Greater demand due to the aging population and expanded healthcare coverage will likely push up the price of antibiotics
Los Angeles, CA (PRWEB) October 27, 2013
Antibiotic products have a buyer power score of 3.3 out of 5.0. A high score indicates a competitive advantage for the buyers. The score reflects current negative pricing trends and moderate rate of bargain power, but is positively influenced by the ease of purchasing complexity and strong purchasing confidence. According to IBISWorld procurement analyst Anna Son, “prices for antibiotics have fluctuated over the past three years as a result of rising regulatory compliance costs and generics competition”. Due to the patent expiry of many blockbuster drugs, increased availability of generic antibiotics, which are generally far less expensive than their brand-name counterparts, has driven down the average price of these products. Nonetheless, a limited number of suppliers of antibiotics that treat rare diseases have kept prices high.
The cost associated with switching suppliers of antibiotics varies depending on the type of supplier. “For example, buyers can expect lower costs associated with switching suppliers of commonly used antibiotics, such as amoxicillin, because of their instant availability and low buying lead time”, says Son. This provides buyers with the opportunity to restock their inventory in a relatively short time frame, barring contract negotiations. In this case, buyers have greater leverage in negotiating contracts. On the contrary, buyers are more likely to incur higher costs when they switch suppliers of antibiotics that treat rare disease, especially when there are only a small number of suppliers of that particular drug. As such, suppliers of rare antibiotics have greater negotiating power over buyers.
Furthermore, antibiotics manufacturers typically capture high profit margins. High margins usually give buyers room to negotiate for lower prices. However, the low availability of substitutes, a moderate level of market share concentration and the high specialization among suppliers limit the buyers' negotiating power. In addition, the antibiotics market is mature and has a low level of financial risk given its established place in the supply chain. The three largest companies in the industry are AstraZeneca, Cubist Pharmaceuticals and GlaxoSmithKline.
For more information, visit IBISWorld’s Antibiotics procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of antibiotic products. Antibiotics, also known as antibacterials, are types of medications that destroy or slow the growth of microorganisms such as bacteria, fungi and parasites. Most antibiotics have two names, the brand name, created by the original drug manufacturer, and a generic name, which is based on the antibiotic's chemical structure. Suppliers of antibiotics include manufacturers, wholesalers and retailers. This report excludes antibiotic products for veterinary use.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.