Report on Management Principles and Australian Pharma Industry

This report provides a comprehensive analysis of management principles within the context of the Australian pharmaceutical industry. It begins with an executive summary that highlights the competitive trends and revenue strategies within the global pharmaceutical market, emphasizing the challenges faced by companies in maintaining profitability. The report then delves into an introduction that frames the industry as knowledge-intensive and globalized, and identifies the key players in the Australian market, including Amcal, Chemist Warehouse, and Priceline. A key section analyzes the competitive landscape using Porter's Five Forces, assessing the bargaining power of customers and suppliers, the threat of new entrants and substitute products, and the intensity of competitive rivalry. Case studies are used to evaluate the regulatory and accessibility challenges, customer satisfaction levels, and operational differences between the key companies. The report concludes with a critical and futuristic analysis of the most profitable pharmaceutical company in Australia in 2022, along with an evaluation of suggested solutions and actionable recommendations.

Running head: MANAGEMENT
Management principles
Name of the student
Name of the university
Author note

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Executive summary
In this study, it has been identified that the competitive trends in the global pharmaceutical
industry, it can be said that based on the intensity of research and development practices the drug
development process gets influenced. In case of generating the high revenue, the price
maximization has become common in the pharmaceutical industry. Increasing growth
opportunities in the market, it has become highly challenging for the pharmaceutical companies
to survive in the competitive business environment. In case of generating the high revenue, the
price maximization has become common in the pharmaceutical industry. Analyzing the
Australian Pharmaceutical industry it has been identified that highly insensitive competition in
the particular industry, various challenges have been aroused in the particular industry.

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Table of contents
Introduction......................................................................................................................................3
Identification of issues in the competitive pharmaceutical industry...............................................3
Comparative analysis of Priceline, Chemist Warehouse and Amcal’s operations..........................6
Critical and futuristically analysis of the most profitable pharmaceutical company in Australia
2022.................................................................................................................................................6
Evaluation of suggested solutions for overcoming the issues.........................................................7
Recommendation with action plan..................................................................................................8
Conclusion.......................................................................................................................................9
Reference list and bibliography.....................................................................................................10

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Introduction
In the current business scenario, pharmaceutical industry is being considered as one of the
important knowledge intensive and highly globalized industries (Thai, Vitry & Moss, 2014). In
case of both the developing and developed countries, the development priorities are influencing
the currently influencing the competitive factors in the particular industry. Analyzing the
competitive trends in the global pharmaceutical industry, it can be said that based on the intensity
of research and development practices the drug development process gets influenced. In case of
generating the high revenue, the price maximization has become common in the pharmaceutical
industry (Steinhauer et al., 2019). Analyzing the Australian Pharmaceutical industry it has been
identified that highly insensitive competition in the particular industry, various challenges have
been aroused in the particular industry. Amcal, Chemist warehouse and Priceline are the popular
names in the Australian pharmaceutical industry, which are dealing with the high market
challenges due to intensive competitiveness in the market.
The purpose of the study is to shed light on different management theories in order to relate the
situational impacts on the companies. The strategic initiatives which have been adopted by these
organizations have been critically compared in case of identifying the most profitable
pharmaceutical company in Australia within coming 2022. The report has shed light on the
evaluation processes of strategic initiatives in the companies and introduced and effective action
plan. At the end of this study, the measurable recommendations have been introduced in this
report.

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Identification of issues in the competitive pharmaceutical industry
Increasing growth opportunities in the market, it has become highly challenging for the
pharmaceutical companies to survive in the competitive business environment. It is also true that
with increasing challenges in the market, satisfying the needs of the customers within reasonable
price has become the important concern for the companies. Changing price of the medicine has
become common challenge faced by the pharmaceutical companies in the market. In order to
analyze the emerging issues in pharmaceutical industry, Porters five force analysis tool has been
used.
Bargaining power of the customers
Analyzing the pharmaceutical industry in Australian it has been identified that there are ample
numbers of brands in the market, which has created the intensive competitiveness. Many brands
in the particular industry, which have introduced the same drugs by offering the discounts. In
that case, due to availability of products as well as companies in the market, the bargaining
power of the consumers gets increased (Australianpharmacist.com.au, 2019). However, it is also
true that there are many drug companies which are patent and the products which are being
produced by the companies cannot be produced by others. In that case the bargaining process in
the particular industry gets influenced. It is also true that due to changes in costs the bargaining
power of the customers gets influenced.
Threats of new entrants
The pharmaceutical industry needs huge investment as well as intellectual resources in terms of
developing business in the market. The business development process on the particular industry
needs more attention as well as legislative supports in terms of developing an effective business

