Introduction and Significance of Research
This survey covers the planetary pharmaceutical industry in general and more specifically AstraZeneca, which is in a stage of restructuring and implementing operational issues. Although pharmaceutical industry continued to turn through 2009, but the down stock markets reduced the market capitalisation of companies in the industry. The pharmaceutical industry faces a figure of challenges including ordinances and monetary value control. At the same clip, a figure of authoritiess, including that of the US, are contemplating far making reforms that could show an chance to the industry. Therefore, in a sense the industry is at the cross roads holding consolidated its place in several respects, but besides confronting a figure of new challenges, as new chances open up for the industry. ( booz & A ; carbon monoxide, 2009 )
AstraZeneca, being one of the largest pharmaceutical companies in the universe with a planetary presence is besides affected by the assorted environmental alterations. Additionally, AstraZeneca has been burdened with overcapacity in fabrication and merchandise development and has been under force per unit area to downsize and do structural alterations ( Rosen, 2008 ) . The company has been on a fling of downsizing its occupations that has affected 3,000, occupation losingss at its place state itself. The challenges faced by AstraZeneca besides include its slow flow of new merchandises on which it could hold farther enhanced its growing and besides its assorted attractive patents making termination within the following five old ages. Additionally, AstraZeneca has been looking for spouses and purchasing out both R & A ; D capablenesss every bit good as spread outing its selling attempts. It collaborates with labs like Palatin Technologies and Arrow Therapeutics in a command to hike its R & A ; D and acquire more merchandises in the market.
One peculiar move that AstraZeneca has made is to spread out its fabrication and selling operations to emerging markets particularly in the Middle East. It has set up fabricating units in the part every bit good as initiated its plans of active partnership with local governmental and non-governmental health care units.
The current research therefore aims to measure the effectivity of AstraZeneca ‘s selling scheme for the Middle East. For making this, the first measure that the research undertakes is to roll up informations sing the adopted scheme of AstraZeneca, its current and future programs for the part. Next, the research includes a critical analysis of the selling scheme of AstraZeneca with a specific mention to the political, societal, economic and legal environment of the part. For this, a PESTEL analysis will be conducted for AstraZeneca in the context of the Middle Eastern part. Below I present the potency to do part from the research analysis.
The Middle Eastern part is a profitable country for pharmaceutical organisations due to the growing in the population of the part every bit good as increasing credence of the Western medical specialties. The economic development of the part excessively has made it a moneymaking topographic point for concern to sell their merchandises, including pharmaceuticals. Additionally, the part is poised to go a hub for wellness touristry where both the physicians and the patients come together for audiences and other wellness services ( Saliba, 2000 ) . These are some of the factors that make the Middle East an attractive market, where foreign pharmaceutical companies can profit. However, there are besides certain push factors that lead these companies to spread out to newer markets. These include exhaustion of place market, terrible competition, high costs of fabrication and distribution etc ( Elizabeth, 2009 ) .
It can be seen from the above that the Middle East market is non merely attractive for the pharmaceutical companies, but it is besides a necessary for them to spread out if they want to go on to stay feasible and profitable. While, pharmaceutical organisations are looking for strategic partnerships in fabrication every bit good as selling in diverse parts of the universe like the Middle East, they base most of their determinations on the handiness of a possible market and consumers. A recent survey by Marc-Andre Gagnon and Joel Lexchin suggests that the growing in the pharmaceutical industry is market driven instead than research-driven, a determination that challenges bing perceptual experiences ( Science Daily, 2008 ) .While this is a good attack, it is besides indispensable that factors other than market potency be besides assessed before doing investings in newer markets. There is a demand to understand the cultural and political facets of those parts every bit good as these facets play a important function in to what extent the foreign organisations, and particularly the pharmaceutical organisations, are able to set up themselves. The current research expects to carry through this demand. It will take toan apprehension of major drivers of growing and alteration in the pharmaceutical industry particular to the Middle Eastern part plus their schemes and challenges they face at that place.
The current research besides aims to supply an nonsubjective position on the selling schemes of AstraZeneca in the Middle East. By measuring the strengths and failings of the strategic selling program of AstraZeneca, the research expects to cast visible radiation on what works best for the pharmaceutical companies in the context of the Middle East part.
