Pharmaceutical industries in the world are facing the biggest threat in losing patents for major medicine to competitors. To be able to remain relevant in the market, Roche has been able to maintain patents but at the same time ensuring that other industries obtain license to produce their products, and in turn pay royalties to the parent company for this matter, Roche pharmaceuticals. This is, however, considered a risk sharing approach in trying to address the revenue generation process. Perhaps it is considered as a stop-gap measure, and that is why, it is not a major discourse in arriving at solutions for Roche. No player in the market is willing to sit back and watch their counterparts make a revolution in the market without having to think of how it will impact on their operations. Every strategy that a pharmaceutical company invokes is considered a crisis response (Allen Franklin 56).
The major strategy that has kept Roche up and running is its investment of millions of resources in research and development and in particular, biotechnological synthesis of drugs. This according to porter is considered as a response to the threat of substitutes. This strategy is facing unprecedented competition from other research and development players who are skewed towards replacing the biotechnology process with chemical processes. The latter is considerably cheaper while the former is considered to be the right approach to production of pharmaceuticals. The nature of competition in the pharmaceuticals industry is so indirect so that, unless Roche has an able team who can dissect the market and establish where the company should invest in, acquiring and or even licensing out small companies may not produce the desired solutions in the limited time frame. A well defined valuation methodology is another strategy that Roche hopes to capitalize on especially with In-licensing. In the past, upfront payments for alliances in the industry have turn out to be a setback, similarly, milestone payments have skyrocketed than were expected so that a lot of resources are heaped in a risk deal that could go sour at any minute (Ramsden, Jeremy & Paata 67).
Competition and rivalry from other competitors; There is competition from other firms in the sense that other companies are acquiring small firms, and or merge production with small companies while others enter into alliances and deals that will enable them play favorably in the market. Merging is considered to be a solution when the market is in some way saturated, and control over the market could make things better. It also ensures that the company is not liable for risks alone instead it enables it to diversify them. The other advantage with this approach is that the company can access the international market, and make sales out of it. With the underlining phrase for Roche being to offer what the clients need, they should be able to traverse the market with ease. The other strategy to be competitive would be to make advertisement for new products although will be gathered for indirectly through the alliance. Firms working with Roche will have to advertise their products, and by so doing, Roche will benefit.
Bargaining power of buyers is other strategies that Roche applies is to maximize on economies of scale. In this regard, it has outlets in the United States and even in china despite acquiring some small firms and licensing some other firms to produce drugs on their behalf. These strategies work out very nicely in the sense that, the running of the affiliated firms remains a problem of those firms, as opposed to direct involvement by Roche Company. Once the organization has managed to open more outlets, the strategy of maintaining a buyer bargaining power will be a reciprocator response from the market. The growing competition requires that the chosen strategy will enable the firm to penetrate the market without compromising on the role of the company in the market (Reepmeyer 89). For instance, when the firm gives licenses to other small firms in other countries, it should retain the trademark of the drug being produced and any right to carry out research and development. Sometimes, the market becomes so volatile to the effect that it becomes unpredicted how further investing will generate revenue. These sentiments are shared by a bigger number of pharmaceuticals companies although with Roche the case has been to invest indirectly by ensuring that there is a competent team to handle the client’s demands at the level they expect. This has been a considerable revelation in the sense that the research and development team are the only game changers; if Roche pharmaceuticals can produce cheaper drugs that are biologically produced, then it can edge the market that is moving towards chemical technology of doing things (Dubbink & Liedekerke 45).
Work Cited
Allen Franklin, Yago Glenn. Financing the Future: Market-Based Innovations for Growth;Pearson Prentice Hall, Mar 23, 2010 - Business & Economics.
Dubbink, Wim, and Liedekerke L. Van. European Business Ethics Cases in Context: The Morality of Corporate Decision Making. Dordrecht [etc.: Springer, 2011. Print.
Hancock, John. Investing in Corporate Social Responsibility: A Guide to Best Practice, Business Planning & the Uk's Leading Companies. London [u.a.: Kogan Page, 2005. Print.
Ramsden, Jeremy, and Paata J. Kervalishvili. Complexity and Security. Amsterdam, Netherlands: IOS Press, 2008. Print.
Reepmeyer, Gerrit. Risk-sharing in the Pharmaceutical Industry: The Case of Out-Licensing ; with 10 Tables. Heidelberg: Physica-Verl, 2005. Print.
