The pharmaceutical industry consists of intensive marketing, production, and research meant to develop drugs that provide the entire world with the capabilities to cure infectious diseases and support daily needs. An aging world population and greater work loads has given an incentive for pharmaceutical firms to rigorously produce and sell numerous variations of drugs to treat cancer, allergies, diabetes, and pain. Some trends to be considered include: greater technological improvements, cheaper drugs, and increased investment/R&D spending. Technological improvements have guaranteed higher purities and cheaper drugs. However, increased research has dramatically driven patented drug prices to an all high premium; Byetta, a type 2 diabetes pen …show more content…
Xyrem is made up of sodium oxybate, which can be sold as a generic form of Xyrem. The Xyrem brand was acquired by the company Jazz Pharmaceuticals in 2005 when they purchased Orphan Medical. In 2015, Xyrem sales increased by 23% to $955.2 million. Xyrem accounted for 72% of Jazz Pharmaceuticals’ overall sales in 2015. Jazz Pharmaceuticals revenue for 2015 was $1.325 billion. This means that Jazz Pharmaceuticals has a market share of approximately 0.1315%. Other types of top narcolepsy medication include Nuvigil, Ritalin, and Adderall. The company that produces Nuvigil is called Cephalon, but was acquired by Teva in 2011; their revenue for 2015 was $1.3 billion: a market share of 25.9%. Ritalin is produced by Concerta; their revenue for 2015 was $821 million: a market share of 16.4%. Adderall is produced by Shire Pharmaceuticals; their revenue for 2015 was $1.564 billion: a market share of 31.2%. Combined sales is 5 billion. That means that in this market, Jazz has a market share of 26.4%. An HHI of 2610 is calculated; this market is …show more content…
This is done by creating a research and development team to improve current production operations. If a company invests in new capital and on a R&D team, they create greater opportunities for innovation. Innovation in terms of the production and quality of a yellow fever drug ensures that less resources are wasted, more of the drug can be produced, and consumers benefit by having a high quality and an effective drug that doesn’t pose a threat to their lives. A company must properly decide whether or not they choose to enter this market, in addition to considering a dynamic efficiency stance. If the company does decide to develop a drug and the country that it resides in doesn’t honor a patent, the company will perish under the competition. If they are honored a patent, the company might flourish in this competition, but with great difficulty and cost. Not developing the drug, but being honored a patent is hurtful for the company and the country, since applying for a patent and approving it is costly. Not developing the drug and not being honored a patent would mean that the company loses potential
The pharmaceutical industry is one of the most powerful and greedy industries in our country, with a goal to make as large a profit as possible, at the expense of the sick.
There are multiple health concerns worldwide and more and more drugs are needed every day. Many drugs however, are extremely expensive to develop, test, and produce. According to the Tufts Center for the Study of Drug Development (2002), it costs up to $802 million to bring a new drug to the market. In 2002, pharmaceutical companies spent $34 billion in research and development (Center-Watch, 2003). In addition to the costs, the overall time from the discovery to approve and market the drug can take up to 15 years.
Economic: Globalization of the pharmaceutical industry is an exciting opportunity to have research and development done at cheaper prices in other countries. However, this could be a double edged sword for companies because it is easy for other countries, such as India, to produce generic versions of the drug in bulk.
In 2015, the pharmaceutical industry spent over 27 billion dollars on advertising. The two greatest components of this effort were promotional advertising and free medication sampling, which the pharmaceuticals invested 15.5 and 5.7 billion dollars respectively (“Persuading the Prescribers”). Promotional advertising involves direct contact with health professionals, the most common being extravagant lunch conferences held for physicians and their staff. On the other hand, sampling involves distributing free sample of medications to physicians, who then have a choice of providing these samples to patients. As a result of these methods, the industry has seen revenue around $400 billion with 90% of physicians having a relationship with a drug company (Campbell 2007). Moreover, the prices of prescriptions continue to rise; a copay of a generic drug is $11.72, preferred brand drug is $36.37 and a specialty drug is $58.37 (Coleman and Geneson 2014). Although the profits are immense in the numbers demonstrated above, it is no surprise when pharmaceutical drug companies elevate their prices even more. For instance, recently Turing Pharmaceuticals raised the price of their medication Daraprim from $13.50 to $750. Keep in mind, this medication is used for threatening parasitic infections, aids, and cancer with alternative options currently found to be inefficient (Pollack 2015). Another example of this practice involves cycloserine, a drug used to
Improvements in health care and life sciences are an important source of gains in health and longevity globally. The development of innovative pharmaceutical products plays a critical role in ensuring these continued gains. To encourage the continued development of new drugs, economic incentives are essential. These incentives are principally provided through direct and indirect government funding, intellectual property laws, and other policies that favor innovation. Without such incentives, private corporations, which bring to market the vast majority of new drugs, would be less able to assume the risks and costs necessary to continue their research and development (R&D). In the United States, government action has focused on creating the environment that would best encourage further innovation and yield a constant flow of new and innovative medicines to the market. The goal has been to ensure that consumers would benefit both from technological breakthroughs and the competition that further innovation generates. The United States also relies on a strong generic pharmaceutical industry to create added competitive pressure to lower drug prices. Recent action by the Administration and Congress has accelerated the flow of generic medicines to the market for precisely that reason. By contrast, in the Organization for Economic Cooperation and
The high prices set by pharmaceutical companies for drugs allows the companies to continue researching, developing, and producing new drugs. As new diseases are discovered, new medications must be discovered in order to treat them.
