New value chain in the precription drug industry : a mandate to change

Abstract

This thesis focuses on an analysis of strategy in the prescription drug industry. For prescription drug companies, the ultimate consumers are patients, but intermediate customers are physicians. Because of regulations and the particular decision making process of choosing pharmaceuticals, the marketing activity of drug companies have focused on physicians and introduced their products to them. However, because of deregulation, the emergence of health maintenance organizations (HMOs), which aim to reduce health care costs, the value chain of prescription drug industry has been changing. Accordingly, prescription drug companies have been re-evaluating the traditional value chain of the industry. They have to invest in a more important part, and to establish a new business model. This paper will focus mainly on a prescription drug market, discussing a new value chain and its demand for change. This paper explains the increasing need for direct-to-consumer (DTC) advertising, which includes information technology and e-commerce, in contrast to the industry's traditional marketing.