Michael Porter's five forces are useful in determining the competitiveness of markets. In this article, I am studying one of the five forces, i.e. threats from new entrants in the industry. A “new entrant” can be defined as a new or existing company that has not previously competed in the industry in its geographic market. A number of common barriers to entry include government policies, economies of scale, switching costs, cost advantages, large capital expenditures, scale-independent cost advantages, artificial deterrence, strong competitive retaliation, access limited to distribution, proprietary product differences, and established brand preferences. To understand the barriers to entry specific to the biotechnology sector, it is necessary to first define the sector. Our group decided to define the biotechnology industry as “companies in this sector primarily use living organisms or molecular and cellular techniques to provide chemicals, food, and services that meet human needs” (IBIS World Report, 2013). For the purposes of this project, we chose to exclude companies that manufacture general biological equipment, develop small molecule pharmaceuticals, and perform contract research. Furthermore, we have chosen to focus on the US market. The biotechnology sector is dominated by a relatively small number of established companies, such as Amigen and Biogen Idec. These dominant companies generally have large capital reserves, large research and development (R&D) departments, access to specialized equipment and materials, industry experts, and generally hold numerous patents. These companies also generally have well-established manufacturing facilities and distribution networks. All of these characteristics may represent significant barriers to...... middle of paper ......this industry also encounters significant "barriers to exit" due to the fact that the technologies produced are highly specialized and have little utility in other areas. Therefore, even when some innovations have limited marketability and generate low profits, they often remain on the market. Because companies often become highly specialized, they can create a niche that is difficult for other competitors to enter but may also be difficult for them to exit. Barriers to entry in the biotechnology sector protect large industries while making it difficult for small companies to enter. Whether these barriers inhibit or promote innovation is debatable. While a smaller company may find the costs of research and development of innovative technologies insurmountable, these companies can license their technology or partner with a larger, more established company..