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Indian pharmaceutical market is set for rapid growth over the next decade. This expansion will be driven

by an ageing population and a gradual shift in disease burden from anti-infectives and gastrointestinal

disorders to cardiovascular, central nervous system and other chronic diseases. However, despite an

extensive healthcare system, Indias performance on health indicators remains low, and this has led to an

increase in private healthcare services and public/private partnerships.

The environment includes

1. The internal environment e.g. staff (or internal customers)2. The micro-environment e.g. external customers, agents and distributors, suppliers,competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

Below is an analysis of the structure of the health industry using the PESTEL (political,economic, social , technological, environmental and legal) model.

Factor Could include:

Political e.g. EU enlargement, the euro, international trade, taxation policy

Economic e.g. interest rates, exchange rates, national income, inflation,unemployment, Stock Market

Social e.g. ageing population, attitudes to work, income distribution

Technological e.g. innovation, new product development, rate of technologicalobsolescence

Environmental e.g. global warming, environmental issues

Legal e.g. competition law, health and safety, employment law

POLITICAL : Politicalinterest has been generated because of the increasing social

and financial burden ofhealthcare. Examples are the UKs National Health Servicedebate and Medicare in the US.

Ideology

Framework political, structural

Domestic versus international concerns

Religion/tradition/culture

Democracy lack of, relations with public health

Short versus long-term goals

Lack of governance

Inter- and Intranational relations

Donor agenda

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Human rights/international law

Globalization

Need for evidence-based policy

Resources

Funding who, how much, when depends on inter- and international agenda Political support and will Public versus private NGO versus government (who provides, who implements, who benefits) Reform health care Access

ECONOMIC

Nine geographic markets account for over 80% of global pharmaceutical sales these are, US,Japan, France, Germany, UK, Italy, Canada, Brazil and Spain. Of these markets, the US is thefastest growing market and since 1995 it has accounted for close to 60% of global sales.

Virtuous spirals between demography, health and money Need for tag teaming public health specialists and economists, political scientists etc. etc. Economists dont have development experience Poor distribution of wealth Finances important in development work Two way relationship between health and economic benefits Financial perspectives dont necessarily relate to needs Health costs are increasing Should economics be used to measure and justify action? Need for financial risk protection

SOCIAL : Good health is an important personal and social requirement. pharmaceuticalfirms play unique role in meeting societys need for good health.

In recent times, the impact of various global epidemics e.g. SARS, AIDS,SWINE FLU etc hasalso attracted population and media attention to the industry.

The effect of the intense media and political attention has resulted in increasing industry effortsto create and maintain good government -industry-society communications.

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Socially-constructed differences between men and women exacerbate/confuse real differences inways that are detrimental to the health of both

Social make-up and history Development interacts with inequality: race, religion and culture Self awareness, education, openness to new ideas Social consequences of demography (aging, migration etc.) Social consequences of environmental change need for environmental justice

TECHNOLOGICAL

Technology creates risks and rewardsRisks

Travel/transportation

Biological warfare

Antibiotic resistance

Genetic testing

Environmental degradation

Rewards

Vaccine development Research and development

Communication and IT

Education methods

Management information systems/logistics/data collection and analysis

Modernization of equipment

Genetic testing

Legal Environment:

The health industry is a highly regulated and compliance enforcing industry. As a results there are immense legal, regulatory and compliance overheads which the industry has toabsorb. This tends to restrict its dynamism but in recent years, government have begun torequest industry proposals on regulatory overheads to so as not to discourage innovation in theface of mounting global challenges from external markets.

Examples are Pfizer\Pharmacia, Glaxo- Wellcome and SmithKline, Beecham and Novartis (amerger between Sandoz and CibaGeigy).