Swot Analysis Of Merck

3.1.3 Industry Competitiveness
Bargaining Power of Buyers
Buyers or customers of Merck over-the-counter medicines are essentially all the players that operate in the distribution channels by selling pharmaceutical products to final consumers.
Historically, the Italian OTC market has been dominated by pharmacies and drugstores. This trend has not changed over the years, although specific laws emanated in 2006 gave permission to supermarkets and great distribution channels like retail stores to sell non-prescription drugs. This attempt to lower prices and increase competition in favor of the final consumer has failed to redistribute the share of sales within the OTC distribution channels. The resistance of this market to achieve consolidation and increase role of supermarkets in OTC distribution was mainly due to the nature of the Italian consumers, that is brand loyal and not so much price sensitive – the modest role of generics within this market confirms that brands have high power in consumers´ buying behaviors. According to IMS Health data, pharmacies held 92.3% share of sales in 2014, whilst drugstores

This can lead to a high power of suppliers over companies in need to obtain these ingredients known as APIs . The size of buyer is important to determine volumes of ingredients to buy or capacity and possibility to produce them internally. Merck as a multinational chemical and pharmaceutical company produces internally all active ingredients and components of its pharmaceuticals. In this way, innovative as well as highly qualitative products can make their way to the market under Merck brand. In this context, no switching costs exist and relationship with external suppliers are limited to raw materials that have less critical role in the production of the drugs. For these reasons, bargaining power of supplier for Merck CH in the Italian OTC market can be assessed as