Industry inalysis

Pharmaceuticals has become one of the most important industries attributing to the well beings and lifestyles of the world’s populations. From treating, diagnosing, curing, and preventing of diseases, pharmaceuticals companies are providing their consumers with options of relief from illnesses. Unlike many other industries, pharmaceuticals was able to increase growth during the recent economic downturn, which further shows the demand that pharmaceuticals command from society. Although the public is the end-user of all products, before the consumer gets the product, there is only a couple of options on how it makes it way to the public. A pharmaceutical company will either sell it to a wholesaler, a pharmacy benefits manager, or to a pharmacy or store directly, depending on the size of the company. For example, a retail store like Wal-Mart, will command enough business to get the product exactly from the manufacturer. However, a company like your local hometown pharmacy, will have to get there product from a wholesaler to receive a better price than they would get buying directly from a manufacturer. The biggest wholesalers are McKesson, AmerisourceBergen, and Cardinal Health. Stores like Walgreens, CVS, Walmart, and other supermarkets also buy directly from the manufacturer. A pharmacy benefits manager, like Caremark or Express Scripts is an intermediary between manufactures and pharmacies, usually the customers insurance is obligated to go through certain pharmacies according to the PBM. Pharmacy Benefits Managers are there to negotiate better prices for insurance companies.

According to the World Health Organization, the global pharmaceutical industry is a $300 billion industry, a figure that is expe...

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...regulatory authority. The FDA is the agency in the US a manufacturer would go to with a description of the drug and the results of the clinical trial. After approval, then the company will gather additional data on effects of long-term risk and benefits. This stage can go on for several years until the manufacturer feels the drug is completely safe for everyday use. According to research done my Lawrence Lord (2011), R&D expenditures have a positive correlation in the amount of profitability a firm will be able to make. Even though R&D is costly, it is a necessary cost that a company must be willing to risk to have an edge on the competition. After all the time and money is spent on developing the drug, the other difficult is spending money to market the drug. Before being able to sell your first pill, the company has already risked at least $1 billion dollars. The