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Course: Business Environment

Brief Outline of project

Batch: 2012-14 Total Words: 500 Group Members: Section: E Total Pages: 4 Project Group No: 10 Country: USA

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Rohit Goyal Roshni Chhabra Sagar Panchal Samiksha Kalra

Roll No.
2012255 2012259 2012262 2012267

Terms of Reference:
Eco-Forecasters is given a project by a MNC to evaluate the market and economic health of USAs pharmaceutical industry to expand. We will be studying USA economy as of today, its policies & regulations, future of US economy and scope of Pharmaceutical industry in USA. Eco-Forecasters will submit the report by 14th march 2013.

Data, Variables and Methodology:

The well-being of the pharmaceutical industry is dependent largely on the economy. The various economic indicators that affect the pharmaceutical industry are: Unemployment Uninsured and Underinsured People

Government Health Expenditure GDP

Structural features of the US economy:

US is a market-oriented and capitalist economy. US firms face higher barriers to entry in competing overseas markets than foreign firms do in the US. Although the US strongly advocates free market principles, the government still plays a major role in dictating the US economy.

Threats and Opportunities

Threats of entry posed by new or potential competitors LOW Degree of rivalry among existing firms HIGH Bargaining power of suppliers LOW Bargaining power of buyers LOW Closeness of substitute products MEDIUM Threat only from generic competition.

Current State of the Economy:

The US pharmaceutical market is the largest pharmaceutical market in the world which has registered a marginal slowdown in the growth rate over the period but because of government healthcare policy restructuring it is one of the lucrative markets. US pharmaceutical industry has recorded a growth in sales over the past few years.


Figure 1

Source: World Bank data

Figure 1 shows declining GDP trend to support above claim.


Figure 2

Source: World Bank Data

As Unemployment is coming down, more people are coming under health insurance ambit. So, demand for health care has increased.

US Government Healthcare spending:

Figure 3

As government health care spending increased because of restructuring of policies like PPACA, it is giving an overall boost to pharmaceutical industry.

Patient Protection and Affordable Care Act (PPACA) has affected the pharmaceutical industry in US. PPACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care.

Assessment of the Future Economic Structure:

Americans spent $286.5 billion on prescription drugs in 2007, up from $40.3 billion in 1990. Though prescription drug spending currently accounts for only 10% of national healthcare expenditure, it is a fast-growing segment. The U.S. Department of Health and Human Services predicts that the national market will continue to increase, reaching $515.7 billion in 2017.

US is significantly lagging in market growth but healthcare market is fundamentally restructuring how healthcare is cost-effectively developed, delivered and reimbursed to improve the overall health of the population.