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Pharma’s Future – A market entry strategy for emerging markets
1. Anmol | Naveen | Pratham
Case solution is given by the Team BrewCrew of IIM Rohtak, India
All the recommendations related to the business problems, as mentioned in the case, are based on the assumption & models of Student Research, IIM Rohtak
Pharma’s Future – A market
entry strategy for emerging
markets
Team BrewCrew
ZURICH ENTERPRISE CHALLENGE 2018
2. 2Team BrewCrew
Africa
South
East
Asia
Latin
America
TANZANIA INDONESIA PANAMA
Strategy & Sub-Strategy
PEST, Porter’s Generic Strategy and Industry analysis suggests
that Pharma Industry should focus on five components for
market entry -
1. Political and Social Systems
2. Openness
3. Product Markets
4. Labor Markets
5. Capital Markets
Macro-Economic
Contexts
General Market
Scenario
Resource Based Risk Mitigation
Risk Mitigation to align strategy to gain competitive advantage
and organizational capabilities in emerging markets
Integration
Integration and Responsiveness in MNCs
types
• Absence of regulatory bodies, contract enforcing mechanism
creating Void of Institutional Bodies which must be
researched well to mitigate uncertainties
3. 3Team BrewCrew
Global Perspective
Along with internal strategies and brief analysis of the conditions of different regions, we
recommend extensive focus on Indonesia to capture the rising South Asian Markets –
India & China
0
1
2
3
4
Political
Economical
Social
Technological
Legal
Environmental
Local producers enjoy a 15% preferential treatment and have to
comply with Tanzanian Good Manufacturing Practices (GMP)
standards. However, as no local producer complies with
international standards yet, they are not eligible for international
donor financed tenders, which are more profitable.
German Development Cooperation (GTZ) can contribute to the
improvement of quality standards, in particular through its PPP
facility
Pharma Growth Outlook
Panama to boost its
investment in it’s Pharma
Sector by $1.1 Billion,
expected to grow more
than 90%. Highly
integrated pharma market,
attract investments and
lower capital costs.
Indonesian government
released the 11th economic
stimulus package with the
aim of boosting the domestic
production of medicines' raw
materials, particularly for
five product categories
namely biotechnology,
vaccines, herbal extracts,
active pharmaceutical
ingredients and medical
devices.
The launch and execution of
JKN scheme by the
government has led to surge
in demand for primary
healthcare facilities and
increased generic drug sale.
4. Panama Tanzania Indonesia
Weight
age
Political
Currently negotiating an Association Agreement with the
World bank regarding the Tax Havens
Tanzania has been spared the internal strife that has
blighted many African states. Has privatized majority of its sector such as telecom,
banking and others
5/5
Inter-regional agreement to have positive effects on rule-
building
Television is under governmental control
Tension between political parties has led to the
instability of coalition
President Juan Carlos Varela, elected in 2014, has
implemented stricter anti-corruption laws than his
predecessor that led to the arrest of several former
government officials.
Many of its people live below the World Bank poverty line,
although the country has had some success in wooing
donors and investors.
The political disagreement has been accompanied by
increasing public disenchantment with political parties
and government performance
Economic
Large natural reserves of important minerals, natural gas
and oil
The inflation rate has remained stable, aided by low food
prices. The current account deficit narrowed to 2.5% of GDP
in 2017, down from 4.2% in 2016, with the decline in
imports more than offsetting the decline in exports.
4.5/5
Deals in its own currency Private consumption is a significant factor of GDP (5.4%)
Privatization of airways is under process
GDP is forecasted to reach US $932.8 billion with an
average growth 3%
Economy based on the production of agricultural goods
Social
Panama’s main FDI partners are the U.S., Colombia, United
Kingdom, South Africa and Switzerland.
Laws encourage self-censorship while threats and attacks
against journalists hinder critical reporting, according to US-
based Freedom House.
Urgently implementing measures to enable and encourage
the private sector to play a more significant role in
Tanzania’s development.
Average salary is euros 0.07 per month
3/5
Panama benefits from strong financial and investment
freedoms: commercial operations are, in general, subject to
transparent rules.
Population is price oriented, regularly seeking the best
value
Unemployment rate at 7.8%, and low labor costs than
Western Europe
Technolo
gical
Deregulation of pharma industry is ongoing
The media industry has grown rapidly following the advent
of the multi-party era in the mid-1990s.
Private sector involvement in the country’s development
can help finance the government’s ambitious investment
plans, be a source of finance and innovation, and create
jobs for new entrants into the job market.
