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Day Lewis Pharmaceuticals Research Proposal

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Day Lewis Pharmaceuticals Research Proposal

  1. 1. 1 Client Based Research Proposal for Day Lewis PLC Presented on February 13, 2015 TEAM: Calum Mackenzie Md Naiem Miah Senira Senarathne Sajiv Karunanayake Project Supervisor: Dr Aaron Van Klyton Acting Director of the MA/MBA IB Programme University of Greenwich, Business School Email : va21@gre.ac.uk
  2. 2. 2 CONTENTS Introduction to Research East and West African market entry objectives Methodology in selecting countries in the East & West African markets Which would be the ideal product strategy for Day Lewis in Sub-Saharan Africa? DRAFT OF RESEARCH INSTRUMENTS Expected Findings Country Analysis Strategic Appraisal Market Data and Partnering Options BIBLIOGRAPHY
  3. 3. 3 Introduction to Research The following proposal for the client, Day Lewis, will predominantly aim to provide a comprehensive overview of how the researchers are going to answer the problem at hand. Essentially Day Lewis is to launch two products into two Sub-Saharan African markets in the West and East regions. The client aims to expand their market share in the pharmaceutical industry, with possibly the UK market’s high saturation being a strong influential factor. This will form the basis for the research. Now,in order to effectively arbitrate the most viable countries to enter, within East and West Africa,the researchers will look at key variables in order to determine the most ‘attractive’ markets to enter, all of which will be explained through this proposal. Essentially the aim is to accommodate Day Lewis with the most potentially profitable markets to enter. Next, the proposal will address the methods in which are going to be used in deciding the most appropriate strategy, i.e. whether to use over the counter or prescription. The newly launched products will also require effective marketing strategies, such as how to brand, distribute and advertise the products for the new markets, taking into account various fundamental elements such as market segmentation, i.e. demographics such as age,sex, income, job type. The proposal will elaborate on the aspects of marketing, whilst justifying the reasons for the selection in how to best market Day Lewis’ products. East and West African market entry objectives This part of the proposal will address how the researcher is going to determine the most appropriate methods and criteria in selecting the most viable and ultimately, profitable East & West African market for Day Lewis to enter. Although the subject of entering two markets is separate,it is important for the researcher to assert that the objectives for determining the most viable markets for Day Lewis to enter will, in effect,be the same. This is justified in that the objectives for determining the most suitable and ultimately successfulmarkets for Day Lewis to enter, will be consistent throughout in the selection of a country from the East African market and similarly, with the West African market. This is also to ensure two comparable relevant measures. Day Lewis are essentially entering both markets with the same products and although the country attractiveness sheet data results will arguably be different for the selection of an East and West African market, the later objectives presented,are largely broad, as they have taken into consideration from well carried out research,the most significant factors for companies of any nature looking to expand internationally, and to do it in such a way as to increase market share and competitive advantage. The research objectives to be addressed will provide the relevant information and data statistics that are required to address the question of which West African market to enter. Carefulconsideration has gone into devising these objectives so that the most accurate decision is formulated:
  4. 4. 4 To determine the market which is most consistent with Day Lewis’ brand strategy? This is important because it will mean that the chosen country will essentially relate more to the Day Lewis brand. However,the researcher cannot neglect that the East & West African markets will inevitably be a lot different and not homogeneous with the UK market. To determine the best criteria to use in order to choose the most feasible market to enter i.e., pull factors to determine the attractiveness ofmarket. Push factors are the unattractive market conditions that drive companies away from their domestic market. Examples include: Poor economic conditions, low growth potential, negative demographic trends and, though not exhaustive, highly competitive environments. These will hold relevance in the sense that they will help address Day Lewis’ their motivation for internationalizing into other markets. Therefore,a more comprehensive and analytical perspective will be asserted in abstaining from a East & West African market that does not coincide with Day Lewis’ goals. In contrast, pull-factors are factors,which constitute towards companies making decisions to leave expand their operations, i.e. export. Examples include, stable political structures, good economic conditions, developing markets, favorable exchange rates,and homogeneous cultural environments. These will arguably form the basis for Day Lewis ‘market attraction analysis’ in determining the most profitable West African market to enter. (Hamilton and Webster,2012) expand on why economic factors are significant for companies in their quest for growth through penetration of additional markets,outside of domestic operation. These authors concede that in many modern industries, the scale of investment needed for research and development (R&D) and production facilities, can mean that the size of a single domestic market is not sufficient to support that industry. By exporting to additional markets, outside the domestic one, companies are increasing potential for growth. Which barriers are most threatening to Day Lewis’ successful penetration into the East and West African markets? Lynch, (2002), a credible academic, asserts that the main barriers to entry for a business trying to expand or penetrate a new market are Competition, economies of scale, saturation, access to distribution channels, brand differentiation, For example, Porter, (2004) asserts in his Five forces model, that some markets are more competitive than others. He mentioned that there will be higher competitive rivalry, for example, when it is difficult to differentiate a product. He made reference to
