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The threat of new entrants and the rivalry between competitors are the key competitive forces. For the new entrants, it needs great fiscal strength to support the expenditure of R&D and development of new drugs. Other essentials, like governmental intervention and patent protection, are considerable and restrict the entry of the industry. As the industry is profitable and a global economy, the competition is very tense. Not only the leading corporations but the small companies are trying their best to search for strategic markets in order to get maximum revenue and retain long-term survive.
Changes occurring now that will significantly affect competition
The trends of growing ageing population and high drugs expectations lead to pursue new, effective drugs and better-tolerated therapies to meet the needs, which would cost much expenditure and time, but may not satisfy the market demands. Besides, the industry has thought out several strategies responding to the challenges caused by globalisation, greater R&D scale and 'productivity crisis', like consolidation (Merck, SmithKline Beecham) which is to look for the potential partners and organic growth. However, which one is more effective is not certain. In addition, the marketing approaches have been changing. Leading companies prefer 'high compression marketing' (HCM) instead of the outdate method based on offering detailed information to individual prescribers.
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