Reference no: EM133338480

Case Study: Analysts have noted that the share prices of firms in the Branded Pharma industry have done quite poorly relative to the US Stock Market as a whole. For instance , over the period 2000-2018, an Index of leading pharmaceutical firms has returned 40% cumulatively, while the S&P 500 has returned over 100%. As a senior executive in Pharma Company, a large pharma company, you are trying to understand the causes of this underperformance of the industry as well as come up with some strategies to address the problems identified. In general, a systematic approach to understand a change in industry value is to understand the industry structure as it stood at an earlier point in time and then identify and understand the implications of any important trends that have emerged in or impacted the industry. Three common reasons for industry profit potential to decline are a) a decline in the industry's value creation, b) an increase in the vertical competition threats faced by the industry, c) an increase in the overall horizontal competition in the industry. Understanding each of these three possibilities by identifying which drivers in each of the three cases above have worsened can also help in developing a set of strategies that systematically address the sources of industry decline.

Questions:

1. Has the branded pharmaceutical industry's value creation declined? If so, which drivers are causing this decline?
2. Have the vertical competition threats facing the industry worsened?
3. Has the horizontal competition in the industry worsened
4. What would you recommend that an industry leader such as Pharma Company should do to counter the threats you have identified. Just a listing of the the strategic responses you would recommend the management consider with justification of each recommended strategic response will suffice.