1. Choose which of Porter’s five forces the following pharmaceutical industry characteristics represent. Use the abbreviations given below to fill in the blanks.

Porter’s Five Forces:

-Threat of substitutes (SUBST)

-Threat of new entrants (NEWE)

-Threats of supplier leverage (SUPPL)

-Threat of buyer leverage (BUYER)

-Threat of rivalry (RIVAL)

1. ________ Few alternatives (healthy lifestyle, herbal medicines) are achievable or as effective.  

2. ________ New drugs are covered by patents that may extend for 17-20 years

3. ________ Government funded 63% of U.S. healthcare costs in 2013

4. ________ Most large pharmaceutical firms have large sales forces and manufacturing is tightly regulated by the FDA.

5. ________ New drugs must receive regulatory approval from the FDA

6. ________ The time to develop a new drug can be as long as 10 years

2. Based on the attributes above, would you suggest that the industry has been relatively attractive, neutral, or unattractive? Why?