Laws of Motion in the for-Profit Health Industry: A Theory and Three Examples

Abstract

The dynamics generated in the for-profit health industry by the drive for accumulation combine with the life cycle of a product to produce, within a given political framework, tendencies toward certain types of industry structure. The evolution of this structure is characterized by increased concentration of economic activity in diversified multinational corporations which combine health and non-health products.

Three industries representing different stages of product and market development are analyzed in this article. The pharmaceutical industry is a mature industry dominated by large diversified multinational corporations which grow mainly through expansion abroad and diversification. The medical and dental instruments and supplies industry is newer, smaller, and faster growing. Its growth potential is attracting many companies and increasing competition. The newest industry, investor-owned hospitals and hospital chains, is characterized by rapidly growing but still relatively small companies. The appendix, included to illustrate certain social, economic, and political issues, focuses on Medtronics, a highly scientific, fast-growing firm which produces electronic pacemakers.

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