The Industry Challenge: Who Would Want to Be in This Business?

Abstract

Although the pharma industry is primarily based on a science-driven paradigm, the industry itself is highly complex with multiple stakeholders and actors. We employ Porter’s Five-Forces industry analysis to examine the power of suppliers and buyers, potential competitors, the threat of substitute products, and rivalry among established companies. Regulators are also discussed, as they constitute a key stakeholder in the industry. We present key challenges to the traditional pharma business model, and conclude with an overview of merger & acquisition and diversification trends in the industry.