Industrial Analysis- Pharmaceutical Case
Industrial Analysis- Pharmaceutical Case
Pharmaceutical industries are very crucial establishments in countries that major in medical productions. USA is one nation that depends so much in these industries being a major player4 in medical innovation. This is reflected in the contribution placed by the major stakeholders in the industries. These include individual contributors in their research firms, government establishments and donor contributions. The analysis herein looks into the structure, economies of scale, technological innovation and a factor for involvement in the industry as an investor. All the discourses surround R& D firm.
Structure and scale of operation
The pharmaceutical industry is a very sensitive plant that requires a high level of regulation due to ensure efficiency and safety. It therefore calls for a lot of regulation to get into the market. These characteristics in terms of efficiency and security are considered workable in a large and accumulated number of patients. This will be able to accomplish studies that are based on trials and observations. Studies are monitored based on the 1962 Amendments to the FDA, which reviews safety based on quality and promotion. According to the study based on R&D, there is a high cost of operations that is utilized majorly in the monitoring process and quality evaluation. This has affected the time duration between discovery and launch of new drugs. New and small firms are highly affected which are not able to meet the high cost required due to their low level of income.
Cost of starting new pharmaceutical firms has been a big challenge for persons motivated to invest in the industry. However, this has been solved through new inventions and innovation in biotechnological changes. The process of discovery has greatly been transformed and the general structure of the industry. The small firms have since grown in the industry to the extent of forming mergers with other companies. This has increased their market share and scale of operation. Small firms are adversely affected. They are however important to the large firms since they provide the big companies with new products.
R &D firms describe a positive phenomenon where alliances are formed to increase efficiency and effectiveness in the industry. According to research, it is argued that big firms are based on focused experience which is considered more valuable than broader one. The alliances develop products that are successfully fated based on the extensive research. Large firms are better placed in their wide scale of operation. Pharmaceutical industries work collaboratively through sharing responsibility. This happens to small and big firms which equally get cash and equity and contingent valuables and royalties. This gives them equal opportunity to facilitate development in the late stages and also to help with marketing. This is meant to help them gain experience.
The industries participate in the marketing and sale deals. These provide varied opportunities to the investors who are persuaded based on the persuasion that is always perpetuated through price discounts. It is therefore an industry that needs careful analysis in order to obtain the best deals in the market. It is important to send positive signals to facilitate validation through dealing with experienced pharmaceutical companies. These are considerable factors. The industries are characterized by mergers and licensing and acquisition activities. Equally big firms merged up to the 1990s. Acquisition is a recent occurrence of most pharmaceuticals.
The industry has indicated high rates of entry in the market. This indicates high structure, competitiveness in the industry. This has resulted in control and monopoly contributed by experiences, by the patients who have continued to help the originator firms to continue to dominate in the market. They have bought insurance cover with the big firms. This has also been improved through starting of private pharmacy. The government contributes a lot in the regulations of the whole operations in the market. It negotiates price discounts as some preconditions. The United States regulates the prices that the public is supposed to pay for the services related to purchase and dispensing of drugs. Incentives are given to generic substitutes for the sake of the pricing mechanism. This indicates a positive move by the US government in suport6 of the industry.
Technological innovation
The industry depends so much on the new technological inventions. This helps in the process of discoveries and manufacturing processes. The whole system requires machines that efficient to enable research activities. Pharmaceutical technology depends on high levels of technology in the biomedical research, biotechnology and machines in the generic medical establishments. Services rendered also depend largely on the current technology to be able to monitor the customers and patient experiences with the new products.
Pharmaceutical operations depend largely on Research and development. The cost incurred in the whole process is always met by the industries themselves. This is based on the research in the UK. This therefore depends on the level of technology employed by these industries which translates to the general efficiency and effectiveness of the resultant product.
Knowledge generated from research is then disseminated to other companies in the industry. The same is shared with other charitable organizations, the general public and other interested organizations. It is estimated that this same information shared in the spillover effects greatly influence the general investment in this industry. Interested investors learn more from these initiatives by the research organizations. They can choose to get into the business or otherwise. Innovation in the Research and Development firms has led to increase in competition in the industry. This has increased productivity in the market and increased quality. However, it has a foreseen danger in the manner of spending and wastefulness. Development of drugs is faster through the new technology and science and better but costly.
Performance and opportunity for investment
Pharmaceutical industry shows a great performance that with lots of encouragement to join for anyone who might be interested to invest. There are various areas within the industry that still calls for interested parties to join in the business. Research and development presents numerous aspects that need exploitation. These include Research and development productivity, development and drug innovation through new technologies, transfer of technology, manufacturing and project management, marketing and sales of new drugs (Gassmann, 2008).
There needs to look into ways of improving performance in the industry. This must be analyzed based on the possible and researched strategies. It is crucial to look at how the operating companies can improve their performance and development of new drugs. Understanding new environment and key determinant factors in the industry is important to anyone who may be interested in the industry. The new trend of competition requires knowledge in Pharmacoeconomics. This will help in the enhancement of quality and reduce cost incurred by firms in research and development.
In conclusion, Pharmaceutical industry depends so much on the new technology in the enhancement of its activities. It requires a lot in terms of finances in order to start. There are regulations that must be adhered to based on the sensitivity of the firms as they directly deal with human life. It is therefore important that government intervention is required in order to streamline the industry and maintain the high sense of efficiency and effectiveness needed in the industry.
References
Gassmann, O., Reepmeyer, G., & Zedtwitz, M. . (2008). Leading pharmaceutical innovation: Trends and drivers for growth in the pharmaceutical industry. Berlin: Springer.
Mazumdar, M. (2012). Performance of pharmaceutical companies in India: A critical analysis of industrial structure, firm specific resources, and emerging strategies. Heidelberg: Physica Verlag.
García-Fontes, W. (2011). Incentives for Research, Development, and Innovation in Pharmaceuticals: [delta]. Madrid: Springer Healthcare Iberica.
Freemantle, N., & Hill, S. (2007). Evaluating Pharmaceuticals for Health Policy and Reimbursement. Oxford: John Wiley & Sons.
