Question

Analyze the market structure analysis of pharmaceuticals concerning perfect competition, monopolistic competition, oligopoly and monopoly and analyze competition and regulation?

Answer 1

Perfect competition in a market are characterised as

1. When there is adequate numbers of buyers and sellers.

2. No barriers for entry and exit.

3. Market structure will not be influenced by price

In case of pharmaceutical sectors products should be similar and identical and there will be no outside influence.

Monopolistic Competition are characterised as

1. Many firms offer similar product.

2. Products are similar but differentiated, can’t be perfect substitute

3. Levels of barriers are low for entry and exit.

In case of pharmaceutical industries, they tries to get an advantage in the market by changing the packaging of the drug or change in administrative method but no change I clinical benefits. Even the companies tries to extend their patent rights.

Oligopoly are characterised as

1. Small number of sellers.

2. There is a barriers for entry.

3. Firms have identical or differentiated products.

Drug companies tries to hold government patents even on those products which are not produced by them.

Monopoly is characterised as

1. One seller

2. High barrier to entry.

3. Price discrimination

In the pharmaceutical industry, patent right is given to an industry, which gives exclusive right to the industry to sale the product and barring others to make it.

Need of competition in a pharmaceutical market-

1. Higher quality in goods and services

2. New and improved drugs will be supplied

3. Encourage in R&D

4. Can provide less expensive alternatives

Need of Regulations in a pharmaceutical market-

1. To remove the exclusive right after patent period.

2. To make the medicines available to the needy and to make it affordable to all.

3. Medicines should not be overpriced.