Case Solution on the Pharmaceutical Industry
Q3. What are the prospects for the industry going forward?
1.Though the average level of profitability in the pharmaceutical industry has been declining over time (In 2002, the average ROIC in the industry was 21.6%; by 2006, it had fallen to 14.5%), historically, the pharmaceutical industry has been a profitable one. Because-
Name of industry | Average ROIC(Between 2002 and 2006) | Pharmaceuticals | 16.45%(large) | computer hardware | 12.76% | Electronics | 3.88% |
2. The prospect for the industry for going forward is very positive. Because the demand for pharmaceuticals has been strong and has grown for decades. Between 1990 and 2003, there was a 12.5% annual increase in spending on prescription drugs in the United States. Looking forward, projections suggest that spending on prescription drugs will increase between 10 and 11% annually through 2013. So these customers spending will increase the profit of pharmaceutical companies automatically.
3. The prospect for the industry for going forward is very positive. Because the proprietary drag companies like Pfizer has already eight Blockbuster drugs that usually enough to generate 55% revenue.
Q3.What are the opportunities, and what are the threats?
There are also some big opportunities on the horizon for firms in the industry. New scientific breakthroughs in genomics are holding out the promise that within the next decade pharmaceutical firms might be able to bring to market new drugs that treat some of the most intractable medical conditions, including Alzheimer’s, Parkinson’s disease, cancer, heart disease, stroke, and AIDS.
However, there are some threats to the long-term dominance and profitability of industry giants like Pfizer.
1.Controlled price in future: As spending on health care rises, politicians are looking for ways to limit health care costs, and one possibility is some form of price control on prescription drugs. Price controls are already in effect in most developed
1.Though the average level of profitability in the pharmaceutical industry has been declining over time (In 2002, the average ROIC in the industry was 21.6%; by 2006, it had fallen to 14.5%), historically, the pharmaceutical industry has been a profitable one. Because-
Name of industry | Average ROIC(Between 2002 and 2006) | Pharmaceuticals | 16.45%(large) | computer hardware | 12.76% | Electronics | 3.88% |
2. The prospect for the industry for going forward is very positive. Because the demand for pharmaceuticals has been strong and has grown for decades. Between 1990 and 2003, there was a 12.5% annual increase in spending on prescription drugs in the United States. Looking forward, projections suggest that spending on prescription drugs will increase between 10 and 11% annually through 2013. So these customers spending will increase the profit of pharmaceutical companies automatically.
3. The prospect for the industry for going forward is very positive. Because the proprietary drag companies like Pfizer has already eight Blockbuster drugs that usually enough to generate 55% revenue.
Q3.What are the opportunities, and what are the threats?
There are also some big opportunities on the horizon for firms in the industry. New scientific breakthroughs in genomics are holding out the promise that within the next decade pharmaceutical firms might be able to bring to market new drugs that treat some of the most intractable medical conditions, including Alzheimer’s, Parkinson’s disease, cancer, heart disease, stroke, and AIDS.
However, there are some threats to the long-term dominance and profitability of industry giants like Pfizer.
1.Controlled price in future: As spending on health care rises, politicians are looking for ways to limit health care costs, and one possibility is some form of price control on prescription drugs. Price controls are already in effect in most developed