MNG 00723 Assessment 2: Report (40 marks) 2500 words Due: Monday 9 am Week 10 Case Scenario: AUSMED, an Australian pharma company manufacturing drugs, has grown fast in the last 10 years. It currently...

Pharmaceutical Industry Investment        1
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Executive Summary
The pharmaceutical industry is one of the fasted growing industries in the world. As the population in developing countries increases, the chance of illness and need for medicine increases. However, there are risks and opportunities to expanding to both China and South Africa as immense and extreme. There are risks and opportunities in both the countries and thus, there has to be careful choice that has to be made to make sure that the risks in the country for this company are minimum and thus, expanding would bring in more profits for the organization and not a large amount of losses or the company would become bankrupt.
Contents
Executive Summary    2
Introduction    4
Analysis of Risks and Opportunities    4
South Africa    4
Opportunities    4
Risks    5
China    6
Opportunities    7
Risks    8
Selected Destination    9
Justification of proposed choice    9
Conclusion    11
References    12
Introduction
The pharmaceutical industry has taken over worldwide. Most developing countries, such as China, India and South Africa have given into the western medical industry and have almost abandoned many of their traditional healing methods and taken up western medicine. This has come to the enormous benefit of the pharmaceutical companies as they have achieved numerous profits from these developing countries. Most of the industries have expanded into these countries as it is easier for them to gain profits, as there is a large population in these countries and since they are international brands, it is easier for them to gain the trust of the customers as well.
Analysis of Risks and Opportunities
South Africa
The African pharmaceutical industry has grown tremendously over the years. From 2003 to 2013, it jumped to a profit of 20$ billion dollars from 4.3$ billion dollars. The market is expected to be worth around 65$ billion by the end of 2020. This is because of many opportunities that the country holds (Khoele and Daya, 2015).
Opportunities
There are many opportunities in South Africa. They are:
1. Highly disease prone environment: South Arica and the entire African continent has poor access to medicine and vaccines and thus, are highly prone to diseases. Almost every major infectious disease outbreak has been reported from the continent like Ebola or the recent Zeka Virus. This makes it highly susceptible to the western medicine influence. Of the many infectious diseases, there are many curable ones like Malaria, and Measles (Gray and Suleman, 2015). With the influence of western medicine, these can be stopped. This is one of the biggest opportunities for almost every major pharmaceutical company in the world.
2. Expanding urban population: Africa has an ever-expanding urban population that does not seem to have a stop. Because most urban city dwellers have a larger income than those living in the rural areas, the demand for quality drugs and medicine is higher in South Africa than in other countries. There are an approximate of 11,000 babies born in Nigeria every day. The population of South Africa, like these other countries is developing at an unprecedented rate and there is a lack of sufficient medicines to provide for the people. This is another opportunity for pharmaceutical companies to expand into South Africa.
3. Manufacturing medicines and other products: This seems to be the biggest opportunity that most foreign pharmaceutical companies can and will have. The medicines being supplied to South Africa were mainly from China or India, but recently a lot of other companies have also started coming in as the business of manufacturing medicines for the climate and health of Africa can be huge business to almost every pharmaceutical company that makes it big in the country (Lofgren and Williams, 2017). The drug manufacturing would have to take place within Africa, but with a government that is willing to spend a lot of money and with a lot of aid from foreign donors, the business is turning out to be one of the most lucrative businesses in the market.
Risks
However, along with the opportunities there are also some valid risks that have to be noted.
1. Laws: The pharmaceutical laws in the country keep changing with every new change of power in the country. This makes the law very unclear about the rules concerning intellectual property (Torre and Albericio, 2017). A few years ago, the law favoured the use of generic medications and this led to issues within the country and the government. However, due to the lobby, this law was soon overturned and a lot of big pharmaceutical companies have coming swooping in to take over the very huge pharmaceutical market in the country. The laws, however, remain unstable and this should be considered a huge risk.
2. Political climate and corruption: The political climate of the country, like in most developing countries is very unstable. This can lead to a lot of issues that have resulted in the lobbying that can be done by pharmaceutical companies. There is also a lot of corruption and thus, to enter the country, there needs to be a hefty investment in terms of bribes and other factors (Maigetter, Pollock, et al, 2015). Plus, there can be a swing on the company from the ministers at any given point. This might lead to the loss of a lot of money and it might even destroy the reputation of the company as well.
3. Traditional healing methods: South...