Porter’s Five Forces Analysis of AstraZeneca
Key Facts
| Name | AstraZeneca |
| Industry | Drugs & Biotechnology |
| Founded | 1999 |
| Headquarters | Cambridge,United Kingdom |
| CEOs | Pascal Soriot MBA |
| Revenues | $38.7billion,2022 |
| Profit | $ 94.7million, 2022 |
| Competitors | AbbVie, Roche, Bayer,Novartis, Merck,Johnson & Johnson, Pfizer |
Company Overview
AstraZeneca Plc is a pharmaceutical holding company that conducts research, development, and manufacturing. Its pipeline is utilized for cancer, cardiovascular, renal, metabolic, and respiratory therapies. AstraZeneca’s revenue increased 9% to $26.6 billion in 2020, led by the success of new medications in cancer and biopharmaceuticals, as well as developing markets.AstraZeneca’s total assets for 2021 were $105.4 billion, i.e. a 57.9% rise from 2020. The organization was created on June 17, 1992, and is based in Cambridge, England.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a widely used model to evaluate companies’ strategies in reference to its industry for neutralizing the competition and increase the margins, it is developed by Professor Micheal E. Porter in 1979, at Harvard Business School.
AstraZeneca Rivalry among Existing Competitor
- AstraZeneca Business Segments: AstraZeneca Plc specializes in Oncology, BioPharmaceuticals (including Cardiovascular, Renal & Metabolism, and Respiratory & Immunology), and Rare Disease.In the United States, AstraZeneca produces, markets, and distributes more than 43 medications.AstraZeneca total assets for the year endingby September 30, 2022 were $94.2 billion, i.e. a 12.16% decline year-over-year.
- AstraZeneca Global Operations Year 2021: Tagrisso, a medicine used to treat non-small-cell lung carcinomas, was AstraZeneca’s top pharmaceutical product by income in 2021.Tagrisso earned $5 billion US dollars in sales for the corporation that year.Vaxzevria, the COVID-19 vaccine, was AstraZeneca’s second-highest revenue generator in the same year. During that year, Vaxzevria produced around $3.9 billion US dollars in income.
- Johnson & Johnson: Johnson & Johnson is a holding corporation that is involved in the research and development, production, and selling of health-care products and surgical equipment. J&J has 148,000employees across the world. Johnson & Johnson’s revenue for the fiscal year ended September 30, 2022 was reported as $96.041 billion, that is a 5.02% rise year over year.
- Pfizer:Pfizer utilizes research and worldwide resources to provide healthcare treatments and remedies to people throughout the world. Pfizer has 29,000 employees and its headquarter is based in New York, USA. The company reported revenues of 22.6 billion US dollars in the third quarter of 2022, which were mostly driven by its COVID-19 vaccine. Pfizer’s net worth as of January 17, 2023 is $268.6 billion. The COVID-19 vaccine was developed by Pfizer in partnership with the German firm BioNTech.
- Roche Holding:Roche Holding AG is a healthcare research company.It comprises of two segments that are diagnostics and pharmaceuticals.Fritz Hoffmann-La Roche started the business on October 1, 1896, and it is based in Basel, Switzerland. In 2022, the corporation had revenues of $68.7 billion. Roche has assets of worth $101.3 billion. Roche produced $15.2 billion in profits.
- Investment in Research & Development-Marketing Cost and Brand Image:AstraZeneca Plc is pursuing research to better understand cancer and its intricacies in order to find, develop, and deliver life-changing therapies and raise the likelihood of cure.
AstraZeneca Threat of New Entrants
- Global Pharmaceutical Industry:In 2021, the United States was the largest national pharmaceutical market, contributing nearly 41% of total pharmaceutical spending worldwide.
With a market share of about 12%, China has established itself as the second-largest market.However, anticipated pharmaceutical sales suggest that North America and Europe will continue to dominate by 2025.
- High Capital Investment- Trained Human Resources: AstraZeneca reported that from2010-2021 more than 199,000 individuals including healthcare workers and employees were trained under healthcare and environment sustainability programs.