Even though the pharmaceutical industry had been highly profitable and contributed about 40% OF Ciba-Geigy’s revenues in profit, there were some trends, which were worrying. The government had attempted to reduce a cost of healthcare thus; pressure to lower costs was mounting on industrialized countries. There were restrictions to introduce new products, and price control became stricter while limiting the freedom of doctors to prescribe medications. Patent controls were becoming reduced, and the pharmaceutical industry was becoming increasingly criticized. These trends later made the industry to
With the huge diversity and changeability of human biology, it is impossible to imagine a reality without some mutations, changes, or issues in the organs and tissues of humans. Thus, it rightly follows that medications and pharmaceuticals have been created in an effort to counteract the various ailments and illnesses that people can experience. However, as time has gone on and these pharmaceuticals have become more and more high-tech, regulated, and trusted, they have also become incredibly commercialized. Worse still, medications have become incredibly expensive and can be unattainable for some people.
Recently, there has been a debate about the high prescription drug prices in the United States. Accounting for 9.7% of the national health expenditure, $329.2 billion was spent on prescription medications ($931 per person) in 2011 (Linton, 2014). So what exactly is the average American getting with their $931? Well, because there is an extraordinary amount of time, effort, and energy that goes into creating, manufacturing, and distributing a new drug, it’s no wonder the prices are so high. But what other costs are folded into the prices of your prescribed medications? This review looks beyond just the research and development costs needed to take a new drug from idea to shelf by examining several journals and other credible, secondary sources, to shed some light on how much pharmaceutical companies are spending to develop, advertise, and sell their drugs.
I would listen to Muhammad’s concerns completely and would not interrupt. This would give him time to express his feelings about the topic. Then, I would talk with Bill and listen to his side of the story and hear what he said. In the end, there would be a conversation with Bill reviewing the rules and guidelines of the policies at the company. I would let Bill know up front if there is any more talk regarding these types of issues he will be terminated from the company with no questions asked. I would let Muhammad know there was action taken and there should not be any more trouble regarding the issue. The warning and review were set in place in case Muhammad did not tell all the facts or even add a few of his own. Bill is now aware of the rules at the company and this behavior will not be tolerated.
The Pfizer case provides an introduction to external analysis. The case highlights the pharmaceutical industry, which has enjoyed extraordinary long-run profitability. The case also demonstrates how broad changes in broad environmental factors (i.e. demographics, technology, culture, etc.) have an impact on industry competition. The case is not especially complex, so it is not overwhelming as a first case.
In 2005, Orphan Medical was bought by Jazz Pharmaceuticals. However, before and after the buy out various clinical trials were being conducted to test for Xyrem’s efficacy in treating narcoleptic symptoms like cataplexy and excessive daytime sleepiness (EDS). Two clinical trials looked at cataplexy in narcolepsy while two other
Drug prices are set by pharmaceutical companies to cover research and development costs. While R&D costs clearly need to be covered, markets in developed countries already pay for most R&D of new products. Because of this, it makes moral and economical sense to establish a two-tiered pricing system; for R&D costs to be paid for by developed countries, allowing significantly reduced prices to be charged in developing countries.
In the pharmaceutical industry, a new entrant may be faced with various hurdles erected by established businesses, such as:
Although R&D has been retained by the large pharmaceutical firms, there has been a continuous decline in the R&D productivity. Controlling R&D is imperative to the success of a Pharmaceutical firm. However, as the pharmaceutical industry is maturing, there are diminishing returns to the R&D investment. Fewer and fewer blockbuster drugs are being discovered and therefore R&D is not the most value adding component in the value