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.