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framework (Australianpharmacist.com.au, 2019). In that case, it can be said that the threats of
new entrants in the particular industry is low due to its huge expenses and strategic business
structure. Especially in case of entering the in the Australian pharmaceutical industry it can be
said that certain legal formalities as well as ethical code of conducts can play an important role
for driving the business operational processes in the particular industry. On the other hand, it is
also true that external environmental situation in this country can also create major challenge for
the new entrants in case of entering in the pharmaceutical industry.
Competitive rivalry
Knowledge competitiveness is being considered as the common element in Australian
pharmaceutical industry (Roymorgan.com, 20190. Analyzing the market situation in Australia, it
has been identified that the pharmaceutical industry has got saturated with the large numbers of
brands in the market. On the other hand, after the globalization, socio economic development
among the people has driven the health concenters among the people. In this situation, it can be
said that high intensity of competitiveness is common in the Australian pharmaceutical industry.
Threats of substitute products
With increasing market opportunities large numbers of brands have introduced in the Australian
pharmaceutical industry. There are various drug producing companies, which provides same
kind of drugs in lower prices on the market for grabbing the attention of the customers.
However, it is also true that the drug producers which have patent, only produce the particular
types of products, which has driven the market uniqueness. In that case, it can be said that the
threats from new entrants is moderate.
Bargaining power of the suppliers

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Analyzing the Australian pharmaceutical industry it has been identified that the external
suppliers plays the dominant role in the industry (Smh.com.au, 2019). It is true that there are
ample numbers of in-house ingredients which are important for the particular industry production
process and being collected from the external suppliers. In that case, due to extreme dependence
on the external suppliers, it can be said that in this industry, the bargaining power of the suppliers
is high. By continuing this, it can also be said that the cost of manufacturing and the sources of
materials get highly influenced due to the supply chain preprocess in this industry.
Case analysis
Question 1
Regulation and access are the main challenges for the pharmaceutical industries of Australia.
Australia has a prolific area of commercial business in every field. However, in the
pharmaceutical arena, Australia has been facing certain regulatory and accessibility issues since
the last ten years. The pharmaceutical companies complain that they had been experiencing
immense regulatory burden in certain areas, which had been subsequently vested upon them by
Pharmaceutical Benefits Advisory Committee (PBAC) since the year 2012. There has been a
reported hindrance of transparent decision making and access to new medicines as there is a lack
of collaboration between the industry and the government.
The second challenge it faces is registering its products. The Minister of Health of Australia had
recently announced about the Expert Review of Medicines and Medical Devices Regulation or
the Therapeutic Goods Administration Review in the month of October in 2014. However,
according to almost 65 per cent of pharmaceutical industries operating in and from Australia, the
processes managed by TGA has either not improved according to the necessities of the industry

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or have worsened over the last two years. Apparently, the Australian agencies of approval of the
medicinal products have not been working properly and efficiently according to the reports.
The third challenge which the Australian pharmaceutical industries are facing is that the process
of PBS reimbursement had turned more difficult and riskier than ever before. It has been found
out that among all the regulatory bodies of Australia, PBAC has the highest regulatory burden.
Pharmaceutical companies have become more reluctant and hesitant to apply for reimbursement
through the Pharmaceutical Benefits Scheme of Australia. According to the reports, the PBAC
process has become more risky as well as degrading than what it was before. The respondents
have happened to declare that over emphasis on price at the expense of delivering improved
clinical benefits to the needy patients is getting hampered in the process (Qureshi & Evans,
2015).
Question 2
Chemist Warehouse and Amcal has been operating as one of the leading pharmaceutical
companies of Australia with highest magnitude of customer satisfaction. However, Chemist
warehouse and Priceline have been getting insufficient reviews as more customers have been
approaching for service over value, which had been deduced by the new study of the
pharmaceutical market. Amcal has been performing well in case of customer satisfaction and
other factors such as product availability, pharmacist availability as far as Chemist warehouse
and Priceline is compared. Amcal has come upward in the list of the top pharmaceutical brands
that are being operated in Australia and has surpassed Chemist Warehouse and Priceline on the
list (Prwire.com.au, 2011). The factors that are responsible for the fame of Amcal are availability

