Memorandum

RSK Pharmaceuticals Pty Ltd

To: Amir Ghazinoori CEO

From: Rahul Sunil Kapadia CVO

Date:

Re: Foreign Market Entry

I recommend that we proceed with entry into the Indian Pharmaceutical Industry, through

the entry mode of wholly owned subsidiaries, specifically through the acquisition of

Claxstone Pharma. Summarily, the fast growing market in India for cardiovascular

pharmaceutical products presents an opportunity for us to market our newest and

innovative product in an emerging market that is according to Global Pharma (2011)

experiencing epidemiological changes.

It was at last Fridays meeting where preliminary discussions were held regarding the possibility

of the company entering either the UK or the Indian market. The country market analysis done in

both markets included using the CAGE framework and analysis of the long term sustainability of

the respective markets. Upon deciding which market was more favourable, the possibilities of

which entry modes suited the companys product and objectives needed to be evaluated.

Our operations should be focussed towards the Indian market because of the potential growth

and profit the company can obtain by gaining a foothold in India. Indias population is growing

rapidly, and this along with a growing economy means that there is growing demand for Western

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medicine. The industry according to Global pharma (2011) is set to grow to $50 billion by 2020

and is set to become an emerging market for manufacturing and R&D. In investing in a wholly

owned subsidiary, a greater control of the patented product and the technology can be assured.

Greater control will also serve to be an advantage for the company to be present across the value

chain, to capitalise on low cost labour, and access to other cooperative South East Asian markets

(Hill, Cronk & Wickramasekera, 2013; Javalgi and Wright, 2003). The potential acquisition

of Claxstone pharma which is an established enterprise in the target market will be vital in the

long term in establishing an early presence in one of the worlds emerging pharmaceutical

markets as Global Pharma (2011) notes, global competitors such as Novartis and Pfizer already

have established wholly owned subsidiaries.

The recommendation is of course made assuming that the new patenting laws that have been

implemented in India will provide greater patent protection for the product. Traditionally the

main deterrent has been the difficulty in protecting intellectual property rights (Booz &

Company 2013). However, Global Pharma (2011) notes, in the last 10 years several

amendments have been made to help pharma companies to bring their patented products to India.

Another limitation is underdeveloped communication and transportation infrastructure that

although is improving has its faults (Javalgi and Wright, 2003). Investing in a wholly owned

subsidiary also is the highest risk and cost strategy that potentially leaves the parent company

vulnerable to political and economic instability (Hill, Cronk & Wickramasekera, 2013).

Although the risks of doing business in a foreign market are mitigated by acquiring a well-

established firm, there also several risks involved with acquisitions, which can be mitigating by

having a careful acquisition strategy (Hill, Cronk & Wickramasekera, 2013). Joint venturing

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was another entry mode that was looked at, as many pharmaceutical companies are using this for

the Indian market. However, the potential lack of control over the intellectual property and

technology served as a deterrent.

References

1) Hill, C.W.L., Cronk, T. and Wickramasekera, R. (2013) Global business today. 3rd edn.
Australia: McGraw-Hill Education (Australia)

2) PriceWaterhouseCoopers (2011) Global pharma looks to India: Prospects for growth.

Available at: http://www.pwc.com/gx/en/pharma-life-sciences/pdf/global-pharma-looks-
to-india-final.pdf (Accessed: 7 August 2016).

3) Javalgi, R.G. and Wright, R.F. (2003) An international market entry model for
pharmaceutical companies: A conceptual framework for strategic decisions, Journal of
Medical Marketing, 3(4), pp. 274286, viewed 5th August 2016, [Proquest].

4) Buente, M., Danner, S. and Weissbcker, S. (2013) Pharma emerging markets 2.0., Booz
and Company 2013, Available at
http://www.strategyand.pwc.com/media/file/Strategyand_Pharma-Emerging-Markets-
2.0.pdf (Accessed: 7 August 2016).