Pharmaceutical Business in Puerto Rico - Personal Statement Example

of Entering the pharmaceutical business market in Puerto Rico Introduction Over the past four decades, Puerto Rico has been hosting several pharmaceutical manufacturers and medical device dealers. It's estimated that over 100 firms operate in this tropical island. The island produces thirteen out of the best twenty companies the manufacture and sell pharmaceutical products in the US. The region gained dominance in this sector during the period around 1970 by the help of incentives from the US government. Pharmaceutical companies alone account for more than a quarter of the Islands GDP- (gross domestic product) experiencing over 36.5 billion dollars in yearly exports. Currently, Puerto Rico is experiencing some serious problems in power supply and taxation and hence some experts predict that the region could be on its path to loosing its position as one of the leaders in pharmaceutical manufacturing unless more incentives are initiated and a shift from basic manufacturing to research based production since sophisticated production means are better for the market. Marketing Objectives The marketing objective of any business firm in to increase sales hence maximizing the profits. This cannot be achieved just like that hence a marketing plan should be put in place to be implemented systematically so that better results are achieved. Since there is a lot of competition of Puerto Rico from existing companies, the entry of a new one would necessitate a thorough and an all inclusive plan or strategy to help achieve the company objectives (Blaisdell 2000). There are three marketing approaches that will be employed and they include; company oriented, product oriented, and disease oriented strategies. The major objectives will include the following; strategic objective which aims to expand the market share and consequently enhance profitability of the firm; the company will entrench a strategic focus in the marketing strategy to help penetrate and expand the markets and to increase its productivity; the company will identify target customers to establish segmentation and product position; the marketing strategy will be implemented to assess competition and establish competitive strategy and positioning and finally the company will establish a unique marketing mix that will address the elements products, promotions, place and prices (Pathak & Escovitz 1996).. Resources The major resources that a business investor should assess before establishing a company are the availability of manpower both skilled and non skilled. Cheaper manpower enhances cost effectiveness. The infrastructure is another basic resource since distribution and transportation of raw materials will greatly rely on the infrastructure (Pathak & Escovitz 1996). For a machine to be operated, there need to be power (i.e. electricity or any other appropriate means) Puerto Rico has established a history of well coordinated distribution lines since the pharmaceutical industry in the region has now been in operation for a while. Infrastructure requirement for new drug dealers in the region will encompass factors such as building, road access, power supply, water availability and better supply and distribution channels (Blaisdell 2000). Puerto Rico is renowned for its highly educated labor force that has also proved to be innovative and very skilled. The country also enjoys extensive regulatory experience fro products and also a well organized delivery system (Pathak & Escovitz 1996). According to market research for marketers in the United States of America, Puerto Rico is has grown rapidly to become one of the largest manufacturers of high technology products in the region. The future of the Island remains bright as there are even more companies involved in research and development of pharmaceutical products, biotechnology hence the region is leading in this drug and device industry (Blaisdell 2000). For a start up business in pharmaceutical products in Puerto Rico, finding human resources is not a very big problem as the level of education for most of the local residents is high hence both skilled and non skilled labor will be readily available. The entry of a new pharmaceutical firm in the region will take advantage of the existing infrastructure in the region which includes fiber optic cable, the state of the art digital, and satellite communications, shipping lines, container ports, international airports and modern net work of super highways. The region also enjoys power supply of about 5,359 megawatts. There is also a continuous supply of outsourced suppliers and other service providers like contract manufacturers and packaging firms (Blaisdell 2000). The human resource of Puerto Rico is composed of highly motivated individuals who have enough experience to work in the competitive international market. As identified earlier, the region has worked for over 40 years under the regulation of Food and Drug act. The education of the workers in the area has been ranked as one of the highest in the world competing with that of the US mainland; the workers are also dedicated with minimal rates of absenteeism. The labor force is cheaper as the salaries are estimated to be 30% lower compared to the salaries of workers on the mainland. Over 9,600 students graduate from the University of Puerto Rico having attained degrees in molecular sciences, bioscience related subjects and pharmacy. Furthermore a biotechnology center has been constructed to increase competitiveness (Richards 2006). Projected Results The new pharmaceutical is expected to thrive well because most of the relevant resources and requirements are readily available. Some of these factors contributing to success have been identified as customers, political, economy, society, technology, supply, intermediaries and natural phenomena. None the less, the marketing strategy to be implemented is an all-inclusive one since the product orientation would ensure that the products that are manufactured are most efficient and safe for use as well, company orientation will be aimed at giving the company a good reputation to be the best provider of healthcare products and devices (Pathak & Escovitz 1996). On the other hand, the disease aspect is designed to provide a set of information to clients, educate them provide the products