SG7001 Managing Strategy Operations
Activity 3
Activity 3a: Evaluation of opportunities and threats posed by megatrends
| Identification of the industry in question. | Pharmaceutical industry | |
| Megatrend | Key issues affecting industry | Impact and Implication |
| Energy efficiency in Research and Development (R&D) | Fuel-development in R&D process in pharmaceutical industry has improved competition for reducing cost, value-added benefits and energy price volatility. | Implementation of Energy efficiency in Research and Development can develop sustainability in this industry. Fuel Diversity is designed to have lower fuel fossil volume and produce useful energy (Leu, 2018). This multi-fuel ability tool has secured uses of energy and mitigated volatility in commodity cost of fuel. A high-tech fuel development will be introduced in manufacturing and research development that would include innovation in this industry.
Implementation of this trend has a potential threat as pharmaceutical plant managers are facing challenges from alternative energy supply and fuel options and requirement of thermal energy is not fulfilled. Implementation of energy efficient technology would hamper cost allocation ratio for production and supply and that would be an important threat for managing financial status of pharmaceutical business. |
| Environmental sustainability | Governments have imposed environmental regulation for controlling water and air pollutant from pharmaceutically active and toxic chemicals. | Pharmaceutical industry has developed green IT and IT data centres as per sustainability strategy that would influence sustainable processes in manufacturing, sales and R&D. As asserted by Zandkarimkhani et al. (2020), this sustainability strategy would move public opinions and their sale target will be consumed by public easily. It is expected to ensure expectation of stakeholders and that would help to improve brand image. In such a way, this industry would be a centric attention of investors and ethical customers to promote their sales goals. Investors and government support is expected to be gathered strategically with this innovation.
Additionally, sustainable movement has developed a challenge for this industry to provide affordable medicines and treatment as implementation of sustainable equipment is poor and underfunded from healthcare systems. Sustainable equipment needs a systematic knowledge and skills of employees and management. This industry would develop responsibility issues and lack of skills for successful implementation of sustainable tools. |
| Industry 4.0 | Industry 4.0 is most trendy innovative strategy in pharmaceutical industry to promote computerised manufacturing processes. This trend has been imposed for implementation of information and communication technologies for ensuring quality, agility and productivity in this industry. | Industry 4.0 or Pharma 4.0 has significant improvements such as improvement in employee productivity, production flexibility, socio-environmental responsibility, competitiveness and data regulatory aspects (Silva et al. 2020). It has identified that Pharma 4.0 has a better governance to optimise administrative usages of resources strategically. Innovative and high resource usages will be promoted strategically in this industry.
However, Pharma 4.0 implementation has met many hurdles and developed a number of threats for this industry. As suggested by Horst et al. (2018), cybersecurity risk is main barrier in Pharma 4.0 implementation and businesses can face a potential threat of confidential information leakages and continuity hampering. Computerised manufacturing is promoted with this trend and that would reduce inference of human ability that would affect collaborative and analytical talent base of this industry. |
Table 1: Evaluation of megatrends in Pharmaceutical industry with their opportunities and threats
(Source: Created by author)
Activity 3B: Critical Analysis of the Industry Environment
| Environmental factors | Issue pertinent to the industry (how might the organisation in the industry be affected) | Implication of the industry
(what should the organisation in the industry do ) |
| Political factors | Administration of most of the states and countries try to attain control over the amount of the drug to make it economical for the people. This remains the same in the context of Morocco. It has been identified that the Moroccan government tends to ban certain drugs that can cause health hazards (unodc.org, 2022). Hence, the Pharma industry might get affected due to the development of banned drugs. | The companies operating in the industry should follow the restriction to get away from causing health hazards and suffering severely. They also acquire the power to lessen the price of the drug to help people be healthy and safe. |
| Economic factors | There is an upward trend in health care spending. It has been identified that the Morocco pharma industry tends to contribute. 2% of GDP, with nearly 5000 products on the market, of which 70% are locally manufactured (applications.emro.who.int, 2020). However, the industry might face economic downturns such as low customer confidence, declining investment and so on. | The industry holds a greater time period for the expiry of the medications so that the medicines are well sold to health carers on (applications.emro.who.int, 2020). Moreover, the pharma industry should face strong loyalty among the customer’s trust and belief in the industry in regard to medicines. |
