The Impact of the External Environment on the Romanian Pharmaceutical Field

Transcription

1 The Impact of the External Environment on the Romanian Pharmaceutical Field Ramona FLOREA & Radu FLOREA George Bacovia University, Bacau, ROMANIA Keywords: External environment, pharmaceutical field, global and local development Abstract: As result of the action of certain factors which operate at national or international level, external environment is composed by a series of variables which influence directly or indirectly on each economic sector. This paper wants to identify the main influences on the pharmaceutical sector and to establish it s influence concerning this sector s development. In this respect, the author studies the impact of the economic, social, legal, political or technological factors on the Romanian pharmaceutical field through a comparative study between Romanian and global development. Making a company diagnosis means principally to identify all the factors which influence it s activity and to group them according to their origin in: internal factors and external factors. External environment consists in all the external elements, such as customers, competitors, business partners, other institutions, organizations, or regulations which may directly or indirectly affect the company activity. External environment analysis aim is to identify which factors influence firm activity, the opportunities and the risks and also, the company interaction with its environment. Depending on how they exercise influence over the organization, external environment variables can be grouped in two categories: direct factors which form the direct environment and indirect factors which make up the general environment. Direct environment includes all the external factors which affect directly the company. Generally, direct environment is represented mainly by: suppliers, customers, competitors, employees and shareholders, the media and non-governmental organizations. Company, through its actions can influence direct environment. General environment includes all the external factors which influence a big number of organizations and companies in a uniform and indirect kind. On the other hand, company has an insignificant influence on general environment.

2 As result of the interaction of factors operating at national or even international level, general environment consists of a set of variables that can be grouped according to their content in: legalpolitical factors (forming political-legal environment), economic factors (economic environment), sociocultural factors (socio-cultural environment) and technological factors (which determine technological environment). Selection and verifying information is the most important activity in order to accomplish a complete, relevant and true global environment diagnosis. In this respect, specialists have to pay attention to the collection and analyzing process of information, selecting sources of information and checking their accuracy. The information used in achieving the diagnosis may come from sources of primary or secondary. Diagnosis of the external environment of SC Antibiotice SA allowed to identify the following aspects: During last years, global pharmaceutical market has increased in a constant rhythm, above 6-7% per year, registering 643 billions USD at Regarding the sales structure, it notes that in 2007 sales of prescription drugs had a growth rate of 11% from the previous year, reaching a level of 230 billion dollars. Medicines to treat cancer were among the best sold pharmaceutical products, with a total turnover of 34.6 billion U.S. dollars, up almost 21% over In terms of therapeutic classes, 37% of the global market of pharmaceutical products, approximately 225 billion dollars, is held by four therapeutic classes: cardiovascular system, nervous system, digestive tract and respiratory system. General trend of increasing global market will remain in the future, among the key factors of influence are mentioned: increasing role of marketing in developing products, multinational companies investments in research and new products developpment, gene therapy that causes the emergence of new modern, expensive and well focused treatments (such as leukemia), the development of biotechnology drugs, increasing of the rate of aging and lifestyle, the development of underdeveloped markets (eg China, India). Figure no. 1 presents the evolution of the forecasted sales for the period mld. USD Crestere anuala de 9% Alte state State Latine Japonia Europa de Est Uniunea Europeana America de Nord Figure no. 1 Evolution of forecasted sales of pharmaceutical products and the distribution by geographical area Meanwhile, the world market trend is to increase outsourcing of research and development, clinical trials, marketing and sales services to specialized firms and concentration of research and development and production activities in to laboratories owned by multinationals companies. 81% of the pharmaceutical products are produced by companies from EU countries or U.S, as shown in Figure number 2.

