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Pharmaceutical Manufacturing Companies + Market Entry

Breaking the Norm: Overcoming Barriers to Entry in the Pharmaceutical Manufacturing Industry

The pharmaceutical manufacturing industry is expected to witness substantial growth in the coming years due to various contributing factors. As lifestyles and habits change, awareness about health and wellness increase, and demand for immediate relief grows, the market is bound to continue growing. Due to advancements in the pharmaceutical and technological fields, there has been an increase in the average life expectancy globally. This directly translates to a larger population of elderly or geriatric individuals, and a continuous need for the pharmaceutical manufacturing industry.

Although awareness about health and wellness is growing, the prevalence of terminal and chronic diseases has grown substantially in recent years, and the need for pharmaceutical drug discovery and development has increased. The pharmaceutical manufacturing industry has also seen a rise in demand due to easy access in the market, with the increased availability of over-the-counter (OTC) medicines. With these market growth drivers, the industry has become a highly competitive space and is attempting to recover from the disruptions caused by the COVID-19 pandemic.

Additionally, pipeline players are now attempting to establish themselves in the recovering industry successfully. However, this industry is considered among the top 10 industries with the highest barriers to entry. Therefore, Infiniti’s market entry experts analyzed the market and identified the most significant barriers to entry in the pharmaceutical manufacturing industry.

With their in-depth analysis, the experts identified four significant barriers to entry, among many others. While identifying and understanding these barriers to entry is important, it is essentially the first step in the process of becoming an industry leader. Infiniti’s market entry analysis helps companies identify, evaluate, and efficiently maneuver the barriers to entry in the pharmaceutical manufacturing industry. In this article, Infiniti’s experts discuss the significant barriers to entry in the pharmaceutical manufacturing industry and highlight the benefits of our market entry analysis.

Entering a market as competitive as the pharmaceutical manufacturing industry is a challenging ordeal. Request a free proposal to successfully break the norm and overcome market entry barriers.

Pharmaceutical Manufacturing Market Entry Barriers

Every industry is plagued with various barriers to entry. Not only is the pharmaceutical manufacturing industry one among these industries, but it also stands among the top 10 most difficult industries to enter. Therefore, our market entry experts identified and evaluated the following four most significant barriers to entry in the pharmaceutical manufacturing industry:

Economies of Scale

The pharmaceutical manufacturing industry requires a well-established distribution network and appropriate infrastructure. This is challenging for new entries into a market and serves as a major barrier to entry. As large pharmaceutical companies dominate the industry, it is difficult for new companies to produce the same drugs at the exact costs and gain market share. Economies of scale play a role in industries such as this one, wherein producers manufacture large quantities of small products. Additionally, brand name recognition plays a crucial role in prescription drugs, particularly drugs with certain effects. Consumers will rarely if ever, choose a brand that is not widely acclaimed or trusted. Therefore, new companies struggle to establish a brand name and gain market share when competing with larger, established pharmaceutical manufacturing companies.

Regulations and Approval

The pharmaceutical manufacturing industry has highly stringent and continually increasing regulations. In the US, the Food and Drug Administration (FDA) takes an average of approximately 21 months to approve a new drug. All pharmaceutical drugs must gain all required regulatory approvals before marketing. Additionally, acquiring FDA approval has proven to be highly challenging, with an extremely low success rate. Obtaining the required approvals is long-drawn and can be extremely expensive for small or new pharmaceutical companies. More often than not, this waiting period allows well-established companies to replicate the product and file a 180-day market exclusivity patent, which in turn provides them with a temporary monopoly. Following this, establishing a monopoly for the new drug can pose a tremendous challenge for the newer company.

Investment Capital

Establishing the required infrastructure, conducting clinical trials, and acquiring all regulatory approvals is extremely expensive. As companies attempt to enter this highly competitive market, they must invest a substantial amount over multiple years. Clinical trials alone require large investments and can still not be approved by the FDA and its parallel administrations across the world. In the US, it can take between 10 to 15 years for a new drug to complete the research and development process, and still face the possibility of not being approved to prescribe for customers. These expenses can be higher depending on the purpose and components of the drug being developed. For new market entries, this translates into high levels of investment, over a prolonged period with no revenue, and the possibility of not gaining approval. Whereas, established pharmaceutical companies continue to earn revenue from previously approved drugs and have the infrastructure in place.

Intellectual Property and Patents

The legal aspect of pharmaceutical manufacturing is agreeably one of the most significant barriers to entry in this market for two reasons. Larger pharmaceutical companies have approved patents that enable them to legally stop new companies from entering the market without establishing a new drug. Additionally, acquiring a patent is a challenging process, and often, patents expire before new companies can acquire the regulatory and FDA approvals that are needed to market and distribute the drug. This enables larger companies to replicate the product and use their distribution and marketing networks to establish a monopoly with the new drug, making it more challenging for new companies to gain revenue and market share.

Request more information to gain more in-depth insights into the impact of investment, regulations, and patents on new companies in the pharmaceutical manufacturing industry.

