AbbVie Inc is a publicly trades company of biopharmaceuticals in America. The company was established in 2012 as the spin-off of the Abbot Laboratories. The company has more than 40 products in market. The company has done many collaborations with other organizations like Google life-sciences, infinity, and Calico. The company employees more than 30,000 people, which includes scientists, researchers, manufacturing specialists, communicators and the regulatory experts. The company believes in continuous innovation and work hard to develop different solutions for the illness. It believes in creating the positive impact on the lives of people (Abbvie, 2019).
The company is working in a competitive industry, which means it has to face threats from the competitors, substitute products, new firms, customers, and supplier. For the industrial analysis, Porter five forces model can be used, which helps in making strategic decisions. Here is the detailed Porter five force analysis of Abbvie;
Bargaining Power of Buyers
AbbVie is a biopharmaceutical company, who takes its customers seriously. As the company deals with the life of patients, it is necessary to provide best quality drugs. The bargaining power of the customers is high. AbbVie distributes products to wide range of consumers through distributors, government agencies, and wholesalers, but does not limit to them only. This benefits the company in a way that some consumers represent the significant portion of business. Notably, this helps the business in United States as many companies generates revenue with the help of wholesalers. Hence, there is a con of it as the company get affected by any one consumer loss (Li, 2014).
Bargaining Power of Suppliers
The bargaining power of the suppliers is low in case of AbbVie. This is mainly because the company has agreements and contracts with many third-party suppliers for different raw materials. The company has efficiently managed its supply chain to get the cost advantage over competitors. AbbVie does not have any material agreements which can put the company under risk. It always keeps a track of inventory and hold inventories for the key materials used in production. This strategy helps in avoiding the disruption in supply chain. Moreover, AbbVie believes in maintaining good relationship with its suppliers especially with key product suppliers to achieve economy of scales. Thus, weakening the bargaining power of suppliers (Nasdaq, 2016).
Threats of New Entrants
The company is facing high threats from the new entrants. This is mainly when intellectual property is going to expires in surroundings. This usually creates new competition of different drugs, which are low priced and get market share easily. AbbVie’s famous drug Humaira is a flagship item, which is known as a good value driver. It is necessary for the company to increase the entry barriers. However, the pharmaceutical industry in America has very strict rules and regulations. The new firms have to build its strong brand image in order to survive in the industry (Li, 2014).
Threats from the Substitute Products
AbbVie is facing high level of threats from the substitute products. The competition in the pharmaceutical industry is high. Regardless of the fact that AbbVie is having a leading position in one of its drugs. That drug uses in the class treatments for many indications, the situation could change anytime. Whenever the competitors advance their technology and clinical development, substitute will be available. Patients want effectiveness in the medicines. Whenever any other rivals’ product will be more effective, AbbVie will face the negative outcome. It is necessary for the company to continuously strive hard towards innovation and provide best quality treatments to consumers (Nasdaq, 2014).
Rivalry of Existing Players
The competition n the pharmaceutical industry is intense. There are numerous companies competing with each other. They strive hard to gain patent for new products to protect themselves. It is necessary for the AbbVie, to strive hard towards innovation, and provide best quality medicine to save lives. The company has to increase its consumer base in order to retain its market position. AbbVie works for the society development and community betterment. The company should also diversify geographically to mitigate the risk (Li, 2014).
References
AbbVie, 2019. Our company. [Online], Available at: https://www.abbvie.com/our-company.html, [Accessed on: 28th November, 2019].
Li, J. 2014. AbbVie presentation. [Online]. Available at: https://studylib.net/doc/5666156/abbvie-presentation, [Accessed on: 28th November, 2019].
Nasdaq, 2016. AbbVie Inc. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/abbv.pdf, [Accessed on: 28th November, 2019].