SUBJECT: DESIGN COMPANY NOVARTIS HELLAS pharmaceuticals firms

PEST ANALYSIS To understand the impact of the environment in any industry, it is imperative to consider four main factors that influence this particular political, economic, social and technological factors. It is a fact that in Greece factors are rather disproportionate influence on the functioning of a healthy market competition. The business environment is regulated by opaque procedures, middlemen, bureaucrats, businessmen and politicians. Difficulty is something that encourages free enterprise for disposal. Political Factors 1. Today there is an intense political uncertainty due to the economic crisis in the country but also globally. The combination of different political thoughts in a government with probably the same orientation (the country out of the crisis), but not necessarily identical manner actions create a coalition with ideological contradictions that cause reasonable doubts. Therefore, consistent policy or economic policy can not be expected. Regarding the Greek case, the model of health is a compromise between a social security system and a National Health System. The prolonged social crisis, the failure of the welfare state to offer new solutions to social problems globalization of the economy, the continued upward trend in spending on health, depletion in combination with the global economic downturn led to a need to refocus health policy in the Greek world and the application strategies productive and efficient use of human and material resources. 2. The Memorandum provides for measures to ensure that at least 50% of the volume of medicines used by public hospitals is composed of generics and drugs whose patent has expired, making it mandatory to procure pharmaceutical products by all public hospitals criterion for the active substance.

3. The investment framework in Greece is rather frustrating for someone who wants to start a new investment because of bureaucracy that exists.

Economic Factors 1. Greece has spent 2007 on pharmaceutical expenditure 9.7% of GDP occupying the highest position in the list of OECD in relation to the average of countries (health spending 9% of GDP). Remedial measures taken by the government expects this expenditure to fall below 6% of GDP (IOBE study 12/14/2011).

2. The ypersyntagografisi has increased excessively pharmaceutical expenditure and has practically impossible even bearable health The single entity created must be found about 1 billion. Euro suppliers of public hospitals (medical articles, pharmaceutical companies, etc.). According to an announcement by NOVARTIS only debts that exceed 90 million net these past years (www.Capital.gr on 07/26/2012) posing-as claimed by the company-jobs at risk.

3. The recent reduction in the minimum wage does not seem to have passed in the prices of drugs still exists after the high profit margin of pharmacies and the reluctance of pharmaceutical companies to reduce their profit, especially after they are due quite money from their health care providers.

Social factors 1. The increase in the number of immigrants from third countries (Asia, Africa) who bring with them diseases which had almost disappeared (malaria, cholera, tuberculosis, etc.) will be charged a health system anyway with no solid foundation.

2. The very nature of the product: - Consumer product (still used unnecessarily-culture polypharmacy) Trichotomimeni demand - Doctor - Patient - Insurance Fund

Supply and demand are largely determined by the same operator: Powerful role of the physician

3. The drug in Greece is a social good, as this expenditure is mainly covered by social insurance. 4. The reduction in drug prices is not a solution to the problem of increasing costs, because, although the costs are a function of price and the amount consumed was identified as the main causes of drug expenditure growth is more the consumption of drugs and substitution of cheap drugs and less expensive than their price (IOBE study 12/14/2011).

5. Persistence of pharmaceutical companies to make'' gifts'' to doctors for prescribing their products.

Technological factors The pharmaceutical industry is demonstrably intensive Research & Development. 1. All new medicines that are the result of precise, durable and high business risk research (expensive clinical trials often years and many resources available necessarily) to get approval for marketing. Risking failure in the companies themselves. 2. The only case of a company to meet its requirements and to fund R & D can have on various markets new drugs but can more often. 3. The patents to occupy as much as possible in the hands of wins to them.

MODEL OF FIVE FORCES OF PORTER (STRUCTURAL ANALYSIS OF INDUSTRY) According to the theory of Porter, five are the main forces of the microeconomic environment that determine the intensity and nature of competition within an industry, and strategies that can be followed by businesses. Here we will deal with these forces, each separately and in relation to the pharmaceutical industry.

