Pharmaceutical Industry Analysis: PESTLE and Porter's Five Forces

Running head: Pharmaceutical Industry
Pharmaceutical Industry
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1Pharmaceutical Industry
Executive Summary:
This paper is analysing the pharmaceutical industry on a global scale and the first
section of the paper handles the background introduction into the industry as basic
information is provided on the trend of the growth in industry. This is added along with the
key drivers of the industry that take it to success, along with the key challenges the industry is
facing with regards to various factors that are mentioned in the paper.
The second section of the paper handles the analysis of the industry based on the
PESTLE which outlines the various factors of society’s effect on the industry and also the
other way around, where it is outlined what effect the industry has on the society that it is
placed in.
The third section analyses the industry from a micro perspective where it uses the
Porter’s Five Forces techniques to detail the different aspects of the industry. This way of
analysing gives a more wholistic approach to understanding the inner workings of the
pharmaceutical company.

2Pharmaceutical Industry
Table of Contents
1. Background of the Industry:...............................................................................................2
2. PESTLE Analysis...............................................................................................................3
3. Porter’s Five Force Analysis...............................................................................................5
3.1. Threats of entry posed by new or potential competitor: LOW....................................5
3.2. Degree of rivalry among existing firms: HIGH..........................................................5
3.3. Bargaining power of buyers: MEDIUM......................................................................6
3.4. Bargaining power of suppliers: LOW.........................................................................6
3.5. Threat of Substitutes: LOW/MEDIUM.......................................................................6
4. Conclusion:.........................................................................................................................7

3Pharmaceutical Industry
1. Background of the Industry:
The global pharmaceutical industry is expected to grow to a value of $1170 billion in the
year 2021, compared to its estimate valuation of $930 billion in the year 2017. This is mainly
due to the presence of such large pharmaceutical companies that the valuation can be so high.
The rate of growth in this industry has accelerated in the past few years, but it still is not close
to the speed at which other segments of the health industry are increasing at (Shaw &
Whitney, 2016). If one were to consider the whole of healthcare then the growth would come
up to almost 7% every year. The global pharmaceutical industry has contributed immensely
to mankind, but now these same companies are facing a very tough phase in the decade.
The pharmaceutical industry is dealing with the discovery, research, development,
manufacturing and then finally the marketing of various prescription drugs. Pharmaceutical
drugs are heavily subjected to various government laws and regulations which are related to
patenting, safety, testing and its marketing (Abrol, Prajapati & Singh, 2017). There is an
increasing shift from prescription drugs to non-prescription drugs because there is a growing
need for personalized drugs, and a general movement away from animal testing in society as
it is not looked at as being ethical. Various surveys state that almost all pharmaceutical
companies have invested heavily in the research of developing more personal medicine (Zhao
et al., 2019).
This industry is only associated with drugs related to humans and the healthcare provided
for them, but drugs concerning animal health are not included under this industry segment
(Peng et al., 2017). The key drivers for this industry are:
 Prevalence of any type of disease
 Affordability of the specific drug in question
 The attitudes of consumers towards the purpose of the medicine