Any manufacturing area has a functioning model that influences it and its competitive forces in a capitalistic society. Pharmacology is not different because several powers are to be considered while entering the market. One of the leading models for examining the sector and the strategic position within the given industry is Porter’s Five Forces analysis. This essay will evaluate the pharmacological sector based on the five given criteria: the treatment of new entrants, suppliers, buyers, an opportunity to get more substitutes, and the business’s rivalry.
According to the Porter Five Forces Analysis, Pfizer was excellent at treating new entrants. First, they constantly innovated their products and services, resulting in a significant fall in their revenues. They had spent lots of money on research and developing new drugs because the new entrants are less likely to enter a stoic company that never develops. However, it is also essential to consider every possibility and risk associated with change because history can repeat. The case of Pfizer is interesting since it was almost defeated. Being the most prominent global pharmaceutical firm, the company seemed to be one of the most successful ones among all others. Pfizer specialized in new medication and treatments of widespread diseases such as metabolism issues. Half of the total income came from prescription drugs, which was relatively common among pharmacies. Pfizer aimed at innovations in medications and heavily involved its company in biotechnology. The organization established its life in research and development, which sometimes can destroy the pharmaceutical industry.
The Pfizer company was a significant industry that needed lots of raw materials from suppliers. They, being in a good position, could have benefited the company significantly compared to their current level of products. Sellers who hold power over the industry usually negotiate with pharmacological companies to gain additional goods payments. Although Pfizer had built a supply chain with multiple manufacturers, they all still affect the firmâs profits. Although pharmacological materials are standard, it is essential to connect Pfizer’s company to those who present unique products and rare equipment. Pfizer had a plethora of issues while developing new medicines, especially concerning the costs of developing and testing new drugs. As a leader in the industry, Pfizer a giant chunk of profits because sometimes the side effects were bad since the drug had been a significant concern for human safety. Moreover, the pre-testing costs were the most significant part of Pfizer’s medical invention.
Buyers are the essential pillar of any business; they dictate change and quality. Nevertheless, they wish to acquire the best for the least. Because prescription drugs were among the main profits of Pfizer’s company, they had a strong base of customers, which was helpful in some ways: it made the company streamline its sales and decreased buyers’ bargaining power (Hager et al., 2017). Moreover, the company usually worked in the field of innovations, which is why it grew to become the most substantial pharmacological firm. They kept creating new drugs, and new innovative methods, which appealed to the customers and made them buy them more.
The amount of substitutes for the product also contributes to its success. For the reason that Pfizer used to develop lots of products, there were replacements for one drug: cheaper and more expensive (Holdford, 2018). Pfizer was mainly a product-oriented company, which proved to be a mistake. They had little understanding of the customerâs needs and preferably were oriented on their buying ability. This is the reason why the company nearly collapsed and ceased to exist. Furthermore, judging from their annual reports, Pfizer had billions of revenue. Medicines such as Viagra, Lyrica, and others were created under the company’s plans: (Mooney and Fay, 2021). However, there was an increasing amount of production, which stopped their development on the stage of clinical testing, which cost millions of dollars. Therefore, the rising amounts of failed medicines created a negative tendency, which started the company’s downfall. The regular resources usually spent on drug creation by the company began to exceed the profits gained by successful medicines.
The company provided the public with an official explanation for the crisis. It stated that the losses were tied to the significant product fall, Lipitor, which equaled 12% of the annual revenues (Mooney and Fay, 2021). For the considerable revenue loss, the dismissal of more than 10,000 employees was announced (Mooney and Fay, 2021). Moreover, because of the significant fall of several effective medicines, the company’s competitors rose after Pfizer’s fall. The main competitors among them were GSK, Novartis, and J&J, which fought each other for the opportunity to manufacture even half-successful drugs to appeal more to the customers.
Furthermore, rivalry is what usually benefits the industry since it moves the organization towards the needing change. Pfizer is a strong and valuable company, and it stands out among others in a major manufacturerâs industry. The competition usually makes the companies similar to one another, since they tend to steal ideas, and so on. However, Pfizer had built a sustainable differentiation and reputation as a better competitor than others (Hager et al., 2017). Moreover, the organization usually collaborated with other similar sellers to increase the size of their targeted market.
To conclude, Pfizer is the most well-placed company in the industry. Despite its initial and evident minutes, it is still better than its counterparts for various reasons. In my opinion, the most crucial industry force that should be taken into account when making a strategy for the industry are buyers. They are essential for any business, so companies should first consider buyers and their needs.
Reference list
Hager, D., Chmielewski, E., Porter, A., Brzozowski, S., Rough, S. and Trapskin, P. (2017) âInterprofessional development and implementation of a pharmacist professional advancement and recognition programâ, American Journal of Health-System Pharmacy, 74(22), pp. 1895-1902.
Holdford, D. (2018) âResource-based theory of competitive advantage â a framework for pharmacy practice innovation researchâ, SciElo. Web.
Mooney, L. and Fay, L. (2021) âCross-Sectional Study Of Pfizer-Sponsored Clinical Trials: Assessment Of Time To Publication And Publication Historyâ, BMJ Journals. Web.