Page 3 - CIMA SCS Workbook November 2018 - Day 1 Suggested Solutions
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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


                  KAPLAN PUBLISHING                                                                    43
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