This research is expected to take to a development of apprehension of the Middle East concern scene every bit good as the chances for the pharmaceutical industry in the part.
The current research has included a reappraisal of available literature on the planetary pharmaceutical industry and the Middle Eastern pharmaceutical industry in peculiar. The reappraisal of the industry is necessary to understand why international pharmaceutical companies may desire to spread out to the Middle East. Next, the possible grounds for the rapid growing of the industry worldwide due to the happening of newer diseases, newer remedies with bing medical specialties and enhanced trust of the people of prescription drugs is discussed. This provides a background for understanding the indispensable demands and grounds why people purchase pharmaceuticals, and therefore is expected to assist in urging suited schemes. The literature reappraisal besides includes an thorough study of the political, economic, legal and socio-cultural environment of the Middle East. This enables the research worker in carry oning a PEST analysis on the schemes employed by AstraZeneca and in doing suited recommendations for it to go a market leader in the Middle East.
Research Questions and Aims
Based on the above presentation, the chief research inquiries are:
What are the drivers that make the Middle East Region attractive to the pharmaceutical companies?
What are the barriers to making concern that pharmaceutical companies face in the Middle East?
Are the selling schemes adopted by AstraZeneca in functioning the Middle Eastern Market adequate to supply the organisation with a fastness in the regional market?
In order to turn to these research aims, my research aims are:
To measure the Political, Economic, Socio-Cultural, Technological and Legal Environment of the Middle East.
To measure the rightness of the current schemes of AstraZeneca for the part
To do recommendations for bettering the schemes.
The research uses both secondary every bit good as primary beginnings of informations. The secondary beginnings will include a reappraisal of literature on the selling schemes, particularly for the pharmaceutical industry and will besides lucubrate upon the socio-cultural deductions of the regional selling schemes. It will spread out upon the general concern environment in the Middle East, and about the civilization and consumer behaviour in the part.
The primary information is based on study and interviews of assorted functionaries of AstraZeneca, every bit good as physicians and consumers ( Drug Stores, Stockiest, etc. ) of drug company merchandises from the Middle East. These study responses are aimed to supply informations on the selling schemes used by the company in the Middle East and besides to indicate out the jobs that the company faces in the part.
Restrictions of the Research
The current research is limited in range as it covers the country of the Middle East and measure the selling schemes of one pharmaceutical organisation ; AstraZeneca. The effectivity of the Marketing Strategy of AstraZeneca is to be evaluated utilizing the PEST analysis for the Middle Eastern context, and penetrations drawn from here are used to do recommendations to AstraZeneca and other pharmaceutical organisations that intend to make concern in the part. This limited usage of one organisation, in one context may non be suited for doing recommendations in general as diverse organisations have their ain sets of resources and attacks.
Following restriction is that the research is conducted utilizing a limited figure of respondents. The research includes interviews of employees of AstraZeneca, consumers ( Drug Stores, Stockiest, etc. ) and physicians. Overall the interviews are limited to 15 in figure with 3 employees from AstraZeneca, 9 consumers and 3 physicians. Still, this should supply footing for farther, much thorough research with a larger figure of respondents included in hereafter. However, in the absence of dependable information on this subject, within these restrictions the research makes utile part.
The thesis is divided into 6 chapters. The 2nd chapter contains a brief overview and background of AstraZeneca. This will assist in developing an apprehension of the selling scheme of the organisation and will be used in concurrence with the interview responses of the employees of AstraZeneca.
Chapter 2 contains the literature reappraisal. This will include a study and critical reappraisal of literature sing the drivers of growing in the pharmaceutical industry. It will besides supply an overview of the Middle Eastern part and it ‘s political, economicaˆ¦
Chapter 3 presents the research methodological analysis adopted for this analysis. This chapter covers the research methods, research instrument, informations aggregation and informations analysis methods and besides elaborates upon the tools like PEST analysis that are employed in the research.
Chapter 4 reports the research findings followed by Chapter 5 of analysis and treatment of the research findings. The thesis concludes with the last chapter, that provides decisions and recommendations for AstraZeneca and the pharmaceutical companies in general about selling in the Middle East
This chapter elaborated upon the principle for the research and set the land for the research inquiries and formulated the research objectives. The chapter besides discussed briefly about the research methodological analysis that will be farther expanded in Chapter 3. Finally the chapter presented the construction of the thesis for easy apprehension, and therefore this chapter acts as a prevue to the full thesis. The following chapter discusses the available literature and presents a reappraisal of assorted subjects related to the current research.
