MA505 Marketing and Management: Pharmaceutical Industry Report

This report provides a comprehensive analysis of the Australian pharmaceutical industry, examining its scope, competitors, and consumer behavior. It delves into the market analysis, covering macro-environmental factors and the marketing mix. A key focus is on the marketing strategies of Chemist Warehouse, including a SWOT analysis, target market identification, and financial considerations. The report offers recommendations for improvement and concludes with an overview of the industry's challenges and opportunities. The research incorporates survey data and provides a detailed understanding of the industry's dynamics and strategic approaches. It also analyzes key competitors like Alphapharm and AstraZeneca. This report is a valuable resource for understanding the complexities of the pharmaceutical market and effective marketing management strategies.

RUNNING HEAD: Marketing and Management 0
Marketing and Management
(Student Name)
1/10/2019

Marketing and Management 1
Executive Summary
The pharmaceutical industry plays a vital role in the health system which is
characterized as a highly complex structure in the overall industry. The pharmaceutical
industry consists of huge size with advance technology that make more profitable sector at
global level. The pharmaceutical industry in Australia is growing that attract maximum
consumers despite the low growth potential in the developed market. The current market
structure of such industry in Australia is accounted as $22.7 billion in the year 2013 and it is
expected to grow in the future with $42.5 billion by 2020. Approximately 16,000 individuals
are employed in the pharmaceutical industry with the investment of $404 million on Research
and Development. It represent as huge market in Australia that cause the issue of competition
in the industry. Alphapharm, AstraZeneca has maximum share in the market by delivering
variety of products to their consumers. The consumers for such companies are doctors,
patients, drug stores and so on. The strict regulation by the government of Australia with low
GDP affects the performance as well as earning of the companies at greater level. In the
following report, the survey has been conducted of Chemist Warehouse to understand the
industry more deeply. The company provide variety of products to their consumers through
various promotion tools and strategies that made the company more successful but there are
certain places where company need to concentrate to improve their performance that would
help them in leading in competitive market.

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Table of Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
Scope of Pharmaceutical industry in Australia..........................................................................4
Competitors Analysis in Market.............................................................................................5
Consumer Analysis.................................................................................................................6
Degree of Segmentation......................................................................................................7
Market Analysis.........................................................................................................................7
Macro Analysis.......................................................................................................................7
Marketing Mix.........................................................................................................................10
Analysis of company................................................................................................................11
Marketing Strategy of Chemist Warehouse Discount Pharmacy.........................................11
SWOT analysis.....................................................................................................................13
Target Market.......................................................................................................................13
Financial Analysis................................................................................................................14
Recommendations....................................................................................................................15
Conclusion................................................................................................................................16

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References................................................................................................................................17
Appendix..................................................................................................................................20
Questionnaire........................................................................................................................20
Letter of Thank You.............................................................................................................20

Marketing and Management 4
Introduction
The pharmaceutical industry is an integral part of the health system in every country.
The pharmaceutical industry is characterized as a highly complex sector in the market. The
industry of pharmaceutical consists of the huge size of companies with complex technologies
as well as processes (DiMasi, Grabowski & Hansen, 2016). Typically, this kind of companies
has also many organizational as well as management structures. Also, the discovery,
development, as well as distribution systems are extremely costly procedures. The main
motive of these companies is to maximize their profits by emphasizing that Research &
Development cost are high due to which the price needs to be kept high so as to constantly
invest in new drug formulations (Pandey, Bharadwaj & Chen, 2017). It is one of the most
profitable sectors at the global level which covers manufacturers as well as markets or
pharmaceutical products. The manufacturing industry of pharmaceutical generates over $950
billion in revenue on average with a growth rate of about 4 percent and reached $1.1 trillion
by 2014. The revenue in the industry is expected to grow due to the reason of the world’s
aging population boosting the demand f healthcare which enhanced the success to more
comprehensive healthcare in emerging countries (Jones et al., 2015). Australia is one of the
most attractive pharmaceutical markets. It is enhancing aligning their legislation and
regulation with Australian standards. The lowering barriers to entry in market force other
multinational companies to enter in such market (Hartung et al., 2015).
In the following part, detailed analysis will be done on pharmaceutical industry of
Australia and how effectively the marketing strategies adopted by the companies of the
pharmaceutical industry to target their consumers in a more effective manner.

