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) External Environment:

The Pharmaceutical Industry is dependent on political and legal conditions of general

environment. In pharmaceutical industry we have two kind of medications which are generic or

innovative. Innovative pharmaceutical industry success depends on the patent protection in

the industry. For example, in United States innovative industry can have 10 to 12 years of

patent protection life from the time that product is for sale in the market. Success of the

generic pharmaceuticals which are bioequivalent to innovative pharmaceutical is also related to

the political and legal environment of their market. If we look at pharmaceutical industry

globally we can see that regulations toward generic pharmaceutical are different in different

countries. For example, in United States they have the Hatch-Waxman ACT 1984including

Abbreviated New Drug Application which reduce the drugs approval period and give the

chance to Generic companies to have a 180 day exclusivity period if the generic company can

submit an abbreviated new drug application before other generic competitors. In Europe

regulations are different in each country for example, United Kingdom and the Netherlands are

very similar to USA, and countries such as Germany and France are more physician-driven or

branded generics market and the cost of sale for generic products are higher in these countries.

Market for generic drugs in the rest of the world also depend on the regulations in each

country. For example Japan and East Asian market are highly regulated and generic drug

occupy only 10% of pharmaceutical drugs in Japan. Developing markets such as Latin America,

eastern Europe, Russia, India and China are very attractive for generic market.

2) Attractiveness of the industry

Pharmaceutical industry has some of porter’s five forces model of competition:

a) Threat of new entrants:

In pharmaceutical industry we can see...

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