and services necessary for specific diseases. The recent developments and increased use of the internet in the industry is bound to put a positive impact on the industry as new form of information sharing emerge, product branding will be very strong than before, the services will be customized and copyright protection will be very essential. The following are expected to be achieved cast savings, customization, improved profitability, flexibility and fair competition against existing firms (Richards 2006). The SWOT Analysis Strengths; the US government has over the past years initiated incentives to drug manufacturing companies in Puerto Rico. Consequently, many multinationals have invested in the region in an effort to decrease overheads by sandwiching their operation on the island where there is cheap labor and low operation costs. The prices of drugs are higher in Puerto Rico compared to its neighbors. The corporate tax is uniquely low in Puerto Rico being 7% while on the US mainland its 35 to 40%. Nonetheless, the government can reduce this further or even lift it fro companies that introduce more innovative technologies. Puerto Rico also provides the largest and most advanced market in the Caribbean region estimated to be about 2.9 US dollars in 2008 and this was attributed to the increased multinational investment in the areas and good relationship with the US (Richards 2006). Weaknesses: excessive investment in industry and the success has lead to over-reliance on the drug companies hence neglecting other sectors of the economy hence there is no much diversity. Overdependence on the industry could have devastating impact of lives of many people incase the industry suffers a major blow leading to its collapse. Due to increased government spending and the red tape, the US has its FDA established in Puerto Rico may cause threatened competition from other markets which are not strictly regulated like in the republic of Mexico(Richards 2006). Opportunities: The increased investment by multinational companies in the region has acted as catalyst for innovation, creativity and fair competition since these has brought new skills and technology to the island. There is increased investment on research oriented companies in the pharmaceutical industry of Puerto Rico and this posits that in the near future, the region would become a global site for pharmaceutical and biotechnology developments. This means there is room for expanding the business to new levels or research or biotechnology. Another opportunity that present for companies in Puerto Rico is the establishment of pharma clinics which offer supportive services of OTCs and the preventive medicine. Lastly, there are incentives, tax breaks to encourage research developments and biotechnology focused companies (Richards 2006). Threats: there are a lot of theft cases in the region described as diverted pharmaceuticals which are a serious and continuing threat to the industry. The availability of pharmaceutical funding can be affected by prolonged recession and even closure of plants. The existence of generics in the pharmaceutical sector is a serious threat to the business as the brand names may not sell yet they are the cornerstone of the economy. The government of the US is seeking FTAs with Andean nations and this could adversely threaten funding of Puerto Rican firms. Also the government's efforts to reform tax loopholes, creation of employment and other domestic reforms will all threaten the low tax rates in Puerto Rico. Lastly, other serious threats include the presence of alternative locations like India, Singapore and island are direct threats and competition to the pharmaceutical industry of Puerto Rico (Richards 2006). Competition It's quite obvious that there is very stiff competition in Puerto Rico due to the concentration of the industries. Furthermore, the US government is increasing its relations with other nations like Ireland, Singapore and India meaning that new investments are likely to come up to compete with those in existence. Most of the competitors in the region like Pfizer, GlaxoSmithKline among others are shifting their operations from research to building the company's reputation and hence gaining competitive advantage over newer enterprises. Other competitors have also invested in R&D for instance GlaxoSmithKline, Wyeth, and Bristol-Myers Squibb have become very influential in biotechnological aspects of research and the Future seems to bode well with these developments. In order to gain competitiveness and remain competitive new firms should seek to attract other business elements like process development, shared services center, clinical trials, and development of processes among others (Richards 2006) Marketing Strategy The marketing strategy to be employed will include external analysis (this assess the clients, the marketplace, and competition) self analysis (this is the evaluation of business performance) strategy identification (this covers product strategies like product profile, target, and position) there is also an aspect of functional strategy which is basically differentiation. Strategy selection is the last stage that includes real scenario with core competencies in play (Pathak & Escovitz 1996). The following are very critical components of marketing that should be addressed before real implementation of the plan; strategic objective (market share and profitability), customers (products positioning and market segmentation), and strategic focus (market penetration, productivity increase). Conclusion Pharmaceutical business is bound to thrive in Puerto Rico as both external and internal factors work in favor of the industry. Several players have managed to thrive here including the Amgen which the world largest company is dealing in Biotechnology. New companies however are likely to be edged out of competition because of the economies of scale; a solution to this is to begin by building companies reputation. References Blaisdell P. (2000). Twenty-First Century Pharmaceutical Development. Informa Health Care Pathak DS & Escovitz A (1996). Managed Competition and Pharmaceutical Care. A Challenge for the Profession. Haworth Press Richards K (2006) Puerto Rico's Pharmaceutical Industry. 40 Years Young. Reed Life Sciences/ Reed Exhibitions. Norwalk retrieved from www.pharmaceuticalonline.com Read More