Introduction
1.1 Introduction to the Organization
XYZ Pharmaceuticals, a company that leads the pharmaceutical industry in the US, has been given lots of credit for its unfaltering innovation and steadfastness towards global healthcare improvement (Smith, 2019). XYZ Pharmaceuticals has developed a broad portfolio that comprises cutting-edge pharmaceuticals evenly distributed across different therapeutic domains. This is attributed to the fact that the company has earned a reputation as a quality pharmaceutical provider within the local market. By using the best innovative technologies in R&D, XYZ Pharmaceuticals has repeatedly broken into new frontiers of the medical field to develop new medications to meet unmet medical needs and improve the patient’s outcome (Li et al., 2020).
1.2 SWOT Analysis
Although XYZ Pharmaceuticals has many inner strengths, such as the research and development infrastructure that is the engine for innovation and product differentiation, it cannot help but be subject to the pressures surrounding it, potentially turning the tide in opposition. Furthermore, the organization will acquire authoritative experience from many years of providing patients with checkable and activity-approval manufactured medicines. On the other hand, XYZ Pharmaceuticals has several areas for improvement, specifically its limited presence internationally and the fact that they are too dependent on a few products for revenue generation. This must be addressed, and the company should try to diversify and expand in the global market (Johnson et al., 2020).
Alongside the external factors that create numerous opportunities, including growing demand for specialty drugs and personalized medicine and a stream of entrapping emerging markets with growing healthcare infrastructure, companies can consider a lot. However, the organization should carefully address potential problems such as heavy regulations, fierce business competition from multinational pharmaceutical firms, and economic challenges that may hinder the company’s strategic development (Johnson et al., 2020).
PESTEL Analysis
The PESTLE framework, a useful tool, gives insight into the forces outside the firm regarding the scale of operation and the strategic decisions that will influence XYZ Pharmaceuticals within the home country or abroad (Johnson et al., 2020).
Policies related to the production, distribution, regulation, and supply chain of the pharmaceutical industry are major political factors. In the United States, the working environment of XYZ Pharmaceuticals is generally stable with the FDA, which is the utmost regulatory body that ensures a high level of quality, effectiveness, and safety of the products (Case, 2019). In the case of China, political stability and official measures taken by the government for healthcare reform and innovation certainly matter if the effective market entry of pharmaceutical companies is ensured.
The economic conditions related to macroeconomic trends, healthcare spending, and purchasing power are included in monetary terms. The US pharmaceutical industry operates in a thriving economy that spends much of its income on healthcare services, highlighting novelty and well-invested development. On the one hand, in emerging markets worldwide, such as China, fast GDP growth and enhanced medical spending have created good market expansion opportunities despite unstable economics and adverse changes in currency movements (Li et al., 2020).
Social factors are related to demographic changes, cultural mores, and consumerism. The ageing population and growing public knowledge of healthcare in the US make people more susceptible to chronic diseases. As a result, pharmaceuticals in the US are in high demand to meet the needs of the elderly and for ailments related to chronic disease. On the same token, in China, a shifting way of life and an ageing population encourage the demand for drugs. It allows XYZ Pharmaceuticals to resolve existing drug shortages (Zhang et al., 2019).
The technological factors in question involve biotechnology, among other digital technologies, and research methodologies. In the US, XYZ Pharmaceuticals deploys innovations and technologies to optimize its drug discovery, development, and manufacturing processes and maintain its competitive advantage in the healthcare sector. Of course, investments in the healthcare infrastructure and digital health solutions in China inspire us to introduce new manufacturing technologies to change the lives of Chinese patients and help doctors optimize healthcare delivery.
The legal side implies all the regulations proper to the intellectual property and legal base governing the pharmaceutical industry. In America, XYZ Pharmaceuticals deals with a multifaceted regulatory framework that ensures drugs are cleared for sale, patent protection is enforced, and drug marketing practices are complied with in terms of regulations. Moreover, in China, registering for, pricing, and intellectual property protections are common regulatory issues that international pharmaceutical companies grapple with if they want to operate within their market (Yang et al., 2021).
Environmental factors include green initiatives, climate change, and environmental regulations. In the United States, XYZ Pharmaceutical Company follows the environmental regulations designed to reduce the environmental impact of pharmaceutical manufacturing, having set out the processes. (Beyer et. al. (2018)) Also, China, based mainly on environmental issues and pollution regulation, must comply with stringent environmental regulations for sustainable business actions (Zhang et al., 2020).
In conclusion, the PESTEL analysis demonstrates how the political, economic, social, technological, legal, and environmental factors should be examined to underpin XYZ Pharmaceuticals’ internationalization strategy. If the firm wants to flourish in the international market, it must handle these complex factors appropriately.
Porter’s Five Forces Analysis
Out of the industrial rivalry theory proposed by Michael Porter, the five forces framework systematically analyses the competitive turnouts and market structures, especially those of the China market, where XYZ Pharmaceuticals will enter (Johnson et al., 2020).
Secondly, the barrier for newcomers is lowered by fierce competition. This is because of a tightly controlled regulatory environment, enormous R&D investments, and a massive demand for high-quality products. Governments establish a controlled regulatory approval system, including strict approval requirements for drug licensing and registration. These are some of the significant obstacles hurdling the way of the competitors. On top of that, well-established pharmaceutical erections enjoy strong distribution networks and good brand recognition, which work to deter potential entrants to this market.
Moreover, in the listed industry, the bargaining power of suppliers in China is relatively low due to the abundance of materials and a vast pool of suppliers (Yang et al., 2021). Alongside other industry players, XYZ Pharmaceuticals has the advantage of having a massive pool of suppliers. During this, they negotiate favourable terms and can prevent a supply group from dominating their market.
