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The Pharmaceutical Industry 2000 Zhu Haiqing Lee Lee Chen Ganesh Kumar Gabriel Rüeck Chen Xingge.

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Presentation on theme: "The Pharmaceutical Industry 2000 Zhu Haiqing Lee Lee Chen Ganesh Kumar Gabriel Rüeck Chen Xingge."— Presentation transcript:

1 The Pharmaceutical Industry 2000 Zhu Haiqing Lee Lee Chen Ganesh Kumar Gabriel Rüeck Chen Xingge

2 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Government Intervention Price and reimbursement control Blacklist and de-list Managed competition Government Policy Political Stability PoliticalEconomicSociocultural TechnologicalLegalEnvironment

3 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Business Cycle Disposable Income Economic Development Status Ease of Finance Exchange Rate Risk PoliticalEconomicSociocultural TechnologicalLegalEnvironment

4 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Population Demographics Customer Behaviors Life style changes Religion & Beliefs Level of Education PoliticalEconomicSociocultural TechnologicalLegalEnvironment

5 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Government Supporting on Research Research Infrastructure Advance in Biotechnology Speed of Technology Transfer Information and Communication Technology PoliticalEconomicSociocultural TechnologicalLegalEnvironment

6 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Regulatory Control on Development Regulatory and Supervision between Countries Trade Policies Patent Protection Regulation on Horizontal & Vertical Integration Ban on DTC Advertising PoliticalEconomicSociocultural TechnologicalLegalEnvironment

7 The Pharmaceutical Industry 2000 Environmental Forces (PESTEL) Environmental Waste and Pollution Disposal Others New Diseases like SARS Other emergency PoliticalEconomicSociocultural TechnologicalLegalEnvironment

8 The Pharmaceutical Industry 2000 Pharmaceutical Industry Macro Environmental Competitive Environment within the Industry Environmental Legal Political Economic Technological Sociocultural Source: Competitive Strategy: Techniques for Analyzing Industries and Competitors, by Michael Porter Potential entrants Potential substitutes SuppliersBuyers Rivalry within the competitive arena

9 The Pharmaceutical Industry 2000 Pharmaceutical Industry Macro Environmental Competitive Environment within the Industry Environmental Legal Political Economic Technological Sociocultural Source: Competitive Strategy: Techniques for Analyzing Industries and Competitors, by Michael Porter Firms Potential entrants Potential substitutes Suppliers Buyers Rivalry within the competitive arena

10 The Pharmaceutical Industry 2000 Relevance of MP’s 5-Forces Framework In origin time horizon A useful tool for analyzing the environment When macro-environmental factors had a moderately low impact on the industry Competitive forces played a dynamic role In recent past and future Increasing uncertainty in the macro-environment Significant implications of PESTEL factors on competitive environment The more uncertain the external factors, the less powerful is MP’s 5-forces framework.

11 The Pharmaceutical Industry 2000 Various Frameworks in Analysis of Pharmaceutical Industry Time Horizon Recent PastOriginFuture Relevancy MP’s 5-forces Framework Others, including Scenario Planning PESTEL Framework

12 The Pharmaceutical Industry 2000 Theory of Scenario Planning Wife? low high no yes Income? yes low high Income? no yes Wife? no Car? We can also have multidimensional scenarios!

13 The Pharmaceutical Industry 2000 Scenario Planning (Step #1) High ImpactHigh Uncertainty Technological Progress Healthcare Funding System Consumer Buying Pattern New Diseases PoliticsGovernment Intervention (Price, Reimbursement)TechnologyGovernment Support of Research Government PolicyResearch Infrastructure (Universities, Research Institutes) Political Stability (Stakeholders, Pressure Groups, Opposition)Progress in Technology (biotechnology, genetic engineering) Funding System (welfare, reimbursement, private insurance)Speed of Technology Transfer IT Infrastructure SociocultureDemographics (Age, Income Level, Education) Customer Behaviour and Beliefs Life Style ChangesLawHorizontal and Vertical Integration Religion & BeliefsBan on DTC Marketing Level of EducationTrade Policies Patent Protection EconomyBusiness CyclesRegulations on clinic trials and medicament releases Economic Development StatusRegulations on prescriptions and pharmacies Disposable IncomeLaws on Research (embryonic research) Ease of Finance (Interest Rate, Financial Instruments) Exchange Rate RiskEnvironmentPollution, Waste Disposal Endemic Diseases OtherUpcoming of New Diseases

