Drug Industry in the United States - Porter s Five Forces Strategy Analysis

Demand has been rising in the recent years in the US Drug Industry. This demand has primarily been created over the years through promotion. In the background, new competitors are forcing the old drug giants to struggle to keep pace. Biotechnology companies are taking the lead in finding new treatments for cancer, a promising and lucrative field. The major drug companies remain highly profitable. While the US drug industry is hardly in a full-blown crisis, however, layoffs are occurring mainly on the margins. But without new drugs to promote as patents expire, line companies have depended on stopgap measures like reformulating existing drugs so they can be taken once a week instead of daily.

The publisher analyzes the United States Drug Industry in the Michael Porter’s Five Forces Analysis. It uses concepts developed in Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Porter referred to these forces as the microenvironment, to contrast it with the more general term macroenvironment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.