Sigma公司案例分析.doc

ContentsPart 1 History and Major Activities 2Part 2 Industry Characteristics (i) Rivalry Among Existing Firms3(ii) Threat of New Entrants3(iii) Threat of Substitute Products 4(iv) Bargaining Power of Buyers4(v) Bargaining Power of Suppliers5Part 3 Competitive Strategy6Reference 7Part 1 History and Major ActivitiesSigma is a large company in the pharmaceutical industry and it has a long history. In 1912, two Melbourne pharmacists established it. After a prolonged endeavour, now Sigma plays an important role in this industry.Sigma began its manufacturing activities in 1942. After fifty-four years, it acquired QDL. And in the next year, Sigma Company Ltd was listed on the Exempt Stock Exchange. Guardian pharmacy group and Amcal pharmacy group were acquired successfully in the following year. In 1999, Smith Kline Beechams Dandenong manufacturing facility was acquired. And in the same year, Sigma incorporated Arrow Pharmaceuticals, which was listed on the ASX in 2002. In 2003, Sigma Company acquired Herron Pharmaceuticals and Chemists Own. And in 2005, Sigma Company Ltd and Arrow Pharmaceuticals Ltd merged and are renamed Sigma Pharmaceuticals Ltd. In 2008, Sigma Pharmaceuticals acquires Orphan Australia. Recently, Sigma divested its Pharmaceutical Division to Aspen Pharmacare Holdings.Now, Sigma engaged in the manufacturing, development and distribution of own branded and contract OTC (over the counter), prescription and generic pharmaceutical products for the Australian and overseas markets. Sigma is also the owner of some of Australias best known pharmacy brands in Amcal, Guardian and Amcal Max. Sigma Healthcare Division was created to align Sigma wholesale and retail services to provide even greater value to primary customer, Community Pharmacists. The Sigma Healthcare Division provides all pharmacist customers with an extensive range of products and services, including daily deliveries, full service warehouses in all states, monthly promotional products, regular consumer promotions, business advice, succession planning, pharmacy design and layout service, facilitation of buying/selling pharmacies, finance guarantees, loyalty program through Sigma Rewards and property/lease negotiations.Part 2: Industry Characteristics(i) Rivalry Among Existing FirmsThe intensity of rivalry of the pharmacy industry can be analysed through several industry characteristics like number of competitors, industry growth, storage costs, and differentiation or switching costs. Industry growth -The global pharmaceutical market sales would be expected to grow at a 4 - 7% compound annual growth rate through 2013, meanwhile, Asia-Pacific region will be the fastest growing pharmaceutical market over the recent past. (Pharmaceutical Drug Manufacturers, 2010) Thus, the pharmaceutical industry growth quickly in the globe including Australia, so the competitive environment is going to be enhance with the industry growth.Number of competitors-There are a lot of competitors in the pharmaceutical industry in Australia. Priceline, Soul Pattinson and Pharmacist Advice are the main brands and banners in the retail health and beauty industry. Thus, the intensity of the rivalry will be increased to some extent.Differentiation or switching costs-There are a lot of innovation products in the pharmaceutical industry so as to attract the customers. API plans to maintain its professional service and advice in the industry and that is also one of the parts of its strategy.(ii) Threat of New EntrantsThe threat of new entrants is very low in Australia Pharmaceutical Industry because the barriers to enter the industry are high even though the economics of scale for production may be small. The complex regulation of this industry is one of the barriers. All drugs and chemicals used need to be approved by the Food and Drug Administration (FDA) and the standards are very strict as well. Patent is another regulation which generally last about 20 years that are very discouraging for new entrants. Besides it is costly in both time and money in developing new drugs while the established firms such as Australian pharmaceutical industries limited (API) and Primary Health Care Limited (PRY) have huge budget to spend on marketing to uphold their brand. As a result the profit margins for these two companies are high.(iii) Threat of Substitute ProductsExperts said that human body gene crack will lead to a change in preventive medicine. And the progress made by human beings accelerated the biological technology development and application of new drugs. According to statistics, only in 1999, 22 kinds of biological technology by the new drugs approved by the FDA to the market, and make the listing of the biotech drugs for a total of 92 species, including breast cancer and other refractory disease of monoclonal antibodies, another 350 kind of biological technology has already entered the new drug clinical trials and hundreds of drugs at an early stage of development. That was in 1993 and 1994, although is this kind of new drug to market the most two years, but only seven kinds of each year. So far, the FDA has approved 637 kinds of biological technology diagnosis preparations. (iv) Bargaining