Chapter 2 Literature Review
The current chapter includes a literature reappraisal and starts with an overview of AstraZeneca and returns to dig on subjects like the planetary and the Middle Eastern pharmaceutical industry. This provides the reader with a background about the current state of affairs and competition in the industry. It besides discusses the assorted drivers of growing of pharmaceutical industry which provides the research worker with the apprehension of the importance of pharmaceutical companies enlargement in newer parts like the Middle East. It so proceeds to foreground the specific economic, political, and societal, direction and legal issues specific to the Middle East. Finally, the literature reappraisal concludes with a treatment on Marketing schemes and their public-service corporation in different state of affairss and parts. The penetrations gained through the literature reappraisal helped the research worker in developing the questionnaire with suited inquiries that could be used for replying the research inquiries.
AstraZeneca – Company Background
AstraZeneca was formed in the twelvemonth 1999 by the amalgamation of two pharmaceutical giants- Astra AB of Sweden and Zeneca Group PLC of the UK ( AstraZeneca, 2010 ) . AstraZeneca is one of the taking pharmaceutical companies in the universe with the reported gross revenues of 32 billion in the twelvemonth 2008. With the corporate office in London, AstraZeneca has a planetary presence in over 100 states. It does most of its research and development activities in Sweden, the UK, the USA and 5 other states across the universe. AstraZeneca does its fabrication in 18 states across the Earth through its 26 fabrication units. Its legion merchandises fall fundamentally into six classs – cardiovascular medical specialties, GI, infection, neuroscience, oncology and respiratory ( AstraZeneca, 2010 ) . The company besides manufactures good known trade names of medical specialties like the Arimidex, Crestor, Nexium, Seroquel and Symbicort ( AstraZeneca, 2010 ) . AstraZeneca employs over 65,000 people in its assorted R & A ; D and fabricating units worldwide. AstraZeneca is besides among the highest investors in research and development and it is credited with an investing of over 5 billion dollars in 2008 and employs over 12,000 people in its R & A ; D units ( AstraZeneca, 2010 ) .
AstraZeneca has a Global Marketing and Business Development group that looks after the selling facet of the organisation every bit good as directs the clinical tests ( AstraZeneca, 2010 ) . The Global Marketing and Business Development Group provides strategic market inputs that enable AstraZeneca in doing appropriate investings in research undertakings and in clinical research that the clients may finally profit from. The company besides spouses and makes strategic confederations with other selling companies across the Earth to impart its selling and gross revenues operations ( AstraZeneca, 2010 ) .
In position of its long term programs for the Middle East, AstraZeneca moved its Middle Eastern regional office from the UK to Dubai as the first measure. AstraZeneca has relocated its regional office in the bosom of Dubai ‘s wellness attention hub, at Dubai Healthcare City ( Andersen, 2010 ) . This move enabled AstraZeneca to place itself in a topographic point where universe category wellness attention installations are promoted, specializers and physicians of international reputation frequent and patients from across the part semen for particular interventions. AstraZeneca in partnership with Dubai Healthcare metropolis hopes to supply both patient instruction plans and specializers and paramedic educational plan ( Andersen, 2005 ) . These plans are brooding of AstraZeneca ‘s vision of helping both the patients and the physicians in better diagnosing, better redress and better followup of unwellness.
AstraZeneca set up its first fabrication works in the part in Cairo to function the Egyption market every bit good as the Middle Eastern states ( Gotensparre, 2006 ) . The fabricating unit in Cairo has besides resulted in the addition of AstraZeneca occupations in the part and the move is in line with the future enlargement programs of the company in the Middle East ( Gotensparre, 2006 ) .
