Environmental factors affecting the pharmaceutical industry

Curtis Hill

Assignment 03: Benchmark: A Starting Point

HA4110D – Healthcare Planning and Evaluation

Robin Bolton

January 24, 2021

Pharmaceutical Industry

The Pharmaceutical industry is known for discovering, developing and producing drugs or medications that are administered to patients with the intention of curing, vaccinating or alleviating symptoms of different diseases (Farooq, 2020). The Pharmaceutical industry usually deals with brand or generic medications and also the production of medical devices. This industry is closely related to the health sector because the drugs which are used in the hospitals are usually manufactured by these industries. Pharmaceutical industries are majorly affected by environmental factors which include political, economic, social and technology.

For political factors, this industry is subject to variety of laws set by states for regulation in developing, testing and also marketing of the drugs produced. Government agencies and other drug related laws usually govern the operations of this industry for the safety and health of the patients who receive these medications (Farooq, 2020). There are also regulations on where these drugs can be sold, because these manufactured drugs can be sold directly to the patients or to hospitals and other pharmacies. These regulations that govern this industry also have a positive advantage because they act as a barrier to entry of new competitors and therefore it is hard for new industries to venture in this business giving the established companies least competition.

There is also pressing pressure when it comes to selling these drugs to the consumers. This is because these drugs are lifesaving and therefore the government cannot allow these industries to sell them at a higher price which will make them unavailable to the needy. In the past the prices of these drugs were not controlled by the government, but the industry started hiking the prices such that they were not affordable to many of the patients and therefore the government took over to controlling the pricing of these drugs (Bush, 2019).

In the economy factor the health care spending is steadily growing because of other factors such as increased lifestyle diseases and therefore this has led to increased or greater revenues for this industry. As for social factors there is a growth in the ageing population which means that there is an increase in age related health complications therefore the pharmaceutical industry will be able to produce more drugs to cure such complications (Farooq, 2020). With the growth in the ageing population this means that the production of age-related drugs will also increase therefore increasing the revenue of the pharmaceutical industries.

There is also increased growing obesity rates in the current generation which lead to increased lifestyle diseases such as diabetes. Such health-related diseases mean that the pharmaceutical industries have to come up with the drugs to cure these diseases which means that the revenue will be increased because a lot of people need these drugs to cure the lifestyle diseases. There is also a health-conscious trend in the current generation meaning that people are striving to live healthy and take supplements to keep their immune system in check, presenting an opportunity for the pharmaceutical industry to provide health related solutions to this generation, hence growing its revenue.

As for the technology there is a growth in biotechnology industry which can take from the pharmaceutical industry because bio technological industries are focused on producing healthier food options and substituting their normal options that usually cause diseases and therefore there will be a reduced need for massive pharmaceutical treatment in the future (Bush, 2019). The Process of producing a new drug is usually complex and filled with risks and therefore a competitive market benchmark analysis is very important in the Pharmaceutical industry. This industry is highly competitive as for the current top 10 pharmaceutical industries, nine of them come from the United States and therefore this industry is very competitive in the United States (White, et al, 2019). These companies usually compete amongst themselves and both of them produce generic and branded drugs. The productor service categories in the committed care industry include oral drugs, parental formulations, novel drugs formulations, topical medicine oncological formulations and modified medical formulations (Yaseen, et al, 2018). These different types or group of drugs are important in the pharmaceutical industry and therefore there is a competition of producing all these categories which are in high demand. Chief providers of these medicines are images of competition in the pharmaceutical industry and every company is focused on providing a better version of the same drug which is more effective and also affordable.


Bush T. (2019). PESTLE Analysis of the Pharmaceutical Industry. Retrieved from https://pestleanalysis.com/pestle-analysis-of-pharmaceutical-industry/

Calcagno, C., Chapsal, A., & White, J. (2019). Economics of excessive pricing: an application to the pharmaceutical industry. Journal of European Competition Law & Practice, 10(3), 166-171. Retrieved from https://academic.oup.com/jeclap/article/10/3/166/5362539?login=true

Farooq U. (2020). PESTLE Analysis of The Pharmaceutical Industry. Retrieved from https://www.marketingtutor.net/pestle-analysis-of-the-pharmaceutical-industry/

Yaseen, M. M., Sweis, R. J., Abdallah, A. B., Obeidat, B. Y., & Sweis, N. J. (2018). Benchmarking of TQM practices in the Jordanian pharmaceutical industry (a comparative study). Benchmarking: An International Journal. Retrieved from https://www.emerald.com/insight/content/doi/10.1108/BIJ-04-2017-0076/full/html

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