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Scope of Pharmaceutical industry in Australia
The expenditure on health by the population of Australia will continue to increase
with the need for the government to subsidize more drugs to treat chronic, non-communicable
disease. Such rises of expenditure in the market attract maximum firms in the pharmaceutical
industry despite the low growth potential in the developed market (David, Wolfender & Dias,
2015).
The health care market of Australia is expected to grow around $42.5 billion by 2020
that is compelled by the coverage of universal healthcare which is delivered by the Medicare
as well as virtuous access to facilities that include subsidized drugs from government and so
on. According to the latest report, pharmaceutical sector in Australia was valued at $22.7
billion in the year 2013 as well as will upsurge at a Compound Annual Growth Rate of 5.1%
to $32.1 billion by 2020 (Lexchin & Gleeson, 2016). The curative equipments of Australia
expanded at faintly gentler CAGR of 4.9% to reach a projected $10.4 billion by the end of the
estimated period (Grundy et al., 2016).
(Source: Australian Government, 2019)

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The industry of pharmaceuticals is knowledge-based technology-intensive business
which is innovatively positioned to grow as well as commercialize the products of long-term
investment in medical research of Australia.
Competitors Analysis in Market
Due to increase in demand in such market, the firms are attracted towards such sector
that creates completion in the market of the pharmaceutical industry. There are huge
competitors are available in the market such as Alphapharm, AstraZeneca, Apotex, Pfizer,
Sanofi-aventis, GlaxoSmithKline, Merck Sharp & Dohme, Sandoz, Boehringer Ingelheim
with their different share in the market (Fabbri et al., 2017).
(Source: Australian Government, 2019)
Alphapharm is one of the largest generics as well as specialty pharmaceutical
companies at the global level. The company manufacture as well as delivers more than 1300
variety of products to wholesale, government, retail as well as consumers of the institution.
The company spread their roots at the global level that make them big in the market. The

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company applies global quality of standards across the line of products as well as the
facilities despite the market. The company offers generic products to their consumers due to
the reason the generic medicines are more affordable as well as preferred by the patients. The
oral solid dose the manufacturing capacity of the company grew about 65 billion as well as
80% of the products of the company are manufactured internally (Gleeson, Moir & Lopert,
2015).
The other competitor in the market is AstraZeneca which is a global pharmaceutical
company that deals with the research, manufacturing, and development as well as supplying
of medicines. The company has adopted various strategies that help them in increasing the
market share and the revenue of the company. They have globally introduced the Youth
Health Programme that supports the susceptible individuals to understand and have a positive
impact to handle the issues regarding health faced by them. The products offered by the
company are set at a reasonable price that helps to attract the maximum consumers (Jelinek &
Neate, 2009).
Consumer Analysis
The pharmaceutical industry consists of various types of buyers which include
patients, hospitals, doctors, drug stores, as well as pharmacists. The buyers in such a market
can affect the business by seeking lower price, better service, as well as high quality. The
main buyers or consumers in Australia are the government as well as the individuals who
obtain prescriptions from medical professionals. Most of the consumer in Australia purchase
pharmaceutical products more frequently in small quantities. The demand for the medicines
will be found everywhere according to their needs and preferences. Most of the consumers
prefer generic drugs due to the reason for cheaper price (Ding & Stremersch, 2016).

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Degree of Segmentation
The consumers in pharmaceutical are segmented according to their age group as well
as their preferences. Most of the consumers in Australia prefer generic drugs that help the
companies to adopt mass marketing for targeting their consumers. The product of the
company covers all kinds of ages which also cover infant children. Therefore, consumers can
also be wrecked down into two diverse clutches which include mail order consumers as well
as walk-in consumers.
Consumers of Mail Order: It covers the group of consumers who order their
medicines through the source of the mail in an exertion to save the cash. They are usually
belonging to the older age typically over 50. The group of consumers covers in this category
will more likely to buy the medicines of several months.
Walk-in consumers: in this group, the consumers are looking for the lowest prices for
their medicines. They mostly prefer to purchase medications monthly at their local pharmacy,
often at a higher price. Some of these consumers pay for the medicines out of their pockets as
well as some submit an assertion to their any insurance company for the repayment at a later
date (Posthumus, 2015).
Market Analysis
Macro Analysis
Political
The domestic and foreign policies of the government have a great impact on the
innovation of industry in a comparison to the other factors. The political decision can impact
on many vital areas for the business such as the health of the nation as well as the quality of

