Question

Discontinuous (or disruptive) innovations apply new technolgies to an exisitng market, and have traditionally been executed by small, venture capital backed start-up companies. Google (algorithmic search), and Uber (peer-2-peer taxi service) are some of the many Silicon Valley examples that moved on to dominate their sector.

However, disruptive innovations in the pharmaceutical space rarely translate into market dominance. Of the top ten pharmaceutical companies, eight are over 100 years old (Roche, Merck, Glaxo, J&J, Pfizer, Bayer, Novartis, AbbVie) while the other two (Sanofi and Gilead) are 30 years old.

What makes pharma different from infotech when it comes to converting innovation into market dominance? List any three reasons.

Answer 1

Converting innovation into market dominance in Pharma sector is different from Infotech sector in the following three ways :-

1) Improved healthcare leads to less demand :-

Generally the innovations in the Pharma sector is focus focused on the treatment of a certain disease . For example various vaccines that has been used to treat the disease have reduced the demand for medicines that were used to treat the disease. For example vaccine for polio have reduced the demand for the drugs that were needed to treat the patients of polio . Thus innovation in the pharma market leads to to reduced revenues in their drug sector sales .

2) Opponents to consumer focused innovation :-

The intermediaries between the consumer and the pharmaceutical companies such as doctor and medical practitioner directly oppose direct contact between the pharmaceutical company and the consumers as they fear loss of their power because if the company directly attempts to reach the patients with their new products then the demand for the services of these opponent group faces a downfall which will directly affect their profession.

3).Obstacles of accountability :-

One of the biggest problem faced by the Pharmaceutical sector is the obstacle of accountability where these companies are bound to prove that the innovated product will cure a certain disease and will work as a supportive equipment for treatment of a certain illness . The innovator faces many government regulations along with compliance of several legal obligations including high accountability in case of any mishappening with the patient.