​ HEALTHCARE SECTOR

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​ Threat of New Entrants: The healthcare industry, including pharmaceuticals, requires significant
investments in research and development (R&D) and compliance with regulatory policies. These
high barriers to entry limit the number of companies that can establish themselves in the
industry. The cost and time associated with developing new drugs or setting up manufacturing
plants discourage new entrants. As a result, a small number of established companies dominate
the sector. However, there is a growing trend of healthcare startups focusing on innovative
technologies like artificial intelligence (AI) and machine learning (ML) applications in
healthcare. These startups have the potential to disrupt traditional healthcare models and are
often targeted for acquisition by larger healthcare and pharmaceutical players.
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​ Threat of Substitute Products or Services: Customers in the healthcare industry, including
patients and healthcare providers, often seek cost-effective alternatives. In the pharmaceutical
sector, when a patented drug goes off-patent, generic versions become available at lower prices,
posing a threat to branded products. Pharmacies also offer alternative brands for the same
molecule, which may be cheaper or incentivized for retailers. Moreover, alternative therapies
and traditional medicine systems like Ayurveda and homeopathy can act as substitutes for
certain medical treatments. However, for critical and emergency healthcare services, the
availability of substitutes is limited.
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​ Bargaining Power of Customers (Buyers): In the healthcare industry, customers, such as
patients, typically have limited bargaining power. Patients generally follow the prescriptions and
treatment plans recommended by healthcare professionals. The options available to them are
often constrained, and they rely on healthcare providers and pharmacies for the required
medications and services. In some instances, governments make bulk purchases of medications
through tender systems, where pricing by suppliers still plays a significant role. The limited
number of potential suppliers further restricts the bargaining power of customers. In developed
countries with well-established insurance systems, customers may have more bargaining power
when choosing healthcare insurance plans, but affordability and coverage limitations still play a
role.
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​ Bargaining Power of Suppliers: Suppliers, such as pharmaceutical companies, medical device
manufacturers, and equipment suppliers, possess significant bargaining power in the healthcare
industry. Healthcare providers, including hospitals, clinics, and pharmacies, rely on these
suppliers for drugs, medical devices, and other necessary supplies. Suppliers can influence
pricing, delivery terms, and availability, especially for specialized or patented products.
Additionally, suppliers often have well-known and branded products, further strengthening their
bargaining position.
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​ Intensity of Competitive Rivalry: The healthcare industry in India experiences intense
competition among various players. Private healthcare providers, clinics, and pharmacies
compete fiercely to attract patients and customers. The competition is driven by factors such as
quality of care, pricing strategies, reputation, and access to specialized services. Companies
invest substantial amounts in research and development, marketing, and pricing strategies to
gain a competitive edge. In the pharmaceutical sector, generic players often engage in price
competition to capture market share, particularly when drugs go off-patent. The competitive
rivalry is also influenced by the emergence of digital health startups, which introduce new
technologies and innovative business models to the industry.