3 RepartiŃia pe zone geografice a principalilor operatori de pe piańa farmaceutică Asia + Pacific 19% Europa 28% America 53% Europa America Asia + Pacific Figure no. 2 Geographical distribution of the main operators in the pharmaceutical market Seven main countries exporting pharmaceutical products (Belgium-Luxembourg, Germany, United Kingdom, Switzerland, France, Ireland) produced at % of total medicines, registering a growth rate higher than the market as shown in Figure no.3. Evolu?ia vânz?rilor realizate de primele 7??ri exportatoare de produse medicale?i farmaceutice mil USD Belgia-Luxemburg 0,7 1,65 4,07 7,21 26,17 Germania 2,5 5,92 10,69 13,83 24,45 SUA 3,12 4,47 7,07 13,82 20,53 Marea Britanie 1,94 4,08 8,08 11,5 20,01 Elve?ia 1,72 4,41 7,8 11,4 19,49 Fran?a 1,62 3,7 7,18 10,95 18,72 Irlanda 0,21 0,97 2,21 5,25 15,76 Figure no.3 Evolution of sales of the first 7 countries exporting medical products and pharmaceuticals The world market is characterized by an intense process of consolidation and concentration of operations achieved through acquisition and merger. Top companies are the result of the consolidation and concentration process. Multinational companies now control over 50% of pharmaceutical market. Thus, , 200 companies covered 96% of the global pharmaceutical market. Main competitors who dispute leadership on the world market are: Pfizer Inc., GlaxoSmithKline, Sanofi-Aventis and Novartis covering 25.6% of the world market.

4 6,12% 5,98% 5,30% 5,19% Cota de piańă deńinută de primele 4 firme din topul industriei farmaceutice 8,70 6,30 5,50 5,00 74,40 Pfizer GlaxoSmithKline Sanofi-Aventis Novartis Alte firme Figure no. 4 Market share held by first 4 of the top companies of the pharmaceutical industry 1 Romanian pharmaceutical products market registered a value of 5175 billion RON (about 1.55 billion euro), having a superior growing rate than global market, between 9% in 2003 and 19% in Table no. 1 National pharmaceutical growing rhytm Anul UM National Pharmaceutica market mil RON National pharmaceutical growing rhytm % Global pharmaceutical growing rhytm % 5,7 6,5 6,2 6 7 The rate of growth of pharmaceutical market in Romania is one of the largest compared to the central and eastern Europe, occupying the second place after Russia. Pharmaceutical market of 12 countries in Central and Eastern Europe reached a value of 11.8 billion euro but represents less than 10% of the total pharmaceutical market of the EU 15 countries (162.2 billion euro). The most spectacular and steady growth was for cardiovascular drug market which increased by 35% compared to 2006 due to increased life, and campaigns to promote these medical products. The entire pharmaceutical market in Romania was served in 2007 by 250 producers. We have to mention that only 50 of them, of which 5 Romanian producers, covered approximately 80% of the Romanian market value. Pharmaceutical products market is dominated by ten companies which provided at % of total sales, most of them multinational or foreign capital companies. Top 10 competitors serving the pharmaceutical products market is represented in Figure no. 5. Analyzing the top 10 companies entered on the Romanian pharmaceutical products market, that the top ranking in the same multinational companies that are among the world, and GlaxoSmithKline, Novartis, Sanofi- Aventis and Pfizer, however, another order was due to interest shown by these different Romanian business market. 8,04% 7,14% 6,19% 4,50% 3.5% 2,60% GLAXOSMITHKLINE HOFFMANN LA ROCHE NOVARTIS SANOFI-AVENTIS PFIZER ZENTIVA SERVIER TERAPIA ANTIBIOTICE KRKA D.D. Figure no. 5 Top 10 companies on the national pharmaceutical market Global Pharmaceuticals Market Segmentation, share by value, 2007.

