APPENDIX A - PORTERS 5 FORCES
Barriers to Entry • Entering of the potential industrialists is easy, if they have the necessary finances, because the cost of obtaining the permit and start operations is very high. However, there is stiff competition among the companies, especially with the pharmaceuticals, which have not only expanded their scope of operations and distribution through mergers and acquisitions, but also have the necessary know how and long experience to combat any new entrant. • The lengthy and cumbersome registration process, spanning up to two years or more, whereby the new companies have to provide the Certificates of Free Sale, (which confirms the approval for the sale of products in US, Europe, Japan etc) ensure the sale of product in the parent company (incase of MNC) and live up to other irrational clauses in the registration form, inhibit the companies from entering. • The pharmaceutical industry is a very capital intensive industry. This requires large amount of investment, and since, we lag behind in the capital industry, and it has to be imported. Thus, limiting new entrants. • With no stress and emphasis on research and development in our country, it is most likely that the new entrants will produce a new form of the generic type, already being produced in abundance. Thus, the absence of any differential advantage over their competitors will further reduce their chances of survival in the industry. • The risk aversive nature of the industrialists works as a major hindrance to entry. With the absence of required finances, lack of economies of scale and stiff competition, the prospective pharmaceuticals manufacturers find the chances of flourishing in Pharmaceuticals industry very grim. Hence, avoid entering the Pharmaceuticals scene. • Only the companies with satisfactory quality and the ability to export their products will be