<p style="text-align: justify;">Takeda Pharmaceutical is a Japanese pharmaceutical and Biopharmaceutical Company. It was incorporated in 1781 and is headquartered in Tokyo, Japan. It is the largest pharmaceutical company in Asia based on revenue (Burke, 2020). The company is among the top 10 pharmaceutical companies worldwide after the $62 billion Shire takeover.</p>
<p style="text-align: justify;">Takeda is a patient-focused and research-driven company with a stated goal to bring health care to people worldwide. It is providing pharmaceutical drugs for over 230 years; during that time company has transformed itself and made a strong commitment to the highest ethical standards.</p>
<p style="text-align: justify;">Takeda operates in 80 countries and region, including Europe, Canada and the US (Takeda, 2021). The company integrated ethics from Japanese culture, and they have vowed to meet healthcare goals 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 style="text-align: justify;">Takeda &#8211; Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The pharmaceutical industry is highly competitive, and companies are competing hard to gain new customers and keep the existing customers. Takeda has operations worldwide though it is based in Japan; it faces competition in the local market and globally. Its major competitors in the Japanese market are Daiichi Sankyo and Otsuka Holdings. Globally, it competes with Pfizer and Novartis.</p>
<p style="text-align: justify;">In 2020, Takeda reported revenues of $30.2 billion and a profit of $406 million with 60% year on year growth in revenue (Fortune, 2021). In the same fiscal year, Daiichi Sankyo reported revenue and gross profit of $9.1 billion and $5.8 billion, respectively (Nikkei Asia, 2021). Otsuka Holdings earned $13.3 billion in revenue and $9.2 billion in gross profit (Nikkei Asia, 2021). Pfizer reported a profit and revenue of $9.6 billion $47.6 billion, respectively (Forbes, 2021). Another international big pharmaceutical company Novartis recorded revenue of $48.6 billion with a profit of $8.1 billion (Forbes, 2021). Therefore, the pharmaceutical industry is highly competitive.</p>
<h2 style="text-align: justify;">Takeda &#8211; Threat of Substitutes</h2>
<p style="text-align: justify;">The threat of substitute is low to moderate. There are many alternatives available, but the near-natural substitutes are homoeopathic and other alternative medicines. Alternative medicines and homoeopathic are considered effective ways to treat different diseases, and their use depends upon the preference. However, recently, more population is willing to take alternative medicine; therefore, there is an increase in people using complementary and alternative medicine in the US at the end of the 20th century (Eisenberg et al., 1998).</p>
<p style="text-align: justify;">Other substitutes are cheap knockoff products; these counterfeit products flush the market. However, neither these products are safe nor effective and thus have more unknown side effects. Therefore, they do not pose a real threat to the products offered by the pharmaceutical companies. Allopathic medicines are the modern miracle and are an important part of the modern healthcare infrastructure, and their existence is inevitable. Therefore, the threat of substitutes remains low to moderate.</p>
<h2 style="text-align: justify;">Takeda &#8211; Threat of New Entrants</h2>
<p style="text-align: justify;">The threat of new entrants remains moderate to low. There are some inherent barriers associated with the industry. The major barrier to entry is the well-established incumbents; the &#8220;Big Pharmaceutical&#8221; companies have a significant market share and resources to fend off the competition with billions of dollars spent on Research and Development (R&;D). The other deterrent is the high R&;D cost.</p>
<p style="text-align: justify;">The competition in the industry needs a significant amount to be spent on R&;D, and it is important for entry and staying competitive. Another barrier for aspirants is the strict compliance and approval process. The drug approval process is stringent and layered; therefore, new entrants are discouraged by higher than optimal drug approval standards (Ward, 1992). Moreover, companies may need to acquire new technology and incur cost to stay competitive. Therefore, despite the competition, the threat of new entrants remains moderate.</p>
<h2 style="text-align: justify;">Takeda &#8211; Bargaining Power of Buyers</h2>
<p style="text-align: justify;">Consumers are assessed to have moderate bargaining power in the industry. However, consumer power depends on consumers&#8217; concentration, available options, and switching cost. Consumers are mostly dependent upon their doctor for prescription drugs and are often reluctant to buy a similar compound from a different brand. However, after a good review, patients usually prefer to stay with the same medicine in chronic disease and seasonal diseases. Therefore, brand loyalty exists despite having a low switching cost and abundance of options to choose from.</p>
<p style="text-align: justify;">Companies can capitalize on this by ensuring the quality of the manufactured medicines. Companies need to create brand equity in the competitive market, and these factors affect brand equity: brand loyalty, brand awareness, and perceived quality parameters (Panchal et al., 2012). Therefore, consumers have moderate bargaining power.</p>
<h2 style="text-align: justify;">Takeda &#8211; Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">Suppliers have moderate bargaining power in the pharmaceutical industry. The important inputs are in the form of specialized equipment, raw material and domain expert human resources. Equipment suppliers do not hold much bargaining power as many suppliers are available, and the companies have multiple sources to get equipment from. Having multiple suppliers is an effective hedge against suppliers&#8217; risk (Chen et al., 2014). The raw material is a commodity in the chemical industry and is easily accessible without much hassle. The experts such as specialized researchers and innovators are not in abundance, and the manufacturing operations are significantly dependent upon them; therefore, they can exercise high bargaining power. Considering the above, suppliers hold low to moderate bargaining power.</p>
<h2 style="text-align: left;">References</h2>
<p>Burke, H. (2020). Who are the top 10 pharmaceutical companies in the world? (2020). Available at: https://www.proclinical.com/blogs/2020-8/the-top-10-pharmaceutical-companies-in-the-world-2020<br />
Chen, X., Shum, S., &; Simchi‐Levi, D. (2014). Stable and coordinating contracts for a supply chain with multiple risk‐averse suppliers. Production and Operations Management, 23(3), 379-392.<br />
Eisenberg, D. M., Davis, R. B., Ettner, S. L., Appel, S., Wilkey, S., Van Rompay, M., &; Kessler, R. C. (1998). Trends in alternative medicine use in the United States, 1990-1997: results of a follow-up national survey. Jama, 280(18), 1569-1575.<br />
Forbes. (2021). Novartis. Available at: https://www.forbes.com/companies/novartis/?sh=2d1d544c3b80<br />
Forbes. (2021). Pfizer (PFE). Available at: https://www.forbes.com/companies/pfizer/?sh=435c75072d6b<br />
Fortune. (2021). Takeda Pharmaceutical. Available at: https://fortune.com/company/takeda-pharmaceutical/global500/<br />
Nikkei Asia. (2021). Daiichi Sankyo Co., Ltd. Available at: https://asia.nikkei.com/Companies/Daiichi-Sankyo-Co.-Ltd<br />
Nikkei Asia. (2021). Otsuka Holdings Co., Ltd. Available at: https://asia.nikkei.com/Companies/Otsuka-Holdings-Co.-Ltd<br />
Panchal, S. K., Khan, B. M., &; Ramesh, S. (2012). Importance of ‘brand loyalty, brand awareness and perceived quality parameters’ in building brand equity in the Indian pharmaceutical industry. Journal of Medical Marketing, 12(2), 81-92.<br />
Takeda. (2021). Who we are. Available at: https://www.takeda.com/who-we-are/company-information/<br />
Ward, M. R. (1992). Drug approval overregaultion. Regulation, 15, 47.</p>