International Business Analysis Project Research Paper

International Business Analysis Project - Research Paper Example According to Busfield (2006), the total worldwide sales of pharmaceutical products in the year 2003 amounted to $ 466 billion (10). It is necessary to note that the usage of prescription medicines globally is on the increase (Blume 1992). All the leading pharmaceutical multinationals, including Glaxo Smith Kline, have head offices in all advanced societies; and their worldwide presence is on the increase (Berg, 1997,). The challenges driving down revenues from the blockbuster strategy to 5% are recognized: declining R&D (Research and Development), rising expenditures of commercialization, augmenting payor influence and shorter exclusivity terms. The pharmaceutical industry has traditionally used the blockbuster approach to develop new drugs, despite numerous challenges of this approach (Williams et. al., 2008, p. 845). Using this approach, some prospective drugs may fail and when their costs are factored in, the actual cost of discovering, developing, and launching new drugs overly i ncreases (McKeown 1976). Publishing arm of a consultancy firm forms the basis of this report and audience are expert in the pharmaceutical field. Challenges of the model The model structure is provided in the diagram below revealing the requirements of the model. The challenges of the model are viewed as the enslaving factors in the pharmaceutical industry. ... vironment for pharma companies has transformed dramatically in the recent past; however, the founding model has not kept the pace thus posing challenges to emerging pharmaceutical companies. The declining research and development (R&D) productivity, increasing costs of commercialization, shorter exclusivity periods and augmenting payor influence have increased the mean expenditure per a successful introduction to $ 1.7 billion and decreased average expected profits on novel investment to the indefensible level of 5%. The challenges has presented predicaments that mergers created will not improve profitability. This forces pharmaceutical organizations to require fresh business models that fit the new environment. The model presents major challenges to all but the three largest organizations; GlaxoSmithKline PLC, Pfizer Inc., and Merck & Co. Inc. the choice is comparatively desolate: with little resources to drive primary care commodities and to venture in the arms race in sales & mark eting, and research and development project (R&D), they will probably be driven faster to replace their blockbuster-based models (Moncrieff 2002). Market worth is shifting previously to some smaller actors that have embraced new models. The effects of model dilapidation have been seen in many pharmaceutical organizations. According to Busfield (2006), pharmaceutical companies get most of their revenue from patented drugs, with most patients lasting for a period of up to 20 years. In 2003, for instance, The US pharmaceutical market, including of six of the peak 10 pharmaceutical corporations, accounted for ‘just under half of the world’s revenue, (Busfield 2006, p. 3).’ The other four companies were based in Europe. Despite the importance of this industry in the world, companies in