Porter's Five Forces Relate to Eli Lilly Threat of New Competitors The threat of new competitors is relatively high. Companies that form alliances are potential rivals. Although this company was not previously considered a threat, after merging with an R&D company or forming an alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is weakened, however, by the significant research and development costs required to successfully enter the business. Eli Lilly's focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new competitors, but other products that make up a smaller portion of the company's sales, such as insulin and others, are exposed to a high risk of new competitors. The need to obtain certificates and licenses also weakens the threat of new operators. The above discussion leads to the conclusion that the threat of new competitors is medium. Bargaining power of buyers Tends to be high in the pharmaceutical industry as major sales are made using whole sales. Institutions that purchase drugs in large quantities take into account the discounts that drug manufacturers are willing to give and are therefore able to influence the price. As long as Eli Lilly has competitors with similar products, it is obvious that buyer bargaining power will be high for the industry. Buyers with lower purchasing volumes do not influence the pricing policy, but such buyers are outnumbered by wholesale buyers. It is also important that people who buy drugs for themselves are generally covered by health insurance and therefore are not interested in lowering prices. However, sales volumes to such buyers are not significant. Bargaining power of suppliers is relatively not high. There is…half of the document…a demand for prescription drugs for the next 25 years. The number of people aged 45 to 64 will increase by 41% by 2015. Given increasing population age and life expectancy rates worldwide and the level of drug use by older individuals , the industry's growth is expected to remain in an upward trend. The pharmaceutical industry is relatively immune to the effects of economic cycles. Demand for the industry's products remains constant through economic cycles of ups and downs because market demand is a function of the general health of the population. However, the globalization of the pharmaceutical industry increases the risk associated with foreign investments and exchange rates. Companies in this industry seek to minimize risks by using hedging practices such as forward foreign exchange contracts, borrowing in foreign markets, and using currency swaps..