Good connectivity through waterways (approximately
421 miles)
5/5
One of most sophisticated telecom infrastructure in Latin
America
National broadband strategy to reach 100 mbps for 50%
households
Rapid development in communications sector Densest train networks in the country
High waterway (6804 miles), airway and road connectivity Current coverage of broadband networks: fixed 98.5%
PEST Analysis
5Team BrewCrew
5. 6Team BrewCrew
Ghana 120
Nigeria 145
Sierra Leone 160
Uganda 122
Tanzania 137
Indonesia 72
Myanmar 171
Philippines 113
Laos 141
Cambodia 135
Ecuador 118
Guatemala 97
Nicaragua 131
Bolivia 152
Panama 79
Ease Of Business Rankings Business & Economic
Risk
Social & Political Risk
Ghana 0.58 0.64
Uganda 0.58 0.65
Tanzania 0.58 0.67
Nigeria 0.73 0.75
Sierra Leone 0.8 0.77
B1- Business: Zero growth B2- Business: -ve change in WGI M1- Market: Increase in competition O1- Other: Operational merger O2- Other: Technology advancement O3- Other Legal: REIT classification O4- Illiquid real estate
RISK Analysis – Competitive matrix, Attractiveness, Viability, Organizational feasibility
• B1 defines the condition when the market will stabilize or exhibit zero growth due to change in technology
• O1: Operational compatibility is again a great risk to be looked into
• 03 : In order for company to maintain their classification as a REIT, 75% of the revenue must come from rental operations and they must distribute 90% of their taxable income to shareholders. In the future, this
may restrain the growth in their ancillary business segment, which has been growing at a good rate and may hamper there plan to go up in supply chain
• 04: Illiquidity of real estate investments may limit its value. Due to the large size and cost of many of the storage facilities, property may not be disposed, i.e., ineffective or not part of the business strategy
IndonesiaTanzaniaPanama
Indonesia 0.46 0.46
Myanmar 0.71 0.72
Philippines 0.56 0.48
Laos 0.63 0.63
Cambodia 0.62 0.68
Ecuador 0.71 0.63
Guatemala 0.54 0.64
Nicaragua 0.65 0.68
Bolivia 0.68 0.76
Panama 0.47 0.52
Manufacturing
R&D Proximity & R&D
clusters ( Universities)
Highly-skilled labor
force
Skill Shortage Risk: due to lack of productivity, there’s an
economic loss of $1.6T. Middle east – most productive
Information Asymmetry: Principal-agent theory
Labor Productivity: over the past decades growing at a
glacial pace – 1%
Technology and Digitization: Less use of technology, no
automation
Risks & Challenges
6. 4Team BrewCrew
Internal and External Analysis explains the risks and uncertainties. It
suggest to adopt internal strategies to achieve future outlook
Climate change
concerns
-
-
-
-
-
-
Uncertainty
government
policy
Worsening fiscal
terms
Access to reserves:
political constraints &
competition from
generic markets
Competition from
new technologies
Cost containment
Firm risks
Human
Capital deficit
New Operational
challenges
Price Volatility
Predicted Risk level
-More Same Less
51% 48% 58% 48%
Generic Markets IP & Related
Disputes
Nature of
Competitive
Disadvantage
Burden of
Government
Regulation
Before 2020 Around 2025 Beyond 2025
Fiscal Policy Shifts in Africa, North
America
Distribution of risk, becoming less
favourable to Domestic players
The abundance of generics, might
lead to fierce pricing competition
Explore New Markets
Undertake efforts in North Africa
and CIS
Strategize roll out of Government
Plans
Operational Excellence
Alliances
Cost optimizations
Improved Customer Intimacy
Compliance with Standards
Uncertainties
Internal Control Strategies
Future Outlook
7. The aim is to have a long
term impact on the
consumers minds of
being an organization
that would be a
companion in their
journey towards a
happier tomorrow.
Partnering with health
related institutional bodies
Are you aware of the symptoms of
Cancer ?
Do you hesitate to share your
health problem ?
The purpose of this partnership with
medical institutions like medical
colleges, nursing homes and
hospitals is to spread the word
based on the 4 A model across the
country.
THE CSR BIG IDEA
5 Pillars4 A Model Happines
s Hubs
HAPPY
Marked by Reliable, Strong and healthy
life with Pharma Worldwide Inc.
Built on 3 elements of :– 4 A model(Affordability, accessibility
acceptability and awareness), Happiness Hubs and 5 pillars to
facilitate CSR, Live a HAPPY life campaign will ensure that the
underserved population can be provided with the best in class product
and treatment facilities.
ONBOARDING PHILOSOPHY
Becomes a part
of the family
availing the CSR
sponsored
facilities
Avails perks of
being a
Happiness Club
family member
Comes to know
about Worldwide
Pharma Inc.
Gets best in class
treatment and
services
Provide proper
information to his
society
Facing health
issues or prone
to serious health
problems
Lives a
Happy
Life
The proposed campaign “Live a HAPPY
Life” has been designed keeping in mind
the peculiarities of consumers from
Indonesia, Panama and Tanzania.
Lack of
effective
treatments
Healthcare
infrastructure
Non –
communica-
ble diseases
Stigma and
discrimination
Reduction of
our patented
medicines by
upto 50%
Innovative
science
creating
value for all
Re- investing
20% of our
profits from sale
Easy availability of
our intellectual
property
nly
Our Aim
Free of cost
check up and
identification
4A Model Happiness
Hubs
5 Pillars
Resistance
to existing
treatments
7Team BrewCrew