Pharmaceutical Products Of The Chemical Industry Essay

Pharmaceutical Products Of The Chemical Industry Essay

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The market players, which in this case are leading pharmaceutical companies, would normally buy supplies, such as active pharmaceutical ingredients (APIs), from major suppliers that form sub-sector of the chemical industry. These are provided on a contractual basis and most pharmaceutical companies face high switching costs if they decide to change suppliers. That is why a number of these companies decided to invest in chemical manufacturing and become partially self- sufficient. Another way in which these market players are able to reduce the supplier power is through purchasing their raw materials from multiple suppliers; since their laboratory equipment and chemical ingredients show little differentiation in between vendors.
Pharmaceuticals tend to employ sourcing managers to further minimize costs through their engagement and good relationships with suppliers. This is an activity that gets more common when there are instances in which specialized materials or facilities are required and supplier power is much stronger. Their capabilities on chemical processing could make them ideal candidates to compete in the manufacture of generic drugs (threat of forward-integration), however unlikely it may be for them to do it doesn’t take away the possible threat.
Outsourcing drug testing and clinical trials to third-party service providers is common between big pharmaceuticals, as so they become a different but important supplier given the weight that regulatory approvals have in the industry.
Barriers of Entry – High
The threat of entry for this industry is deeply affected by regulations, legal frameworks and the acquisition of specific licenses. One of the main regulators in the US is the Food and Drug Administration (FDA) for which ...


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...con), and 18.5% from complex, differentiated generics and biosimilars (Sandoz) in FY2015. This variety of assets allows the company to capture opportunities across global markets recording consistent growth over the years.
Novartis concerns itself with continuous innovation and improvement of its operations, in FY2015 they invested $8.9 billion in R&D, significantly advancing its promising pipeline projects and securing major FDA and European approvals across its portfolio. Novartis has achieved a very good image and high reputation on a global scale, becoming a respectable example of the “good global citizen”, frequently ranked among the top companies of Fortune magazine’s most highly admired companies of the pharmaceutical industry. The reason behind it emerges from their emphasis on environmental protection policies, as well as safety and satisfaction of patients.

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