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Pfizer Company acquisition of EMS Pharma in Brazil

The focus of this paper is making strategic recommendations for foreign market entry into Brazil. This project involves developing a proposal for the Pfizer Company to acquire the target company EMS Pharma in Brazil. Remember, you are proposing a new acquisition that has not so far been undertaken by your client company. Include in your document links to any summary descriptions of key strategic frameworks and concepts that you should consider using in developing the critical reasoning of your international acquisition recommendation.

Only Section II is required. I am including the entire outline just so you understand what is being requested so you can conceptualize the requirement.

International Acquisition Proposal

Executive Summary -
First sentence of the Executive Summary should be:
"Team Saxonville is recommending that Pfizer, a major company in the pharmaceutical industry enter the BRIC markets through an acquisition EMS Pharma in Brazil.

I. Background Information and Analysis

A. The global structure and environment of the selected industry.
B. The home country structure and environment of the selected industry.
C. The importance of the BRIC countries to the selected industry.

II. Determination of the target BRIC country (Brazil) for the proposed acquisition.

-Include references
A. Comparative risk, opportunity and overall business climate of the BRIC
countries.
B. Comparative industry market potential & structure of the BRIC countries
C. Selection, with rationale of the target BRIC country (Brazil).

You can use the link below to find additional information on the Healthcare industry in the BRIC countries (Brazil, Russia, India and China). Select the industry (Healthcare) that you want to research from the global industry forecasts below and comment on the strategy implications of what you have read. Then, for each of the BRIC countries that you have examined in the Country Assessment Analysis above, use the information to inform how you chose Brazil.

Once you click on the link below, click on Healthcare and select the BRIC country you are researching.
http://viewswire.eiu.com/index.asp?layout=IB3Home&pubtypeid=1152462500

Below are questions and formulated answers to guide you in completing section II A, B and C.

What is the comparative market size of the industry in each of the BRIC countries by 2015. (Hint: Use something like the number of passenger car registrations to size the automobile industry, other metrics for other industries) and how might that impact your decision on prioritizing the countries in your global business strategy?

If we look at the comparative market size by 2015 we can find that China would be the more strong economy among the BRIC countries in terms of the market size. If we look at the data released by emarketer.com we can find that by 2014 the number of mobile subscriber will rise to 266.5 million in Brazil, 271.5 million in Russia, 1.037.3 billion in India and 1,223.7 billon in china for the year 2015 as compared to 202.9 million Brazil, 229.2 million in Russia, 677.2 million in India and 879.7 million in China for the year 2010. This indicates that China would have huge market share followed by India. So comparatively China tops the rank followed by India.

What is the comparative growth, both in absolute terms and in percentage terms from 2011 to 2015 for the industry you have selected in each of the BRIC countries and how might that impact your decision on prioritizing the countries in your global business strategy?

The comparative growth of the BRIC countries is as follow: In Brazil, the life expectancy at birth is seen to be 73% and the healthy life expectancy is 60%. In Russia, the rate of life expectancy is 66% and the healthy life expectancy is 59%. In India, the rate of life expectancy is 64% and the healthy life expectancy is 54%. The rate of life expectancy in China is 74% and the healthy life expectancy is 64.5% (Future Growth, 2010).

This information impacts the decision on prioritizing the countries in the global business strategy through revealing the opportunities that the countries can seek in order to gain a competitive advantage. The other impact of this information is that it causes an improvement of healthcare activities within the country. This is because the countries develop policies that will ensure that a healthy life expectancy is generally increased in order to match the actual life expectancy in the country. Another impact of this information in prioritizing of the countries in the global business strategy is that it increases interaction within the countries. This interaction is enhanced to learn the different health practices that are followed within countries with high healthy life expectancy as in case of China. Developing these practices will assist the other BRIC countries and thus increase the health life expectancy.

The key company player of health care in the Brazil is the National Health Service clinics who services 80% of the countries residents. The rest of the 20% in Brazil are mostly the affluent people who prefer private or public services of healthcare. In Russia, the key company player of the healthcare industry is the Private Healthcare Markets in Russia. This is because of the difficulties that exist in the public healthcare service in Russia. The key company player in India include Apollo Life, Sun Healthcare, Nicholas Piramal India Private Limited, Wipro GE Healthcare, Serum Institute of India Limited, Cipla, Advanced Healthcare Resources of India, Whole Health Now, Cadilla Healthcare and IndoGlobal Health Sciences. The key company player in China is the government and the other private sectors play a major role in the China Healthcare.

