1ContentsPart 1 History and Major Activities 2Part 2 Industry Characteristics (i) Rivalry Among Existing Firms3(ii) Threat of New Entrants3(iii) Threat of Substitute Products 4(iv) Bargaining Power of Buyers4(v) Bargaining Power of Suppliers5Part 3 Competitive Strategy6Reference 72Part 1 History and Major ActivitiesSigma is a large company in the pharmaceutical industry and it has a long history. In 1912, two Melbourne pharmacists established it. After a prolonged endeavour, now Sigma plays an important role in this industry.Sigma began its manufacturing activities in 1942. After fifty-four years, it acquired QDL. And in the next year, Sigma Company Ltd was listed on the Exempt Stock Exchange. Guardian pharmacy group and Amcal pharmacy group were acquired successfully in the following year. In 1999, Smith Kline Beechams Dandenong manufacturing facility was acquired. And in the same year, Sigma incorporated Arrow Pharmaceuticals, which was listed on the ASX in 2002. In 2003, Sigma Company acquired Herron Pharmaceuticals and Chemists Own. And in 2005, Sigma Company Ltd and Arrow Pharmaceuticals Ltd merged and are renamed Sigma Pharmaceuticals Ltd. In 2008, Sigma Pharmaceuticals acquires Orphan Australia. Recently, Sigma divested its Pharmaceutical Division to Aspen Pharmacare Holdings.Now, Sigma engaged in the manufacturing, development and distribution of own branded and contract OTC (over the counter), prescription and generic pharmaceutical products for the Australian and overseas markets. Sigma is also the owner of some of Australias best known pharmacy brands in Amcal, Guardian and Amcal Max. Sigma Healthcare Division was created to align Sigma wholesale and retail services to provide even greater value to primary customer, Community Pharmacists. The Sigma Healthcare Division provides all pharmacist customers with an extensive range of products and services, including daily deliveries, full service warehouses in all states, monthly promotional products, regular consumer promotions, business advice, succession planning, pharmacy design and layout service, facilitation of buying/selling pharmacies, finance guarantees, loyalty program through Sigma Rewards and property/lease negotiations.3Part 2: Industry Characteristics(i) Rivalry Among Existing FirmsThe intensity of rivalry of the pharmacy industry can be analysed through several industry characteristics like number of competitors, industry growth, storage costs, and differentiation or switching costs. Industry growth -The global pharmaceutical market sales would be expected to grow at a 4 - 7% compound annual growth rate through 2013, meanwhile, Asia-Pacific region will be the fastest growing pharmaceutical market over the recent past. (Pharmaceutical Drug Manufacturers, 2010) Thus, the pharmaceutical industry growth quickly in the globe including Australia, so the competitive environment is going to be enhance with the industry growth.Number of competitors-There are a lot of competitors in the pharmaceutical industry in Australia. Priceline, Soul Pattinson and Pharmacist Advice are the main brands and banners in the retail health and beauty industry. Thus, the intensity of the rivalry will be increased to some extent.Differentiation or switching costs-There are a lot of innovation products in the pharmaceutical industry so as to attract the customers. API plans to maintain its professional service and advice in the industry and that is also one of the parts of its strategy.(ii) Threat of New EntrantsThe threat of new entrants is very low in Australia Pharmaceutical Industry because the barriers to enter the industry are high even though the economics of scale for production may be small. The complex regulation of this industry is one of the barriers. All drugs and chemicals used need to be approved by the Food and Drug Administration (FDA) and the standards are very strict as well. Patent is another regulation which generally last about 20 years that are very discouraging for new entrants. Besides it is costly in both time and money in developing new drugs while the established firms such as Australian pharmaceutical industries limited (API) and Primary Health Care Limited (PRY) have huge budget to spend on marketing to uphold their brand. As a result the profit margins for these two companies are high.4(iii) Threat of Substitute ProductsExperts said that human body gene crack will lead to a change in preventive medicine. And the progress made by human beings accelerated the biological technology development and application of new drugs. According to statistics, only in 1999, 22 kinds of biological technology by the new drugs approved by the FDA to the market, and make the listing of the biotech drugs for a total of 92 species, including breast cancer and other refractory disease of monoclon