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Question:
Introduction
This report is talking about the risk and opportunities faced by the pharmaceutical company which is entering in global market. The pharmaceutical companies also have faced many challenges while entering in the global market. The pharmaceuticals industry is defined as all those who contribute to the discovery, creation and supply of pharmaceuticals products and services, including prescription medicines and vaccines. It includes the originator medicine sector, the generic medicine sector and the medical biotechnology sector. It is obvious that a Company has to face many challenges and problems related to culture, marketing strategies and behavior of consumers while entering in to global market. It is the most important point to understand by the drug and pharmaceutical companies that how the product and service will be perceived by the consumers of another country. It is assumed that there is a pharmacy company which is going to enter in the global market such as China and South Africa. For the discussion, an Australian pharmaceutical company Pfizer Australia is taken which is a well known company in the country. It is the leading and famous pharmaceutical company in the world and it has expanded its business in most of the countries including China and South Africa.
It is a subsidiary of Pfizer Inc. and a leading medicine provider company. Company has a wide range of portfolio of innovative products of medicines and consumer healthcare. The company started its business in Australia since 1956. The mission of the company is to provide value based service to its customers. Company is highly engaged to meeting the need of the customers and always put efforts to satisfy its customers. Company believes in the welfare of the customers. It seeks long-term relationship with customers by understanding their needs. Company always tries to improve its performance. It provides better service by most complete, most efficient and in a proper way (Pfizer Inc. 2013). Company always makes the way for research and development in products to make them useful for customers. Company always understands and collaborates with customers to identify their needs. The company develops medicines for human as well as for animals. Pfizer will now focus on core business of medicines.
The company is the world’s largest research-based pharmaceutical company, and it has aimed to apply science and global resources to improve health and well-being of all people at every stage of life. It also aims to be a leading industry for improving everyone’s ability to have consistent and affordable health care. The company produces medicines including biologic and small molecule medicines, vaccines, nutritional products and many well-known consumer products. Pfizer has adopted open innovation strategy in which idea of new products is always generated from internal and external sources. By Open innovation, Company has get opportunity to target more and more patients. Company is creating values by doing partnership with different industries. By entering in the global market, company has faced many challenges and risks in the global market.
It is obvious that when a company enters in global market, it has to face many challenges in the international market. Pfizer Inc. has faced many challenges in global market. It was new in the international market that’s why it has faced many challenges in the market. There are four types of risks when company operates globally i.e. commercial risk, currency (financial) risk, country risk and cross-cultural risk.
Reason of commercial risk is lack of knowledge about the global market. If a company does not have proper and sufficient knowledge of global market, company will be fail after some time. The reason of failure of the company may be poor business strategy, poor procedures such as operational problem, timing of entry, weak execution of strategy, poor competitive strength etc (chang, n.d.).
In the case of china market, Pfizer has maintained its position with effective strategy implementation. Since the 1980s, Pfizer has established eight state-of-the-art plants in Dalian, Suzhou and Wuxi that manufacture products for the pharmaceutical, nutrition, consumer healthcare, animal health and capsule users in china. Pfizer understand the market of china first, and then it had made strategy according to the market environment.
In South African market, Pfizer South Africa’s Biopharmaceutical Division is part of globally-renowned Pfizer Inc, the world’s largest research-based pharmaceutical company, whose history dates back to the 1880s.Pfizer’s vast product range covers a variety of sectors, including oncology, vaccines, cardiovascular, biological medicine, neuroscience, urology, anti-inflammatory, anticoagulation, anti-infective, pain medication and ophthalmology. Stakeholders include healthcare professionals, pharmacy groups, hospital groups, media and government. By this, company has proper knowledge of the market and chances of failure of the company are very less.
When a company deals in foreign market, the company has to face currency risk related to different countries. The currency or financial is occurred due to fluctuations in the exchange rate in the targeted country. Currency risk arises due to asset valuation, foreign taxation, transfer pricing, inflation etc.
In case of china and South Africa, despite of raising revenue and sales, Pfizer was conscious about the revenue because of fluctuations in exchange rates. 57% revenue was generated from international operations by Pfizer. These international based revenues face risk because changes in exchange rates (wikinvest, 2016).
