The ZURICH team has created a topic-specific scenario in the Zurich Risk Room tool to support your evaluation. Please make sure to review the tool before tackling the scenario. Your team will be required to answer three questions in your presentation and the Academic Review Board (ARB) will recognize and reward teams who adequately balance their presentation time between all team members.
The ARB has provided some guidance for participants entering the Zurich Enterprise Challenge 2018. This guidance is optional and, as always, each submission will be evaluated on its merit. The ARB guidance can be found at the end of the topic below.
Teams can submit their solution until Sunday, April 22, 2018 at 23:59 in the last time zone (UTC-12). To enter your team to the Challenge follow the instructions under "Registration".
Phase 1 Topic: Pharma’s Future – A market entry strategy for emerging markets
Pharma Worldwide Inc. is one of the global market leaders in developing medical devices, pharmaceutical products and therapies for cancer treatment. While its headquarters is located in Switzerland it operates across all major OECD economies with significant market shares in North America and Europe, as well as fastly growing revenues in Asia. Until now, Pharma Worldwide Inc. has manufactured its medical devices and pharmaceutical products in-house, in part to avoid the risks associated with outsourcing solutions. However, outsourcing the manufacturing of its products could offer Pharma Worldwide Inc. significant cost reduction opportunities in the highly competitive global pharmaceutical market.
Pharma Worldwide Inc.’s manufacturing model depends on various factors of influence some of which are detailed below. In particular Pharma Worldwide Inc pays attention to the relationship between manufacturing and R&D and tries to locate sites close to each other.
Manufacturing factors of influence include:
- Secure access to raw materials
- Quality and reliability of infrastructure
- Transportation networks
- Consideration to the level of property rights protection across its markets of operation, the overall regulatory environment and various political risk factors
- Access to a large and qualitative suitable supplier network
R&D factors of influence include:
- The availability of state-of-the-art research and development (R&D) facilities, geographical proximity to local and regional R&D clusters, as well as strong ties with universities and other basic research institutions.
- Access to a highly-skilled labour force, and sufficiently high standards of professional training and education.
Pharma Worldwide Inc.’s future focus on cancer treatments in emerging market countries
The prevalence of cancer is still relatively higher in higher income than in emerging economies, mainly due to demographic factors, as well as nutritional and other consumption habits, such as tobacco and alcohol consumption. However, cancer is also becoming an increasingly significant problem in emerging markets, not only due to increasing life expectancy, but also due to increased air, water and other environmental pollution in these countries. Despite these trends, emerging countries still face a significant lack of cancer treatment facilities and pharmaceutical products to address the needs of their populations. To help bridge that gap and provide first-class pharmaceutical products and services, Pharma Worldwide Inc. plans to extend its production and sales operations to these markets. Therefore, they performed a comprehensive due diligence analysis across potential target locations and identified the following emerging countries for potential market entry.
Table 1: Target countries
|Region||Country||GDP per capita (in current USD / y-o-y change)||Total population (in millions)||Life expectancy (in years)||Cancer prevalence1 (share of population affected / average change 2000-2017)|
|Africa||Ghana||1‘600 / 5.1%||28.7||62.4||21% / 14%|
|Nigeria||2‘100 / -0.1%||191.8||53.0||12% / 22%|
|Sierra Leone||600 / 5.9%||6.7||51.4||11% / 19%|
|Uganda||700 / 3.1%||41.7||59.5||14% / 13%|
|Tanzania||1‘000 / 6.2%||56.9||64.9||22% / 17%|
|South East Asia||Indonesia||3‘900 / 5.6%||263.5||69.0||27% / 22%|
|Myanmar||1‘300 / 8.3%||54.8||66.4||23% / 12%|
|Philippines||3‘000 / 6.3%||103.8||69.0||31% / 8%|
|Laos||2‘600 / 7.2%||7.0||66.3||30% / 13%|
|Cambodia||1‘400 / 7.2%||16.1||68.5||25% / 6%|
|Latin America||Ecuador||5‘900 / 0.4%||16.6||76.1||29% / 5%|
|Guatemala||4‘200 / 2.9%||17.0||73.0||23% / 25%|
|Nicaragua||2’200 / 5.1%||6.2||75.0||31% / 23%|
|Bolivia||3’400 / 4.3%||11.1||68.7||27% / 8%|
|Panama||14’400 / 5.5%||4.1||77.8||39% / 4%|
Using the information provided in the ZRR online tool, identify the top 3 countries from the list above where Pharma Worldwide Inc. should consider investing in their own production facilities or outsourcing to local production sites. Are these top 3 countries also the best for Pharma Worldwide Inc. to conduct pharmaceutical research?
When answering this question, consider both relevant risks and opportunities associated with Pharma Worldwide Inc.’s business operating model.
Which are the main risks associated with the countries identified in Question 1 and what could be adequate strategies for Pharma Worldwide Inc. to mitigate these risks?
Using the scenario analysis functionality of the Zurich Risk Room, what would be the impact of mitigating these risks on the individual countries’ overall risk positions?
In line with the United Nations’ Millenium Development Goals, a key area of Pharma Worldwide Inc.’s Corporate Social Responsibility strategy focuses on also providing the poorest shares of the populations in its countries of operation with access to affordable and high-quality pharmaceutical products and services.
Identify innovative ways by which Pharma Worldwide Inc. could provide its cancer treatment products and services for the poorest shares of the populations in the selected countries identified in Question 1.
Although the first two questions relate to risk, it is important to put any discussion of their importance in the appropriate commercial and societal context. After all, Pharma Worldwide is considering making a series of investment decisions and the latter are influenced by other factors as well. Your analysis should highlight how risk factors reinforce, counter, or otherwise interact with other significant drivers of corporate decision-making.
With that in mind, to structure your thoughts often it makes sense to use a corporate strategy tool, international business strategy framework (such as Ghemawat’s Adding Value Scorecard), or other methods to address market and policy-related risks faced by firms. Porter’s Diamond also offers insights into the key aspects of national business environments. The goal should not be to demonstrate that you can use a tool, rather that you can use it to identify the most relevant factors, the significance of those factors, and, where appropriate, the implications for firms seeking to mitigate (in particular) risks.
Make sure your presentation contains clear, empirically-supportable, and actionable recommendations. If you have never used the “pyramid thinking” approach to structure your presentation then this may be an excellent opportunity to do so.