

                                                                 References

Business Monitor International, Global Marketing Strategy, Abbott Laboratories.

          (August 6, 2012). As retrieved from: http://www.businessmonitor.com.proxyau.wrlc.org/cgi-bin/request.pl?SessionID=9AF50D3A084611E2B1F237187B297F78&view=articleviewer&service=3&article=642931

Business Monitor International, United States Pharmaceutical and Healthcare.  

          BMI Industry Report-United States-Q32012. (June 29,2012). As retrieved from:

http://www.businessmonitor.com.proxyau.wrlc.org/cgi-   bin/request.pl?view=articleviewer&article=629718&SessionID=7B88F3B0085711E29DC27B5E7B297F78&iso=US&metaid=202&service=3

                                                                                                                           

Blog 1: Generics In the United States

The report I studied was Generics in the United States. Since I did not know much about generic products, reading this report was helpful and informative about the impact generics have in the United States. For example, the United States is reported to make about 2/5 of all generics in the world. In a diagram figure presented in the report, the main factors in generic pharmaceutical good demand are the importance of quality and cost, no substitute inputs, and the threat of an oligopoly. The report I read revealed how generic brands of pharmaceutical products are increasing in demand; by 2015, the generics market is expected to rise 10.6% from 72.2% (2010) to 82.8% in volume of the amount of generics supplied for name brand pharmaceutical products in the United States. While researching the pharmaceutical industry, an interesting piece of information came up. While the industry has fluctuations of an increase/decrease in supply and cost, demand is relatively the same year to year and does not change drastically. This is due to the fact that pharmaceutical needs, such as prescription drugs, are always in demand (essential-need), and consumers are likely to still buy the good needed, given that the good is in a reasonable price range. After reading this report, further exploring the topic of how the influence of pharmaceuticals in the United States affects the economy would be of interest. Initially, my thoughts of the pharmaceutical industry in the given future are that the pharmaceutical products will continue to be in high demand; with more generics becoming available in the industry, consumers will have greater variety of choice of pharmaceutical products. An interesting fact I learned about the pharmaceutical industry is that the government is currently trying to reduce the cost of name-brand products or influence support towards generic brand products, which are already in low cost. The pharmaceutical industry is in constant demand, and continues to become a stronger industry with new breakthroughs in development of pharmaceutical products.

"Generics in the United States." Datamonitor 360. N.p., Aug. 2011. Web. 26 Sept. 2012. <http://360.datamonitor.com/Product?pid=B70CB9A3-8422-4F24-8833-A9BD17682FA4>.

Blog #1: Pharmaceuticals in The U.S

I found a PDF industry overview called Pharmaceuticals in The U.S, which was published in 2011, so it’s statistics were based around 2010. The overview was very informative and gave a pretty good holistic insight into the pharmaceutical industry. I found it interesting that the U.S actually accounts for 36.2% of the global pharmaceuticals market value, with Europe accounting for 29.2% and Asia-Pacific accounting for 25% in 2010 (page 11). I had never given much thought to the pharmaceutical industry, so knowing that the United States is the leading player is quite astonishing. I also found it interesting that it is mainly the U.S that advertises drugs on television. Though I do believe that advertisement in general can help revenues, I don't think for drugs that it's a good idea to showcase drug in a favorable light, then have disclaimers at the end. The disclaimers are more likely to scare off buyers than have them buy the products. I am very curious on how much advertisement plays in the pharmaceutical market. I am also curious on how come the U.S allow medical practitioners to advertise for wholesale companies, while other countries make it illegal. The overview also pointed out that the rivalry of pharmaceutical manufacturers is very strong in the U.S (page 23). Rival manufacturers would wait in till the patents for certain products expire and develop a similar type of product that could beat out that product on the shelves. Competition is definitely prominent in the pharmaceutical industry. I think that in the future, the pharmaceutical industry will grow, not only in size, but also in market value. Already from 2006-2010 there was a 4% compound annual growth rate (CAGR), and predictions have been made that from 2010-2015 there will be a 5.5% CAGR (page 8). That would be a difference of 100 billion from 2010 and 2015. The need for prescription drugs will never go away, so the pharmaceutical industry has nowhere else to go but up.