Besides, against the unlimited availability of generic substitutes and the potential leverage of the providers of healthcare services (according to Li et al., 2020), the bargaining power of the buyers in the Chinese medical market is noticeably moderate. While individuals may need more input on drug prices, medical care providers could pressure producers by including a drug on the drug list and conducting large-scale procurement.
Additionally, the excellent breadth of substitutes in China’s drug market is for more than just medicine with designated patents or is used for specific patients (Yang et al., 2021). Whether there are several generics on the market or not, the substitute effect is not that direct on original drugs, as they have unique therapeutic profiles, and many consumers still prefer them.
Lastly, the situations between Chinese competitors in the pharma market are complicated and challenging, making multinational and local pharmaceutical businesses compete fiercely. XYZ Pharmaceutics contends with stiff competition from established global pharmaceutical powers and local names vying to secure market share. Companies usually use differentiation approaches like branding, tactical pricing, and collaborations with their competitors in the battle for market leadership.
In short, the practical application of Porter’s Five Forces model depicts the multidimensional nature of competition and the complexity of the pharmaceutical industry within China, both of which are held and compared to a model. It is priceless information for the company analysts of XYZ Pharmaceuticals when they are pursuing the most suitable global marketing entry strategy and unceasingly posing a challenge to their successful global expansion drive.
BERI Matrix Analysis
The BERI Matrix helps to carry out a risk assessment of all areas of globalization for the potential company XYZ Pharmaceuticals entering the Chinese market (Johnson et al., 2020).
Market Attractiveness: China has a considerable market size owing to its large population, spending on healthcare, and more need for drugs. However, the issue of strict regulations, environmental property, and much competition are just some aspects of the market’s needs before entering.
Risk: The political landscape in China is generally stable, and the government’s initiatives in reform and innovation are creating the foundation for a conducive environment for market entry in this healthcare sector in the public domain (Johnson et al., 2020). However, it is essential to consider the regulation’s difficulties and any likely policy changes to avoid random political risks.
Economic Risk: XYZ Pharmaceuticals has a great prospect of finding an extensive market in China, which is experiencing fast-rise economic growth and the heritage of the rising middle class (Lisa et al., 2020). On the other hand, fluctuation effects on profitability and instability of finances might cause companies to undertake risk management strategies that may be robust enough to mitigate all the adverse effects.
Overall, the leading domestic and foreign pharmaceutical enterprises seek a foothold in the Chinese market while facing factors like politics, economic welfare, and the uncertainties of regulations, which lead to unknown opportunities and risks.
Assessment of Market Attractiveness
However, the Chinese pharmaceutical market presents the firm XYZ Pharmaceuticals with a great chance of success, fueled by the market’s massive size, the breadth of the growth potential, and the environment of the regulations.
WithMarket Size: With a population of more than 1,400 million, China is one of the biggest pharma markets in the world (Li et al., 2020). One of the significant advantages this industry offers is its immense revenue potential, which facilitates entry into the market. The global increase in chronic diseases and the ageing population accelerate this.
Growth Potential: The pharmaceutical market of China is characterized by the marvellous growth opportunities presented by the ascending healthcare expenditures, the rising middle class, and the improvement in access to healthcare services (Li et al., 2020). Projections show an expected constant growth in the demand for medical products, owing to many factors such as over-urbanization, lifestyle changes, and government projects that help access health care.
Regulatory Environment: Whereas in the case of the regulatory environment in China, strict requirements and a complex approval process are the facts, current reforms and initiatives try to keep the same process smooth and eliminate corruption (Johnson et al., 2020). Also, the Chinese government demonstrates its readiness for innovation and has created appropriate rules for foreign investors in the pharmaceutical field, which allowed XYZ Pharmaceuticals to spend money to get over the regulatory barriers
To sum it up, the Chinese pharmaceutical market is an up-and-coming destination for XYZ Pharmaceuticals, and the promise of fast growth, increasing regulations, and an evolving environment make it a place anchored by both potential and stability. However, marketing challenges also exist.
References
Beyer, A., Bartz-Beielstein, T., & Sun, H. (2018). An Industry 4.0-based methodology for pharmaceutical manufacturing. International Journal of Production Research, 56(1-2), 516–527.
Johnson, G., Whittington, R., Scholes, K., Angwin, D., & Regnér, P. (2020). Exploring Strategy: Text and Cases. Pearson Education Limited. https://thuvienso.hoasen.edu.vn/handle/123456789/12693
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Zhang, J., Xu, Y., & Zhang, J. (2020). The impact of environmental regulation on China’s pharmaceutical firms: empirical evidence from the provincial-level panel data. International Journal of Environmental Research and Public Health, 17(4), 1233.https://doi.org/10.1016/j.jenvman.2021.113910
Li, T., Zhang, H., Lu, J., Zhang, J., & Sun, H. (2020). Does the internationalization of Chinese pharmaceutical firms impact their innovation performance? The moderating role of home country regulatory stringency. Technology Analysis & Strategic Management, 32(9), 1028–1042.
Smith, S. R. (2019). FDA regulation of pharmaceutical marketing. Oxford Research Encyclopedia of Politics. https://doi.org/10.4324/9781003330271
Yang, Q., Liu, H., Gao, Z., & Ma, Y. (2021). Market access challenges for pharmaceutical companies in China: implications for multinational companies. International Journal of Healthcare Management, 14(1), 90–99. https://www.frontiersin.org/journals/public-health/articles/10.3389/fpubh.2021.708832/full
Zhang, B., Duan, W., Wang, H., Wang, Z., & Yu, X. (2019). The association between health literacy and self-efficacy towards a healthy diet among pregnant women in China: a cross-sectional study. BMC Public Health, 19(1), 1–9. https://doi.org/10.1186/s12889-019-7676-2
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