  5. 5. 5 the pharmaceutical industry specifically, stating that products of this nature will be hard to differentiate, and will therefore be heavily reliant on competing on the basis of cost. Further cultural barriers are arguably one of the largest barriers for Day Lewis to contend with. Knowing the barriers of the market will help Day Lewis to determine the least attractive market to enter. Evidently, though, even the most ‘attractive’ market will have barriers to entry, especially as Day Lewis is new in the West African market. This needs to have careful consideration. Howwill saturation/competition influence attractiveness ofDay Lewis’ products? The researcher is aware that Day Lewis wants to expand their business on one of the premises that the UK pharmaceutical market is highly saturated. Therefore,consideration will go into avoiding countries with high market saturation. However,this factor will not be too influential, as the sales in the West and East African markets will, in effect,be subsidiary to the overall business. What will be the most suitable market entry modes? To expand into foreign markets, Day Lewis needs to decide which mode could be suitable to enter a market among exporting, licensing, joint venture and direct investment (Bernard et al, 2003; Melitz, 2003). This research will focus only on exporting and joint ventures because Day Lewis has revealed plans to export from the home country to the host country and collaborate with local retailer or agents. Exporting is a well- established and traditional market entry mode to reach international market that directs sale of domestic products or services in another country (Helpmen, 2012; Elhanan, 2013). Some researchers believe that joint ventures are more effective than exporting owing to reduced investment costs, where combined resources of two companies and overcomes ownership restrictions and cultural distance (Aitken and Harrison, 2010; Asiedu and Esfahanin, 2012). On the other hand, exporting is speedy method of entry, minimizes risk and investment, and maximises scale using existing facilities (Helpmen, E. et al 2011; Horn & Persson 2013) but there are some issues such as trade barriers and tariffs, transport cost, limited right to use of local information and company views as a foreigner (Bertrand, el al 2007; Girma, el al 2009). Methodology in selecting countries the East & West African markets The methodology will effectively address how exactly the researcher is going to answer the objectives of this proposition. Cottrell, (2014) contended that the types of research chosen should directly coincide with the subject and the question being addressed. For example, what is the study aiming to achieve ultimately? Considering one of the aims of this study is to determine the most suitably compatible market in East and West Africa,it is arguably a viable option to use both Qualitative research and quantitative methods. This is to provide a sufficient scope for research. The researcher will not neglect the importance and the contribution in which qualitative research provides. Naoum,
  6. 6. 6 (2012) for example asserts that collections of statistics and number crunching are not the answer to understanding meanings, beliefs and experience, which are better understood through qualitative data. This is because the entering of a new and somewhat unfamiliar foreign market will require additional information that goes beyond what data and statistics will offer. Day Lewis, for example, require the most viable market to enter,therefore data collection has to go beyond that of what quantitative research will offer in order to determine which market, in the West African market to enter. Further, entering the West/East African markets will not be homogeneous with Day Lewis’ market in Britain, therefore,an understanding of the East/West African market’s beliefs, values and experience is imperative and this must be carried out through qualitative research. Elements such as culture, need to be considered, given that the West and East African markets will largely contrast in terms of their culture with other markets in which Day Lewis operates in. Moore, Bruce and Birtwistle, (2004) assert that Culture, values and beliefs are very significant factors that must be considered in entering a new market. On this basis, the researcher will carry out interviews with representatives of the ministry of health in order to address ‘gaps’ that have not been answered sufficiently from the secondary data. On the other hand, the researcher must not ignore the value in which quantitative data will offer. Data statistics such as population size, household income, and demographic variables,such as age,sex,lifestyle-(health statistics- i.e. highest rate of diabetesin the country), market saturation, consumer behavior and education will all be valuable knowledge assets in determining a suitable