Strategic Management and Sustainability in the Pharmaceutical Industry: A Critical Analysis of AstraZeneca

This report critically analyses the UK and global pharmaceutical industry and sector, evaluates the competitive environment of AstraZeneca using PESTLE and SWOT analysis frameworks, and uses industry five forces and industry life cycle frameworks to provide insights into the industry.

Strategic Management
and Sustainability

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Strategic evaluation of the UK and global pharmaceutical industry and sector.....................1
Industry five forces.................................................................................................................1
Industry life cycle...................................................................................................................3
Evaluate the competitive environment of AstraZeneca..........................................................4
CONCLUSION................................................................................................................................7
References:.......................................................................................................................................9

INTRODUCTION
In the contemporary business, organisation of the different industry has faced the major
downfall in their operations and profitability due to the impact of the global pandemic COVID-
19. The disease has widely spread all across the world and bring major influence over the leading
industry that is pharmaceutical industry (Muriuki, Thomas and Joyce, 2017). The pandemic has
changed the global scenario of this industry by impacting its several functions associated with
this industry. For the present report the AstraZeneca is the pharmaceutical enterprise founded in
1999 and is headquartered at Cambridge, England. The company is known for successful
development of the COVID-19 vaccine which is distributed all across the globe in order to
facilitate the mass vaccination. The report will analyse the pharmaceutical industry and sector in
which AstraZeneca operates critically using suitable frameworks like Industry five forces and
Industry life cycle, the report will also conclude the competitive environment of AstraZeneca
using the pestle and SWOT analysis framework.
TASK 1
Strategic evaluation of the UK and global pharmaceutical industry and sector
Industry five forces
Industry five force analysis is a strong strategic tool to analyse the competitive
environment of the industry and it is also useful in avoiding or minimising the risk associated
with the competitors in terms of losing the competitive edge of an organisation thereby ensuring
the profitability and productivity of their organisation. The global and UK Pharmaceutical
industry has close vision oriented with the innovation and regarding the investment in medical
science for more return (Barbosa, Castañeda-Ayarza and Ferreira, 2020). Organisations like
AstraZeneca per part of the pharmaceutical industry and highly dependent on the business
profitability in terms of the five forces of industry that are discussed below:
Competitive rivalry: global and UK pharmaceutical industry there is use competition among the
firms and with the emergence of pandemic the competition half widely spread thereby
identifying the lucrative nature of the pharmaceutical industry with their organisations like
AstraZeneca are working hard in order to maintain their power and competitiveness within the
global pharmaceutical industry. In context of AstraZeneca the competitive rivalry is more based
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on the diversity of the development of medicines and also in terms of market share, brands and
products.
Threats of new entrants: entering into the pharmaceutical industry staff as new companies
required legal permissions and a complete authorisation of medical licence. The pharmaceutical
industry and all the organisations operating in this industry this factor remains in the favour as
the market is created with barriers in order to prevent the entrance of new companies into the
industry. Pharmaceutical industry defines itself into the different sectors website creates in both
industrial and legal barriers (Cavaleri and Shabana, 2018). of apart from this in context of
AstraZeneca the company has used size and reputation in the market which plays important role
in stopping the newcomers to enter the market also the cost of raw materials drugs chemicals is
extremely high therefore financial barrier is also one of the reason that stops new entrants enter
the pharmaceutical industry.
Threats of substitute: in pharmaceutical industry where are the alternatives and substitute of
some of the medicines therefore the threat of substitute products is related to the moderate in this
industry as the technological innovation advancements some organisations like AstraZeneca UK
coming up with the substitute products that are comparatively better and prices and also high in
quality. Any product which is a substitute of another product may seem to be dangerous by
another company causing a threat of replacement therefore there is the high threat of substitute
lead by the lower profitability this limits the pharmaceutical industry in terms of profits. Covid-
19 government is restricted the companies for higher prices the growth potential of the industry
has been lowered due to the reduced profitability margins (Baumgartner and Rauter, 2017).
Bargaining power of suppliers: pharmaceutical industry deals with the drugs medicines and the
various amount of medical supplies used in the hospitals and various dispensaries therefore the
power of suppliers as relative Lee very high in order to capture the significant value for
themselves and also for the demand of high prices without limiting the quality and quantity of
product for the participants of the industry. Is one of the part of this industry as a supply and
therefore this factor is highly important and beneficial for the company as company is imposed
to the supplier of the vaccination and where is different manufacturing of the medicines in the
high quality and quantity. But in the pharmaceutical industry the supply is a highly differentiated
products therefore causing no substitutes available for the product.