| Socio-cultural factors | Here, the industry might face problems due to the core impact of lifestyle. As the lifestyle of the individuals is growing, yet are also keeping good care of their health through natural medicines, which directly affects the pharmaceutical industry. | The pharmaceutical industry can explore its boundaries with the recent natural medicines for these types of people who are believers in natural drugs. |
| Technological factors | The pharmaceutical industry is affected by technological factors in regard to clinical research. Here, the industry faces issues in proper clinical research as proper technology is not updated in the recent era (Bruijl and Gerard, 2018). | Suggestion to make the clinical research is to adopt effective training and standard technological procedures and policy. |
| Legal factors | The prime legal issue which might affect the pharmaceutical industry is the breach of intellectual rights, analysis of the enforcement law, a change in the rules of price and so on (edrawmax.com, 2022) | The future implication that the industry might adopt is to become familiar with the previous problems and also file several provisional applications for patents. It is imperative for companies operating within the pharma industry to maintain acts and regulations related to drug development. |
| Environmental factors | The pharmaceutical industry can be affected by environmental factors such as releasing antibiotics into the environment which eventually can promote the natural growth and development of resistant antibiotic pathogens that are literally hard to treat. | The industry of pharmaceuticals can degrade the drugs through a chemical explosion and do it far away from the normal environment. |
| Porter’s force | Strengths | Justification |
| Threat of new entrants | Knowing the new entrants’ market pattern | This strength has been identified because in knowing the market pattern of the other new entrants in the pharma industry, the industry can easily check out the original way of detailing their products in the market (ipl.org, 2022). |
| Bargaining power of supplier | Acknowledging the demand of the superior and understanding the supplier | A low power of supplier of low, then it enhances and creates a more attractive industry and also enhances the potential of the pharma industry (ipl.org, 2022). Moreover, this stretch is very vital for the pharma industry to be more attractive and well established in its own field. |
| Bargaining power of buyers | Understanding the pattern and demand of the buyers | In the pharma industry, the power of the buyers is understood to make the pharma industry more appealing and also holds the power to enhance the profit of the sector in an effective way. |
| Substitute products | Knowing the duplicate product in the market | Availability of the substitute or replicate product in the pharma industry holds a greater strength (ipl.org, 2022). Moreover, the demand for the products of the pharma industry continues and eventually, the pharma industry thrives. However, knowing the replicate market is regarded as strengths for the industry because it provides customers with various choosing options to satisfy their requirements. |
| Rivalry | To regulate the competitiveness of the market | However, the pharmaceutical sector is hugely competitive due to the possibility of great return if recent drugs or medicines can be created. In determining the competition in the market it would definitely help the services, products and marketing stand out. In addition to this, this will also help to set a stable price taking into consideration the rivalry and also assist to respond competitive marketing campaigns with the industry’s own initiatives. |
References
applications.emro.who.int (2020), Medicine Prices, Availability, Affordability and Price Components Available at: https://applications.emro.who.int/dsaf/dsa944.pdf?ua=1#:~:text=Morocco%20has%20an%20essential%20medicines,which%2070%25%20are%20locally%20manufactured [Accessed on: 22 July, 2022]
Bruijl, D. and Gerard, H.T., (2018). The relevance of Porter’s five forces in today’s innovative and changing business environment.Available at SSRN 3192207.
edrawmax.com (2022) WondershareEdrawmax Available at: https://www.edrawmax.com/article/pharmaceutical-industry-pestel-analysis.html [Accessed on: 21 July, 2022]
Horst, D.J., Duvoisin, C.A. and de Almeida Vieira, R., (2018). Additive manufacturing at Industry 4.0: a review. International journal of engineering and technical research, 8(8).
ipl.org (2022) IPLAailable at: https://www.ipl.org/essay/Porters-Five-Forces-Analysis-Pharmaceutical-Industry-FCNC56YJK5U#:~:text=PORTERS%20FIVE%20FORCES%20ANALYSIS%20%2D%20PHARMA,and%20bargaining%20power%20of%20customers.
Leu, T., (2018). The impact of the Swiss climate policy instruments on the energy consumption and greenhous gas emissions in the industry and the service sector: evidence from an ex-post evaluation of microdata. In IEPPEC 2018: International Energy Policy & Programme Evaluation Conference, Vienna (Austria), 25-27 June 2018.
Silva, F., Resende, D., Amorim, M. and Borges, M., (2020). A field study on the impacts of implementing concepts and elements of industry 4.0 in the biopharmaceutical sector. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), p.175.
unodc.org (2018), DRUGS AND AGE Available at: https://www.unodc.org/wdr2018/prelaunch/WDR18_Booklet_4_YOUTH.pdf [Accessed on: 22 July, 2022]
Zandkarimkhani, S., Mina, H., Biuki, M. and Govindan, K., (2020). A chance constrained fuzzy goal programming approach for perishable pharmaceutical supply chain network design. Annals of Operations Research, 295(1), pp.425-452.
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