14 The Pharmaceutical Industry 2000 Scenario Planning (Step #2) New Diseasesno epidemics new epidemics (SARS, Ebola, …) Technological Progress no breakthrough development new effective treatments Consumer Buying Patternrestrictive use active interest in health & lifestyle Healthcare Funding Systemgovernmentpurely private

15 The Pharmaceutical Industry 2000 Scenario Planning (Step #3) Scenario 1: NO GREAT CHANGES no epidemics no breakthrough development restrictive use no changes in funding Focus on: Decrease production and R&D cost Horizontal and vertical integration Adapted move to developing markets (China, India) Complete product spectrum Structural Changes: No abrupt changes. Other Factors: Patent expiries lead to eroding profits

16 The Pharmaceutical Industry 2000 Scenario Planning (Step #3) Scenario 2: AGE OF PLAGUES new epidemics (like SARS, Ebola) no breakthrough development active interest in health & lifestyle no changes in funding Focus on: Increase R&D efforts Lobby for accelerated field trials Secure government funds Increase production of supplementary treatments Market “prophylactic” medicine Structural Changes: Associate with R&D institutes, universities, laboratories Buy prospective companies Prepare distribution channels Speed is important! Other Factors: Lack of breakthrough therapy inhibts profit growth

17 The Pharmaceutical Industry 2000 Scenario Planning (Step #3) Scenario 3: GOLDEN AGE OF HEALTHCARE breakthrough progress in therapies active interest in health & lifestyle government funding for disease control Focus on: Secure IPR and file patents Fast time-to-market Lobby for government funds Lobby intermediaries, disintermediate some markets Brand awareness Fight plagiarism Structural Changes: Flexible production facilities Efficient worldwide distribution system Customized medicine  standard product, more segments Speed is important! new epidemics (like SARS, Ebola)

18 The Pharmaceutical Industry 2000 Likely Implications of Changing Business Environment Increasing market potential in Asia Attract international firms to set up operations in Asia New diseases and deadly epidemics Influence location of bases setting up clinical and research centers Cater to emergency demand Threats of terrorism Spread risk - do not place all eggs in 1 basket Influence location of base

19 The Pharmaceutical Industry 2000 Likely Implications of Changing Business Environment Relative lower cost in Asia Shift in manufacturing base - China, India Increase in outsourcing Shorter time to market Emergence & distribution of R&D centers Increased competition Home grown companies competing against MNCs

20 The Pharmaceutical Industry 2000 Likely Implications of Changing Business Environment More M & As Shift in market leader position Consolidation Advances in technology Race to be the breakthrough center Increase in intensity in R&D Talent much sought after

21 The Pharmaceutical Industry 2000 How does this relate to Singapore ? Great opportunity attract pharmaceutical firms to invest in Singapore Singapore possess many strengths political stability responsive government robust infrastructure extensive trade links good IP protection framework leading financial center R&D resources educated workforce vibrant cosmopolitan city state

22 The Pharmaceutical Industry 2000 How does this relate to Singapore ? Singapore’s Vision - Position itself to be the Biopolis of Asia where biomedical sciences companies will locate their manufacturing, R&D, clinical development and headquarter activities here Pharmaceutical, medical technology, biotechnology and healthcare services Aims to be global hub for both big and small technology intensive firms

23 The Pharmaceutical Industry 2000 How to get there ? Singapore government very committed Actions, Initiatives, Efforts taken Top level ministerial involvement Establishment of councils, regulatory bodies, legal framework Establishment of robust ethical framework Establishment of physical infrastructure Provision/ Availability of funds/resources Establishment of a regime for protection of intellectual property rights Attraction, retention & nurturing of talents Financial & economic incentives More vibrant lifestyle Intensify R&D

24 The Pharmaceutical Industry 2000 Singapore is not alone Government Investments in Biotechnology (million USD) Source: Frost & Sullivan,

25 The Pharmaceutical Industry 2000 Singapore is not alone China, Korea, Japan, Taiwan are also in the same race Advantages over Singapore : Huge domestic market Larger talent pool

26 The Pharmaceutical Industry 2000 Can Singapore be a global player? Can excel in R&D, clinical development and headquarters activities but difficult to compete in manufacturing Real test is the breakthroughs in R&D and clinical development dependent on talent dependent on the “culture” and “environment” Strong reputation and branding required Results ethics management global branding

27 The Pharmaceutical Industry 2000 Thank You! Q&A…


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