When a company operates globally, it has to face some risk of political, legal and economic environment in foreign country. This risk includes trade barriers, property rights, lack of legal safety, mismanagement etc.
When Pfizer entered in the global market like China and South Africa, it has many political and legal issues such as patent rights and prohibition rules. There are also some rue and regulations for trading, export and import which company has to face. For the patent rights, it has faced many legal issues for its important drugs such as Lyrica, Sutent, and Celebrex etc (Benson, 2015).
When a company enters in global market, it has to face cross cultural risk because of different culture. Every country has different culture and tradition. It includes differences in language, religion, lifestyle, behavior, thinking, mindset, tradition etc.
In case of Pfizer, company has faced problems related to language and communication in China and South Africa. To overcome from these problems, company has given cross cultural training of its employees related to language and communication in different language (Evans, 2007).
Pfizer is a leading pharmaceutical company is china. It has started working in china in 1980. The company has launched around 50 innovative drugs in the country and also has maintained a strong position and image in the china market. Company has around 10,000 in 300 cities of China. In spite of facing many challenges, Pfizer became successful in making strong position in china market (Pfizer, 2015). Company has adopted unique strategies for expanding its business in the china market. Company has two brands of Pfizer in china i.e. Caltrate and Centrum. These are OTC brand of the company. Along with this, company is also trying to bring new brands in the market. Company is serving about 200 million customers in China. Most of the customers are from rural and urban areas. Pfizer Inc. is the fastest growing pharmaceutical company and biggest drug Maker Company in the world. The company seeks to grow its business by at least 25% from china market. Pfizer identified china as a most important market for growing the business. Company has four main business units in drug market i.e. primary care, specialty drugs, so called established products and cancer care (Geschek, 2013). The company is seeking for partnership with other Chinese companies for the growth. Along with this, company is trying to cooperate with the government to increase Chinese healthcare system. Company is expecting to become third largest drug company in the country. Although, the company has faced various competition in the market, but still it has maintained its good brand image in the market (Loftus, 2016).
The china market presents very attractive ways for the growth of pharmaceutical companies. The market is not only appropriate for the manufacturing of premium and generic drugs but also suitable for the innovation of new drugs and medicines. Along with this, china market is suitable for the process of drug discovery and healthcare solutions. There are various conditions such as socio economic, demographic, legal, and political conditions by which china has become suitable and best market for the drug companies. China has become a most appropriate destination for the pharmaceutical companies for remaining competitive and profitable in the market. By the PEST analysis, the reason of choosing china can be analyzed:
Political environment: The government of china is very careful in case of healthcare. It is heavily involved with the drugs companies to provide health care services to the general public. The legal environment of china is very helpful for the drug industries for doing innovation and development. China is very attractive country in case of labor law. There is very cheap labor cost in China as compared to other countries. The new company income tax law and other rules have provided tax incentives to the drug manufacturing company. The tax laws in China boosts R&D sectors along with drug manufacturer.
Economic environment: The economy of china is second largest economy in the world. China has best economic reforms, economic structure and growth pattern. The government of China is more conscious for the economy of the country. The government of China has started a policy named one child policy. Being strong with economic environment, china is still suffering from the shortage of health care facilities and the solution of this problem is to invest in more health care resources (Chitour, 2013).
Social environment: The social environment of china plays an important role in establishing the market size of pharmaceutical company. The existence of urban areas in the china is very important part for the expansion of drug companies. China’s increasing population is also plays an important role for the drug companies. Increasing urbanization and disease such as diabetes, cancer motivates the pharmaceutical companies to move towards China market.
Technological environment: China’s well society, science and education are the most important factors which drive the drug companies to move in China market. The growing society of China and growth of domestic china market attracts the pharmaceutical companies. Because of governmental support, China is a platform of innovation and R&D for the drug companies. Supporting technologies and large fund in China market attract companies to set up in China.
