The Pestel Analysis Of The Pharmaceutical Industry

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1- Derive three opportunities and three threats for GSK by first making the PESTEL analysis of the macro-environment surrounding the pharmaceutical industry. (9 points)

* PESTEL analysis of the pharmaceutical industry:
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ECONOMICAL:
• Global Economic crisis
• Globalization
• Mergers and acquisition have become common practice in many industries
• Reduction in the average income
SOCIAL:
• Population changes: aging, increase in obesity in western countries/ under nutrition in developing countries, etc.
• Customers are better informed (internet, etc.)
• Emerging markets are becoming more and more important
• Differences between health insurance owners inside a country and between different countries (access to different services)
TECHNOLOGICAL:
• New technologies for both communication and equipment
• Possibilities of customized treatment
• Complexity of new drugs’ development: 15 years in average
ENVIRONMENTAL:
• Development of the “green-market”
• People awareness about ecology is growing
LEGAL:
• Changes in patents and international
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Mergers, generics and better medicines are responsible for this situation. GSK has done further mergers, which help the company being more and more influential. But in this competitive environment, mergers are not sufficient. Indeed, generic products and new drugs that are considered better are getting more popular and tend to be more appreciated by the customers. GSK should thus think about its product range in order to fit the market demand.

Law regulation:
The controls, restrictions and pressures are really important in pharmaceutical organization in many countries such as France, USA, Japan, etc. Some governments are directly involved in the price control of pharmaceuticals products. It is impossible to foresee whether controls, regulations or buyers’ pressure will increase, or if new controls or regulations will be created in any area where GSK is present. The pricing strategy is actually essential, especially in the pharmaceutical industry, as it is a budget that cannot be cut down by customers. People belonging to lower class will always prefer low price drugs.

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