This information impacts the decision on prioritizing the countries in the global business strategy by revealing the opportunities that are available within the countries. For instance, this information reveals that in China, there are a lot of customers requiring healthcare services in the country. In addition to this, this information can be used to in order to integrate the activities that that are found to be productive from one country to another. In Brazil for example, the National Health Service clinics can implement their activities so as to improve the healthcare globally. This information helps to impact the prioritizing of the country through analyzing the health performances within the country. This information can be utilized so as to improve the healthcare activities in Russia, whose public healthcare is poor. This increases the efficiency in the healthcare industry of the country thus improving competition around the world.

References

University of Maryland College. Retrieved from:
http://viewswire.eiu.com.ezproxy.umuc.edu/index.asp?layout=IB3Home&pubtypeid=1152462500
Future Growth in BRIC health-care: A Comparison. (2010). The Emerging Markets Report.
Retrieved October 3, 2011 from http://www.emreport.com/2010/01/15/russia/future-growth-bric-health-care-comparison.html
Private Health care Markets in Russia and Ukraine. (2011). Research and Markets. Retrieved
October 3, 2011 from http://www.researchandmarkets.com/research/55fc91/private_healthcare
Health Companies in India. Bestindiansites.com. Retrieved October 3, 2011 from
http://www.bestindiansites.com/top-companies/health/
Pharmaceutical industry rapidly expanding partnerships with new entrants in health care space.
(2011). Ernest and Young Quality in Everything We do. Retrieved October 3, 2011 from http://www.ey.com/CN/en/Newsroom/News-releases/2011_Pharmaceutical-industry-rapidly-expanding-partnerships-with-new-entrants-in-health-care-space

Provide reasons for your decision based upon your research. (properly cite these).

III. Determination of the target company to be acquired (EMS Pharma).

A. Key multinational & local players in the target industry in the target country. -
B. Selection, with rationale of the target company to be acquired. -

IV. Review of the strategic rationale of the proposed acquisition.

A. Industry structural characteristics rationale. Five Competitive Forces (Porter) -
B. Competitive advantage rationale. Competitive Advantage (Porter) -
C. Resource Based View of the firm rationale. Resource Based View of the Firm -
D. Value Chain rationale Value Chain Framework (Porter) -
E. Vertical integration rationale Vertical Integration -
F. Horizontal integration rationale Horizontal Integration -
G. Financial rationale Risk Management and RAROC -
H. Political, Economic, Social, Technological Factors PEST Analysis -
I. Other rationales
Conclusion

Solution Preview

Comparative risk, opportunity and overall business climate of the BRIC countries.

Market size:

Strategy, Policy, and Review Department (2011) provides that BRIC countries' population will account for 41.8% of the world total population in 2015. GDP from the countries will account for 21.6% of total GDP while imports and exports will account for 18.8% and 20.1% respectively in 2015. Lucintel (2009) provides that markets in BRIC countries have been growing at a fast rate for the past 5 years having increased at a compound annual growth rate of 10% and that in the next 5 years composites consumption with register strong growth at compound annual growth rate of 9%.

Large market size is also reflected by the research carried out by emarketer (2011) that indicates that mobile subscribers will significant increase. mobile subscribers in 2010 amounted to 202.9 million in Brazil, 229.2 million in Russia, 677.2 million in India and 879.7 million in China and numbers are projected to increase to 266.5 million in Brazil, 271.5 million in Russia, 1,037.5 billion in India and 1,223.7 billion in China which indicates that BRIC countries are registering high growth rates and have large markets. Brazil is projected to be the 11th largest market for pharmaceuticals by 2015, India will be the 10th largest, and China is projected to be the 5th largest market by 2015. Pharmaceutical market in Brazil will amount to $ 20 billion, $ 20 billion in India and $ 38 billion in China by 2015 (Kumra, n.d).

Comparative risk:

Stippich (2011) provides that risks that exist in Brazil include inadequate enforcement of laws, high taxes and dealings with the state consume a lot of time and are costly. Risks that Pfizer could face in Brazil include competition mainly from generic products, cost restricting initiatives by the government meant to favor local businesses and also investment by the government in state owned pharmaceutical enterprises (IMAP, 2011).

Russia faces risks such as underdeveloped judiciary, a complicated tax system and also inadequate transparency on part of the government and also in financial reporting. Another menace present in the country is organized crime that infiltrates legitimate businesses and enforcement bodies are discretionary (Stippich, 2011). Pharmaceutical problems that exist in Russia include the fact that pharmaceuticals are characterized by high prices and the country also experiences high levels of government intervention in drug prescription. According to IMAP (2011), there are powerful lobbies in Russia that favor local businesses thus making offering challenges to foreign enterprises.

AMB (2011) ranks India's economy as moderately risky due to strong domestic demand which maintains the economy, strong manufacturing and services industries and tight monetary policies. However, political risk in the country is high due to high income disparity whereby a third of the population lives in poverty and there has been insufficient anti corruption ...

Solution Summary

Pfizer Company acquisition of EMS Pharma in Brazil is examined.

$2.19