Five Competitive Forces in the Biotechnology Industry and Its Economics Scenarios

1801 Words Sep 14th, 2014 8 Pages
Five Competitive Forces in the Biotechnology Industry and Its Economics Scenarios

Table of Contents Industry Analysis 3 About the Biotechnology Industry 3 The future of Biotech companies is bright 4 Porter's Five Forces 4 Threat of New Entrants 4 Power of Suppliers 4 Power of Buyers 5 Competitive Rivalry 5 Forecast Industry 5 Competitors 6 Economic Scenarios 7 Increased Demand for Money 7 Increase of Money Supply 8 Deflation 9 Price for Biotechnology Products 10 When to Build Inventory? 10

Industry Analysis
About the Biotechnology Industry
The biotechnology industry uses advances in genetics research to develop products for human diseases and conditions. Biologic drugs and products are more complex
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The industry rivalry is under control. The biotech companies have the potential for entering the biosimilars segment, drawing on its wealth of expertise in manufacturing biological drug due to 1) Decades of proven biologics R&D experience 2) Strong biologics manufacturing heritage 3) High-quality and reliable supply.
Biotech industry usually has a robust pipeline aimed at unmet medical needs.
Porter's Five Forces
Threat of New Entrants
The industry has limited competition and a low threat of new entrants. Biotech firms require huge amounts of funding to finance their large R&D budgets. Not having ample cash is one of the biggest barriers. Specialization also creates barriers. For instance, knowledge about cancer and heart disease is quite high therefore a there are very few experts in this field. Last but not least it can take up to 10 years to bring a biologic drug to the market.
Power of Suppliers
Biotech companies are unique because most of their value is driven by intellectual property. Unlike in other industries, the nature of their business does not force them to rely on suppliers. Scientific tools, materials, computers, and testing equipment are highly specialized, but the likelihood of these companies invading on biotech companies’ line of business is not very high.
Power of Buyers

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