Overview of the Pharmaceutical Industry
The planetary pharmaceutical industry is in a stage of restructuring and implementing operational issues. The industry continued to turn through 2009, but the down stock markets reduced the market capitalisation of companies in the industry. The industry faces a figure of challenges including ordinances and monetary value control. At the same clip, a figure of authoritiess, including that of the US, are contemplating far making reforms that could show an chance to the industry. Therefore, in a sense, the industry is at the cross roads holding consolidated its place in several respects, but besides confronting a figure of new challenges as new chances open up for the industry ( booz & A ; carbon monoxide, 2009 )
The pharmaceutical industry is besides under a force per unit area to incorporate its costs in the US, European and the Nipponese markets. This makes it a feasible option for the pharmaceutical organisations to prove newer emerging markets like the Middle Eastern that is estimated at $ 8bn.
The Middle East pharmaceutical market achieved $ 8bn growing in the twelvemonth 2005. Combined Annual Growth Rate ( CAGR ) of the Middle-Eastern pharmaceutical market between the old ages 1999 and 2003 was following to that of Southeast Asia and China.
The pharmaceutical market, like most other markets in the Middle-East, is an import dependent market. Most of the states in the part import over 50 % of their pharmaceutical merchandises. For illustration, Saudi Arabia imports 80 % of its pharmaceutical merchandises while Lebanon gets 94 % from outside. Israel and Jordan excessively import in big measures at 60 % and 70 % severally ( Abderrahmane, 2009 ) . The ground for this import is fundamentally the non-availability of fabrication capablenesss for the generics, every bit good as the high credence of branded Western medical specialties. The generic market is about non-existent has states in the Middle East rely to a great extent on the better quality of merchandises that they import from the UK and the US.
Regionally, Egypt provides the largest pharmaceutical market while Saudi Arabia is the largest market in the Gulf part. UAE boasts of being the highest-priced markets in the part. Israel has one of the largest generic drug companies of the universe. These generics merchandises are more competitively priced than the branded drugs and lead to a better market incursion based on their strategic pricing ( Thomas and Holden, 2002 ) . Jordan, while importing most of its pharmaceutical merchandises, is besides among the largest exporter of medical specialties and other pharmaceutical merchandises within the part ( Business Insights, 2009 ) . Jordan nevertheless largely repackages or acts as a conduit for import for the part.
There are several international pharmaceutical companies already runing in the part, and particularly from Egypt. Some of these include AstraZeneca, GlaxoSmithKline, Novartis, Eli Lilly, and Pfizer. These organisations have established their fabrication units in Egypt and behavior distribution and selling for the full Middle East part. Most of these organisations work in close association with local traders who are cognizant of the local market kineticss. Some of them maintain their multi-lingual web sites to pull clients from the local market ( Business Insights, 2009 ) . The selling and fabrication schemes adopted by the international trade names mostly depends on their perceptual experience of what the market needs and clients require ( Seldon and Colvin, 2003 ) .
Drivers of Growth in Pharmaceutical Industry
Addition in ingestion of prescription drugs
It has been seen that there is an addition in the ingestion of the prescription drugs in the past few decennaries. The free handiness of insurance is merely one factor in increasing the ingestion of prescription drugs. Surveies have found that addition in the existent cost of the drug to the consumer has small consequence on its ingestion. The monetary value snap of prescription drugs is reasonably low and varies in the scope of 0.1 to 0.2. This is non surprising as the usage of prescription drugs implies that these are required for the intervention of the populace, and will therefore still be utilized by the populace for intervention every bit long as these are within the ability of the populace to be paid for.
The consequence though is volatility in the disbursement on prescription drugs with the planetary economic system holding an impact on the disbursement on the prescription drugs by the populace. For illustration, a survey by Smith et Al. ( 2006 ) revealed that private disbursement on drugs slowed down in 2004, along with slower wellness insurance growing. Drug disbursement declined in the instance of all wellness attention remunerators, including private insurance companies and public wellness bureaus.
In earlier old ages, disbursement on prescription drugs was buoyed by good economic conditions with the pharmaceutical houses besides driving the disbursement with their selling of these merchandises. Harmonizing to Findlay ( 2001 ) , passing on prescription drugs has been demoing a fast accelerating tendency driven chiefly by the selling, publicity and advertizements by pharmaceutical companies, peculiarly direct-to-consumer advertisement ( Neff and Sanders, 2004 ) . Harmonizing to Dietz ( 2004 ) , passing on prescription drugs tripled during the period 1993-2003. Price rise, peculiarly in the instance of new drugs, accounted for 29 % of the addition. Quantity of drugs purchased accounted for 74 % addition in drug disbursement. Furthermore, an aging society coupled with longer life spans, and higher disbursement on drugs to command chronic diseases contribute to increased ingestion of prescription drugs. This tendency is expected to stress in the hereafter, ensuing in much higher disbursement on prescription drug. ( Dietz, 2004 ) .