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Bargaining power of buyers: pharmaceutical industry the customers at very low power as the
medicines in the medical supplies are the necessity of a customer patient when operating in the
pharmaceutical industry. But in terms of prices quality and the service is the customer's plays the
huge part in choosing the correct organisation therefore product standardization and
differentiation is a huge strategy within the pharmaceutical industry in order to maintain the
bargaining power of the customers (Rafiq and et. al., 2020). AstraZeneca they are the clients
which are the highly powerful biases the government and other authorities where the negotiation
in this industry is going to be very strong due to the sensitive prices and pressure of supplies to
reduce the price.
Industry life cycle
The cycle of the industry provides detail information regarding the business firm or the industry
in which company operates. There are four phases of the industry life cycle i.e. introduction,
growth, maturity and decline. The pharmaceutical industry is the growing and leading industry
currently. The organisations like AstraZeneca has developed the covid-19 vaccine which has
been popular in global pharmaceutical industry (Urbancová and et. al., 2020).
Introduction phase: the introduction stage in which organisations in this industry introduce
themselves as the part of the industry in the different areas. In this the industry and the
organisation has to introduce itself as the legally with the approved government medical license
to trade ans sell the medicines and drugs. In context of AstraZeneca the company during
COVID-19 gained the emergency government authorization and approval to distribute and sell
the vaccines to public and private firms and hospitals.
Growth phase: In this stage the industry develop they position and try to become leading
organisation to gain growth. This stage is crucial stage for the organisations of the
pharmaceutical industry as this will decide the sales and revenue generation of the firms. In
context of AstraZeneca the firm in this stage eliminates all the flaws in order to speed up the
growth and also add new features to product and manufacturing to gain competitive advantage.
The roll out demand of AstraZeneca vaccine has gained major growth in the pharmaceutical
industry.
Maturity phase: in this phase the company of the pharmaceutical industry tends to gain maturity
and high profitability. Thus through this stage company like AstraZeneca gains enough
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popularity and maintain their market share and position. The vaccine of AstraZeneca was able to
take the company to this stage in the pharmaceutical industry.
Decline phase: the last stage where the organisations face the loss of revenue, sales and market
position. In pharmaceutical industry there is huge competition but with the emergence of Covid-
19 all the organisation and the whole industry has no chance of decline stage as the organisations
are heir boost stage and experiencing huge demands of medical supplies. The AstraZeneca can
face the decline stage when the production quality will lack or the prices for the medicine and
vaccine may become high (Shad and et. al., 2019).
Evaluate the competitive environment of AstraZeneca
PESTEL Analysis
The pestle analysis is strong analytical toll and technique to interpret the external
environment factors that bring opportunities and threat to the organisations (Gustafsson,
Hermelin and Smas, 2019). The PESTLE analysis consists of six different factors that
collectively constitute the whole external competitive environment and is also useful in
evaluation of the competitive environment of the AstraZeneca. The brief discussion of the factors
of the PESTLE Analysis is discussed below:
Political factors: AstraZeneca is the part of the global pharmaceutical industry and the political
factors plays a huge role in the functioning of this industrial sector. The AstraZeneca is operating
in the political environment of UK pharmaceutical and is majorly impacted by the pricing
policies and pressure of the UK government. For example during the COVID-19 the UK
government strictly asked the organisations like AstraZeneca to sell the medicines and other
medication supplies to the citizens at low price. The Brexit has positively impacted the UK
pharmaceutical industry because due to this the company's received an opportunity to start their
own production of medicines thereby increasing market share AstraZeneca.
Economic factors: the economic turn-down has very bad impact over the global pharmaceutical
industry and the organisations operating in it (Wheelen and et. al., 2017). The restrictions of
trading during COVID-19 are the main reason that has impacted the economic conditions of the
globe. Due to this AstraZeneca also faced huge problem in selling their medicines at global level.
With the reduced R&D expenditure of the country due to low economic situations the
AstraZeneca got an opportunity to reduce overall cost and increase profit margin.
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Social factors: Social factors include different changes in the trends of the people’s life, work
style, demographic changes, changes in the population growth etc. The global pharmaceutical
industry with the covid-19 there is a huge social change of increasing number of patients
suffering from which disease caused by the virus also due to the change in the working style and
the eating habits as per the urban lifestyle there is growth in the patients this is an opportunity for
the pharmaceutical industry and the organisations like AstraZeneca. Rising income levels and
decreasing health organisations like AstraZeneca are getting benefit to the increasing demand of
the medicines and medical supplies in the hospitals.
Technological factors: Advancement of technology and the technological diffusion all across
the globe there is increased importance of technological factors in every industry including
pharmaceuticals. With increasing technology related to the artificial intelligence and tracking
systems are aiding the pharmaceutical industry and their organisations like AstraZeneca in drug
discovery. Technological advancements are the opportunity for the pharmaceutical industry and
the organisations to invest in building innovation centres for the quality manufacturing of the
medicines and medical supplies and also to advance the medical industry (Pröllochs and
Feuerriegel, 2020).
