Phân tích SWOT và kế hoạch marketing hỗn hợp của công ty CP dược và vật tư y tế THái bình e

Marketing Management 2011 Phân tích SWOT kế hoạch Marketing hỗn hợp công ty CP Dược vật tư y tế THái Bình Question: In the context of Pacific Pharmaceutical and Medical Materials Co., present an analysis of its SWOT and one element of this marketing mix A VIETNAMESE PHARMACEUTICS With a pretty long history of foundation and development in more than 29 years, Vietnamese pharmaceutics has become a large – scale sector of the economy and a lucrative business of which the growth rate has been always higher than that of the overall economy Vietnamese citizens’ spendings on medicines and healthcare are still low This spending rate in Thailand is five times and in India is four times that in Vietnam To such developed countries as USA, Germany, etc the rate is even higher Therefore, it can be concluded that Vietnamese pharmacy is of high potential market and the demand for medicines, particularly for products rich in nutrition and good for health remains high because of the economic growth rate and the increasingly high standards of living Although there is a number of large – scale local businesses, the market share of indigenous products only makes up less than 50% The medicine preparation industry in Vietnamese pharmacy is of major market share In the mid of 2006, the number of domestic producers of new medicine and foreign invested producers are 174 and 12 respectively Among those 174 local producers, 42 producers are of GMP – ASEAN standards and 23 are of the GMP – WHO standards The 65 producers are of large scale with the production value counts for more than 85% the total value of Vietnamese pharmacy sector Marketing Management 2011 Vietnamese pharmaceutical companies only focus on producing ordinary medicines and have not been able to produce products for special treatments Of the 1563 active elements registered for the approval of usage in Vietnamese market, only 652 elements are registered by local enterprises The concentration of these domestic companies on such ordinary medicines as antibiotics or vitamin causes big competition while developing imported products is still out of local companies’ reach The imported products area is both a challenge and an opportunity for the development of indigenous enterprises The distribution activities of domestic pharmaceutical businesses have been protected after Vietnam joined WTO Expanding distribution systems widely helps Vietnamese corporations increase their market share The biggest advantage of local businesses is distribution systems which have been further protected since Vietnam’s WTO membership validates To distribution systems in Vietnam market, foreign pharmaceutical companies are allowed to export and import medicines (from of January 2007 on, foreign pharmaceutical companies are permitted to directly import medicines into Vietnam) Direct distribution activities which are protected in long-term become an advantage for local companies to improve their presence in the market through established distribution systems Distribution channels have played the most important part in the consumption of products over the past years Since most consumers rarely ask chemists about the origin of medicines except for products for special treatments, medicine sellers gain the upper hand in distribution practices This is the main reason for the Vietnamese pharmacy’s instability prominently reflected by the fact that medicines’ prices have been pushed up at high level due to high commission to sellers In short-terms, this fact causes more disadvantages to consumers than to producers In addition to the growth rate target, development of technology is another goal the pharmaceutics industry sets for their initiative in the material preparation step for producing pharmaceutical industry products Marketing Management 2011 and products for special treatments According to the assessment of WHO, UNCTAD and UNIDO, Vietnamese pharmacy’s capability of producing some end pharmaceutical products from imported ingredients is not really high The capability is not as high as that of such countries in the same region as China, India, Korea, etc and developed countries as US, Canada, Germany, Italia, etc Accordingly, Vietnamese pharmacy technology, particularly the technology of medical research and of proprietary medicines development, is considered to be not quite advanced Under estimation, local pharmaceutical products meet 60% local needs in 2011, annually increased by 20% and 30 % of these products are made from local ingredients This is among strategies for stabilizing the current new medicine market The value of imported new medicines is more than USD 1.2 billion, yearly increased by 9.2% and more than 50% of consumers’ spendings are on imported medicine Almost all these imported products are proprietary medicines or ingredients that are beyond the reach of domestic pharmaceutical companies’ production The value of exported medicines is much smaller than the above-mentioned imported one Despite the growth rate is pretty high, the value of exported medicines in 2010 is only USD 35 million, equal to 4.03% that of imported one Up-to-date, some domestic companies started to export their products but because Vietnamese pharmacy technology is the same as that of neighborhood markets, the response of these markets for Vietnamese products is weak Therefore, domestic medicines are prominently exported to markets of lower technology Vietnam is listed among 150 low-tech production countries In the aspect of financial evaluation, both growth rate and efficiency of the local businesses are high On average, the yearly growth