market. These factors are essentially criteria that form a ‘country attractiveness analyses’.The researcher importantly needs to state that certain criteria will take priority over others. Population size for instance could take 4/10 to represent its significance in research relevance; in contrast market saturation could take 8/10. On this basis, then, the researcher will consider market saturation as a more significant selection criterion in selecting the most feasible East/West African market to enter. Further, there are many criteria to select from; however, it is in the researcher’s best interest to choose the most viable ones, so that the criteria selected provide the basis for selecting the most appropriate market to enter in East/West Africa. Day Lewis,for example have already demonstrated the concept of priority when it comes to selecting the most ‘attractive’ factors in penetrating a foreign market. Day Lewis has clearly stated that they wish to abstain from entering the Nigerian market. The Nigerian market is very highly populated, which is considered a ‘potentially’ attractive criteria on which to select a country to enter, however, Day Lewis’ decision of not to enter the Nigerian market, clearly demonstrates how certain are not as significant as others. Day Lewis’ decision to abstain from entering the Nigerian market was arguably based upon the uncertainty of this market and the high saturation levels of the pharmaceutical industry. So the choice upon which market to enter based upon the country attractiveness sheet,is largely contextual and based upon the nature of the business, whilst considering the macro environment, i.e. the competition, technological factors,social factors and political factors. These variables will essentially form the foundation for the research,with the qualitative research methods ‘triangulating’ the gaps in what the quantitative data does not find. The above variables objectively provide the most significant information for initial market entry. Alexander, (2009) determines, for example, that a large population offers increased opportunity for international traders. This essentially is primary research. ‘Primary research delivers
  7. 7. 7 more specific results than secondary research,which is an especially important consideration when you're launching a new product or service.’ Subjective interpretation of this observation, suggests that the need to be specific in the entering of a new market for Day Lewis stems from limiting risk and ambiguity. Entering foreign markets is arguably a very risky endeavor for even the most lucrative company. Variables that will be explored will primarily therefore, assess demographics, geographic, socio-graphics and psychographics elements. On the contrary, the researcher will take into account the need to go beyond the ‘drivers of international expansion’, as Alexander, (2009) so proclaims in his works. For example, a positive social environment and a high population, are indeed ‘drivers of international expansion’, however, one driver will take importance over another, depending on the nature of the business. Therefore the researcher will acknowledge the foundation literature, but also use intuition and well-calculated research methods to make the ‘right’ decision to coincide with the pharmaceutical industry, and more specifically Day Lewis’ requirements as a company to place them in a more competitive position within their market. Which would be the ideal product strategy for Day Lewis in Sub-Saharan Africa? DESIGN: The research design plays a significant role, when attempting to answer the research question at hand (Cargan, 2007). Having said that, a balance between use of quantitative and qualitative methods of research; is imperative for a steady research design Pickard (2007). While qualitative studies allow researchers to explore behaviours, perceptions, feelings and experiences of a situation in depth; on the other hand quantitative methods incorporate numerical data to assess a situation (Hantrais, 2009). The research design will aim to discover current trends in specific markets, shifts in trends in those markets and the how these regions compare to global norms; this would also involve gathering numerical data relevant to past performance and changing performance trends of the relevant strategies in the selected markets. This design was chosen in order to facilitate the precise actions and aims in this study. DATA COLLECTION:A key set of data needed are historical data in the Sub-Saharan region for both classes (OTC & Rx).This data will be collected from healthcare information and analytics databases. These data sources were selected by the recommendation of relevant peer reviewed articles. However,further validation of this data will be done through a questionnaire which will collect 500 responses from consumers on their inclinations towards OTC and Rx drugs, in order to increase the response rate the questionnaire would be handed outside pharmacies and drug retailers, this would give an updated view of consumer sensitivity. Moving on the study will go on to collect data on multinational firms already operating in the market (e.g.,GSK, Pfizer) through annual reports and other publicly available sources, this information will enable to understand the stance of top competing firms. Specific attention will be given to competitor specific variables such as product strategy, internationalization experience,country of origin, entry timing (Wrona and Trąpczyński, 2012). Further data from competing brands from selected products (Paracetamol, Metformin) from the specified data sources will aid in distinguishing revenue patterns and current market condition with regards to those specific products.
