[Challenge:Future] Disrupt your world: The Future of Work
Biopharmaceutical industry in Bulgaria Vision for the Future Team: Disrupt your world Country: Bulgaria Team leader: Mario Todorov Team members: Kristina Naidenova
Competitiveness of Bulgaria Supporting industry - big local pharmaceutical producers - presence of international and local companies - developing chemical Firm strategy & rivalry cluster - lowest corporate tax rate in EU Factor conditions - EU market integration - skilled labor force - underdeveloped markets, Bulgaria’s - political and macroeconomic stability favorable to new entrants diamond - EU outsource destination-presence of global firms in the domestic market model - cultural and business - people tend to seek the similaritiesbest when it comes to their - favorable FDI destination health Demand conditions - proximity to large, sophisticated markets - population aging - city pollution - stressful lifestyle
Figure 1. Bulgarias GDP (at 2005 prices) Figure 2. Bulgaria - final consumption and exports (at 2005 exchange rates) expenditure (at 2005 prices) 30000 30000 Milions of EURMilions of EUR 25000 25000 20000 20000 15000 15000 10000 GDP 10000 Final 5000 consumption Exports 5000 0 expenditure 0 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2000 2002 2004 2006 2008 2010 2012 Period Period Figure 3. Bulgaria - gross saving as Figure 4. Bulgaria - gross capital formation percentage of GDP (current prices) (at 2005 exchange rates) 30 12000 Percentage of GDP 25 10000 Milions of EUR 20 8000 15 6000 10 4000 Gross capital Gross saving formation 5 2000 0 0 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Period Period The Bulgarian, as well as the Eastern European market, is developing. The country has upward GDP and investment trends, high savings rate and stable population. The stable banking system and low budget deficit contribute to the efficient allocation of resources. Still, Bulgaria has to tackle its Achilles’ heel – corruption, red tape and ineffective legal system. Source: Eurostat, team’s calculations
Interviews and DiscussionsWhen asked the majority of the people pointed out a fewproblems, pulling the Bulgarian economy back: “There is a bunch of documents, references, declarations to fill in, which costs time and energy. I think that it ineffective legal was calculated that over corruption system a 100 working days are needed in order to process all the documentation in the red tape country.” Bulgarian food stores entrepreneur Uncompetitive economy and inefficient resource allocation
Interviews and Discussions The generalized results show pharmacy and IT as the industries, on which focus should be put on. Popular opinion commands the importance of foreign investments in Bulgaria as a growth driver. People recognized the youth of the Bulgarian free market as a development opportunity.
Bulgarian biopharmaceuticals company• Why biopharmaceuticals and why in BulgariaBiopharmaceuticals seem to be the naturalextension of the pharmaceutical industry. Theglobal trends of urbanization (leading to morepolluted cities), combined with the agingpopulation, deficient consumption of healthtreatment and the stressful lifestyles that we aresubjected to suggest the importance the productsof the industry have in our lives.
Bulgarian biopharmaceuticals company Figure 5. Bulgaria’s biopharmaceutical industry 700000 600000Thousands of USD 500000 400000 300000 Export Value (in USD 200000 thousands) 100000 0 Health and Beauty Biopharmaceutical Products Products Subcluster The pharmaceutical industry marked a 9 percent growth rate in 2010, one of the hardest years for the world and the Bulgarian economy. People ranked the price of the medicine as the third factor, determining their purchasing decisions, when we presented our questionnaire to them.Source: Prof. Michael E. Porter, International ClusterCompetitiveness Project, Institute for Strategy andCompetitiveness, Harvard Business School; Richard Bryden,Project Director
Bulgarian biopharmaceuticalscompany New entrants - developing market -higher return on investment - developed distributional network Buyers Suppliers Competitive rivalry within - access to large near-by industry markets - a lot of small companies - local and international - access to international - increasing consumption in producers suppliers with world market local market - industry growth distribution channels - a lot of buyers with - weak brand identity different sizes Substitutes - high consumer propensity to substitute
Bulgarian biopharmaceuticals companyOur vision is of a biopharmaceuticals company in Bulgaria. The national diamond model of the country shows its potential to capture a share of the value chain of the biopharmaceuticals world market. Although Eastern countries dominate Bulgaria on cost basis, we believe that the large Western European companies in the industry will outsource their R&D activities in Eastern Europe, due to its proximity to the mother companies, the similarities in our cultures, the favorable factor conditions and the bigger power the market leaders would possess negotiating with Eastern European governments, compared to the Chinese government for example.
Bulgarian biopharmaceuticals company Initially the companies would be. branches of world-known leaders, outsourcing their activities. Brought know-how combined with local companies and supporting industry would result in new market players. Well established distribution channels and proximity to large markets will ease the interaction with the rest of the world. The most important sector of the company would be R&D. Combined with our skilled work force and favorable business climate this would ultimately result in innovative value propositions and higher return on investments compared to Western Europe.