Business Policy Presentation

8/2/2019 Business Policy Presentation

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PORTERS FIVE FORCE

MODEL

FOR PHARMACEUTICALINDUSTRIES

9-Mar-12

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By

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Kranthi Kiran P

Krishna Chaitanya P

Raviteja Ch

Raviteja D

Aditya B


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Introduction

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The marketplace for this industry is the humanbody but only as long as it holds diseases.

A key strategy to improve profits is to develop

drugs that simply mask the symptoms whileavoiding the cure!!

The worst part is that, the eradication of

diseases is by its very nature opposed to theinterests of the pharma investment industry.


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Overview about Pharma Industry

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Worlds 13th largest in terms of value.

4th largest in terms of volume.

Highly fragmented with more than 20,000registered manufacturing units.

Market leader holds 7% of the market share.

Leading 250 pharmaceutical companies

control 70% of the market.


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Overview about PharmaIndustry

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Highly Regulated Product Patent Regime(2005)

NPPA

Research Oriented Product Patent Regime(2005)

Limited Customer Choice

End-user different from influencer Highly dependent on development of

Health Infrastructure


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Industry Competition/Rivalry

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Most competitive industries in thecountry with as many as 20,000 differentplayers.

Top player in the country has only 7%market share and top five have 20%.

High growth prospects.

Fixed cost requirement is low and needfor working capital is high.


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Continued

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Generic drugs - Rivalry is mainly due tocost competitiveness.

Has remained the same even after

2005.

Patented drugs Rivalry due to productdifferentiation.

Has increased after 2005.


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Bargaining Power of Buyers

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End user of the product is differentfrom the influencer.

Consumer has no choice but to buy

what doctor says.

Buyers are scattered and they assuch does not wield much power in

the pricing of the products.


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Bargaining Power of Suppliers

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Pharma industry depends upon severalorganic chemicals.

Very competitive and fragmented

industry.

Chemicals are largely a commodity.

Pharma industry can switch from their

suppliers without incurring a very highcost.

Supplier can go for forward integrationto become a pharma company


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Threat of new entrants(Genericdrugs)

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Most easily accessible industries for anentrepreneur in India.

Capital requirement for the industry is

very low, creating a regionaldistribution network is easy.

The bigger players are moving towards

R&D, thus providing an opportunity fornew entrants.


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Threat of new entrants(Patentdrugs)

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Very high capital and skill required.

The field of discovery anddevelopments of new chemical entity

(NCEs), had more misses than hitsand very few discoveries reach thefinal stages of approvals

Established firms will make it verydifficult for a new entry.


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Threat of Substitutes

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One of the great advantages of thepharma industry.

Demand for pharma products

continues and the industry thrives. Recent improvements in bio-

technology and biopharmaceuticals

can prove to be a threat.


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Conclusion

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In the domestic market, the new patentlegislation resulted in fairly clearsegmentation.

The big players narrowed their focus ontohigh-end patients who make up only 12% ofthe market, taking advantage of their newlybestowed patent protection.

Meanwhile, the smaller firms have chosen totake their existing product portfolios and targetsemi-urban and rural populations


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THANK YOU

Documents

Business Policy Presentation