Power of BuyersCommon surname buy drugs in when the boss is in passive accept status. Even though the prices of drugs are controlled by government, to common people, medical difficult is still a serious problem. As parts of the drugs are monopolized and buyers bargaining power is low, for large quantities of wholesalers, bargaining power relatively high.Australian pharmaceutical industries limited (API) and Primary Health Care Limited (PRY) are two companies that both operate in pharmaceutical industry. Both of their operations involve a large number and a wide range of buyers. These buyers are mainly comprised of various pharmacies, hospitals, doctors, pharmacists, individuals and group consumers. Moreover, in the industry, there are no buyers who are concentrated, large or buy in volume. For example, APIs retailing business serves millions of individual buyers every year. For its wholesaling, just one type of pharmacies, independent pharmacies, has formed over 4000 buyers to API. Similarly, PRYs medical centres provide service to over 6 million general practitioners every year. Its medical doctor clinical softwares are used by more than 16000 general practitioners and specialists, and over 3500 medical practices use PRY practice management software. These dispersive and large numbers of consumers indicates that buyers are low power in the industry. Moreover, according to pharmaceuticals industry report (2009), API has been the second largest Australian wholesaler with dominating 30% market shares. Furthermore, as the expansion of its retailing business, it has become one of Australias leading health and beauty retailers. Similarly, PRY is also placed in a dominance position. For example, its health technology is applied by over 80% Australias major hospitals. These dominance positions further efficiently suppress buyers power. Therefore, the power of buyers is relative low in the pharmaceutical industry. That is, in the industry, the API and PRY are more powerful when they face buyers, which benefit to promote a higher profit margin for the both two companies.(v) Bargaining Power of SuppliersAlthough these two companies are in the same industry, they involve different business. APIs business includes wholesaling, retailing and manufacturing while PRY, as a services company, mainly engaged in providing medical and allied health services to professionals. Thus, the different business causes the different suppliers associated with the two companies. APIs products are sourced from over 100 suppliers, but its most significant supplier is Alphapharm (Annual Report 2009). Alphapharm is the leading generic medicine supplier and it possesses huge consumption groups. Globally, it provides products for over 140 countries and territories customers, and there are millions of people take its generic medicine every day only in Australian market. Such a strong and dominant performance make Alphapharm become more powerful in the industry. In addition, Alphapharm has robust product pipeline, high product quality, advanced equipments and integrated product portfolio. These make buyers switch to another supplier more difficultly. Therefore, the APIs supplier power is relative strong in the industry, which presses a lower level profit margin to API. In contrary, for PRY, there is not a crucial supplier or few suppliers who can affect its supplier chain. Even if there are some significant skill experts, they cannot form a threat to PRY. Furthermore, after acquisition of Symbion, PRYs supply chain and market share has obtained further boost. Therefore, the supplier power is relative low to PRY in the industry, which boost PRYs profit margin to reach a higher level.Part 3: Competitive StrategySigma continued to face challenging times over the last year. However, we are confident that we have stabilised the core operations of the company. Through the ongoing support of Sigmas shareholders, customers, suppliers and staff, Sigma has emerged from its recent difficulties with its underlying business sound and a robust balance sheet.According to the annual report of Sigma, there is no obvious superiority in the costs. As the every step of producing medicine is essential important and the material is settled, Sigma can not achieve cost leadership.So, generally, we can believe that Sigma follows the differentiation strategy. It has superior product quality, superior product variety, superior customer service, and more flexible delivery, investment in R&D and brand image. Sigma is proud to be a Community Service Obligation qualified pharmacy wholesaler, committed to fully service some 4,000 pharmacies nationally and help to ensure all Australians have timely access to their medicines. Sigma supports pharmacies with full retail operational support, including marketing, buying, business analysis, store design, professional development programs and private label products. These all ensure that Sigma is more advantageous than other companies.Reference1 Pharmaceutical Drug Manufacturers, 2010, Pharmaceutical Market Trends 2010, Available from Accessed on 19/08/20102 Australian Pharmaceuticals Industry at a crossroad? Report of the 2007 medicines Australia member e