Abstract

The business model of the large pharmaceutical companies is complex and has become increasingly so with the technological developments in the industry particularly in relation to the innovations introduced by biotechnology. A business model is not a well defined concept but may be paraphrased as a description of 'how a business makes its money'. It answers a series of questions essential to any business - who are the customers, what do they value, what is the underlying economic logic that explains how that value can be delivered to the customer at an appropriate cost and finally how the business makes its money. It consists of both a narrative of how the business works and the numbers - how it makes a profit (Margretta 2002). Underlying any business model is the structure of its value chain.