According to IBIS World, competition in the pharmaceutical industry is high and the trend is increasing. It all depends on whether a company still has there patent or not and if the product is new and does not yet have a generic version competing against it. Another important factor that plays into competitive landscape is promotion. Promotion is a major influence on the products and drugs customers choose to request from their doctors or buy over the counter.
The issue used to be that pharmaceutical companies were not showing enough of an entrepreneurial attitude toward research and development but as of this year a change in the exclusivity laws has changed this attitude. Since companies had patents that guaranteed the exclusivity of their product, motivation in the research and development sector of the industry was slow. As of this year though, many pharmaceutical companies’ patents are set to expire which means that now other companies are free to develop a generic version of the brand name product which will hurt sales for the creators of the product and as a result many brand name pharmaceutical companies are making some changes in order to avoid a loss in revenues.
One of the biggest leading entrepreneurs of the pharmaceutical industry today is Pfizer. Pfizer’s patent is set to expire this year (2011) and as a result they have made some changes in order to remain successful in such a competitive industry. Some of the changes Pfizer has made are its reduction of employees. As a result of the patent expiration many jobs have been lost or outsourced in order to lower costs. Another move Pfizer has made is commercializing and selling its product outside of the United States. According to IBIS World, “outside of the United States, [Pfizer] generates revenue in excess of $500.0 million in 14 countries” and recently they have made a contract agreement with India-based Claris Lifesciences Ltd. to commercialize 15 sterile injectable medicines. When experiencing a loss of exclusivity within the US, Pfizer saw opportunity outside of the US to save their revenues and made the move. Going international was the best move Pfizer could have made. And as of lately Pfizer has been investing a lot of money in research and development in order to continue to make profit in the US by developing a new and effective product before any other companies do and before generic companies can mock their product.
Another one of the biggest leading entrepreneurs of the pharmaceutical industry today is GlaxoSmithKline. GlaxoSmithKline is a UK pharmaceutical company that has many international locations just as Pfizer does. Opposite of Pfizer though, GlaxoSmithKline has decided to cut its investment in research and development. According to IBIS World, GSK has decided to “halt to discovery research in selected areas including depression and pain and looking to establish a new unit for research into rare diseases.” This is smart because with how expensive research and development is in the search of new products, companies want to invest in a product less basic and easily duplicated by generic companies. Discovery of a new product for a rare disease will only sky rocket revenues and put their company in the lead.
These entrepreneurial moves made both by Pfizer and GlaxoSmithKline is what has helped to keep their companies in the lead of the pharmaceutical industry especially during a time when competition is at its highest do to patent expirations.
~ Zenas
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