Supply and demand in this industry is
radically and totally different from supply and demand in any other
industry. The most important
reason why it is so different is that the demand for the goods are generally
inelastic. This means that no
matter how much the price of certain medicines are raised the demand will not
lower. If the price penicillin
goes up then the amount bought wills stay exactly the same. It is not something that one can ever
do without no matter what the price is the amount of people wanting it will
remain the same. The supplies for
the various drugs one the other hand is something that are always up in the air. This is because there are constantly
new drugs coming out that can solve new diseases. Sometimes drugs can also become useless because the drugs were
used to delay a disease could now cure a disease.
This is an article that summarises some of
what I have said as well as expanding upon it
"The demand for the goods is generally inelastic". This is absolutely true, and the effect it has on the pharmaceutical industry is very interesting. Most other industries have to worry about the demand of their goods decreasing, but the need for medicinal drugs will never dissipate. One can safely say that profits for the industry are relatively safe in the near future.
ReplyDeleteI find it really interesting that so many companies can sell essentially the same product and still all make such huge profits. It shows just how high the demand for pharmaceuticals is in today's market and also how there seems to be a non-ending supply for consumers. It was also interesting to see that the demand is inelastic.
ReplyDeleteHi Matt,
ReplyDeleteYou are right about the demand being inelastic in the pharmaceutical industry. For future blog posts, you must meet the minimum word count of 300 words at least. Also, summarize parts of the article and then include your own analysis. I also want to see you expand your analysis. For example, explain what you mean by the supplies for the various drugs are always up in the air. Although there are new drugs being created, it does not necessarily mean that the components of old drugs are changed. Also, please make the comments on other members' posts longer. The comments should be about a paragraph (5-7 sentences) and can include your own analysis and questions.