Pharmaceuticals in the us. In (2011). (pp. 1-46). Retrieved from http://360.datamonitor.com/Browse?nav=4294549386 4294855257

Overview of the Pharmaceutical Industry

I researched and read the article, OTC Pharmaceuticals in the United States, One of the most interesting things I found about this article is that it is behind revenue sales of comparative countries. United States market generated total revenues of $28.3 billion in 2010. the European and Asia-Pacific markets grew over the same period, to reach respective values of $44.5 billion and $37.3 billion in 2010 (page 6). Even though the United States grew steadily it was not as great as other countries. This was interesting because the United States is so advanced, but was still beat out by other markets around the world. One question I would further like to explore about pharmaceuticals is if substitutions are a major threat to limiting or getting rid of this industry. Is it possible for prescription drugs to wipe out the need for pharmaceuticals and what is the pharmaceutical industry going to do to address this issue? The pharmaceutical industry is growing steadily and is predicted to stay that way. The United States OTC pharmaceuticals market grew by 2.8% in 2010 to reach a value of $28,309.4 million (page 2). In 2015, the United States OTC pharmaceuticals market is forecast to have a value of $32,613.4 million, an increase of 15.2% since 2010 (page 2). It although does have issues that can escalate in the future, one being the possibility of prescription drug substitutes and the other is market rivalry. The US OTC pharmaceutical market is highly fragmented, with the top three players holding 27.9% of the total market by value (page 2). One interesting fact in, OTC Pharmaceuticals in the United States, was my company, Pfizer Inc., accounts for a further 5.9% of the market (page 11). This is the second largest share below Johnson & Johnson at 18.2%. The market is highly fragmented and that is why it is much further behind the leading company, Johnson & Johnson. With the three top contenders holding 27.9% of the market the other companies divide the rest of the 72.1%.

OTC Pharmaceuticals in the United States (2012).( pp.1-34). Retrieved from <http://360.datamonitor.com/Product?pid=83EF29C2-D796-42BB-AEE4-07906912804E>.

Blog #1: Business Intelligence in the Pharmaceutical Market

One thing that I found most interesting about my industry report is how important a role business plays on the pharmaceutical industry. I always thought that the pharmaceutical industry was strictly medications and coming up with new medications to cure certain incurable illnesses and diseases. Now I realize that Business Intelligence has a lot to do with the success of the industry as a whole. By adopting Business Intelligence, organizations get the benefits of improved data management, improved sales performance, a breakdown of organizational silos to improve investment decisions, and reduced costs (Mahajan, 2010, p. 22). I think it is very interesting that the pharmaceutical industry relies so heavily on Business Intelligence. Without it, they will not be as successful in marketing and selling their products, as well as, managing data and making smarter investments (Mahajan, 2010, p. 22). I want to further explore the rest of the pharmaceutical industry. This report was only on the Business Intelligence part of the industry. I am very interested in learning more about the other aspects involved in the pharmaceutical industry. I feel that there are so many parts involved in the success of pharmaceuticals, such as Business Intelligence, and I am very interested in learning more about all of those parts. My initial thoughts about the future of this industry were that it is a big industry and it is worth a lot. All of the companies in the pharmaceutical industry will be very valuable to invest in, because the industry is always improving. Even in this report, it is shown how the changes to the industry by Business Intelligence are earning the companies more money and making them more successful. Every year the Business Intelligence market in the pharmaceutical industry is worth more and more millions of dollars. It is expected to be worth $555 million dollars in 2012 (Mahajan, 2010, p. 20). Also, each year Business Intelligence helps companies market their products, manage their data, invest properly and keep them on a low budget (Mahajan, 2010, p. 22). All of this proves how much the pharmaceutical industry develops each year, and how important this industry is becoming. My assigned company is Novo Nordisk. One interesting data point about my company is that they have significantly more sales in the United States than any other region of the world. Their sales in the United States are 8,356 million Danish kroner while Europe is 5,081 and China is 1,550. This is significantly interesting because Novo Nordisk's product areas are mainly diabetes care and growth hormone therapy (Novo Nordisk, 2012). This gives me the sense that Americans are more in need of this company’s products because we have more problems with diabetes and growth hormones than any other region of the world. And these problems are so plentiful that we significantly surpass the sales of their products in all regions of the world.

 

Works Cited

Mahajan, Rashmi. (2010, May 17). Business Intelligence in the Pharmaceutical Market. Retrieved      
       from http://360.datamonitor.com/Product?pid=BI00027-036&view=d0e11
Novo Nordisk. (2012). General Information. Retrieved
       from http://www.novonordisk.com/about_us/facts_and_figures/facts.asp