Answer To: This is the report of Global business subject. In this report we have to discuss the opportunities,...
Kuldeep answered on Sep 01 2020
Global business
Global business
Global business
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Executive Summary
AUSMED, Australian Pharmacy Company manufacturing drugs and has grown rapidly in the last 10 years. At present, the company employs more than 60 employees as well as has approximately AUD 30 million turnovers annually. However, development of company has closed recently, and now AUSMED is considering expanding its business and entering the global market for the very first time in countries like South Africa and China. This study summarizes the risks and opportunities in both countries for the company executive. This study recommends the best destination country and provides justification for the entry in the best suitable country for AUSMED.
Contents
Introduction 2
Analysis of risks and opportunities 2
South Africa 2
China 6
Selected destination country 8
Proposed entry for the chosen country 8
Conclusion 10
References 12
Appendices 13
Introduction
The international pharmaceutical market is worth approximately 350 billion dollars annually and is also expected to increase by 33, 3% by 2019 to 400 billion US dollars. The charm of South Africa's pharmaceutical products exports will depend on effectiveness or efficiency of the large manufacturing firms and on the exchange rate weakness, which makes the exports attractive. Even though, there may be an undesirable outcome in the weak exchange rate because it can affect the import of active drug content (APIs), potentially increasing the price of major drugs. On the other hand, China is the largest pharmaceutical market in the world and the world's largest pharmaceutical market. It is estimated to reach $158 billion in 2016 globally, and CAGR is 6.6% from 2014 to 2019. With China's population growth moreover increasing medical desires, it has become the world's largest exporter and producer of pharmaceuticals.
Analysis of risks and opportunities
South Africa
Opportunities
Lifecycle International standard medicinal drugs are being manufactured in South Africa and the country is going to attain self-sufficiency in the production of the pharmaceuticals. While unveiling sign of a vital drug productive project here, the EDCL is by now supplying medicines for exporting to various international organizations. After the implementation of the business new policy, the industry will go forward and create new job opportunities in South Africa. At least developed countries Bangladesh will get the opportunity to generate patent medicines by 2016.
The value of the pharmaceutical industry of Africa was just $ 4.7 billion a decade ago and $ 20.8 billion in 2013. This growth is going on fast: and it has been predicedt that by 2020 the market will be value $40 million to $65 billion (performance). This is good news for the multinational companies and pharmaceutical firms seeking new growth sources in the form of developed markets (Chen and Jinag, 2015). It is good news for the patients, who only have access to formerly unavailable medicines. Still, it is not adequate to know where the next development engine of the industry can be found. The leaders should also determine what driving growth is and what challenges or issues they might face, and how to collaboratively work with the healthcare systems in order to win such a complex environment.
Market factors: In the world of slow and steady markets, Africa probably represents the final geographic front where in fact the high growth can still be achieved. Early movers might take these steps to follow competitive advantage: Africa is not an integrated market, but 54 are different, among which cases of market size, development trajectory, and macroeconomic scenario, legal political and structural complexities. There is a wide gap between countries. In the last decade, countries have distributed more than one-third of Africa's growth domestic profit and in cumulative growth. However, most of the opportunities are not at the country level however in the cities.
Profit retention factors: Africa is not an integrated market, but there is a big difference in countries like 54 different markets, market size, growth path, comprehensive financial structure, legal structure and political complexities. Over the last decade, ten countries have developed two-thirds of Africa's GDP and growth. However, most of the opportunities are not at the national level but in cities. In fact, our analysis shows that 37% of African customers are concentrated in 30 cities and by 2025, consumers will enjoy more than homes compared to Australia and the Netherlands.
Risks
The patent system has some concerns about its current structure. The new government might be changing certain provisions of business patent law enacted by the previous government. The competition in the pharmaceutical industry is increasingly fierce. Therefore, pharmaceutical companies must face market competition. Increase the cost of wages; basic wages, so it affects the total cost of production and will increase the price of the drug sold. Raising interest rates, banks' interest rates are increasing. Therefore, investors do not agree to borrow from banks. There are threats or risks from different low-cost countries, for example, Israel and China, so differences in contract manufacturing may be diminished.
The short-term risks to the pharmaceutical industry are the VAT implementation uncertainty. Although this may have a very negative impact on the short term as well as on the enduring or long-term impact is beneficial to the industry. The bad sales practices of some companies in the pharmaceutical industry may inhibit market growth. In addition, the depreciation of Taka will increase the cost of imported raw materials(Saleh, 2018).
Political and Government factor: In the past few years, pharmaceutical companies have faced severe political scrutiny on a global scale. Drug prices in South Africa are already under pressure. It is not just a pharmaceutical company, but drug dealers are also in trouble. For a long time in the United States, pharmaceutical companies were able to charge the way they liked. The profit margins are already low, and price pressures have caused losses for several pharmaceutical companies,...