Page 3 - CIMA SCS Workbook November 2018 - Day 1 Suggested Solutions
P. 3
SUGGESTED SOLUTIONS
CHAPTER FOUR – E3
EXERCISE 1
Political
In countries where healthcare is government-funded, the government is the customer
Global governments looking for healthcare savings
Subject to political change e.g. change in ruling party may lead to increase/decrease in
spending on healthcare
In Europe the UK Brexit vote has led to political uncertainty affecting all industries. There
are suggestions that stockpiling of drugs is currently occurring due to this uncertainty.
Strong lobbying results in increased regulation
Economic
High margin industry
Considerable profits needed to fund further R&D
Low interests helps fund growth in productive capacity (cheap debt)
Budgets set by governments/hospital trusts for healthcare expenditure
Foreign exchange risks for global operators (although a natural hedge in that revenues in
multiple currencies are offset against costs in the same currencies)
Investors demand high returns due to inherently risky nature and cost of drug research
Slowing growth globally in the pharmaceutical sector
Social
Longer average lifespans can result in greater sales per head
Greater focus on individual patients and “precision medicine” e.g. blockbuster drugs
designed for the average patient being replaced by treatments that take into account
individual variations in genes, environment and lifestyle
Increased concern over ethical standards of pharma companies means greater scrutiny
Nature of illnesses changing in the modern era e.g. higher instances of obesity and diabetes
in developed countries
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