Faculty of Commerce, Law and Management

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    Creating value from mergers in the South African pharmaceutical industry
    (2012-10-05) Naidoo, Angie Nicole
    Mergers and acquisitions (M and A's) has become a strategic option for companies to meet the strategic needs of the rapidly changing competitive landscape. Pharmaceutical companies are facing several major inter-related challenges, the most strategic being the decline in Research and Development (R and D) productivity resulting in empty product pipelines which cannot replace the products nearing patent expiry, competition from generics, healthcare costs and product liability. The aim of this study was to identify and describe the drivers of merger success in the pharmaceutical industry in South Africa and the aspects of an effective post-merger value creation strategy that will grow the business and maintain business continuity. Data was collected through conducting 20 semi-structured interviews to search for a deeper understanding of merger and acquisitions in the pharmaceutical industry in South Africa. The main findings in this research have shown that the aspects of an effective postmerger value creation strategy start with a well-articulated plan for integration. Each step of each plan has to be communicated to all stakeholders in a manner that is transparent, open and honest so that there is buy-in, acceptance and finally mobilisation of the company to create the desired value. Pivotal to local companywide post-merger value creation are leaders that are trusted, who will enable the organisation to align around the vision and mission and goals of the merger. Decisions require foresight. Culture underscores the success of any strategy in the organisation. The end goal of achieving post-merger value creation depends on the organisation’s resources, the people, processes and systems; and matching these with the external opportunities. Retaining the best from both legacy organisations and fusing them together will result in a high performance organisation which will create post-merger value. Not much has changed in the industry except for the risks and the size of the opportunities. Strategic alliances with companies that have expertise in health economics and health technology assessments and companies that have strong relationships with authorities, who will register products faster, should be an option for serious consideration for future growth.
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    THE CHANGING STRUCTURE OF PHARMACEUTICAL PRODUCTION IN SOUTH AFRICA
    (2012-01-19) Naudé, Carel te Water; Te Water Naude, Carel
    The structure of the South African pharmaceutical manufacturing industry has undergone changes in the last 10 to 20 years. The purpose of this research is to investigate the changing structure of pharmaceutical production in South Africa. This includes establishing the global and local contributing factors to the changing structure and evaluating the possible implications of the changing structure on the South African pharmaceutical industry and the response of the pharmaceutical industry to these implications. Generally, these factors have resulted in a decline in the number of pharmaceutical manufacturers in South Africa and in particular manufacturing operations owned by multinational companies (MNCs). Simultaneously, within this period the global demand for generic medicines has increased due to their ability to improve access to affordable medicines. As a result, the supply of medicines in South Africa is being increasingly met by mostly imported generic medicines and to a lesser extent locally manufactured generic medicines. These changes together with a turbulent and sometimes uncertain regulatory environment has led to interesting dynamics and changes within the structure of the pharmaceutical manufacturing industry in South Africa. Qualitative data was collected through in-depth interviews conducted with stakeholders within the local manufacturing industry using pre-determined questions that served as a guideline for a detailed discussion. The key findings have been that, despite an apparent decline in the number of pharmaceutical producers in South Africa in recent years, interesting trends appear to be emerging that may be indicative of a sustainable local pharmaceutical manufacturing capacity. This sustainability, however, does appear to rely mainly on government intervention and the successful strategies of the largest generic medicine producers locally. The future viability of the industry largely depends on the ability of the local industry and the government to cooperate and work collectively in achieving their individual mutually beneficial objectives.