  8. 8. 8 DRAFT OF RESEARCH INSTRUMENTS PRIMARY DATA: The following questions will be posed to gather consumer sensitivities towards OTC and Rx drugs. The first part of the questionnaire will identify the demographics of the respondents; this will include gender and age. Responses to gender are, male(1) and female(2); and responses to age range from 18-24(1) to 65+(4). The second part of the questionnaire will contain statements, where the responses to questions will range from strongly disagree (1) to strongly agree (5). This data will be analysed using structural equation modelling (factor analysis). Some examples of the statements follows: ● The pharmacist is a good source of information about minor medical problem ● I find prescribed pharmaceutical drugs to be of good value, drugs to relieve minor medical problem are important to me, ● I believe that only prescribed drugs will help relieve medical problems, ● I find OTC drugs less effective, ● I find OTC drugs to be of good value, advertisement assist me when purchasing OTC drugs, for minor medical conditions drugs bought over the counter are as effective as drugs prescribed by the doctor The design of this questionnaire has been mainly influenced by the location where the survey will be conducted. The strategy is to use networking through local pharmacists in order to collect the data. This may need to be coordinated with the client. Also, the Likert scale (1-5) approach is useful in this context because respondents may hesitate to participate if the questionnaire includes descriptive answers, which would be time consuming. The current design encourages respondents to participate in the survey. SECONDARY DATA: Data sources that are going to be used in secondary data collection are as follows; IMS health, Scrip Intelligence, IRI, GSK, Pfizer. Through IMS MIDAS data related to current sales volume of both OTC and Rx markets, market shares of current key players in the markets; and growing and declining trends will be collected. The database houses information from more than 100 countries and captures more than a 95% of the global industry, data are gathered either at the point of sale to pharmacies or at the point of sale to consumers. Data collected through Scrip Intelligence will provide an expert opinion of market trends, as a leading source of pharmaceutical industry news and strategic analysis, the data is sourced by experienced writers and analysts based around the globe (scrip intelligence, 2014). The database covers all aspects of the industry from small biotech start-ups to large multinational corporations. Data collected through IRI will provide an expert view sales and marketing trends in the two markets (OTC & Rx). Expected Findings
  9. 9. 9 The research would be focused on collecting data in relation to three different substantive categorise in order to effectively cater to the above mentioned objectives. Country Analysis An in-depth country attractiveness analysis would be carried out to grade and identify the best country for the market entry out of a shortlisted set of countries from an initial filtration. This would ensure that the initial steps of the market development plan are a success. The population, economic conditions, demographics, culture and the level of dependability on British medicine and pharmaceuticals would be among the areas of high focus to obtain the information.In addition to those the countries legislations, the registering process and the requirements to bring the products into the market, would be of high focus, among other factors such as the process of exporting and the entry barriers for the selected countries. Strategic Appraisal An effective strategy is an essential to successfully launch the product; therefore high focus should be placed on effectively identifying the best strategic options through a strategic appraisal. The best options for the strategic decisions would be well facilitated through information on successfulpharmaceutical companies in the selected country and the entry methods they’ve used (Sub Saharan pharmaceutical market is dominated by foreign products). The expectations are that effective information on competitors’ growth plans and developments would enable us to set reasonable goals and targets in positioning in the market.The method of positioning and bringing the products to the consumers effectively and successfully would require us to gather information on the external factors to the industry that would have effects on the business. An example would be the