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Name of Industry or Sector Strategic GroupThe Pharmaceutical Industry Threat of new entrants Several aspects have been taken into consideration for the threat of new entrants Firstly the expenditure of RD is too costly especially for the branded prescription drugs Regarding the pipeline it takes too long a time for new drugs to move from discovery to market nearly 12 years In this situation the spending on RD is high due to the long lead times which have something to do with the clinical testing Furthermore the growing spending on RD and contrarily the decline of new drugs reaching market indicate that the market yield is falling Considering the patent protection one-third of the top 35 molecules NCEs will counter patent expiry by 2004 in which the generics will not be against by the regulations Finally the spending for pharmacy is controlled by governments and their methods vary from each others and sometime are very strict and combined with many approaches A further obstacle is the government approvals slow down In the 1990s the FDA approved 35-45 new compounds a year but in the first nine months of 2001 only 11 were approved Smith Threat of substitute products As surgery develops many diseases and illness can be cured through operations instead of taking pills which maybe more convenient and time and money saving Moreover being without side effects surgery has an advantage over drugs So it seems that it is unnecessary to be intervened by drugs However the threat is low to the industry Power of customers As there are many ways to get information about drugs such as TV advertisements and internet customers have many options and high awareness of price Furthermore the convenient transportation and different distributions offer consumers various ways to purchase For example they can prefer other countries drugs due to the barriers to some certain drugs Meanwhile because the expense of pills is increasing
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