Pharmaceutical Manufacturing Companies and Market Entry Analysis

Infiniti’s market entry analysis helps new pharmaceutical manufacturing companies identify market entry barriers. It also helps identify and capitalize on appropriate market opportunities and understand the market that they choose to expand into or enter. Infiniti’s market entry experts also help companies with the following:

  • Understanding the needs and expectations of customers, identifying and developing the ideal consumers-centric products that gain the trust of their consumer base
  • Identifying and planning for the most profitable segments of a market, and making optimum use of the company’s resources
  • Evaluating and efficiently maneuvering various barriers to entry, improving profit margins, and extending its business in new, and existing markets

In the pharmaceutical manufacturing industry, Infiniti’s market entry analysis enables companies by providing in-depth insights into the barriers to entry discussed above and other potential obstacles. It also allows them to gain market share in their category and generate substantial savings. Additionally, market entry analysis provides companies with the information they need to develop or adopt strategic initiatives to overcome common challenges, such as regulatory issues or changing market dynamics.

To learn how market entry analysis addresses regulatory and intellectual property challenges in the pharmaceutical manufacturing industry, speak to our experts.

Market penetration strategy

Market Penetration Strategy for a European luxury beauty and personal care brand

The US is currently one of the largest markets for beauty and personal care products. In addition, this industry is now growing at a steadier and faster pace in the US when compared to other countries in the world. The lucrative opportunities in the US beauty and personal care sector is prompting several foreign players, especially European companies, to venture into the market. Furthermore, there is an increasing demand for luxury and premium products among American consumers. With ample market opportunities and a robust growth trajectory fueled by the premium segment, the US is now an attractive growth priority for premium beauty brands to expand its global footprint. By leveraging a strong market penetration strategy, businesses can gain a comprehensive understanding of the pros and cons of a new market and become fully equipped to establish their business in a foreign country.

You are just one step away from successfully establishing your business in a new market. Request a free proposal to know how our market penetration strategy for business can help you achieve this.

Business challenge

The client, a European luxury beauty brand retailer, wanted to expand their business into the United States. Although the market for luxury beauty products in the United States looked promising, the client wanted to understand in detail the key challenges and opportunities that the market has to offer before making a move towards market entry.

As the company’s core business is into luxury retail, it is a no-brainer that it would be challenging to appeal to all the customer segments equally. So, with Infiniti’s market penetration strategy, they wanted to understand the demographic conditions in the US and group different customers based on the most profitable segments. Through this, they wanted to gain a better understanding of which customer groups to target for their product marketing strategy and identify the best channels to do so. The European luxury beauty brand retailer also sought to gain an idea of the best distribution models and investment capacity in the US using our market penetration strategy solutions.

An effective market penetration strategy is all you need to win over your target audience. Get in touch with us our experts to know how we can help you formulate an ideal market penetration strategy for your business.

Key challenges in the US luxury beauty market 

market penetration strategy

Highly competitive market – The luxury personal care and beauty market in the US is more consolidated when compared to that of Europe. Unlike the European luxury segment, in the United States, the top 10 companies collectively own a greater share of the premium market segment. This relative consolidation leads to fierce competition and has a major influence over the coveted share of finite shelf space at key retailers.

Distribution channel mix – Due to significant competition and product proliferation, distribution channels play a critical role in both the market entry strategy and growth potential of beauty brands entering the US market. The fundamental difference in the distribution channels here is that US markets demand a localized distribution strategy, which is critical for the growth of European brands in the US marketplace.

Changing consumer preferences – Consumers’ increasing preference for plant-based, organic, and natural beauty products have spurred investment and innovation as companies to capture market share in this growing category. Natural products appeal to modern consumers, both from ethical considerations (concern for environment and sustainability) as well as health concerns (fear of harmful ingredients).

Solutions offered

With over 15 years of experience in serving various industries across the globe, the experts at Infiniti Research helped the client to devise an efficient market penetration strategy to enter the US luxury beauty and personal care market.

  • A thorough market entry research was undertaken to help the client understand the demographic segmentation and demand patterns in the market and plan their market penetration strategy accordingly.
  • As a part of the market penetration study, Infiniti helped the client formulate a comparative market analysis was provided to the client to help them understand the strategies of their key competitors in the US. They were also able to gain insights on the core difference between consumer groups and demand patterns in the European and US markets. This helped them identify the best promotional activities that are more likely to work with their target audience in the US.
  • During the course of the market penetration strategy study offered to the client, we identified the different modes of distribution that can be chosen by the client to quickly leverage local resources, networks, and market knowledge with minimal investment.

Results obtained

Based on our market penetration strategy and insights, the client gained a detailed understanding of the market demographics and competitive scenario in the US luxury beauty and personal care market. They also developed a detailed understanding of the attractiveness of market opportunities for their product and service offerings. The European luxury beauty and personal care retailer was also able to devise a market penetration plan to establish a foothold in the US. Also, with the help of our market penetration strategy analysis, they were able to better understand the current and future market potential, make effective targeted promotions to attract customers, and thereby successfully plan their market entry into the US.

Learn more about the importance of a market penetration strategy for your business

Connected Car Technology

Top 3 Challenges Companies Must Watch Out for Before Devising International Market Entry Strategies

Today, in the era of globalization, brands across the world have been compelled to ‘think global’ and expand their reach to international markets. This would eventually boost their growth and profit potential. Doing business in foreign markets is attractive for both big as well as small ventures and this is why robust international market entry strategies play a crucial role in making any brand a global success. But there are several challenges associated with a foreign market entry. Therefore, it is essential for companies to be careful while formulating international market entry strategies since they may overlook certain challenges that might prove to be fatal for the business. In this article, we have listed a few important challenges that companies must watch out for before devising international market entry strategies. To help companies achieve this, we have suggested a few measures that can help companies combat these barriers efficiently.

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