level of corruption in the country, black markets for pharmaceuticals. In addition to this it is expected that the research would enable us to gather information on any government subsidies or foreign aid provided for pharmaceuticals and healthcare in the specific country as this have a direct impact on the business. Market Data and Partnering Options The specified research options are focused at deriving the information about consumers, consumer perceptions and the best methods and strategies that can be applied to effectively position the client’s pharmaceutical products in the selected sub Saharan markets. The OTC would require a specific marketing strategy focusing on consumers as this would have a considerably lower switching cost than a prescription drug specified by a medical professional. The research is focused at deriving information with regard to the supply chains and existing marketing practices adopted by established pharmaceutical companies in the specific regions. The research including primary data from medical professionals such as Doctors and Pharmacists would be focused on gaining information with regard to the level of influence and the consumer adherence to the specified medicines. General networking and information gathering brought to us that some sub-Saharan pharmaceutical markets are barely regularised or urbanised enough for the
  10. 10. 10 consumers to depend on medical advice. The focused interview and discussions with potential partners would focus on identifying the legislative requirements for a partnering agreement and also the business related information for the partnership (share of profits and generalcredit terms for operations in the market, the level of investment and the market reach, Etc.)The researcher would also seek for opportunities to gain unofficial market information and to verify the level of dependability on the information from the published sources. BIBLIOGRAPHY Cargan, L. (2007) Doing social research,Lanham,Md., Rowman & Littlefield Publishers. Hantrais, L. (2009) International comparative research,Basingstoke [England], Palgrave Macmillan. Wrona, T. and Trąpczyński, P. (2012) Re-explaining international entry modes – Interaction and moderating effects on entry modes of pharmaceutical companies into transition economies,European Management Journal,30(4), pp. 295-315. Scripintelligence.com, (2014) Scripintelligence - About Us, [online] Available at: http://www.scripintelligence.com/aboutus/ (Accessed 8 December 2014). Alexander, N., Doherty, Anne Marie, 1111. International Retailing by Alexander, Nicholas, Doherty, Anne Marie (2009) Paperback. Oxford University Press. Alexander, N., 2009. [(International Retailing )]. Oxford University Press. Complications of diabetes [WWW Document], n.d. . Int. Diabetes Fed. URL http://www.idf.org/complications- diabetes (accessed 12.6.14). Cottrell, D.S., 2014. Dissertations and Project Reports: A Step by Step Guide. Palgrave Macmillan. Hamilton, L., Webster,P.,2012. The International Business Environment, 2 edition. ed. OUP Oxford, Oxford ; New York. How Inflation Impacts Your Life [WWW Document], n.d. . About. URL http://useconomy.about.com/od/inflationfaq/f/infl_impact.htm (accessed 12.8.14). Kotler, P.R.,2002. Marketing Management, 11 edition. ed. Pearson,Upper Saddle River, N.J.; London. Lynch, R., 2002. Corporate Strategy, 3 edition. ed. Financial Times/ Prentice Hall, Harlow.
  11. 11. 11 McGoldrick, P.,2002. Retail Marketing, 2 edition. ed. McGraw-Hill Higher Education, London. Moore, C., Bruce, M., Birtwistle, G., 2004. International Retail Marketing: A Case Study Approach. Routledge, Oxford; Burlington, MA. Naoum, S.G., 2012. Dissertation Research and Writing for Construction Students, 3 edition. ed. Routledge, New York. Peabody, J.W.,Taguiwalo, M.M., Robalino, D.A.,Frenk, J.,2006. Improving the Quality of Care in Developing Countries, in: Jamison, D.T.,Breman, J.G., Measham,A.R.,Alleyne, G., Claeson, M., Evans, D.B.,Jha, P.,Mills, A., Musgrove, P. (Eds.),Disease Control Priorities in Developing Countries. World Bank, Washington (DC). S.P.Sethy,n.d. PRODUCT LIFE CYCLE MANAGEMENT IN PHARMACEUTICALS:A REVIEW | PharmaTutor [WWW Document]. URL http://www.pharmatutor.org/articles/product-life-cycle-management-in-pharmaceuticals- review (accessed 12.4.14). “Western diseases” drive pharma boom in Africa [WWW Document], n.d. . CNN. URL http://edition.cnn.com/2013/03/15/business/africa-pharmaceutical-industry/index.html (accessed 12.3.14).

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