The supply and demand graph for the pharmaceutical industry works differently than a normal supply and demand graph. This is because the pharmaceutical industry works differently than others. Medicines are always in demand. People will always need medicine to cure their illnesses. Sometimes people need drugs for a short period of time and other times they need it for life (Lgriffith, 2008). There will never be a time or period of the year where drugs and medicine are not in demand. Therefore, no matter what the price is or how much of the drug is supplied, there will always be a high demand for it. This is different than a normal supply and demand curve. In a normal curve, as the price goes up, the supply of it goes up but the demand for it goes down (Heakal, 2003). This is normally because people are less willing to pay more for a product, however, when it comes to medication for their health, they tend to be more willing to pay more for it. Everyone needs medicine at some point in their life. Many people rely on certain medications more than others. When a doctor prescribes a drug, people have to pay it, or at least their health insurance providers do. Medications are a necessary component of life. They help people stay healthy. In this case, the supply and demand curve for the pharmaceutical industry is not going to look the same as the supply and demand curves for other industries. The demand curve is always going to go up and never down. Medicine is always going to be in demand. My company, Novo Nordisk, has the same supply and demand curve as its industry. Novo Nordisk sells drugs relating mostly to diabetes (Novo Nordisk, 2012). There are always going to be people with diabetes in the world. This way, there are always going to be people that need medicine to help them with their diabetes. Their products are always going to be in demand for people suffering with diabetes. The demand for their product is never going to go down. The supply and demand curve for my company behaves the same way as the supply and demand curve for the industry as a whole. Medicine is always in demand. That is something that will probably never change.
Works Cited
Novo Nordisk (2012). About Novo Nordisk Overview. Retrieved from
Lgriffith (January 2008). Supply and Demand - Pharmaceutical Industry. Retrieved from
Heakal, Reem (2003). Economics Basics: Supply and Demand. Retrieved from
The supply and demand in the Pharmaceutical industry is pretty unique compared to other industries. I find it really interesting that because medicine is so inelastic, there will be a constant demand for it. This is definitely one of the defining aspects of the pharma industries.
ReplyDeleteSupply and demand is different from most other industries. As you said, pharmaceutical products are always in demand, and because of this, there can be a price inelasticity in which prices for products can be raised, with the known fact that the product will still be purchased. Having insurance can help reduce the costs of products, which benefits the consumer.
ReplyDeleteDue to the fact that the supply and demand of pharmaceuticals are so unique it is important to chose the company that is tailored to retain customers and this is done by not exploiting the nature of the product, namely perscription drugs because growing closer to a certain price would instill a switch in purchase in customers from perscription to generic if possible and reduce customer loyalty. It would be best not to chose a company that would be too greedy with the price of goods supplied as that would gain them the loyalty of customers, which in such a competitive industry filled with substitutions is vital.
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