Analysis Of The Global Drug Market As A Competitive Market

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5. Analysis of Global Drug Market as a Competitive Market:- • A competitive market consists of a large number of buyers and sellers that are small relative to the size of the overall market. Similarly, for the global drug market, there are numerous players in it. Infinite number of sellers and buyers of the pharma-drug comprises of the Global Drug Market. Some major players of the global drug market from all around the world are Novartis, AstraZeneca, Johnsons & Johnsons, Lilly, Roche, Merck, etc. • The sellers in the competitive markets offer reasonably homogenous or similar products. In other words, there isn 't any substantial product differentiation, branding, etc., in competitive markets, and consumers in these markets view all of the…show more content…
For example, if an individual seller were to increase its supply, as shown above, the increase might look substantial from the perspective of the individual firm, but the increase is fairly negligible from the perspective of the overall market. This is simply because the overall market is on a much larger scale than the individual firm, and the shift of the market supply curve that the one firm causes is nearly imperceptible(very slight). Because the shift in supply is nearly imperceptible from the perspective of the market, the increase in supply is not going to lower the market price to any noticeable degree. Also, note that the same conclusion would hold if an individual producer decided to decrease rather than increase its…show more content…
Therefore, an individual firm in a competitive market is said to face a horizontal or perfectly elastic demand curve, as shown by the graph on the right above. But in the case of the drug market, an individual firm is capable enough to become the “Price Maker” in the market. Some firm are the only single producers of the specialised drugs which are to cure the life-taking diseases like cancer. For example, Novartis developed a drug named Gleevec that is capable of extending the lie span of a cancer patient up to a great level. With this exclusive benefit, Novartis became the price maker of the drug in the market as no other firm could produce such a drug. On this basis we can consider the global drug market as a partial monopolistic or monopoly

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