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of the pharmacists, range of health products, range of beauty products and advice provided by
the professionals at the outlets. The operational differences that can be found between Chemist
warehouse, Amcal and Priceline is that, Chemist Warehouse has been lagging behind overall
satisfaction of the consumers which encompasses the marketing as well as post marketing
operations of the company which is not up to the mark. According to the Roy Morgan Retail
Satisfaction Report of Australia, the company Amcal has been providing 90 per cent satisfaction
to their customers. The Website privacy policy of Amcal has helped the company to develop a
devoted customer base for themselves which has increased their credibility as a company and has
also affected their reputation and goodwill in the market (Amcal.com.au, 2019). Tallying with
the Australian Privacy Principles (APP) and Privacy Act 1988, the firm has taken a major
management principle of keeping a premium privacy of their website. Amcal’s privacy policy is
regarding the collection, access, storage and use of personal information which they may obtain
during the course of operating their business which has helped the customers to develop a
trustworthy relationship between each other and has helped develop a better and reliable as well
as consistent customer base.
Question 3
Analyzing the numbers of differences faced by the pharmaceutical firms, it has been identified
that based on the operational initiatives as well as strategic directions the dissimilarities are being
observed. In case of Chemist warehouse, it has been identified that the franchising model is
being used by the company in terms of ensuring its business expansion. In order to manage the
huge networking services in the Australian market. The company has involved in the least equity
investment process, which has helped the company for ensuring its sustainable position in the
competitive market. On the other hand, it is true that based on the Henry Fayol’s principle, the

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franchising model has played an important role in terms of reducing the power of upper level
management. On the other hand, in case of Priceline, it has been identified that involvement of
higher level authorizes is being considered as the important part in the operational process in this
company. Comparing the operational process of Amcal, it has been identified that the company
has focused in case of managing its business operations based on the modern business models.
Due to this reason the business operations have become more centralized in the organization. It
can also be said that the company also focuses on expanding its business through the ecommerce
facilities, which has made its business operations more active.
Critical and futuristically analysis of the most profitable pharmaceutical company in
Australia 2022
Analyzing the strategic initiatives of Priceline, Chemist Warehouse and Amcal, it has been
identified that in order to sustain in the competitive pharmaceutical industry, these companies
have developed various strategic initiatives in the market for ensuring the sustainable position.
Analyzing the operational initiative in Chemist Warehouse, it has been identified that the
company has mainly focused on introducing the increasing amount of sales volume rather than
profitability. In order to increase its rate of profitability the company has introduced its business
model in strategic manner. Analyzing the business expansion strategy of Chemist Warehouse, it
has been identified that by adopting the franchising model, the company has aimed to enhance its
networks. It is also true that Chemist warehouse follows the discounted pricing strategy, which
can help the company to gain huge market share. On the other hand, it can also be said that based
on the larger market segment, Chemist warehouse can be able to maintain its sustainable position
in the market. Following the market penetration strategy the company has successfully

