Porters Five Forces

Threat of potential entrants : Moderate Firms specialising in moving specific molecules along the value chain could be tomorrows main competitors. Emphases on disease prevention and early detection begin to shift R&D priorities; and could favour pharmacogenomics providers.

Power of buyers : High Controls on pricing, reimbursement and market access continue to tighten (value for money is a top concern on both sides of the Atlantic). Growth of managed care (and the information it provides) is expected to continue deteriorating the profitability of big pharmaceuticals regardless of the outcome of regulation

Power of substitutes : High Biotechnology and combinational chemistry further reduce lead times to market. Biotechs may become more successful at bringing successful products to market as genomics allows targeted application so that clinical trial size and length can be shortened. Diversification into generics protects the market share (but not the profit) of big pharmaceutical companies. Physicians develop independent systems to compare therapies and non-integrated rivals search for information databases comparable to those of the big pharmaceuticals.

Power of suppliers : Low Lack of profitability of outsourcing markets for R&D, clinical trials and managing the approval processes may result in a shakeout with fewer suppliers able to put upward pressure on out-sourcing costs.

Competitive Rivalry : High Continued industry consolidation results in fewer larger global companies, focused on specific franchises, with intense rivalry within therapeutic franchises.