Pfizer Industry Analysis

An Economy and fabrication Analysis Focus Industry Pharmaceutical Industry Focus Company Pfizer, Inc. (PFE NYSE) Pharmaceutical Industry sort The pharmaceutical application seems to be an intermingling of conveyth and expansion stage. This is chiefly referable to the fact that there are so much explore and developing (R&D) work macrocosm conducted in the application, creating growth in the industry. At the aforementioned(prenominal) time, unhomogeneous players in this industry harbor started to acquire or flux with their respective competitors, in order to expand and diversify harvesting line, foodstuff share, or new markets.The worldwide pharmaceutical sales has continued to grow faster than most segments of the world economy driven by square demographic tr polish offs of the world population aging population in many countries, lengthening of average life antepast, and rising incidence of chronic diseases. This industry is a non-cyclical industry, as the produc ts, drugs and medication, are geared towards consumers and markets that are not given to price changes, inflation, or economy fluctuations.Consumers in the market might heel towards product lines in the lower end of the affordability spectrum, rather than higher end purchasing generic products in the market. Pharmaceutical Industry Application of doorkeepers Five Forces Industry Competitors and Intensity of Rivalry In general, the main competitors for the pharmaceutical industry are Pfizer ($45. 2B in 2003 sales), GlaxoSmithKline ($35. 2B), Merck ($22. 5B), Bristol-Myers Squibb ($20. 7B), Abbott Laboratories ($19. 7B), and Johnson & Johnson ($19. B). However, with the recent spur in mergers and acquisition (M&A) activities in various(a) industries, the pharmaceutical industry had a world-shattering merger in August 2004 among two France competitors Sanofi-Synthelabo and Aventis creating Sanofi-Aventis, one of the cap three pharmaceutical companies with Pfizer and GlaxoSmit hKline. The rivalry among the current competitors in this industry is unrelenting referable to the competitive nature of product development and patent profitability. separately competitor is spending billions of dollars in their respective R&D efforts to interrupt new products and patents to continue the stream of prescribed and over-the-counter drugs produced and sold to consumers in the market. The rivalry is overly intense due to the regulation set by by Federal Drug Administration (FDA) in US and early(a) governmental regulators in various countries of the world, where stringent requirements and scarce tout ensembleocation of patents are given out to companies developing new drug products.However, due to much(prenominal)(prenominal) intense rivalry, numerous companies have started to merge (like Sanofi-Aventis), or form alliances or joint-ventures in creating new products, to compete with other competitors. Bargaining Power of Buyers In the world of pharmaceutical, the buyers are basically in large quantities distributors such as central Health Inc. , McKesson, and AmeriSourceBergen. These wholesale distributors play the middle-man role in selling and distributing all pharmaceutical products to various buyers like pharmacies, hospitals, HMOs, clinics, and mail-order companies.The submerging of buyers are high due to the fact that there are only a select a couple of(prenominal) key buyers that make huge purchases from all the players in the pharmaceutical industry. As such, buyers do have above average talk terms power that allows the wholesale distributors to dictate the price of the products. However, all the pharmaceutical companies have distributor agreements that alleviate curb the bargaining from being overzealous. Bargaining Power of SuppliersSuppliers to the pharmaceutical industry players are in abundance. The industry does not suffer from scarce resources as the raw materials (both active and inactive ingredients) are always availab le from various drug ingredient makers and distributors. As such, the suppliers are low in niggardliness and without much bargaining power. Most of the suppliers are similar and as such, comfortably interchangeable, without much risk or hassle.With the globalization of economy, the market of available suppliers is even out bigger than it used to be resulting in even lower concentration of suppliers and giving the pharmaceutical industry more power in bargaining for the prices of drug ingredients. Threat from Substitute Products For the brand prescription drugs, the main supplant would be the generics or competitors similar prescription drugs. However, this internal menace between competing products does not change the dynamics of drugs that are produce in the base hit of patent.The larger threat that the pharmaceutical industry faces is from alternative medicine such as herbal medicine, acupressure, acupuncture, massage therapy, homeopathic medicine, and other growing fads of self-remedy. The encumbrance of alternative medicine is limited however to the critical and chronic dot of the diseases and illnesses that could be treated or prevented. Threat of Potential Entry The threat of potential entry for this industry at this stage (growth and expansion) is definitely low.This is mainly due to the enormously high barrier to entry in obtaining pileus and resources for R&D efforts to produce patents. Due to the scarcity of patents and large essence of capital required for the numerous years of research and development, it is close to unacceptable for new smaller companies to enter this industry at this time. Each of the players in this industry is spending billions of dollars each year just to conduct researches and do studies, which hopefully will result in the development of an effective and streamlined drug that can be patent. some other than that, there are also ratified and regulatory obstacles that prevent new competitors, from the FDA and othe r governmental structures. Other Influencing Forces Due to the nature of the drug products, there is intensive regulatory and legal implication that affects this industry. A good example of how the government and political milieu influence and dictate the direction of the pharmaceutical industry is through various regulations by the FDA and Department of Health and Human Services (DHHS), involving patent protection, product approvals, pricing controls, and product liability.The demographic evolvement in the world is another federal agent that should be considered. As the baby boom generation ages and life expectancy rises, demand for pharmaceuticals are soaring. In the US, seniors corned 65 and older soon represent only 13% of the population but account for 34% of all prescriptions written and more than 40% of drug sales. Approximately 80% of seniors in the US use prescription drugs on a habitue basis. According to aUnited Nations study, the number of people worldwide aged 60 o r older will grow from 593 million in 1999 to close to 2 billion by 2050. Recent technological developments and breakthroughs have changed the way new drugs are discovered, how they are tested, the precision that it affects the diseases, and how the drugs are being delivered or distributed to patients. The recent development in stem cell research will definitely create more opportunity for growth in the pharmaceutical industry, especially in the European Union a