rate is 15 % and the rate of return per charter capital is 50% To some companies like Hau Giang Pharmaceutical J.S.C, the later rate in 2011 is up to 100% Most of these companies plan to supplement capital for their further investment and expansion of current scale This indicates the “attraction” of both Marketing Management 2011 the pharmacy industry and its corporations Vietnam’ s Outstanding WTO Commitment Tax: the import tax rate on medicines reduces from – 10% to – 0.5% The average rate is 2.5%, valid for years, from Jan 2007 on Regulations on quality control: all Vietnamese pharmaceutical enterprises must have met the GMP – ASEAN standards and GMP – WTO standards by January 2007 and January 2008 respectively Production right: Foreign businesses are allowed to branch out in Vietnam from January 2007 Right to conduct export – import business: From January 2008 on, enterprises of less than 51% foreign investment have the right to import and export medicines Foreign invested companies or any branch of foreign enterprises in Vietnam are allowed to directly export and import medicines from January 2009 on Right to directly distribute medicines: Pharmaceuticals directly imported by foreign invested companies or any branch of foreign enterprises in Vietnam are resold to local distributors The regulation that foreign pharmaceutical enterprises are not granted the right to directly distribute medicines is the permanent commitment made by Vietnam Development trend and risks a Development trend: Vietnamese government schedules to develop the pharmacy sector into one key industry in Vietnam Local products meet 60 % of the domestic demand; the average annual spending on medicines is $12 -15 per capital Marketing Management 2011 The restructure of the pharmacy industry shall direct in expanding the production of imported medicines which are well consumed Hi-tech production lines shall be invested in order to produce pharmaceuticals for such special treatments as cancer, heart diseases, diabetes, etc It’s estimated that the total revenue of domestic pharmaceutical production and the value of potential market in 2012 can reach VND 8000 billion any USD 1.5 billion respectively Those figures reflect the increasing domestic demand that creates development opportunities for local pharmaceutical enterprises Competition with foreign enterprises has strong impact on the existence, development and function differentiation of domestic companies Pushing up the distribution function of Vietnamese corporations and giving foreign enterprises no right to distribute medicines as per the Vietnam’s WTO commitment shall be the obvious trend of the pharmacy sector b Risks: The regulations on patent rights and distribution rights applied to domestic enterprises have been more stringent since Vietnam became a member of WTO In case of being taken to court and losing, Vietnamese enterprises that produce pharmaceuticals or are entrusted parties to import medicines can be required to stop their production or importing sued medicines The fact that foreign companies have the right to directly import medicines from January 2009 forces the domestic ones to fiercely compete in import activities Import tax reductions on 47 pharmaceuticals items (the average reduction rate is 3%) shall become an obstacle on the competition way of Vietnamese enterprises Besides, the brain drain from domestic companies to foreign ones becomes a Marketing Management 2011 common practice Competitiveness inside pharmacy sector Although to new companies, pharmacy is considered to be a super profit industry and a “delicious cake” at the present, there exists fierce competition among domestic enterprises The competition is indicated through the followings: Non – price competition Pharmaceutical enterprises apply such methods to compete with each other as establishing or controlling distribution channels and expanding them to bring more convenience to consumers Since the direct customers of producers and whole-sale companies are distribution channels or brokers, not citizens, non – price competition utilizing the method of attracting distribution channels is increasingly applied to improve enterprises’ competitive power Moreover, companies launch such brand promotion activities as giving the poor medicines, implementing free advisory services to citizens, building charity house (like Mekophar), opening clubs for customers (like Hau Giang Pharmaceutical J.S.C), sponsoring races (like Domesco race) In addition, local enterprises get their products advertised on mass media However, advertisements on pharmaceuticals are stringently supervised and managed by the government Price competition: An indispensable element in the competitive pharmaceutical industry is price competition In the context that domestic pharmaceuticals are not enough for consumer, we have to enter many foreign medications This results in different prices among domestic companies, between internal and foreign medicines The number of pharmaceutical companies involved are quite large Each of them represents only a small market share compared to the industry The demand curve of every business usually more elastic than the industry demand curve A clear proof is that domestic pharmaceutical companies often sell their products at lower prices than foreign ones Marketing Management 2011 Large firms in the industry: 10 leading pharmaceutical companies in term of revenue have generated total revenue of 2.680 billion VND, accounting for 40% of the whole industry B COMPANY PROFILE Company history September 15th 1962: Pacific Pharmaceutical and Medical Material Co was established Currently, the company operates branches in Ho Chi Minh