Introduction
Pharmaceutical industries are responsible for the manufacture of drugs. Like any other industry that we know, they aim at making profits. However, they are not exempted from the challenges that other firms go through. Like any other firms, they face challenges. Environmental factors are part of those challenges. In a case study conducted by Holland S and his partner Bernard, environmental factors play a vital role in influencing the productivity of pharmacies. According to the study, the following factors are highlighted.
Increase in numbers of drug companies
There have been considerable changes in the pharmaceutical industries with the process of restructuring taking place and the changes that have occurred in the society that surrounds the industry. Unlike in the past when they enjoyed the space, there are new drug discovering companies that are posing a threat to the sure market that the pharmaceutical had initially. However, there are so many players in the industry of drug production who regulate the rate at which these drugs’ production is done.
Highly bureaucratic but slow procedures
In order to progress in medicine and get new discoveries, there is need to incur great cost that can be highly wasted if failure occurs at any particular stage.
Containing medical cost
There is pressure of how to contain medical costs due to demographic development. The population of the old in the society is high thus causes health cost explosion. There is also the aspect of many diseases changing their patterns and attacking in new ways that need new remedies for them, and the chronic diseases taking longer than usual times to heal.
Integration between countries
The process of integration between countries like the EU, for instance, has led to the competition being increased since they do not allow the member countries to vary their prices. As a result, the benefits are minimized further. In addition, the governmental systems governing pharmaceuticals have been altered in such a way that they do not have different prices and there is no restriction for movement of drugs. In addition, even when drugs are exported to countries and sold at higher prices, the profits are used in exportation.
Centralized licensing boards
The industry has also faced problems that cause uncertainty related to the established licensing boards that are centralized. This means that licensing is done at the same place for all the pharmaceutical industries.
Reduced patent times and development of generic drugs
Pharmaceutical products undergo various delays during production and in the process, the time granted by the government for copyright are reduced. As a result, the public authorities make the pharmaceuticals reduce their prices in order for them to handle price containment. The regulation on patent period is regulated to avoid contraindications for instance a certain prescription causing a problem to the consumer. There is also the arising of the generic medicine that is reduced in costs hence there are less profits expected from the pharmaceuticals.
Due to this challenges that are faced by the Pharmaceuticals, there are several frameworks and models adapted to ensure that they stay in business. The models and frameworks are in the various strategies that have been put in place to ensure that they counter the challenges.
Disease Management Initiative is one of the embraced strategies. Pharmaceuticals have started conducting studies that are aimed at demonstrating that the newly produced drugs have added value and are safe as far as tolerability is concerned and they are efficient.
Pharma-economics is the other model applied to ensure increased and well evaluated pharmaceutical firms. The medical sector is also characterized by trading and as a result, needs to be evaluated in terms of its productivity. A change in the health like the one that has occurred in the US has led to the development of Pharma-economics for this purpose.
A direction for managing medical organizations is a new concept which has spelt out guidelines or directions that are supposed to be followed by the pharmaceuticals in organizing health care. They are required to consider several aspects like finance, clinical and prevention. In addition, since the health sector is in the hands of profit-seeking private sector, chances are that it will improve due to competition among the Health Maintenance Organizations. The problem with this is the fact that being a public good company, it still has to carter fro the poor nations by providing medicine at low costs or no cost at all. This makes management a great challenge.
There is also the aspect of consumer choice in which the consumer will choose from a most preferred pharmaceutical product. This poses a challenge of ensuring that you examine the needs of consumers as they increasingly change and know what they demand and supply it. There is also need to commercialize the product well. This way, a pharmaceutical industry captures even the most informed and learned customers. This is referred to as embracing the marketing concept in which the consumer needs are put in mind, which is, being patient-centered. Consumer choice has also been boosted by the introduction of the direct consumer advertising. However, these advertisements can lead to the advertising wrong medication and the consumer will be at the risk of using it. It is also very expensive.
The introduction of too many new technologies is changing the future of pharmaceutical industries, for instance the patients have a better access to the health services because of the improved infrastructure, something that can boost production. The problem is the adjustment; need to train personnel to deal with those new technologies. To the industry, training workers is just an extra expense.
The pharmaceuticals have also been required to demonstrate creativity so that they can produce specialized drugs that are patentable and can be marketed globally. They should also be easy to produce at a high speed. Creativity can start with the knowledge of where there is need for intervention by constant research or even sponsoring research so that they can come up with those details. In regard to this, it is difficult for the firms to secure intellectual property.
There is also the venturing in the production of bestseller drugs. These drugs are usually for common diseases and their effect is long term. However, these drugs are usually very few and a firm cannot rely on such. The newly invented medicines level is really going down for example, The European Medicine Evaluation Agency reported a drop in the applications it received for drugs that were being developed. The figure dropped from 58 in 2001 to 31 in 2002.
There was also the deploying of sales persons. This is believed to have improved the sales of the medicine commendably, for example, in the US alone, the firms spent about $ 9.4 on marketing alone.
Another working strategy is the launching of drugs which involves the improvement on the original drugs and giving them brand names, which is important because, with the brand name, the consistency is felt by the consumers, the brand names carry a certain message with them for the consumer and the message is usually visualized to achieve maximum effect.
Implications of the changes in the business environment
Because of the many restrictions that have been placed upon the pharmaceuticals, there is need to spend more in order to make sure that they produce high quality products that will ensure there is no lose in form of a production that backfired. The level of competency has to be boosted. As a result, they will be able to improve the quality while embracing technology and ensure that the management of the industries to make sure they are at the top if the competition. This will ensure that they are getting some profit from the production.
There is need for a stable and qualified system of economic management to analyze and keep upbeat with the changes that are occurring in the industry so that they are aware of the adjustments needed. This way, the consumers will be available and this will keep them in business. Most important is the change of perspective from the producer/doctor centered to the patient/problem centered approach to enhance the quality produced. This is also important because of the competition posed by the other companies, for instance those producing generic drugs.
There is also need to commercialize the product appropriately so that you can capture the market. Some consumers are ignorant as not to find the benefits of a certain drug before they decide against buying them. They need to be told through commercials, as there is need to have the products used anyway.
Government policies are difficult to adjust especially since they are usually as a result of their political motivation. As such, it might be a very big challenge dealing with some of their rulings that might be negative to the pharmaceuticals. To avoid disadvantages, pharmaceuticals should be keen on being or operating within the jurisdiction. This builds trust between them.
Finally, Pharmaceuticals are public good firms and should balance between supplying their shareholders’ interest and providing affordable medicine to all groups of people.
Work Cited
Holland S, Bernardo B. The Global Pharmaceutical Industry. 2004. London South Bank University. Web.
Suoniemi, S. The Pharmaceutical Industry In Transition: In Transition: Implications for New Drug Discovery Firms. Web.
Scholes, K. Whittington, R. Exploring Corporate Strategy: 8th ed. Pearson Education Limited.