The above analysis shows that the general tendency in drug ingestion is driven by factors such as insurance and proviso of benefits. The disbursement on prescription drugs is besides straight affected by the sum of publicity done by the industry ( Rajadhyaksha, 2002 ) . These tendencies show that pharmaceutical growing is straight related to ingestion of drugs.
Impact of new diseases
Lichtenberg ( 2003 ) shows that the handiness of improved drugs and a greater figure of drugs have led to a diminution in morality rate, demoing a positive correlativity between province of wellness and figure of drugs available. Moynihan, Heath and Henry ( 2002 ) travel a measure further in specifying the function played by new diseases in the growing of pharmaceutical industry. They allege that companies in this industry, in collusion with physicians and consumer groups, actively prosecute in what they call ‘Disease peddling ‘ . They define disease mongering as spread outing the boundaries of treatable diseases to include many more common conditions.
This takes the impact of new diseases on the growing and chances of the pharmaceutical industry to the new dimension in that the industry non merely benefits from existent happening of new diseases but actively invents them to advance their ain well-being. The research will besides reexamine this statement and have a position on the sentiments and statements of stakeholders associating to this development as a cardinal driver in the growing of the usage of prescription drugs.
Turning Focus on Research & A ; Development
Pharmaceutical research, and more significantly the debut of a new drug in the market, is both dearly-won and hazardous. However, such research has been at the underside of much advancement and societal benefits. Surveies have found that the societal benefits of pharmaceutical research are more than twice those of the private benefits ( Kotler, 2004 ) . Other surveies have shown that the public policy of authoritiess and modulating governments, including regulative policies, controls and patents, has a direct influence on the extent of research. Pharmaceutical companies have been found to put the highest importance on patents. ( Grabowski, 2002 ) High growing outlooks fueled by past dual figure growing rates in the industry have forced organisations in the pharmaceutical industry to invariably introduce ( Trout, 2000 ) . The leaders in the industry are peculiarly vulnerable to this tendency as they frequently have to transcend outlooks. These companies rely on “ blockbuster drugs ” – new drugs that generate one-year grosss in surplus of US $ 1 billion – to run into these outlooks ( Kotler, 2003 ) . With patent terminations and merchandise adulthood, many of the bing portfolios are likely to lose their shininess as blockbusters and will hold to be replaced with new 1s in order to keep the growing degrees.
Middle East Political Economic Social and Technological Environment
Instability of the Region
Middle East offers a great chance for the international pharmaceutical organisations as it is estimated to be presently $ 8bn worth and turning at a fast gait. However, there are assorted distinguishable issues associated with the political and concern environment of the part that cause concern for those organisations that may draw a bead on to be a portion of the growing of the pharmaceutical market in the Middle East. The foremost concern is the perceptual experience of the part as being instable in footings of its political relations and geo-political facets ( Saliba, 2000 ) . The long drawn tensenesss between Israel and Arab provinces, the Iraq War, and the current trade stoppage with Iran on the atomic issue enhance the perceptual experience of the part as unstable and may discourage organisations from puting.
Intricate and Complex Business Laws and Restrictions
Additionally, there are intricate legal and proficient limitations for carry oning concern and selling in the part and these are non ever easy understood by the planetary houses anticipating to make concern here. These protocols, paper-works and processs are even more complex in the instance of pharmaceutical concern ( Rosenbloom, 1995 ) . Organizations anticipating to set up themselves in the Middle East, about ever have to take in local agent ‘s aid to voyage through the drawn-out enrollment processes every bit good as the selling conditions that need to be fulfilled.
