Pharmaceutical Drugs Industry Structure and Key Factors
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Lecture on Micro Economics
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Pharmaceutical Drugs Industry Structure and Key Factors
- 1. Pharmaceutical Drugs Industry By Zach Brewer, Joanna Schrank, Tracy Empson, Mark Lyubovitky ECON-200-002
Notes de l'éditeur
- -Monopolistically competitive -Many sellers producing differentiated products -Firms engage in vertical/horizontal integration -Companies often specialize in product lines that deal with specific types of illnesses like cancer or central nervous system disorders -Johnson and Johnson -Founded in 1886 -Fortune 500 company -250+ subsidiary companies -Barron’s Magazine ranked it the world’s most respected company -Pfizer -Founded in 1849 -Best known for Lipitor and Lyrica -Shares made a part of the Dow Jones Industrial Average in 2004 -Bayer -Founded in 1863 -German Company -Best known for Bayer aspirin
- -Special features of the nature of demand in the pharmaceutical industry - Physician, not patient generally determines which drugs, and what quantity, are purchased - Demand is less elastic among people who are insured than among people who are not insured - Elasticity of demand also depends on whether or not there is a generic version of the drug
- -Sensitivity to changes in income depends on the type of pharmaceuticals - Drugs needed to treat more pressing medical conditions (like infections, diabetes, etc.) are not so sensitive to income - Drugs used for preventative care or less pressing medical conditions (high blood pressure, depression, etc.) are more sensitive to income because people don’t see them as necessities when they have less money to spend
- -“Many doctors and other experts say consumer belt-tightening is a big factor in the prescription downturn.” -” If enough people try to save money by forgoing drugs, controllable conditions could escalate into major medical problems. That could eventually raise the nation’s total health care bill and lower the nation’s standard of living.” -”With money tight, even cheaper generic drugs may not always be affordable drugs.”