Five Forces of Cancer Market
Five Forces of the global Pharmaceutical industry
THE CANCER MARKET
Cancer is a disease which has a high disease burden throughout the world and whose treatment is notoriously difficult. The market for anti-cancer drugs can be described as being in the “growth phase” of the industry cycle.
Threat of entry - MEDIUM
Based on previous traditional “synthetic drug development model” for cancer, threat of entry has been low based on high fixed costs required for the arduous processes of drug discovery, development, manufacturing, and approval through the various regulatory bodies, with a significant amount of money needed to be spent on drugs which never reach the market.
Notwithstanding this there has been an emergence of a number of smaller “bio-tech” firms which use a different (i.e. biological) model of drug development, and have considerably less start-up costs relative to that required to set up “Big Pharma companies”. This has reduced barriers to entry.
Supplier power- LOW
The materials required by Big Pharma companies to make chemical entities for the “traditional synthetic drug synthesis model” on the whole are readily available raw chemicals, available from a large variety of different suppliers
Biotech companies use natural materials and laboratory chemicals/materials to synthesise drugs. These are also supplied by a variety of different companies to Biotech’s and other institutions such as Universities etc.
Buyer power - MEDIUM
Drug expenditure has continued to increase within the nations where the Pharma market is largest due to people living longer and requiring more continued drug treatment to sustain them. As a result price sensitivity has increased.
Insurance based health maintenance organizations were set up in the USA and agencies such as NICE in the UK. The aim of such organisations was to reduce unnecessary health care costs by analysing the cost and benefit of the proposed treatments (such as the number of extra years of quality
THE CANCER MARKET
Cancer is a disease which has a high disease burden throughout the world and whose treatment is notoriously difficult. The market for anti-cancer drugs can be described as being in the “growth phase” of the industry cycle.
Threat of entry - MEDIUM
Based on previous traditional “synthetic drug development model” for cancer, threat of entry has been low based on high fixed costs required for the arduous processes of drug discovery, development, manufacturing, and approval through the various regulatory bodies, with a significant amount of money needed to be spent on drugs which never reach the market.
Notwithstanding this there has been an emergence of a number of smaller “bio-tech” firms which use a different (i.e. biological) model of drug development, and have considerably less start-up costs relative to that required to set up “Big Pharma companies”. This has reduced barriers to entry.
Supplier power- LOW
The materials required by Big Pharma companies to make chemical entities for the “traditional synthetic drug synthesis model” on the whole are readily available raw chemicals, available from a large variety of different suppliers
Biotech companies use natural materials and laboratory chemicals/materials to synthesise drugs. These are also supplied by a variety of different companies to Biotech’s and other institutions such as Universities etc.
Buyer power - MEDIUM
Drug expenditure has continued to increase within the nations where the Pharma market is largest due to people living longer and requiring more continued drug treatment to sustain them. As a result price sensitivity has increased.
Insurance based health maintenance organizations were set up in the USA and agencies such as NICE in the UK. The aim of such organisations was to reduce unnecessary health care costs by analysing the cost and benefit of the proposed treatments (such as the number of extra years of quality