City, Hanoi, Thai Binh, Hai Phong, Can Tho, and Da Nang Number of employees: March 31st 2013, the company employs 624 workers (20.83% are graduates and post-graduates, 36.86% are those who finished colleges or intermediate, and the rest 42.31% are unskilled) Charter capital and the process of capital increase July 2001: The charter capital was 22 billion VND March 2005: increased to 44 billion VND Early 2006: Increased to 70 billion VND December 4th 2011: Increased to 84 billion VND In 2012 the company plans to increase its charter capital from 84 billion VND to 116.61 billion VND in phases + Phase 1: Increase the capital from 84 to 92.4 billion VND by paying a dividend of 10% by shares (which were issued from April 2007) Marketing Management 2011 + Phase 2: Increase the capital from 92.4 billion to 101.64 billion VND by issuing new shares to the existing shareholders in proportion 10:1, and at a favor price of 60.000 VND/share + Phase 3: Increase the capital to 115 billion VND by issuing 198.000 new shares to the company’s employees at 60.000 VND/share, and the rest to major individual investors + Phase 4: Issue 161.200 shares to State shareholders (Vietnam Pharmaceutical Corporation) Business/ Industry 3.1 Production; sales and purchase; and import and export of pharmaceuticals, medical instruments & equipments, and packaging materials for manufacturing pharmaceutical products 3.2 Manufacture, sales and purchase; and import and export of traditional medicines, cosmetics, foodstuff, functional foods, beverages, hard and soft drinks, antiseptics for human 3.3 Provision of storage services for medicine and raw materials 3.4 Aquaculture, processing, and sales and purchase of pharmaceutical materials 5.3 Tourism & resort business 3.6 Financial investment and real estate business However, the core business of Pacific Pharmaceutical and Medical Material Co is to manufacture medicines and traditional medicines, purchase and sell medicines, pharmaceuticals, pharmaceutical chemical, pharmaceutical raw material, and medical devices The company has currently produced over 190 kinds of products, including over Marketing Management 2011 30 franchise products of large overseas corporations or companies such as Sandoz (Biochemie), Union pharma, DP pharma, Innotech (France), etc The company’s products and services include: Medicines produced by the company: the antibiotics, pain medications, proprietary medicines, anti-allergic drugs, and functional foods Medicines non-produced by the company: those are imported or purchased by the company from other entities for distribution The company’s revenue structure comes from both the medicines produced by the company, which accounted for over 90%, and those purchased from suppliers, and other profits The company’s profit coming from its production accounts for 100% (in 2010), 94.03% (in 2011), and 100.07% (first quarter in 2012) The proportion of revenue by region: Northern Delta (51%), HCM City (20%), Central Vietnam (7%), northern mountain area (5%), Hanoi (7%), Mekong Delta (10%) Development Strategies in 2012 Studying new products under the brand of Pacific Thaibinh Pharmaceutical of which revenue and profit growth increased by 55% over 2011 Expanding the distribution network throughout the country (such as the Western Highlands, Central Area, and South Area) and exporting to countries in Asian and Africa (such as France, Moldova, South Africa, Cambodia, etc.) Expanding and developing the production of franchise products Building a factory producing Cephalosporin injectable antibiotic at Vietnam- Marketing Management 2011 Singapore Industrial Park in the Pacific Industrial Park Increasing investment to enhance high-tech equipments for the existing plants and to reserve more materials C SWOT ANALYSIS Strengths According to statistics in 2011, there are 10 domestic pharmaceutical manufacturers which have the highest turnover Among them are DHG (373 billion VND), Sanophi Aventis Vietnam (the largest with 340.7 billion VND), Mekophar Pharmaceutical Chemistry JSC (332 billion VND), Imexpharm Pharmaceutical JSC (301 billion VND), Domesco Medical Import-Export JSC (259 billion VND), Pacific Pharmaceutical and Medical Material Co (180 billion VND) The company quality management system meets the standard ISO 9001:2000 in both production and pharmaceutical business in 2008 Pacific Pharmaceutical and Medical Material Co is one of the leading pharmaceutical manufacturers in Vietnam which can fully meet the GMP standards in all parts from production to storage In addition, the company also has elements facilitating its business activities such as: - The company is located in material area, which helps the company very much with its raw material purchasing - The company has a standard management process and norm on production and processing seafood for export purpose - The company’s product quality has been trusted by customers in most of the 10 Marketing Management 2011 markets - The market is relatively stable Weaknesses - Risk of law: Transferred from an SOE to a joint stock company, Thaibinh pharm’s activity is influenced by the legal documents on equitiation, securities and stock markets, as well as laws and sub-laws in this area which is in the process of being completed Government policies may change and once it happens, they will more or less affect the company operations - Economic risk: Economic growth is the factor which directly affects the drug demand The more the economy develops, the more people care for their health Thus, the demand increases for pharmaceutical products in general and for Thaibinh in particular Moreover, economic growth will also affects business performance of the company - Exchange