Business organisation and policy Essay Example | Topics and Well Written Essays - 2500 words

Business organisation and policy - Essay Example Both large and small firms are confronted with huge demands to step up output but must stay creative and pioneering as they face mergers of immense scope, escalating health care costs, cost-control efforts, fast-changing population demographics and high-speed evolution of new technologies. Such development has pushed several major players in the pharmaceutical sector to persistently invigorate and maximize their R&D expenditures in order to enhance their pipelines and keep abreast with their competitors in the pursuit for high level, large scale operations. This is in harmony with the perception that for large companies to keep on satisfying its shareholders’ expectations, undoubtedly, it is not acceptable and tolerable for them to stick with the status quo. However, the cost of taking in a new active substance (NAS) into the market, projected at US$600 million (Kettler 1999) and the plummeting number of these substances launched lately (Van de Haak 2001) explicitly describe t he scope and magnitude of this challenge. The US$600 million figure per NAS introduced consists of a considerable contribution from the expenses of all NASs that didn’t make the grade in the R&D process. So as to minimize and lower the high gnawing cost, a lot of firms have put portfolio management systems into operation. Since development projects eat up 10 times or more the capital needed for a research project, project selection and prioritization have been strongly emphasized, before entry into the development process. For specific corporations, the expenditure per NAS is greatly influenced by the firm’s character and distinctiveness -- its product profile, type of technology being used, and the kind of activities the firm opts to conduct in-house and those it decides to outsource (Findlay and Kirmani 2000). For so many years, large pharmaceutical companies had wished and anticipated that the greatly increased number of compounds