The threat of new firms entering the industry

The advantages of existing firms in an industry against new entrants or for those who want to enter him, called entry barriers. Of course, this meant that existing businesses prevent the entry of new industry Competitors because it reduces their market share and of course profits and reduce their forces. The barriers to entry are very high when the industry is highly competitive. So it's perfectly logical an existing business in an industry seeking to foreclose and entry barriers to new potential competitors since it knows that there is probably concerned to take a big share of the market and thus reduce earnings. But the pharmaceutical industry, things are a little more complicated. As in any other industry existing firms exploit advantages of economies of scale, due to the volume of production have the per unit cost is lower, while the advantage of owning tech formulations and production of the product. So if a new company wants to enter a branch must go with a significant number of products that appeal to many medical specialties. And while there is no legal restriction that prohibits or makes difficult the entry of a new pharmaceutical company, the fact that the discovery of a new drug is quite difficult and time-consuming affair, has the following result: when a new company finds something new he feels ready to enter the industry, the large existing firms either redeem or buy the patent. They usually have large financial reserves and when their existence is threatened by the new 'player' are trying to buy or fund research in order to have future rights to the product. The result is potentially new industries not create ch The bargaining power of suppliers The bargaining power of suppliers is a second power of the micro-environment that in many areas is one factor that can significantly affect the cost manufacture. Costs for raw materials and supplies are an important percentage of the total cost of output, which is why suppliers may exert significant influence on the company and its strategy. Pharmaceutical companies, however there is an important distinction. The only one in substance supplier is their research departments. Both the active substance and the other

substances that allow the absorption of the body is the result of research laboratories of pharmaceutical companies. So the cost of a drug is cost investigation and not supplies of raw materials. Of course this does not mean that a pharmaceutical company may obtain drugs or patents from other laboratories. Since then the survival of the pharmaceutical company depends on innovation and existence of new products (lack of new product for quite a long time, it means most cases the disappearance of the company), research centers would expect these anyone have high bargaining power over drug, as reported and above usually bought by big pharma.

The bargaining power of buyers In every industry, the bargaining power of buyers, customers say the company is too high, since they determine the demand for products are those that can reduce prices or demand better quality for the same price etc. As mentioned already, the pharmaceutical industry and the market in general presents drug several features and is a great buy, definitely not free. Their customers are pharmaceutical companies, doctors, hospitals, pharmacies and wholesalers. What matters a pharmaceutical company great as the NOVARTIS, is the production of wide range of drugs that target many medical specialties. If a particular specialty doctor or university professor convinced the effectiveness of a drug, then the ordinary physician would definitely prefer, we will trust and will provide its patients. So the pharmaceutical promote products to physicians and pharmacies through presentations, conferences, journals, Internet and brochures. The doctor decides on the granting of particular drug to his patients so depends from the path of a

product, the company's profits and survival. However, a good and effective medication for no reason, at least on the part of physicians not promoted. There is the case of hospitals and pharmaceutical warehouses. There is growing recognition of the so-called bargaining power. That is, a other pricing offers from various pharmaceutical companies. The wholesalers in turn will supply pharmacies and so we could to say that they exercise a considerable bargaining power.

Threat of Substitute Products We believe that two products are substitutes when one can replace the other in a specific use. The existence of substitute products has a direct impact on demand products of an enterprise and usually companies that produce substitute products compete against each other. In the market there are clearly drug substitutes. Not can substitute one drug to another. Here just talking about competing drugs two or three or more companies, which exist to deal with a particular disease or other more and more rapidly effective, other acts for longer time, another has fewer side effects.

Competition among existing firms in a sector The intensity of competition between firms in a sector is a result of effort to improve their market position to gain larger shares market, stronger and dominate in every aspect compared to their competitors. In the area of drug competition among enterprises is too big. The reasons will be discussed briefly but are certainly different from those encountered in other sectors. Initially, companies operating in the sector are too many to relatively small market shares. Made from all efforts to increase their share of domination through to individual

classes of drugs (cardiac, gastrointestinal, etc.) and through the discovery of more and more new drugs, advanced and more efficient. Invest this Therefore much research, developing strong research centers but if this is not enough, make acquisitions and funding other independent research centers to ensure their survival through the new product. Really talking about a hunting acquisitions precisely because the existence of new products alone will provide lifetime company. The agent technology and the development of drugs is particularly important, since today the demands and the competition is very high. A drug must be combines many features, effectiveness, immediate energy, security, etc. We have also in the pharmaceutical industry very high fixed costs. The cost of research is of course the biggest (technology, research staff, etc.). Furthermore, regardless of the efficiency or not a product, there is a lack differentiation therebetween. Ie each product category there are enough of one or the other company, which excel one against the other on the one or the other feature. Neither substitute another, but there is a lot of competition. The company will first find a new product against a disease will prevail over the other and this is the essence of competition.