- High Research & Development Cost: AstraZeneca’s research and development budget has rapidly grown in recent years. In 2021, over 27% of AstraZeneca’s total revenue was being spent on research & development. AstraZeneca was also considered to be among the top ten pharmaceutical corporations in the world by early 2021, based on the number of medicines under development.
- Technological Advancement: AstraZeneca collaborated with JanaCare to provide an in-home creatinine monitoring test (Serum creatinine monitoring is a measure of kidney function). It makes studies more patient-centered by using a home device.
AstraZeneca Bargaining Power of Suppliers
- Supplies Industry Influencer: AstraZeneca supplied about 2.5 billion vaccine doses to more than 180 countries in 2021. It is one of the leading COVID-19 vaccine dose suppliers globally.
- Suppliers Collaboration: AstraZeneca has a supply chain financing program in order to help its external suppliers with cash flow. Taulia Inc. manages the program.
AstraZeneca Bargaining Power of Buyers
- High Product Differentiation:COVID-19 vaccines and booster shots introduced were the key indicator for the high product differentiation. The massive amount of cancer research funds allocated and 20% revenue growth in cancer treatments provide a competitive edge to AstraZeneca in global market.
- Customer Satisfaction – After Sales Services:AstraZeneca administered COVID-19 vaccines at large scale across the world. AstraZeneca reported that among the 21,583 individuals who got at least one dose of the vaccine, there was no increased risks found of blood clots.
- Government Rules &Regulations: It also faced strict government restrictions and scrutiny due to theextensive supply of COVID-19 drugs and vaccines across different regions. These medications were supplied after approval from the health and drug control authorities of USA, UK and other countries.
AstraZeneca Threat of Substitute Products or Services
- Lifesaving Drugs and Vaccines: The industry has grown significantly over the last two decades, with global pharma revenues expected to reach 1.42 trillion US dollars in 2021. USA currently holds the world’s largest national pharmaceutical market. Until June 2022, 1,521 medicines and vaccines addressing COVID-19 were in development. Forbes highlights the importance of pharmaceutical industry processes, that it must be arranged in line with the industry standards, such as good manufacturing practice (GMP) and the process analytical technology (PAT) framework.They can be applied throughout the manufacturing stage of drug development.
- Brand Loyalty: The pharmaceutical sector is primarily reliant on research and development. Recent advancements in medications and vaccines for rare illnesses and COVID-19, have enabled it to earn a significant market share in emerging countries and increase the goodwill.
- Post-COVID 19 Market: McKinsey & Company states that COVID-19 pandemic, inflation, and new methods of working necessitate pharmaceutical companies to carefully reconsider their long-term sourcing, manufacturing, and supply chain decisions. From new treatments to smart devices, enhanced analytics, and digital connection, a new wave of research and innovation started. The AstraZeneca vaccine is expected to have prevented 50 million COVID-19 infections, five million hospitalizations, and saved over one million lives.
References
- Forbes, Profile, AstraZeneca
- Forbes, Profile,Roche Holding
- Pfizer 2021 Annual Review, Financial Performance 2021. Available at Pfizer
- AstraZeneca Annual Report and Form 20-F Information 2021. Available at AstraZeneca
- AstraZeneca Company Overview. Available at AstraZeneca
- AstraZenecaAnnual Reports. Available at AstraZeneca
- Statista (October 12, 2022) Global pharmaceutical industry – statistics & facts | Statista. Statista.Availableat.Statista
- Statista (October 14, 2021) Market share of top 10 national pharmaceutical markets worldwide in 2021 | Statista. Statista.Availableat.Statista.
- Statista (February 2022) Top products of AstraZeneca based on revenue from 2019 to 2021(in million U.S. dollars) | Statista. Statista.Availableat Statista
- AstraZeneca Vaccine 100% Effective In Preventing Severe Disease And Hospitalizations, U.S. Trials Show.Available at Forbes
- Europe’s Mixed Messages On AstraZeneca Vaccine Jeopardize Global Covid Response. Available at Forbes
- Emerging from disruption: The future of pharma operations strategy (October 10, 2022) | Article. Available at McKinsey & Company