Ok I am getting smoked on easy questions… the ans to this is C… but why not A? If you have a patent, can you not control the price? f an analyst was assessing a pharmaceutical company’s competitive strategy, the length of the drug patent would be related to which of Porter’s Five Forces? A) Bargaining power of buyers. B) Bargaining power of suppliers. C) Entry barriers. D) Rivalry among existing competitors.
you could make that argument, but C would be amore appropriate answer that creates a barrier for any other competitor to create the same drug
Go with the most immediate and significant relationship. If there was no patent (entry barrier), then generics would compete away the price premium on the drug, and only then will buyers have choice on which drug to buy which results in increased bargaining power.
In these questions, it is often all of them that “could/would” work, but Schweser likes to be anal on these. I know what they’re after here is the fact that the length of the patent will determine when the company’s advantage will run out. Once that restriction is removed, say, after five years, the flood gates will open as that barrier to entry for the competition is gone. Also, I think the fact that it is a pharma industry is a hint…generic manufacturers would seek to imitate.