Pfizer Inc. is working in china market for many years. Company has made a proper business strategy for the china market so that it can identify the needs of the customers and can expand its market effectively. Pfizer’s strategic moves are entering in global market, identifying and capture emerging market; maintaining competitiveness by merging and acquiring with other companies. The aims of the company are to increase growth, increase partnership for the welfare of the society and identify opportunities for innovations. In present time, china market has become second largest market for pharmaceutical companies. For entering in china market, Pfizer has also adopted some market penetration strategies:
Pfizer is leading in the market which has adopted different approaches for market penetration. The company has done an agreement named strategic corporation agreement with Jointown in 2011 which is a famous pharmacy group in China, to develop its market.
Pfizer had also used corporation pilot team model in which company became successful. Under this model, the team of the company had covered around 200 cities and now these cities are the part of company’s business.
Company had set up joint venture with the domestic companies of China named Hisun. The aim of this joint venture was to reach in lower tier market with the help of existing market network of Hisun. Company also got benefit of Hisun’s local network to identify new opportunities.
Along with this, company also adopted business unit pilot team model to deal with the product features and broad market of China (m-brain, 2014).
Conclusion
By the above discussion, it has been analyzed that the pharmaceutical companies are facing many challenges while entering in the global market. Pfizer is highly engaged to meeting the need of the customers and always put efforts to satisfy its customers. It seeks long-term relationship with customers by understanding their needs. By the analyzing of risk, it has been observed that Pfizer has faced many risks while entering in China market but company has got success in the market and has maintained its strong image in the market. It can be clearly seen that Pfizer has adopted innovative strategy in selling process of product and the result is that it is a leading and powerful pharmaceutical company. Pfizer identified china as a most important market for growing the business. For entry into the china market, company has adopted different models such as joint ventures, merger and acquisition with local and domestic Chinese companies. The aims of these strategies are to increase growth, increase partnership and identify opportunities for innovations. Overall it can be said that Pfizer has faced may risk and challenges to enter in international market but it company got success in its aim.
References
Benson , M., (2105), Why Pfizer’s Leverage Is Important to Investors, on 19th September 2016 from http://marketrealist.com/2015/03/analyzing-pfizers-research-development/
Chang, Y., (n.d.), Four risk and examples in international business, accessed on 19th September 2016 from http://www.academia.edu/7074727/Four_risks_and_examples_in_international_business
Chitour, H.L., (2013), Big Pharma in China—the Driving Forces behind Their Success—A Qualitative Analysis, accessed on 19th September 2016 from http://file.scirp.org/pdf/ChnStd_2013112522572541.pdf
Evans, R., (2007), Cross-cultural training boosts communication at Pfizer. Accessed on 19th September 2016 from http://www.cipd.co.uk/pm/peoplemanagement/b/weblog/archive/2013/01/29/crossculturaltrainingboostscommunicationatpfizer-2007-04.aspx
Geschek,P., (2013), Pfizer's Long-Term Strategy: A Possible Breakup, accessed on 19th September 2016 from http://seekingalpha.com/article/1200781-pfizers-long-term-strategy-a-possible-breakup
Loftus, P., (2016). Pfizer Plans Expansion In China, Other Emerging Markets, accessed on 19th September 2016 from http://www.advfn.com/nyse/StockNews.asp?stocknews=PFE&article=41171654
M-brain, (2014), Market Penetration Strategies for China’s Pharmaceutical Broad Market, accessed on 19th September 2016 from https://www.m-brain.com/blog-posts/market-penetration-strategies-for-chinas-pharmaceutical-broad-market/
Pfizer Inc, (2013).accessed on 19th September 2016 fromhttp://www.pfizer.com.au/about-pfizer-australia/our-values
Pfizer, (2015), GLOBAL REACH, accessed on 19th September 2016 from https://www.pfizer.com/files/investors/financial_reports/annual_reports/2015/assets/pdfs/pfi2015ar-global-reach.pdf
Wikinvest. (2016). Interest Rate and Foreign Exchange Risk, accessed on 19th September 2016 from http://www.wikinvest.com/stock/Pfizer_(PFE)/Interest_Rate_Foreign_Exchange_Risk
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