5 Forces Analysis- Individual Assignment #1
Company: Biogen Inc.
Industry: Biotechnology/Pharmaceuticals
NASDAQ: BIIB
Buyer Power: Buyers in the biotechnology and pharmaceutical industry includes various
hospitals, medical doctors, and pharmacists. But, the ultimate buyers are the patients that
need the products that are produced by these pharmaceutical companies. Biogen focuses
on highly specialized treatments for autoimmune and hematologic disorders in the US.
Biogen’s products treat hemophilia, non-Hodgkin’s lymphoma, rheumatoid arthritis, and
leukemia (2). Companies who specialize in creating treatments for these diseases are very
few; therefore the patients have little buyer power when they require these treatments.
Supplier Power: Suppliers provide the pharmaceutical companies with raw materials
and manufacturing plants, but they do not have a very strong bargaining power (3). Many
suppliers have formed alliances with companies such as Biogen in order to have a
constant source that purchases their products (1).
Threat of New Entrants: Biogen deals with a low threat of new entrants into their
pharmaceutical and biotechnology market because there are high barriers to entry. Biogen
has a varied product pipeline that requires in depth research and testing. Therefore, there
are high R&D costs to develop products as well as FDA government regulations on the
drugs in this market (4).
Threat of Substitute: Patent protection is extremely important to Biogen because it is
crucial to success in the biotech and pharmaceutical industry (1). There is a high threat of
substitutes by a generic drug or a bio similar treatment from competitors. Biogen is
substantially dependent on revenues from their principle products TECFIDERA,
AVONEX, TYSABRI, and RITUXAN (1). Biogen could potentially lose their share in
the market if a competitor developed a generic for their principle products.
Competition: Although the barriers to entry are high, competition within the industry is
high (3). Biogen and others compete to develop new products better and faster than their
competitors. A select few industry giants compete for a collective 33% percent of the 300
billion dollar yearly market (5).
