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Strategy Case | Pharmaceutical Market - Study Group 25
Transcript of Strategy Case | Pharmaceutical Market - Study Group 25
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?
•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.
USEFULNESS OF STRATEGIC GROUPS
Strategic groups are organizations within an industry or sector with similar strategic characteristics, following similar strategies or competing on similar bases.
Analysis of strategic
Q & A
STRATEGIC GROUP ANALYSIS
CASE STUDY: LUNDBECK – A MID-SIZED EU FIRM'S RESPONSE TO IMPLICATIONS
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
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