<p align="justify">The Shire is a pharmaceutical company that was founded in 1986. It was originated in the United Kingdom and had an operational base in the United States. It was taken over by Takeda, a japan based pharmaceutical company (Lisa Du, 2019). Takeda is a Biopharmaceutical Company with the primary focus of finding the cure for incurable diseases (Takeda, 2020). Research and development are core to Takeda&#8217;s mission, and by harnessing technology, they want to pursue ambitious discoveries. Focus areas for Takeda are oncology, Neuroscience, Gastroenterology, and vaccines (Takeda, 2020). Takeda integrated ethics from Japanese culture, and they have vowed to meet the goal of healthcare for all. Porter&#8217;s five forces model is used to analyze the threats faced by Takeda and the opportunities it can exploit.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">In 2018 Global Pharmaceutical market had annual revenue of $ 1,204 billion (Matej Mikulic, 2019). With a massive market and potential for a huge revenue, create a competitive environment. In the pharmaceutical market, companies compete fiercely. Takeda is in a fiercely competitive industry wherein 2019, its revenue was $18.911 billion. Takeda faces competition from global giants, including Cardinal Health, Pfizer, and Novartis. Cardinal health leads the market in 2019 with $143.53 billion, whereas Pfizer and Novartis have $53.66 and $50.21 billion in sales (Matej Mikulic, 2019). Companies in the United States are leading globally in turnover. North America&#8217;s pharmaceutical market is almost half the size of the global market. Takeda&#8217;s takeover of Shire will help its ambition to take advantage of Shire&#8217;s presence and distribution channels in the United States. The overall pharmaceutical industry has huge earnings potential; thus, it has intense competition.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes is high in the presence of a suitable alternative and vice versa. Overall few substitution threats exist for pharmaceutical companies. Its closest alternative is homeopathic medicine. Practitioners of homeopathic medicine use plants and herbs to stimulate the healing process. It is famous in few parts of the world, but it is not as big as the allopathic medicine industry. Thus, it poses no real threat to the pharmaceutical industry. Another threat is posed by the knock-off medicines. The pharmaceutical company spent hefty resources on research and development than it goes to the clinical trial and approval process. When the drug is officially launched, and it is marketed, fake copycats appear in markets around the globe. They infringe patents and sell substandard drugs to make easy cash as does not act as a true replacement of the drug, and it ruins its reputation. There exists a low threat of substitutes.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">The primary barriers to entry are required capital, product differentiation, and regulatory environment (Robert M. Grant, 2010). The massive turnover entices many to pursue a business in the pharmaceutical industry. The primary capital requirement is directly related to research and analysis cost of the perceived product. If the company comes with the product idea, it can be financed by venture capital. But product lifecycle from the research and development phase to the production phase is infinite and unreliable. Also, there are stringent regulatory requirements for clinical trials and then approvals. Even though, in the end, the pharmaceutical industry offers a bigger payday, it comes with critical insight from the general public. Their huge profits are perceived as immoral and unethical. These factors deter new entrants who are a reason for low threat in the industry.</p>
<h2 align="justify">Bargaining Power of Buyers</h2>
<p align="justify">The pharmaceutical industry has a unique landscape in terms of its consumers. An important consumer is a Patient who holds no bargaining power. The consumer is in need of medication and does not possess any prowess to alleviate its condition by other means. In the case of chronic patients, they are helpless as they have to continuously use medicine. Other consumers are doctors who prescribe medications to the patients; they are ethically bound not to side with these corporations. They have low to moderate bargaining power. At last, the consumers are hospitals, pharmacies, and distribution channels. They can pressurize pharmaceutical companies by ordering bulk quantities and requiring stricter quality control. They also cannot exercise bargaining right with much to gain. Considering all the facts, pharmaceutical companies consumers collectively have low to moderate bargaining power.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">The three major sources of supply for the pharmaceutical industry are raw material, instruments, and chemists. The raw material used in the pharmaceutical industry is also used in other prominent industries. The raw material is easily accessible and can be purchased from many vendors globally. It is also used as a raw material in the chemical industry. Those suppliers have nothing special to offer, thus holding no bargaining power. Instruments and machinery required for production are of similar nature that are used in manufacturing and other industries. Chemists are in decent supply, and experienced chemists may cost a significant amount. The pharmaceutical companies have enough resources to fulfill their demand. Considering all the factors, suppliers have low bargaining power.</p>
<h2 align="justify">References</h2>
<p align="left">Du, L. (2019). How Takeda&#8217;s $62 Billion Shire Deal Reshapes Pharma World. Available at: https://www.bloomberg.com/news/articles/2019-01-07/how-takeda-s-62-billion-shire-deal-reshapes-the-pharma-world<br />
Grant, R. M. (2010). Contemporary Strategy Analysis. 7th Edition.<br />
Mikulic, M. (2019). 2019 ranking of the global top 10 pharmaceutical and biotech companies based on revenue. Available at: https://www.statista.com/statistics/272717/top-global-biotech-and-pharmaceutical-companies-based-on-revenue/<br />
Mikulic, M. (2019). Global Pharmaceutical Industry &#8211; Statistics &; Facts. Available at: https://www.statista.com/topics/1764/global-pharmaceutical-industry/<br />
Takeda. (2020). Areas of Focus. Available at: https://www.takeda.com/what-we-do/areas-of-focus/<br />
Takeda. (2020). Who We Are. Available at: https://www.takeda.com/who-we-are/</p>