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The factors affecting therapeutical diversification of domestic pharmaceutical companies in Korea

국내 제약기업의 치료제 질환분야 다각화 결정요인

  • 정승연 (성균관대학교 약학대학) ;
  • 이상원 (성균관대학교 약학대학)
  • Received : 2018.07.24
  • Accepted : 2018.10.05
  • Published : 2018.10.31

Abstract

This study is to identify factors influencing therapeutic diversification strategy for Korean pharmaceutical companies. So, it purposes to find deciding factors for companies to adopt strategy for diversification or specialization. In this paper, we set six factors that are expected to influence diversification. The factors are asset scale, sales, profitability, and growth potential. Also, we included number of employees and SG&A cost ratio as factors that reflect business characteristics. We analyzed the impacts of each factor on diversification and found a relationship amongst each other. In this paper, regression analysis is applied with forward selection method, considering that it takes 5 years for companies to decide on diversification strategy. As a result, asset scale, the number of employees and profitability have significantly influenced decisions of diversification at t-1 time, and growth potential was significantly influenced at t-2 time. Korean pharmaceutical companies generally tend to go with specialization model if they have larger asset scale, higher profitability and growth potential. However, they have tendency to decide on diversification strategy, if they have large number of employees. Overall, the result of this study is expected to provide useful information for Korean pharmaceutical companies to set the suitable strategy for their situation to become a competitive company in global pharmaceutical market.

Keywords

Berry-Herfindahl Index;BHI;diversification;pharmaceutical;therapeutic area

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