risk: To ensure its product quality, the company uses imported materials to produce them The materials’ prices of the company may be affected by exchange fluctuation This requires companies to be flexible in setting the time of entry and storage to minimize the impact of exchange fluctuation - Risk of human resources, management capability: The company needs to retain skilled workers and fully equips modern production facilities + Quality Management System GMP is proving to be more effective and generates positive effects on many aspects of the company operations + The brand Thaibinh is highly appreciated and many doctors trust Thaibinh products + The market still has strong demand for the company pharmaceutical products 11 Marketing Management 2011 The potential of development of new products, thus, is very high On the other hand, the company staffs are all qualified, basically trained, and can master the technology and have experience The company which is developing at high speed always needs a workforce to develop its distribution network and to well-manage its activities The skilled labor force in the market is now failing to meet the demand, especially in the pharmaceutical industry Therefore, the risk of manpower shortage will always be standing if the company has no personnel policy and proper policies to attract talents However, the company is always prepared to minimize this risk by providing its employees with good working conditions and benefits; regularly training to improve their skills; and recruiting, detecting, fostering and training of middle management levels In addition, most of the senior managers in the company are longtime staff with extensive experience in the industry They often self-train or are professionally trained in management capacity This source of labor is less volatile Therefore, it helps to lower the risk of loss of senior managers - Other risks: Due to the nature of the pharmaceutical industry, the cost of sales item affects inventory and profit accounted at each time the balance sheets are drawn As the costs of the products are also counted in the cost of goods sold, when they are consumed and calculated in the company’s revenue, the profit (equal Revenue minus Cost of goods sold) is not affected Otherwise, they are still in the inventory item In this case, their cost of sales are counted in their costs as explained above, which makes inventory value as well as profit increase instead of being listed in the cost of goods sold item Pacific Pharmaceutical and Medical Material Co owes overlapping debts of tax and other obligations to the State from the prior period financial statements However, Thaibinh always make the declaration and payment according to current regulations, it has no overdue tax debts In addition, other risks such as natural disasters, enemy sabotage, fires, etc are also cases of force majeure If they occur, damage to property, people and general operational 12 Marketing Management 2011 status of the company is possible Opportunities The pharmaceutical industry’s current annual average growth rate is 18-20% In recent years many domestic pharmaceutical manufacturers have made great efforts to win market shares A number of new pharmaceutical companies and enterprises built each year Till now there are about 100 production lines meeting standards and well-practicing manufacturing However, the current domestic drug production only meets nearly 49% of market demand in term of value; the remaining 50% is satisfied by import activities According to the Treatment Department-Ministry of Health, in 2011, people’s medical expenses reached about $630 million/year Thus, due to the consumption of $10-12/person/year in 2012, the market size will reach $1 billion Domestic pharmaceutical market is still potentially huge for domestic enterprises, especially those with GMP However, there is remarkable that the domestic pharmaceutical market is huge potential for development of domestic enterprises, especially enterprises with GMP However, the domestic pharmaceutical industry is also faced with following challenges which easily lead to loss of market share and even the market as Vietnam joined the WTO: has little understanding of global market and international law, weak management capacity, backward technology, weak business efficiency and competitiveness Many enterprises are predicted to go bankrupt due to their impossibility to compete imported products Threats - Prices of pharmaceuticals increased due to the scarcity of supply shortages As fluctuations in oil prices, diseases, especially bird flu in many countries and areas, terrorism, political security around the world occurs as a result, many nations 13 Marketing Management 2011 increase their storage of pharmaceutical raw materials to be ready for possible risks - Intense price competition of generic products among domestic pharmaceutical enterprises - Funds for storage of raw materials, investment for development of consumption system and construction of new plants, etc are limited from banks - Lack of human resources to meet development needs 14 ... elements registered for the approval of usage in Vietnamese market, only 652 elements are registered by local enterprises The concentration of these domestic companies on such ordinary medicines... quality, the company uses imported materials to produce them The materials’ prices of the company may be affected by exchange fluctuation This requires companies to be flexible in setting the time... longtime staff with extensive experience in the industry They often self-train or are professionally trained in management capacity This source of labor is less volatile Therefore, it helps to lower