Global Strategy - blog

Author: Ville Airo (2010).Download file: Regulation and Coordination in European Generic Medicines Industry: A Fuzzy Set Analysis Masters thesis, Aalto University School of Science and Technology

The global pharmaceutical industry is changing. A number of factors, like rising health care costs, indicate that the importance of generic medicines is growing. The European companies have particularly been affected by the harmonization of inner markets and changes in legislation. Therefore, the main research problem of the thesis is: what kind of business environment favors generic medicines industry. Secondary problems of the thesis discuss the industry dynamics at the European level in more detail through regulatory and other factors.

The thesis found that the two most important factors predicting the future success of the generic medicines industry consist of the generic promotion as well as the growing number of elderly people. The other four factors affecting the success consist of the competitiveness of domestic industry, public health care financing, income levels, and the level of coordination in the economic system. An in-depth fuzzy set qualitative comparative analysis (fsQCA) with the six factors revealed four distinct configurations of these factors lead to successful markets. None of the factors alone were found to be necessary for achieving success. The analysis suggests Europe could be divided into five regions that offer different challenges and opportunities for both companies and public policy makers. Furthermore, the analysis of company population shows that the carrying capacity of the competitive environment has been reached and the population density is declining. One reason for the declining number of companies is the escalating merger and acquisition activity.

The thesis supports an increased focus on micro- and meso-level analysis as proposed in the theory of “Varieties of Capitalism.” Combining set-theoretical research methods works well in this context and provides usable results. The thesis suggests companies operating in generic medicines industry the division of Europe should adjust their strategies specifically for these regions. In addition, public policy makers should utilize these regions and start harmonizing the promotion legislation in Europe to increase the overall effectiveness of markets.

 

Keywords: varieties of capitalism, fuzzy set methods, qualitative/quantitative comparisons, generic medicines