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    Porter's Five Forces Model: 1. Threat of New Entrants - Moderate To Low

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    138PATEL KHYATIMMSB
    Michael Porter identified five forces that shape industry competition: threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. When applied to the Indian pharmaceutical industry, the summary found: 1) Threat of new entrants is moderate to low due to high R&D and regulatory costs. 2) Bargaining power of suppliers is low due to many alternatives. 3) Bargaining power of buyers is moderate as patients have little choice of medications. 4) Threat of substitutes is moderate to high from low-cost generics and alternative medicines. 5) Rivalry among existing players is high due to intense competition.

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    Porter's Five Forces Model: 1. Threat of New Entrants - Moderate To Low

    Uploaded by

    138PATEL KHYATIMMSB
    547 views2 pages
    Michael Porter identified five forces that shape industry competition: threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. When applied to the Indian pharmaceutical industry, the summary found: 1) Threat of new entrants is moderate to low due to high R&D and regulatory costs. 2) Bargaining power of suppliers is low due to many alternatives. 3) Bargaining power of buyers is moderate as patients have little choice of medications. 4) Threat of substitutes is moderate to high from low-cost generics and alternative medicines. 5) Rivalry among existing players is high due to intense competition.

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    Porter's Pharma

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    Michael Porter identified five forces that shape industry competition: threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. When applied to the Indian pharmaceutical industry, the summary found: 1) Threat of new entrants is moderate to low due to high R&D and regulatory costs. 2) Bargaining power of suppliers is low due to many alternatives. 3) Bargaining power of buyers is moderate as patients have little choice of medications. 4) Threat of substitutes is moderate to high from low-cost generics and alternative medicines. 5) Rivalry among existing players is high due to intense competition.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    547 views2 pages

    Porter's Five Forces Model: 1. Threat of New Entrants - Moderate To Low

    Uploaded by

    138PATEL KHYATIMMSB
    Michael Porter identified five forces that shape industry competition: threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among existing competitors. When applied to the Indian pharmaceutical industry, the summary found: 1) Threat of new entrants is moderate to low due to high R&D and regulatory costs. 2) Bargaining power of suppliers is low due to many alternatives. 3) Bargaining power of buyers is moderate as patients have little choice of medications. 4) Threat of substitutes is moderate to high from low-cost generics and alternative medicines. 5) Rivalry among existing players is high due to intense competition.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
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    Porter’s Five Forces Model

    Overview:

    Michael Porter, in his revolutionary article - "Five Forces


    that Shape Strategy", observed five forces that significantly
    impact a firm's profitability in its industry. The Five Forces
    model is widely used to analyze the industry structure of a
    company as well as its corporate strategy. The Porter Five
    Forces are -

    ● Threat of New Entrants

    ● Bargaining Power of Suppliers

    ● Bargaining Power of Buyers

    ● Threat from Substitute Products


    ● Rivalry among the existing players.

    Porter’s Five Force analysis for the Indian Pharmaceuticals Industry:

    1. Threat of New Entrants – Moderate to low


    The backbone of this industry is Research and Development, constant RnD efforts are needed to
    maintain the position that a company enjoys in the market. The costs associated with RnD are
    usually very high. Even if the company is focused on producing generics and not high-end
    research, purchasing patents too is quite expensive.
    In addition to this, the government has stringent guidelines and regulations that need to be
    followed by the companies for approval of new drugs or treatments which acts as a high barrier.
    Considering these factors, the threat by new entrants is moderately low.

    2. Bargaining power of Suppliers - Low


    There are various organic chemical requirements in the form of APIs or other formulations.
    There are a number of suppliers present in the market, whereas the switching costs are relatively
    low which doesn't give suppliers much bargaining power.

    1
    3. Bargaining Power of Buyers - Moderate
    The pharmaceutical industry broadly has two types of customers, bulk buyers such as hospitals
    and patients. The hospitals have a variety of drug providers to choose from as there are many
    companies in the market that provide similar products. They use this to pressurize the
    pharmaceutical companies to keep the prices in check. However, medicines are prescribed by
    the doctors to the patients which gives the patient little to no choice, not all patients are aware
    or comfortable using generics which makes the overall bargaining power of the buyers
    moderate.

    4. Threat from substitute products - Moderate to high


    As mentioned above, there are many generic medicines available in the market. The buyers tend
    to choose the cheapest medicines. Generic manufacturers do not incur the high cost involved in
    research and development and regulatory activities such as approval and clinical trials. These
    are the reasons they can offer their product at a cheaper price. Apart from this, ayurvedic and
    homeopathic medicines are also gaining traction due to their low side effects. This increases the
    threat of substitutes.

    5. Rivalry among the existing players - High


    There already exist many well-established players in the market and the intense competitive
    nature of the industry is very easily noticeable during the ongoing covid19 crisis. Most of the
    global players are in the race to find the cure for the disease. Under normal circumstances too,
    high working capital requirements and high bargaining power of buyers makes this industry
    highly competitive.

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