CMN 124 Lecture Notes - Biopharmaceutical, Switching Barriers

• School: Ryerson University
• Department: Communication
• Course: CMN 124
• Professor: Shavin Malhotra

Document Summary

Chemical manufacturers are suppliers to the pharmaceutical companies. Switching costs are low and suppliers have low power in this industry. Drug industry is facing challenges as buyer poser increases over time. Substitute products are typically generics; generics manufacturers enter markets when a patent expires but have recently been using legal mechanisms to enter markets before anticipated pater expirations, reducing profits of innovator companies. The long and expensive product development cycle is a barrier to entry and leads to multiple risk-sharing and profit-sharing alliances between biopharmaceutical firms and larger pharmaceutical companies and between smaller firms. The competition within the industry is fierce and follow-on products to a new innovation emerge rapidly (18 months or less). Even with a few large players, smaller firms can still survive through innovation and intellectual property capture; niche drugs can allow smaller companies to address focused markets.