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    Porter's Five Force Model

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    Krishna Chaitanya
    The document analyzes the external environment of the Indian pharmaceutical industry. It finds that the industry is highly fragmented with over 20,000 manufacturers and the largest player having only a 7% market share. While generic drugs see high competition, patented drugs have experienced increased rivalry since India adopted a product patent regime in 2005. Buyers have little bargaining power as consumers must purchase what doctors prescribe. Suppliers face significant competition. Entering the generic drug market has low barriers but developing patented drugs requires significant capital and expertise. The industry faces threats from new biotechnologies and alternative remedies. Overall, the industry has segmented with large firms focusing on patented drugs for high-end consumers and smaller companies targeting rural populations with generic drugs.

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    Porter's Five Force Model

    Uploaded by

    Krishna Chaitanya
    462 views19 pages
    The document analyzes the external environment of the Indian pharmaceutical industry. It finds that the industry is highly fragmented with over 20,000 manufacturers and the largest player having only a 7% market share. While generic drugs see high competition, patented drugs have experienced increased rivalry since India adopted a product patent regime in 2005. Buyers have little bargaining power as consumers must purchase what doctors prescribe. Suppliers face significant competition. Entering the generic drug market has low barriers but developing patented drugs requires significant capital and expertise. The industry faces threats from new biotechnologies and alternative remedies. Overall, the industry has segmented with large firms focusing on patented drugs for high-end consumers and smaller companies targeting rural populations with generic drugs.

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    Porter’s Five Force Model

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    The document analyzes the external environment of the Indian pharmaceutical industry. It finds that the industry is highly fragmented with over 20,000 manufacturers and the largest player having only a 7% market share. While generic drugs see high competition, patented drugs have experienced increased rivalry since India adopted a product patent regime in 2005. Buyers have little bargaining power as consumers must purchase what doctors prescribe. Suppliers face significant competition. Entering the generic drug market has low barriers but developing patented drugs requires significant capital and expertise. The industry faces threats from new biotechnologies and alternative remedies. Overall, the industry has segmented with large firms focusing on patented drugs for high-end consumers and smaller companies targeting rural populations with generic drugs.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    462 views19 pages

    Porter's Five Force Model

    Uploaded by

    Krishna Chaitanya
    The document analyzes the external environment of the Indian pharmaceutical industry. It finds that the industry is highly fragmented with over 20,000 manufacturers and the largest player having only a 7% market share. While generic drugs see high competition, patented drugs have experienced increased rivalry since India adopted a product patent regime in 2005. Buyers have little bargaining power as consumers must purchase what doctors prescribe. Suppliers face significant competition. Entering the generic drug market has low barriers but developing patented drugs requires significant capital and expertise. The industry faces threats from new biotechnologies and alternative remedies. Overall, the industry has segmented with large firms focusing on patented drugs for high-end consumers and smaller companies targeting rural populations with generic drugs.

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    You are on page 1of 19

    1

    EXTERNAL ANALYSIS FOR INDIAN PHARMACEUTICAL INDUSTRY

    9-Mar-12

    By
    2

    Kranthi Kiran P Krishna Chaitanya P Raviteja Ch Aditya B

    9-Mar-12

    Introduction
    3

    The marketplace for this industry is the human body but only as long as it holds diseases. A key strategy to improve profits is to develop drugs that simply mask the symptoms while avoiding the cure!! The worst part is that, the eradication of diseases is by its very nature opposed to the interests of the pharma investment industry.

    9-Mar-12

    Overview about Indian Pharma Industry


    4

    Worlds 13th largest in terms of value. 4th largest in terms of volume. Highly fragmented with more than 20,000 registered manufacturing units. Leading 250 pharmaceutical companies control 70% of the market. Market leader holds only 7% of the market share.
    9-Mar-12

    15

    9-Mar-12

    Overview about Pharma


    6

    Industry

    Highly Regulated
    Patent Act (1970), Product Patent Regime(2005)
    NPPA

    Research Oriented
    Product Patent Regime(2005)

    Limited Customer Choice


    End-user different from influencer

    Highly dependent on development of Health Infrastructure


    9-Mar-12

    STRATEGIC GROUP MAPPING

    9-Mar-12

    9-Mar-12

    9-Mar-12

    Industry Competition/Rivalry
    10

    Most competitive industry in the country with as many as 20,000 different players. Top player in the country has only 7% market share and top five have 20%. High growth prospects. Even though need for working capital is high, patents for generic drugs are available easily and it does not require skilled personnel.
    9-Mar-12

    Continued
    11

    Generic drugs - Rivalry is mainly due to cost competitiveness. Has remained the same even after 2005. Patented drugs Rivalry due to product differentiation. Has increased after 2005.

    9-Mar-12

    Bargaining Power of Buyers


    12

    End user of the product is different from the influencer. Consumer has no choice but to buy what doctor says. Buyers are scattered and they as such does not wield much power in the pricing of the products. Can be slightly higher in case of generic drugs.
    9-Mar-12

    Bargaining Power of Suppliers


    13

    Pharma industry depends upon several chemicals. Very competitive and fragmented industry. Chemicals are largely a commodity. Pharma industry can switch from their suppliers without incurring a very high cost. Can be slightly higher in case of patented drugs. 9-Mar-12

    Threat of new entrants(Generic drugs)


    14

    Most easily accessible industries for an entrepreneur in India. Capital requirement for the industry is very low, creating a regional distribution network is easy. The bigger players are moving towards R&D, thus providing an opportunity for new entrants. Supplier can go for forward integration to become a pharma company.
    9-Mar-12

    Threat of new entrants(Patent drugs)


    15

    Very high capital and skill required. The field of discovery and developments of new chemical entity (NCEs), had more misses than hits and very few discoveries reach the final stages of approvals Established firms will make it very difficult for a new entry.

    9-Mar-12

    Threat of Substitutes
    16

    One of the great advantages of the pharma industry is that it is almost irreplaceable. Demand for pharma products continues and the industry thrives. Recent improvements in biotechnology and biopharmaceuticals can prove to be a threat. Home remedies
    9-Mar-12

    CONSOLIDATED ANALYSIS
    17

    9-Mar-12

    Conclusion
    18

    In the domestic market, the new patent legislation resulted in fairly clear segmentation. The big players narrowed their focus onto high-end customers who make up only 12% of the market, taking advantage of their newly bestowed patent protection. Meanwhile, the smaller firms have chosen to take their existing product portfolios and target semi-urban and rural populations
    9-Mar-12

    19

    THANK YOU

    9-Mar-12

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