Marketing and Management 9
the infrastructure of the economy. The government of Australia have countless buying
influence as well as distress the business majorly in a manner of political. The government of
Australia control on clinical trails that created main issues in a pharmaceutical industry other
than that the government has taken various steps to control over the process of the product
that affects the profit margin of the company. The government of Australia has also restricted
the pattern of advertisement in their country for the drugs as well as check the advertisement
on the drugs; it increases the cost of the company on adverting their product at a greater level.
The government of Australia has also changed the cost containment plan that affects the
whole pharmaceutical industry at a greater level (Jackson, Hussainy & Kirkpatrick, 2017)
Economic
The economic factors provide a major impact on manner the trade functions with
effective decision-making. The marketplace of pharmaceutical is majorly connected with the
progress of GPD. The economic condition of the country turns down that affect the growth of
the industry at a greater level. The economic recession affected the profit margin of the
industry that resists the other companies to enter in such a market. The companies earn
slighter revenues that in turn they have money allocation of inadequate research. Moreover,
given the poor fiscal outlook in the general economy, it has been analyzed that healthcare
system would be unsustainable over the long term as well as the country will look at cost-
cutting measures that negatively affect the profit margin of the pharmaceutical firms
(Maresova, Penhaker, Selamat & Kuca, 2015).
Social
The social factors include cultural changes, the growth of population, health problems
and so on. It affects the demand of the product of the company as well as how it operates.
The consumers of Australia are well-educated therefore, they would able to compare the

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products with other as well as the consumers prefer a better quality of drugs at a cheaper
price that affects the profit margin of the companies as well as creates competition in the
market at a greater level. While providing drug care to the employees increase the cost to the
company as well as decline the company business competitive power.
Technology
Technology plays an essential role into pharmaceutical industries according to the
current state of art methods for development as well as manufacturing of drugs and it open
new ways of research and invention. The advancement of technology increase cost to the
companies of the pharmaceutical industry due to the reason of huge investment requirement.
The competition in the market requires or forces the companies to invest their huge amount in
research and development to survive in such a market.
Environment
The country is suffering from a bad environment that causes the health risk to the
people. The country is facing the issue of greenhouse gas that causes from pollution as well
as waste. The producers of medicines have to find out the ways that need extra investment by
the companies, it affects the overall cost of the company in such an industry. There is also a
risk of research failure that results in a loss of investment.
Legal
The pharmaceutical industry is subjected to the regulatory as well as the division of
the industry will also scrutinize all the facts to upkeep the security as well as constancy in the
market. The pricing policies, as well as law of product liability on pharmaceutical revolution,
are extremely exaggerated. The government of Australia has introduced new rules for the
copyright protection that affect the companies, as well as the complex legal as well as ethical

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issues related to the generic medicines, resist the new companies to enter in such market
(Mignani et al., 2018).
Marketing Mix
Product
The companies in the pharmaceutical industry offer a variety of product to their
consumers. some of them concentrate on generic products to target maximum consumers
such as Chemist Warehouse, Davey Street and other companies offers all variety of products
to their consumers such as Discount Drug Store.
Price
Most of the companies offer different discounts and offers to attract the consumers
but the price of Chemist Warehouse is lower than other discount chemists such as Davey
Street and Discount Drug Store.
Place
Some of the discount chemists offers their products online and some of them offline
through their stores. Chemist Warehouse provides their service through online store and
Davey Street setup physical store to reach out the consumers in the approachable market
(Mirzaei, Carter & Schneider, 2018).
Promotional strategies
The pharmaceutical industry has a huge market that increases the consumption of
medicines in the market. There are huge competitions in the market that increase the
promotional strategies by the companies to attract maximum consumers. The Chemist