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Strategy Case | Pharmaceutical Market - Study Group 25

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Natasha Garcha

on 27 October 2013

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Transcript of Strategy Case | Pharmaceutical Market - Study Group 25

THE GLOBAL PHARMACEUTICAL INDUSTRY: SWALLOWING A BITTER PILL
Question 2
Carry out a strategic group analysis of the pharmaceutical industry.

What implication, if any, are there for a mid-sized company based predominately in the European conventional, ethical drug market?

Separate elements:
•The pharmaceutical market will reach nearly
USD 1,200 billion by 2016.

• Leading emerging countries will account for
28% of global spending on pharmaceuticals by
2015, compared to 12% in 2005.

• The US share will decline from 41% in 2005 to
31% in 2015, while Europe’s share will fall from
27% in 2005 to 19% in 2015.
COMPETITION
FOR IP
HIGHLY
REGULATED
INNOVATION
BASED
USEFULNESS OF STRATEGIC GROUPS
GROUP 25

Christopher D'Cruz
Natasha Garcha
Mark Hearson
Hilary Polk-Williams
Jason Salminen
Yashveer Singh
KEY MARKET
CHARACTERISTICS
Strategic groups are organizations within an industry or sector with similar strategic characteristics, following similar strategies or competing on similar bases.
Understanding
competition
Analysis of strategic
opportunities
Analysis of
mobility barriers

Q & A
INTEGRATORS
GLOBALS
GENERICS
BIOTECH /
BIOPHARMA
SPECIALISTS
STRATEGIC GROUP ANALYSIS
CASE STUDY: LUNDBECK – A MID-SIZED EU FIRM'S RESPONSE TO IMPLICATIONS

COMPANY BACKGROUND
Specialists in neurosciences
Headquartered in Denmark
2012 sales of USD 2.7 bn
1H2013 sales growth:
23% U.S, -2% EU, 14% Int’l


Implication: Follow a clear growth-oriented strategy
situated in a fragmented, consolidating EU market with lower growth and lower margins, Lundbeck has leveraged its competitive advantage by:

Analysis of strategic
opportunities
Sales by Geography
PESTEL ANALYSIS OF EU ETHICAL, CONVENTIONAL PHARMA ENVIRONMENT

In terms of Porter’s Five Forces:
Reduced Competitive Rivalry – Niche focus
Eliminated Supplier Power – In-house R&D
Reduced Customer Power – Seller’s market
High Barriers to Entry – High investment
Reduced Substitutes – Innovative, patented drugs
Developing a niche in high-growth, high-margin Central Nervous System pharma and research
Expanding into the U.S. and international markets
Establishing a good R&D pipeline of innovative, patented products reinvesting 20% of sales
Full transcript