Innovation Management

Question 1.

This happens due to the fact that there is almost no competition in the market for some pharmaceutical industry. Therefore, the profits can be made to 35% on investment. The use of patents have encouraged monopoly effect and people have the tendency to purchase medicines via government departments.

As a result, there is lack of price sensitivity.

Question 2

This industry is really crucial in the way it influences other industries in the world. As a result it has such a tremendous power to influence decion makers. Due to the lack of competition caused by the patent system, most companies can make huge profit out of it. Other industries could not have that much profit and monopoly because of 2 following reasons:

• Other industries like bread and milk have a huge amount of suppliers that create no chance for monopoly.
• Other industries may have other techniques to create their products while a chemical formula cant be replaced.

Question 3

Drugs are not price sensitive as they are controled by the Government and they have all been set budgets for certain treatments. Moreover, people also have the insurance for their health problems to be covered. This, therefore, provides more opportunities for insurance companies to have proper investigation and researches to know this information in pharmaceutical industry.

Question 4

Due to the effort of government to prevent competition, this can’t happen. Patent systems are made to prevent copy. In other industries, companies can have alternative systems. However, the nature of science in pharmaceutical industry does not allow alternative products.

Question 5

Natural science cycle

There are Nobel prizes given to tremendous contributions in pharmaceutical industry every year.

Integrated engineering cycle

Pharmaceutical industry requires the most technical effort put in. This is therefore the first stage of the product development process to find out the formula and effects any drugs have on human.

Differentiated services cycle

Every customer has a specific treatment. It therefore requires different kinds of drugs and treatments so as to adapt with the need of customers.

Social sciences cycle        

After producing, the need must be generated and the products should be supported by regulators. They will be the ones to support the new products

Entrepreneur

Question 6

Patent system is important in case to protect and restrict the use of knowledge. Moreover, it can be the demonstration of monopoly which can lead to the fact that medications become more unaffordable for people who don’t have insurance. In these cases, some costly diseases become more devastating and prizes can solve this situation. However, this require a prize fund to afford to give prizes from governments in certain treatments to help millions of people.