Lack of Appropriate Intellectual Property Laws
The part besides suffers from unequal statute law safeguarding the Intellectual belongings rights. As such, making concern and particularly of the type of pharmaceutical merchandises that are extremely dependent on patent protection and IP Torahs, is considered to be hazardous in the part. Harmonizing to the Pharmaceutical Research and Manufacturers of America ( PhRMA ) , the deficiency of equal IP protection led to the US Pharmaceutical organisations losing out over $ 555m in 2004 in the Middle East ( Saliba, 2000 ) .
The part has nevertheless risen to battle this job and several states have initiated reforms in their IP Torahs. This has besides been driven by the inclusion of many states from the part in the WTO or the World Trade Organization. For illustration, being a portion of the World Trade Organization, Saudi Arabia besides adopted the TRIPS ( the Trade Related Aspects of Intellectual Property Rights understanding ) . Jordan has amended its IP Torahs to reflect the altering demands of the modern times ( Saliba, 2000 ) .
Liberalization and Free Trade
The coming of globalisation and the desire to diversify in other sectors than the oil, has made many states of the Middle East to follow a broad stance towards foreign investing. This has besides been true in the instance of the wellness attention sector, which is being promoted quickly in the Middle East a signifier of touristry – the wellness touristry.
Middle East has liberalized inward investings, leting up to 100 % foreign ownership in the health care sectors. In some states, like Israel, liberalisation has been enacted in the over the counter sector as good ( Saliba, 2000 ) . There have been widespread investings in developing healthcare substructure to provide for the expatriate population every bit good as to pull the wellness tourers from across the universe. Examples of monolithic investings in the sector can be seen in the King Fahad ‘s Medical City, Riyadh, developed at the cost of $ 534m, and DuBiotech – a biotechnology park developed in the UAE to pull specialist physicians. States have invested in concerted wellness insurance and frequently made it compulsory for the exiles, for illustration in UAE, to hold the wellness insurance screen. ( for more inside informations see, Saliba, 2000 ) .
The past few old ages have seen an addition in the figure of free trade understandings ( FTAs ) . There are FTA ‘s of several Middle Eastern states with EU and the USA that provide chances for organisations from these parts to make profitable concern in the Middle East ( Macklan and Knox, 2000 ) .
Local Pharmaceutical Players
While the pharmaceutical market in the Middle East is to a great extent dependent upon the imports, there are a big figure of local makers. Most of the companies that have been traditionally importing pharmaceutical merchandises to the Middle East have been from Europe due to propinquity, but past decennary has seen an increased import from the US as good ( Elizabeth,2009 ) .
There are several local participants but all of them are from the generic market and none of them produces any branded or new merchandises. There is small if any investing in R & A ; D in the part. However, the local makers of generic drugs, like Israel do good as they are able to export their merchandises to the US and the EU every bit good as to the other states of the Middle East.
Human Resources, Skills and Technology
The part, particularly Egypt has an abundant pool of technically qualified people who could be employed at a comparatively lower salary rates. This makes holding fabricating workss in the part a good investing. Additionally, the part is progressively encompassing the Current Good Manufacturing Practice ( cGMP ) certified workss that are well-equipped to bring forth high criterions of merchandises under rigorous quality controls.
These make the part an attractive finish for pharmaceutical organisations to do strategic confederations or license understandings and acquire their ain regional fabrication undertaken nearer to the market. ( Elizabeth, 2009 )
Decision of Literature Analysis
Pharmaceutical industry has been systematically demoing dual digit growing degrees for the past several old ages. The growing is accompanied by increased disbursement on drug ingestion. Studies show that the addition in drug ingestion has been much higher than the addition in monetary values or in disbursement on other facets of medical attention.
New diseases represent another set of drivers of pharmaceutical industry growing. Organizations respond with new drugs, and have besides been accused of join forcesing with physicians and consumer groups to make new diseases through a procedure of “ disease mongering ” . Research and Development is the other of import driver of pharmaceutical growing. The societal benefits of research are more than twice those of the private benefits to the organisation. In bend, Research is influenced by controls, ordinance, confidentiality and patent Torahs. In the Middle East, though there is a growing in the drug company market, there are besides frights of instability of the part, complex regulations and ordinances, and menace of inexpensive generic drugs that foreign branded pharmaceutical organisations have to cover with. Any foreign house runing in the part ( like AstraZeneca ) need to carefully measure such a complex context and consequently develop their selling schemes. This research helps to analyze this.