The Threat of New Entry
Essay by Tharit Saorayangkoon • November 2, 2016 • Essay • 563 Words (3 Pages) • 773 Views
The Threat of New Entry
In my perspective, the threat of new entrance is low in pharmaceutical industry because the capital requirement is huge to invest in this sector. To produce the product, it spends a huge amount of money and it takes a long length of time in order to develop the product. Innovation also can be the risk for new companies because nowadays, technology is evolving rapidly, therefore, it is very difficult to ensure that a product, which company is developing will succeed or not as I mentioned, it required a long length of period to develop a pharmaceutical product. Furthermore, this section is related to the safety and health of consumers, therefore, it requires many rules and regulation by the government to maintain the standard to prevent any dangers to consumers which is barriers for new companies to enter into market.
The Threat of substitutes
In my opinion, threat of substitutes is moderate. The substitute products in this biopharmaceuticals, however, to develop this product, it required time at least 10 years and a huge capital to invest. Therefore, the price of this substitute product is quite expensive. Also, the import of drugs or parallel trade from other countries is cheaper than the domestic pharmaceutical products in some countries. https://mktpharma.wordpress.com/tag/biopharmaceutical-
products/
Bargaining Power of Suppliers
Bargaining power of supplier is low. Suppliers in this industry are from chemical industries. A company is able to change its supplier without incurring a very high cost. It is very difficult for the suppliers to increase the price because if they increase their price a company might change supplier to get a lower price compared to existing one. Also, suppliers do not supply their raw material to final customers therefore they are able to supply only pharmaceutical companies. Also, the main player in this industry such as Pfizer is able to purchase in very large volume of raw material which decrease the decreased the bargaining power of suppliers. Labour and experts are
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