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developed its business, which can ensure its increasing profitability rate within coming 2022 in
the Australian pharmaceutical industry.
Evaluation of suggested solutions for overcoming the issues
Analyzing the emerging issues in pharmaceutical industry, it has been identified that increasing
price as well as substitute drugs in the market, the growth process in the industry is getting
influenced. In case of dealing with the challenges, business expansion has become necessary. In
this situation, introduction of diversified range of products not only help to ensure the expansion
of market base, but also it can play an effective role in terms of reducing the market risks (Thai,
Vitry, & Moss, 2014). Introduction of new product line the company can be able to introduce
potential solution as well as geographical expansion for ensuring the market sustainability. On
the other hand, it is true that based on the Henry Fayol’s principle, the franchising model has
played an important role in terms of reducing the power of upper level management. On the
other hand, in case of Priceline, it has been identified that involvement of higher level authorizes
is being considered as the important part in the operational process in this company.
Recommendation with action plan
Initiating the product development strategy the company can be able to manage the foreign
market operations in proper manner, which can indirectly help to reduce the complexity in the
operational process.
Action plan
Step 1
Research will be done on the market in case of identifying the market needs.

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Step 2
After the identification of issues, the draft of new product development plan will be designed.
Step 2
With the draft of the project, the budget plan will be shared with the higher authority for
financial sponsorship.
Step 4
Idea will be shared with the employees and the training process will be introduced.
Step 5
Before completion of the new product, testing will be done for avoiding its harmful
consequences.
Step 6
The new product line will be launched in the market through different media platforms for
sharing the knowledge regarding the product with the customers.
Step 7
In case of analyzing the effectiveness of the product, proper monitoring process will be
introduced, in which the feedbacks from the customers will be collected.
Conclusion
In this study, it can be concluded in case of generating the high revenue, the price maximization
has become common in the pharmaceutical industry. Analyzing the Australian Pharmaceutical
industry it has been identified that highly insensitive competition in the particular industry,

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various challenges have been aroused in the particular industry. Based on the operational
initiatives, it can be said that in order to survive in the competitive business environment,
ensuring the new product development strategy can help the company to manage foreign
expansion of Chemist Warehouse.

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Reference list and bibliography
Amcal.com.au (2019). Available at: https://www.amcal.com.au/privacy-policy
Australianpharmacist.com.au (2019). retrieve from:
https://www.australianpharmacist.com.au/pharmacy-future-vision-2023/
Canstarblue.com.au (2019). Retrieved from:
https://www.canstarblue.com.au/stores-services/pharmacies/https://
www.professionalpharmacists.com.au/2018-community-pharmacistsreport/
Commbank.com.au (2019). Retrieved from:
https://www.commbank.com.au/content/dam/commbank/assets/corporate/industries/
pharmacyinsights-report-2018.pdf
Fabbri, A., Grundy, Q., Mintzes, B., Swandari, S., Moynihan, R., Walkom, E., & Bero, L. A.
(2017). A cross-sectional analysis of pharmaceutical industry-funded events for health
professionals in Australia. BMJ open, 7(6), e016701.
Gleeson, D. H., Moir, H., & Lopert, R. (2015). Costs to Australian taxpayers of pharmaceutical
monopolies and proposals to extend them in the Trans‐Pacific Partnership
Agreement. Medical Journal of Australia, 202(6), 306-308.
Insideretail.com.au (2019). Retrieved from: https://www.insideretail.com.au/news/sigma-hit-by-
competitors-blow-201807
Prwire.com.au (2011) Available at: https://prwire.com.au/pr/23991/amcal-matches-chemist-
warehouse-and-priceline-pharmacy-in-customer-satisfaction-1

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Qureshi, A. M. A., & Evans, N. (2015). Deterrents to knowledge-sharing in the pharmaceutical
industry: a case study. Journal of Knowledge Management, 19(2), 296-314.
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issue-warning-over-walk-in-pharmacyhealth-checks-20180630-p4zops.html
Steinhauer, D., Salat, M., Frey, R., Mosbach, A., Luksch, T., Balmer, D., ... & Kema, G. H.
(2019). A dispensable paralog of succinate dehydrogenase subunit C mediates standing
resistance towards a subclass of SDHI fungicides in Zymoseptoria tritici. BioRxiv,
616904.
Thai, L. P., Vitry, A. I., & Moss, J. R. (2014). Discounting of medicines in Australian
community pharmacies. Australian Health Review, 38(5), 517-522.