Global Phamaceutical Company

Global Pharmaceutical Industry

(1) Undertake a PESTEL and 5 Forces analysis to identify the key forces of change in the global pharmaceutical industry as depicted in the Case

The origin of pharmaceutical industry can be traced back to the coal tar industry in the 19th century German neighbourhood. These developments gave birth to the rise in scientific research particularly in the field of chemistry into the wholesale of drug worldwide.

PESTEL is a strategy planning tool that is used to evaluate the effect of macro environment of an organisation. PESTEL - Political, Economic, Social, Technological factor, Environment and Legal is usually beyond the control of the industry (Kotter & Schlrsinger, 1991). Therefore, the analysis of this factor is necessary to turn threats into opportunities.

Political

The sensitivity of the product of the industry necessitates the intervention of the government to regulate the framework and design of drugs that are released to protect public health and prevent serious health issues. Governing agencies had been known in UK, Europe, US and other areas to remove drugs from the market and cap advertisement as several law prohibits the adulteration of drugs forcing the manufacturers to reveal drug composition and ingredients.

In 1985, the British government blacklisted and removed funding of some patented drugs. The government as the major purchaser uses the health care services as a political platform to control healthcare expenditure and also to exert pressure on demand and price control (Jeffords, 2004). The creation of European Medicines Evaluation Agency (EMEA) a regulatory framework in Europe harmonise the standards of drug but removes the decision making process from country's governing body or agencies to simultaneous agreement of all participating countries. Reasoning from the above is outside the control of the pharmaceutical industry because of political inferences.

Economic

The economic downturn has a high impact on the provision of health care service in a country with welfare system. The low availability of funding because of the effect of recession combine with high cost of technological solution creates an unsustainable situation.

While government price control poses a problem in control of supply to maximise profit by the industry, the allowance of free movement of goods across Europe allows organisations to source for distributors in cheaper market (Johnson, 2005). Although the profits were lost to parallel importers it created the cross boarder merger and acquisition of companies in bids to make it easier to buy from countries.

Social

The demand and supply of drug may be influenced by factors such as demographic