Given the changing trends in the industry's global value chain and gradual shifts in international trade patterns, if the former pioneers (US, UK, Switzerland, and Germany) wish to remain competitive, they need to expand the development of new drugs. Otherwise, they will face a continuing of the intensified competition from developing nations that has appeared over the last decade as outsourcing investment in drug discovery and product development has grown. Also, as major patents expire and generic companies in countries like Israel and India enter these markets, this will be put added pressure from emerging economies on the former pioneer nations.
The political determinants that govern the pharmaceutical industry are all regulated by the Food and Drug Administration. Their laws and guidlines rule all production and manufacturing codes. The government established this organization to protect the health and safety of all customers by ensuring the quality of all drugs produced. As a result the regulations are extremely strict and few drugs are actually passed and reach the open market. Like the FDA, each nation has its own rules and regulations, and American companies look for other nations to ensure stronger footholds.
Entering the field takes an immense amount of capital, due to the time needed to research, test and produce the drugs. Also drugs that have already been created are protected under WTO patents. But, once a successful drug is marketed, the industry can be very lucrative. The demand for pharmaceuticals is relatively stable even if other markets decrease in an economic slump, so with constant research and production of new drugs, a company can benefit largely. This therefore would ensure global competitiveness and succes for a corporation; that is if the drugs also passed the other nations regulations.
Over the past 50 years, the pharmaceutical industry has experienced tremendous growth and change. Along with this growth has come a series of pressures to unite the industry under international standards and regulations. These international regulatory guidelines have increased the barriers to entry in the international market and have driven top firms to create voluntary corporate standards. Also, the idea of "corporate social responsibility" has recently emerged as companies attempt to avoid liability issues and decrease their impact on the environment. In addition, environmental certification issues are a becoming driving force for change in the pharmaceutical industry. In the future, if pharmaceutical companies are able avoid liability issues by adjusting social and environmental regulations, they will be very competitive in the international marketplace.