The Global Pharmaceutical Industry Commerce Essay

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Policies in major markets also have effects on the industry. For example, the UKs National Institute for Clinical Excellence supporting the trend of evidence-based medicine has raised the difficulty of introducing new drugs. In contrast, President Obama's proposed healthcare reform could possibly enlarge the US market.


Economic factors concern about the macro-economic cost-related matters for the organization (Witcher and Chau, 2010). There is a linkage between sales and GDP since when income level rises; patients are willing to pay a greater proportion of drug cost. Hence, sales growth rates are higher in emerging markets than established markets. Free trade areas like European Union that allow parallel trade have affected the pharmaceutical industry by letting wholesalers to buy and sell medicines between different countries with a margin.


Social factors refer to the changes in values, morals, society culture and demographic (Wheelen and Hunger, 2012). The ageing populations and the increase of chronic diseases have created an increased demand for healthcare cost and medicines. Patients are also well-informed about the modernizing healthcare products thus having a rising expectation.


Technological factors concerns about the innovative aspects of the industry (Johnson et al., 2011). The computer-based e-prescribing has influenced the decisions of doctors on which drugs to use. Other innovations such as biopharmaceuticals and stem cell therapies reveal numerous opportunities of new markets.


Environmental factors concern about the awareness that industries need to be exposed of the effects related to the ecosystem (Witcher and Chau, 2010). The main concern of the public is drug's safety towards human-beings, which has to be ensured by the industry through many costly phases of R&D process. The reputation of the whole industry, however, can be easily ruined by careless practices of just one single organization.


Legal issues relates to the changes in the law and regulations that affects the industries (Witcher and Chau, 2010). The regulations focus on drug safety, the R&D process, industry's sales and marketing practices. Since 1970s, legislation had tightened the control of clinical trial and reduced patent protection period, which reduced the product life cycle. The legal controls also prolong the time of R&D process as well as the introduction to the market, and then require the proven cost-benefits ratio for price settings. Undoubtedly, legal factors adversely affect the pharmaceutical industry.



Vision is a statement of organization's desired future state and the strategic directions (Johnson et al., 2011). The vision is the leading idea, the goal or forms the strategic intent of the company (Hamel, 2010). The overall vision identifies the clear direction for development, facilitates growth, and supports tools such as Balanced-scorecard (Rigby and Bilodeau, 2007; Kaplan, Norton and Rugelsjoen, 2010).


Mission refers to the prevailing purpose of the organization (Johnson et al., 2011). Mission statement determines the core activities, which helps keep the management to focus on the fundamental areas of the business. Mission affects the development and growth by shaping the business model of the organization (Witcher and Chau, 2010).





"We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering and to enhance the quality of life.

We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company."

Merck (Schering-Plough)

"Our vision is to make a difference in the lives of people globally through our innovative medicines, vaccines, biologic therapies, consumer health and animal products. We aspire to be the best healthcare company in the world and are dedicated to providing leading innovations and solutions for tomorrow."

"We have made it our mission to provide innovative, distinctive products and services that save and improve lives, satisfy customer needs and to be recognized as a great place to work."

Beximco Pharma

"We've built Beximco Pharma into one of the most trusted pharmaceutical companies in the country by delivering solid returns to our shareholders, and helping patients with life-altering conditions so that they may live their lives to the fullest."

Table 2. Visions and Missions of Pharmaceutical Companies (Norvatis, 2012; Beximco Pharma, 2010; Merck Sharp & Dohme Corp, 2012).



Emerging markets.

The economic development in countries such as China, South Korea and Brazil has raised the demand in healthcare. It is expected that around 2020s, the pharmaceutical market growth will mainly come from more than 16 emerging national markets (Management Centre Europe, 2012).

Rise in health-consciousness.

The increasing number of well-informed consumers who become more health-conscious has requested for more and better healthcare products, which forms an unceasingly expanding pharmaceutical market.

Scientific advances.

Scientific, medical and IT innovations have facilitated the R&D of new healthcare products, which creates new markets and sectors in the pharmaceutical (Kabene and Wolfe, 2011).

Unmet medical needs.

Being pressured by the aging population and the pandemic of obesity-related chronic diseases, the ineffective healthcare systems in some countries have rendered a portion of population uncovered by medical care, which forms potential markets for low-cost medication.


Harsh governmental and legal control.

Governmental price control policies, regulations that raise the cost of and prolong the time of R&D process and strict controls on drugs' safety and effectiveness have reduced the profitability and can possibly lead to financial failure of pharmaceutical firms.

Parallel trade.

Free trade area like EU allowing distributors to profit by buying cheaply in one country and selling at higher price, which is possibly still below official price, in another country. This damages the profitability of pharmaceutical firms in the latter due to price differentiation.

Merging of companies.

Merging of companies has been believed to improve research and development program including productivity and cost. However, the management in some merged companies resulted in complicated systems and processes hindering productive research, innovations and development environment.


Beside the importance of changing and drawing out implications of external factors, there are still some certain flaws that we need to consider in PESTEL analysis (Johnson et al., 2011).

The external factors mentioned in PESTEL analysis are inconstant. Hence, this would be risky to predict how these factors may affect the project because those external factors usually are beyond firm's control and considered as threats (Williamson, 2003).

PESTEL analysis requires enormous amounts of relevant data which must be up-to-date, reliable, and hence, should be collected from external reliable agencies, which is time consuming and costly. Moreover, the lack of reliable data would lead to the fact that the analysis is based more on the assumptions instead of actual facts.

​The effectiveness of the analysis depends on the accuracy of the information collected. Furthermore, although the elements are described separately, marketers should pay attention to their interactions since these will lead to the new opportunities and threats (Keller and Kotler, 2011).