3.

0 Porter's Five Forces Analysis of Pharmaceutical industries:

Porter's Five Forces analysis is one model for examining a company’s strategic position
within its industry. The analysis looks at five competitive industry forces: the threat of new
entrants, the power of suppliers, the power of buyers, the availability of substitutes, and
competitive rivalry. The following are explained below:
The threat of New Entrants or competitors
The big payoffs and profits in the pharmaceutical industry usher a steady flow of new
companies being created. A team of researchers and experts with innovative ideas or newly
granted patents can find venture capital funds eager to provide millions of dollars in startup
funding. However, these smaller companies pose no serious threat to big pharma
companies. For startup investors, one of the primary strategies is to sell out to a big pharma
firm when new products are in the initial development phase.
Power of Suppliers
The Suppliers have very little power in the pharmaceutical industry, and the raw materials
for manufacturing drugs are commodity products in the chemical industry, readily available
from numerous sources. Suppliers usually offer various products to the manufacturer, which
moderates pricing on rarer materials and unique equipment requirements.