Reference no: EM132906268

In the following industry what do you think are the threats and the opportunities a firm might have? Explain your answer.

The pharmaceutical industry consists of firms that develop, patent, and distribute drugs. Although this industry does not have significant production economies, it does have important economies in research and development. Product differentiation exists as well, because firms often sell branded products. Firms compete in research and development. However, once a product is developed and patented, competition is significantly reduced. Recently, the increased availability of generic, nonbranded drugs has threatened the profitability of some drug lines. Once an effective drug is developed, few, if any, alternatives to that drug usually are available. Drugs are manufactured from commodity chemicals that are available from numerous suppliers. Major customers include doctors and patients. Recently, increased costs have led the federal government and insurance companies to pressure drug companies to reduce their prices.