Strategic considerations for South African based generic pharmaceutical companies conducting business in Sub-Saharan Africa

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Date

2015

Authors

Ramsuran, Nisha Anand

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ABSTRACT The evolution of Africa as a business destination following the global financial crisis in 2008 has attracted the attention of many global companies. The changing global landscape has positioned South Africa as the ‘gateway to Africa.’ Pharmaceutical companies are drawn to the rest of the continent particularly due to the number of individuals not having access to affordable medicines. Sub-Saharan Africa represents 65.9% of the global burden of disease yet only accounts for 3% of the global pharmaceutical market. With South Africa being the ‘gateway to Africa’, the focus of this research was South African based generic pharmaceutical companies as opposed to multinational companies. A cross-sectional qualitative research design approach was adopted for the purposes of this study and generic purposive sampling was used. A sample size of nine participants was selected. A guided semi-structured interview format was used and the data collected analysed by content analysis. The first research question aimed to identify the internal and external challenges experienced in sub-Saharan Africa while the second research question aimed to identify the strategic aspects that were considered most crucial to success in sub-Saharan Africa. In addition, the contribution that these companies make to alleviating the burden of disease and identifying with the concept of shared value was also investigated. The results of the research indicated that respondents identified the external challenges as being infrastructure, regulations, corruption, patents, counterfeit products, cultural differences, corporate governance, patient affordability, competition and the lack of data. Internal challenges were identified as financial, management commitment, skilled personnel, cost, time investment and the product portfolio. Internal challenges were highlighted as having a greater impact than external challenges although it was agreed that external challenges were significant contributors to the internal challenges experienced. The key aspects that were highlighted as critical to the strategy formation process were the continuous strategy review process, the business model, financial aspects, the product portfolio, the market and disease prevalence, the regulatory framework of the market, competitors and the skills required. It was also found that distribution agreements were favoured over joint ventures and that preference was generally given to importing products from South Africa as opposed to manufacturing in any of the sub-Saharan African countries. The research also indicated that products specifically developed for the South African burden of disease were generally used to penetrate the sub-Saharan African region as opposed to being specifically developed for the targeted region. Over 78% of respondents identified with the concept of shared value but also agreed that their current company strategy did not address the burden of disease and that this was compensated for by donations and funding. The key message that this research aims to deliver is that while the African continent presents many business opportunities for South African based generic pharmaceutical companies, rigid defining, planning and execution of a companies’ strategy is still required as well as innovative solutions to the challenges posed.

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MBA 2015

Keywords

Pharmaceutical industry -- South Africa,Strategic planning

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