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Gilead Sciences Case Solution

Solution Id Length Case Author Case Publisher
2116 1129 Words (6 Pages) W Lazier, John W Glynn, Kevin Taweel Stanford Business School : E9
This solution includes: A Word File A Word File

Gilead Sciences is a leading research-based bio-pharmaceutical company. It has gradually developed its portfolio across diversified products and research lines. It has been responsible for undertaking research on various health problems found in different parts of the world (Gostin & Rai, 2020). This report throws light on the industrial dynamics, in which Gilead Sciences is operating. Porter's five forces model has been used to understand that.

Following questions are answered in this case study solution

  1. Industry Competitors

  2. Potential Entrants into the Industry

  3. Substitute and Complement Goods or Services  

  4. Bargaining Power of Suppliers

  5. Bargaining Power of Buyers

Case Analysis for Gilead Sciences Case Solution

1. Industry Competitors

Competitors play a major role in shaping the strategy of a company that intends to function in a competitive landscape of a particular industry. Gilead Sciences is an important name in the field of Pharmaceutical and Biotechnology research industry. It has a diversified product portfolio consisting of various therapeutics and medicinal research in different areas of the medical field. The pharmaceutical industry has a very broad scope of operations, as it produces medicines catering to mass varieties of illnesses found in the global arena. It has acquired a number of reputable pharmaceutical companies that, although contributed to the growth of the company, but also intensified competition in the overall medicinal industry. Started initially as a pharmaceutical research company, Gilead progressed on to compete with the biggest names in the pharmaceutical manufacturing industry. It competes with pharmaceutical giants such as Pfizer and GlaxoSmithKline (GSK), and given this intense competition, this company has grown to become a multi-billion dollar company. The acquisition has been an important strategy used by Gilead to maintain its position in the competitive landscape. However, this has also resulted in the company competing on price on account of certain pharmaceutical products. For instance, AbbVie (ABBV) launched a product, Viekira Pak, in opposition to Sovaldi, a product made by Gilead for fighting against Hepatitis C (Drews, 2003). Nonetheless, competition varies along different product lines, and this has played a balancing role in ensuring a stable functioning of the company.

2. Potential Entrants into the Industry

A lot depends on the dynamics of the industry as to whether it is suitable for a company to enter into a particular industry. The pharmaceutical industry is characterized by high-profit margins and is also considered as a highly regulated sector in different economies. Although it offers profitable avenues for new entrants, it is difficult to enter such a regulated industry; therefore, barriers to entry are high. The pharmaceutical industry already has a presence of established brands, so it can become quite difficult for any new entrant, even after passing the difficult phase of entry, to develop contacts with the distribution channels to market its products. There are also different practical aspects of the pharmaceutical industry (Gostin & Rai, 2020). For instance, mostly drugs are patented in the industry. So a new entrant would have to start from scratch, to develop a certain reputation. Heavy investment is also required the purchasing relevant machinery and technology, and also to fulfill various regulatory stipulations.

3. Substitute and Complement Goods or Services  

Over a period of time, a number of substitutes have developed in the treatment of different ailments. From the perspective of the pharmaceutical industry, the patent period is quite important, as, during that time, there is no substitute for that drug. Till that time threat of substitutes in that particular medicinal category is quite low. However, after the end of that period, generic production takes place by a number of players in the industry, and the threat increases to a certain extent. Another major consideration in this perspective is the increasing prominence of alternative medicine in the overall industry.

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