10 Jul SOME OPPORTUNITIES AVAILABLE IN THE MALAYSIAN MARKET
Strategic Management MGT8002 Assignment Help
Modern Pharmaceutical industry is known as one of the big revenue generation and profitable businesses in the world with an expected annual growth of 7.5% between 2014 to 2019.In 2014 pharmaceutical income of the world has reached up to one trillion U.S dollars for the first time of the history. Majority of this income has mainly generated from ten leading pharmaceutical companies located in North America, South America and Europe. (Global Pharmaceutical Industry – Statistics & Facts).They represent about 85% of the market share while United States remains as the leading market over 45% of the market share and GDP of 3%.(WHO 2015)
Asia Pacific region is becoming a major player in the market having China as largest GDP contributor. While Japan and Australia competing with China as second and third largest, Malaysia is struggling to increase the market share because of large young population of about 32.2% out of 63.4% of age group between 15 and 64.Accordinly there is less need for medication compared to countries with large aged population such as Australia and Japan.
There are four different pharmaceuticals product lines in Malaysia: prescription medicines, over the counter products(OTC), traditional medicines and food/health supplements .Home Pharmaceutical (HP) is concentrate about three strategic business units (SBUs) namely over the counter products, hearing devices and health food supplements unit.OTC products line continue to grow because it generates a lot of savings for the health care systems in many countries specially in developing countries. Research has found out that in 2015,OTC line of business has generated about US$ seventy billion worldwide .(PharmExec.com)
There are some opportunities available in the Malaysian market with an expected growth of 13% p.a. Accordingly HP should be able to take advantages of the situation being 6 major local companies in the industry. However it will not be easy for HP to stay competitive and enter in to export markets because of the establishment of multinational pharmaceutical firms in the country. This has become one of the main reasons for capitalization need of US$70 million in 2016 alone in order to remain competitive.
PESTEL analysis helps to understand market growth or decline, and as such the position, potential and direction for a business (Miller; Vendome;McBrewster,2011) application of this analysis is as follows,
Political
1. Government polices to encourage foreign investments.
2. Low government expenditure on health care sector compared to developed countries
Economical
1. Health care sector as one of ten Key National Economic Areas (NKEAs)
2. Medical tourism has become another key factor
Technological
1. Online opportunities and marketing
2. Tax incentives for innovation
Legal
1. Off-Take agreement scheme under EPP 3
2. amendments to the ASEAN China frame work agreement
3. European Free Trade agreement
Social
1. Growing elderly population
2. Suitable environment to do business
3. Eco system to grow clinical research
Environmental
1. Corporate social responsibility
2. Health conscious population
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