5 Presence on the Romanian market of a considerable number of multinational companies, which hold an important position on the world market offers a lot of advantages related to increasing products competitiveness and the diversity, producing a large range drugs. There are also disadvantages related to an inadequate product policy (these companies manufacture innovative products, sometimes completely non-adapted to market requirements) and a price policy (charged by higher margins, which causes an increase in the products selling price, thus limiting access). National companies are faced with problems of insufficient human and financial resources to enable them to conduct research and development activities, new products approval and launching and dependence on external suppliers of raw materials, product and license for manufacture of innovative pharmaceutical products. The consumption of pharmaceuticals per capita at the end of 2005 was 54 Euro/person, placing Romania on the penultimate place in the European countries with a consumption of 4 times lower than Czech Republic (223 Euro / per capita) and 8 times lower than Germany (410 Euro / head) as shown in Figure no. 6. Euro Consum de medicamente / cap locuitor (2005) Ungaria Cehia Slovacia Polonia Bulgaria Romania Rusia Spania Franta Germania Japonia SUA Drug market in Romania is organized into two main segments: Retail trade, composed by over 4600 pharmacies, representing 75.61% of the market, with an increasing trend; Hospital segment consisting of approximately 460 hospitals, representing 24.39% of the total market and financed by the state budget. The portfolio of products for sale on the Romanian market totalize over 2700 products, grouped into two main segments, namely medicines issued on prescription: 1642 products (60.1% of total) and medicines obtained without prescription: 1088 products (39.9% of total), also known as OTC (Over The Counter). Romania's EU integration led to the alignment of legislation and practices on the production and marketing of pharmaceutical products to European standards. In this regard, the regulations were implemented in the production of pharmaceuticals through the adoption of the Rules of Good Pharmaceutical Practice (GMP). GMP standards, approved by the Minister of Health Order no. 1058/2003, became mandatory on 1 January 2004 when the current production was provided by 27 manufacturers certified GMP. However, in order to align Romanian legislation to European Union was created National Agency for Medicines by OG 125/1998. This institution is a public one having the main role to ensure the safety assessment and surveillance of medical products for human use in the treatment circuit. According to international statistics the Romanian population will decrease to 16.5 million in 2050, half of which will have over 60 years. In these circumstances, each active person will pay social security and health insurance for nine people. Technological environment of the pharmaceutical products market is characterized by a continuous process of renewal of the products portfolio as result of research activity and the changes in the population health. Worldwide, the pharmaceutical industry is faced to an intense process of modernization of production, technologies and production structures, which results in an increase of product

6 performance, reducing costs, increasing quality while reducing secondary effects of various pharmaceutical products. Research and development and new products launching is concentrated in the large firms, multinational companies, which allocate resources of the creation and promotion of new products, investing considerable amounts to the creation and development of new products (800 million USD / new product launched) and promote them worldwide, with marketing budgets that can reach 40% of total revenue. National companies, SME-s, do not have the necessary financial resources for new products research and development and orientated for the generics production. These companies can cooperate with multinational companies, patent and innovative medicines owners. However, national pharmaceutical market is faced to a continue decrease in the field of efficiency and productivity as result of patents and exclusive rights expiration, products portfolio aging due to increased average duration of development, new products testing and approval, which causes low or negative profitability rates. Concluding, we can appreciate that general environment, consisting in economic, demographic, social political and legal aspects ensure a continuous and constant development of the global and national pharmaceutical market. Bibliography Anger, V., L., ş.a., Conduire le diagnostic global d une unité industrielle, Edition d Organisation, Paris, 2001 Atamer T.,Calori R., Diagnostique et décisions stratégiques, Ed. Dunod, Paris, 2003 Băcanu B., Practici de management strategic: metode şi studii de caz, Editura Polirom, Iaşi, 2006 Ciobanu I., Ciulu R., Strategiile competitive ale firmei, Editura Polirom, Iaşi, 2005 Dinu, E., Diagnosticul strategic al firmei, Ed. Economică, Bucureşti, 2003 Florea, Ramona, Management strategic, Editura Tehopress, Iaşi, 2007 Florea, Ramona, Diagnosticul si strategia firmei, Editura Tehopress, Iaşi, 2009 Markham, C., Cum să fii propriul tău consultant în management, E. Rentrop & Straton, Bucureşti, 2005 Niculescu Maria, Diagnostic global strategic, edińia a-ii-a, Vol. 1,2 Editura Economică, Bucureşti, 2002 BUSINESS MONITOR INTERNATIONAL- Romania-Pharmaceutical & Healthcare Report 2007, March 2008 CEGEDIM ROMANIA Romanian Pharmaceutical Market Report IMS Health Reports Global Pharmaceutical Market Grow in 2007, march 2009 PHARMEXEC - Annual Report on the World s Top 50 Pharmaceuticals Companies, mai 2008 WORLD TRADE ANALYZER Top 20 Countries Exporting Medicinal and Pharmaceutical Products,