1. Do you agree/disagree with the set of recommendations included in the business analysis below? Why?
2. Offer potential critical directing questions and specific and constructive ideas for improving this analysis.
Introduction:
Acino Pharma is a Swiss Pharmaceutical branded generic company, many strategic decisions has taken in last 5 years, the last strategic decision at 2012, when they decide to shift their business from BtB (Business to Business) market to BtC (Business to Customer) Market.
Their "geographic scope" Collis et al.(2008) is Middle East, Africa, Latten America, Eastern Europe and central Asia Acino Vision is to achieve 1 billion EUR by 2020 and to be ranked in top 10 in selected emerging market.
Emerging market is characterized by its double digit economic growth, with high demand.
In the following writing, I select Middle East & Africa (MENA) region to study with special focus on KSA market, as Saudi market characterized by high growth rate and high demand.
Market Analysis:
From "ScanStep analysis" Pitt & Koufopolos (2012), change in political and economic factors in the region considered as a major factor which may affect any organization's strategy
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Positive impacts
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Negative impact
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- High economic growth rat
- Pharmaceutical industry about 8.2 billion USD in KSA, with positive growth rate 7%
- Market trend favored generic products
- Governmental trend to encourage foreign investment (KSA, UAE)
- Fixed currency exchange rate in KSA & Gulf
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- Decrease in petroleum price affect economic scale in gulf region and KSA
- High fluctuation in currency exchange rate in other countries (Egypt, Tunisia, and Africa)
- Increase the demand of local generics
- Many political changes (Yamane war & Syria War)
- High bargaining power of the customer (looking for profit & better payment terms)
- Increase in fuel price by 60% which reflect on transportation cost (KSA)
- Expatriates are about 30% of population, new economic condition may leads to home back migration
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Internal analysis:
Using "SCOT Analysis" Schulz et al. (2012) for Acino pharma show the following skills and capabilities:
According Schulz et al. (2012), "Identify current and past skills & capabilities, then future skills and capabilities to create future competitiveness", the "Competitive weapon" of Acino is their delivery forms, they have to use their capabilities in R&D area to develop new patent delivery forms specially for new medication with high demand and high potential.
As Acino is pioneer in R&D of delivery forms - specially skin delivery forms- they can develop this form for other medication, accordingly Acino should use "Visionary Strategy" Reeves et al. (2012) as the market is stable and they can change the market through delivery forms
Strategic statement:
According Collis et al. (2008) "three elements for good strategic statement: Objective, Scope, and competitive advantage"
1- Objective: achieve 1 billion EUR sales by 2020 and ranked in top 10 organization in selected emerging markets
2- Scope:
Geographical: emerging markets: Middle East, Africa, Latin America, and Eastern Europe.
Customer: all medical field (doctors, pharmacists, nurses)
3- Competitive advantage: unique delivery system which ensure patient compliance and improve medical adherence, high quality products with affordable price
Recommendations:
After viewing ScanStep Analysis, SCOT analysis, and VRIOS Analysis the recommended Strategic action should be taken as the following:
• Invest in R&D to develop new delivery forms with patency with selections on highly demanded molecules.
• Launch of new controlled medicine product with its unique formula in Middle East and make targeting governmental sector
• Acquire new organizations in the selected market (with the same diversified portfolio with Acino) to increase company portfolio.
• Build or acquire new production site in Middle East (KSA or UAE) to get benefit from low labor cost to increase profitability and accessibility to M.E market
• Look for strategic alliance with production sites (Locally in Middle East) to get benefits for institutional sector (as they give preference for local manufactured)
• Create OTC business with a baseline of some diversified products.
• Try to use their innovations in delivery forms to penetrate Cosmo-theutical market
• Continue ESG responsibility in Africa through its antimalarial products (CSR through patient education)
• Keep low profile in other market such as Egypt & Tunisia till revising pricing strategies according new currency exchange rate