Legal factors: Legal factors plays the most important role in the pharmaceutical industry as
compliance with in appropriate production of medicines for drug dealing leads to legal actions or
suspension of medical licence. Organisations like AstraZeneca PLC operating in the
pharmaceutical industry has to keep strict I over there supply chain production and dealing with
the global companies in order to maintain ethical conduct of business in the field of medicines.
In UK there is decline of drug approval from the legal body which has impacted the business of
AstraZeneca majorly in terms of decreasing profitability. Also there are the changes in the
corporate tax in the USA which is increased the rates of import export of drugs and medicines
from UK to USA impacting the business of AstraZeneca.
Environmental factors: Every industrial sector has to take care of the environment in order to
control the impact of the businesses on the environment. Government bodies and customers are
also playing the use concern of the environment there for the industries like pharmaceutical has
to take care of their operation in order to safeguard the business under the environmental norms.
Astrazeneca has taken a leadership role in order to tackle the global climatic change for which
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company has waste management policies, recyclable policies renewable technologies in order to
gain the competitive strategy.
It is critically analysed from the above Pestle analysis of AstraZeneca that company holds
competitive advantage in the pharmaceutical industry of UK and at the global level in terms of
economic conditions. Also in terms of the environmental factors company has used competitive
strategies in order to maintain the environmental benefits and to reduce the impact of their
operations over the environment (Ashrafi and et. al., 2020). Thus, it is analyse that technology is
playing the use importance in the estrogenic and also the uses of advanced technologies
providing the company a competitive advantage as well as increase in the revenue and
profitability.
SWOT Analysis-
SWOT analysis is a framework which contains both internal as well as external
environment that is described to analyse firm's competitive position and to develop strategic
scheme. It can be done for a product, place, industry, or person which helps with proper planning
and decision making. AstraZeneca is a British-Swedish multinational company having its
headquarters in England which is founded in 1999. It contains major collection of many diseases
includes oncology, infection etc.
SWOT analysis on AstraZeneca:
SWOT is used by managers to do an analysis which is very important to evaluate strength,
weakness, opportunities & threat. It is very helpful in building whatever you do well, minimize
the risks, to make greater profits and to understand internal factors of the company.
Strength: It refers to the internal factors which are the characteristics or positive
attributes of the business or a firm that can give it an advantage over them.
 The biggest strength of AstraZeneca is the high level of customer satisfaction as this
company has able to achieve a good level of satisfaction and good brand equity between
the potential customers (Casarejos, Frota and Gustavson, 2017).
 AstraZeneca has strong distribution network who built a good distribution network to
reach its potential market. It has been also involved in developing the Covid-19 vaccine.
Weakness – This analysis is a area on which each company or a firm can improve upon.
These are the characteristics of a firm which make it a disadvantage to the competitors.
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 The biggest weakness is limited success outside a core business as AstraZeneca is one of
the leading firm who faced many challenges in moving to other segments.
 In this there is a space in the scope of product which lacks the choice a new competitor
that results in holding the market. And also it can be the weakness when it is affected by
the shortage of its product which will directly impact on the population as drug will not
reach to everyone on time.
Opportunities- It refers to the external environment which allows it to plan and apply the
strategies to increase the development and profit of the company.
 The main opportunity for AstraZeneca is getting new customers from online channel that
is in past few years company has invested in online platform which has opened new sales
channel for this company. So in next few years company can serve better by knowing its
customer better.
 Because of lower shipping prices, it decrease the transportation cost which brings down
the cost of AstraZeneca's products as an opportunity of the company to boost its profit of
company (Cavaleri and Shabana, 2018).
Threat- Elements in this environment could threaten the integrity and profit of the
business.
 In case of AstraZeneca, some extreme guidelines for the development of drugs can be a
biggest threat for the company.
 There are more competitions which are coming up with various effective drugs as there
can be a new component of Covid 19 vaccine through which it can be manufactured.
CONCLUSION
From the above information it is concluded that pharmaceutical industry has worked under the
high pressure and workload during the global pandemic. It is analysed the whole pharmaceutical
industry has been impacted majorly by the pandemic. From the industry life cycle it is analysed
that AstraZeneca and many other such organisations of this industry is in the maturity phase
where they have earned enough capital and popularity. Also the pharmaceutical has helped in
increasing the GDP through he export of vaccines. Thus the industry is ever growing industry
and also the AstraZeneca is operating in competitive industry. It is concluded that in this industry
there is huge competitive rivalry and also the company's has huge bargaining power.
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References:
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