Globalisation should be a beneficial strategy for both businesses and consumers. The benefit of this strategy is the wide-reach of products in international market, and by creating intra-industrial trade, globalization offered consumers broad-range of similar products in similar industries. What does this mean?
It means that companies should work hard to create sustainable competitive advantage (SCA) to be able to differentiate its products from rivals’. Innovation is the best strategy can be taken to create sustainable competitive advantage. Though Michael Porter doesn’t explicitly imply innovation as a strategy in its theories, however it puts the idea on the table. It’s pellucid clear that innovation can be made by improving already existing invention. That’s where the problem is born in Pharmaceutical Industry. A pharma-company cannot make any innovation based on an existing product due to the patent protection. If it cannot make innovation, it buys the company that made the innovation. You might ask, so what?
When most of the products are converge into one chamber, it kills the competition, which in a long term also kills the innovation. That’s what will happen if Pfizer-New York based, and Allergan-Dublin based, both are one of the biggest players in the industry, merges. There is also a tax benefit in this merger, which is another big problem for the government and consumers. However, the most significant disadvantages of such mergers are on consumers.
Pfizer&Allergan deal is considered to be the biggest deal in health-care industry, if reached. U.S. Treasury Department tries to prevent U.S. companies buying foreign companies, because they misuse the merge to lower their tax payments. Pfizer and Allergan in this case use reverse strategy, namely Allergan will purchase Pfizer.
Big corporations play very unfair by purchasing new patents instead of creating them. Besides, most of the small companies that research on finding new drugs do not anymore intend to sell their drugs, but their company. After all, it Is not hard to see that future of the industry (and many such industries there are) is going to be based on few big corporations, namely the end is oligopoly.
This makes me worry about free trade market. When free trade is just another word for `everybody anywhere buys from us`, I lose my faith in consumer benefits. Main rational behind the idea is, nobody will ever compete anymore. Every emerging company that makes innovation will do it for big corporations.
It’s time to think about one question:
“Does globalization benefits consumers?”