| dc.description.abstract | There can be little doubt that competition in the pharmaceutical industry has increased considerably over
the past few years. Growth in the pharmaceutical industry in South Africa has been affected adversely in
recent years by the increased competition from generic drug manufacturers. As soon as a drug comes off
patent, competitors are ready with generic copies, resulting in price drops. Pharmaceutical companies are
therefore forced to continually evaluate their existing strategies, to ensure that their financial performance
remains at the desired level.
This study aims to determine the importance that entities in the pharmaceutical industry attach to
competition during the strategy-formulation process. The study will also attempt to provide an
understanding of how entities have adapted their product-market strategies, as identified by Ansoff, over
the past five years. As an ancillary objective, this research aims to determine whether the level of
competition in the industry has adversely affected the financial performance of the entities competing
within the industry.
Entities within the pharmaceutical industry consider the level of competition in the industry to be very
high, and, accordingly, it is one of the major factors that they consider when determining which product market
strategy to adopt. Because of this, the product-market strategies adopted by entities in the
pharmaceutical industry have changed substantially over the past five years. No strategy is, however,
dominant.
Over the past five years, most of the entities in the pharmaceutical industry have displayed improved
profitability, risk and cash flow-ratios, as well as growth in revenue, net profit and net asset value. This
improvement in financial performance is despite an increased level of competition. It can therefore be
concluded that the level of competition in the pharmaceutical industry is not reflected directly in the
overall financial performance of companies in the industry. | |
