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Porter’s Five Forces Pharmaceutical Industry Philippines

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Basically, DREX is the new entrant so the threat would be low since it is directed more towards established drugstores. However, there is also the existence of a high brand loyalty for established drugstores as well as pharmacies which sell generic medicines, thus would make it hard for new entrants to penetrate the market. However, through accessibility and affordability, DREX aims to match this and gain competitive advantage against these drugstores and pharmacies. Threat of Substitutes

In terms of the threat of substitutes, which involves buyer’s inclination to substitute and price performance trade-off of substitutes, the result would be high. This is because of the fact that OTC vending machines is relatively new in the industry and there would be the drugstores that people have been used to buying medicines. DREX has to ensure its presence through good positioning for it to be accessible; since it is its primary competitive advantage. While typically the threat of substitute would be the cause of price competition, it will not be the case since DREX aims to be affordable; hence, another competitive advantage. Rivalry of Firms

Based on structure of competition, rivalry of firms is low since there is a clear market leader in the industry – Mercury Drugstore. There is also low degree of differentiation since OTC drugs are only basically different by branding. In addition, rivalry is reduced by the high switching costs. People tend to buy other brands when they are cheaper. However, we can say that the firms are still pursuing aggressive growth strategies. To make their presence more felt, some pharmacies still use television ads to promote the medicines they sell. This is basically done by the newly entrants like pharmacies that sell generic brands, especially when this is a relatively new competitor in the industry. Bargaining Power of Supplier

When it comes to the bargaining power of the suppliers, it specifically entails the presence of raw materials that comes in from the supplier, labor and others. With regard to this industry, it has low due to the differential in terms of prices in the market, abundance of supplier and low distinction of its product.

Bargaining Power of Buyers
This involves the impact that customers have on a producing industry. In terms of the industry, buyer’s loyalty into a certain brand would be present though not that evident since DREX’s primary competitive advantage would be its accessibility. In other words, people buy as the need arises so a bigger factor would be its positioning; as it should be made sure it is stationed in strategic areas. This is because compared to its competitors which are basically drugstores, it is basically the first vending machine for OTC (over the counter) drugs in the Philippines. Moreover, DREX will also be attractive because of its affordability. As a result, the power of the buyers is high, with only little concern on whether people will still prefer buying OTC drugs in drugstores.

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