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Pharma Value Chain Analysis

Essay by   •  November 13, 2017  •  Case Study  •  497 Words (2 Pages)  •  189 Views

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G is a global pharmaceutical manufacturing company based in the US. We recently secured a patent for our OTC organic hypertension medication. The patent will protect our IP for 20 years when manufactured or sold in WTO nations in accordance with the TRIPS Agreement1. The R&D was performed at our facility in Research Triangle Park, North Carolina. All R&D was performed in-house to further protect our IP and maintain oversight of the R&D process.

G sources raw materials from USDA certified organic farms in the US. The USDA organic certification is a very stringent process which includes a thorough onsite initial inspection and annual reviews2. We believe sourcing our raw materials from USDA certified farms will ensure the quality of our ingredients. As an additional quality check, all raw materials undergo further testing at our R&D facility before use. Our studies show that our drug is as effective as other hypertension medications, without the usual side effects. We believe this is due to our organic formula which is why we put so much emphasis on R&D and raw material sourcing.

G sells in Mexico, USA, India and China. We chose these countries due to their large populations suffering from hypertension – Mexico (25.18 million), USA (41.56 million), China (265.02 million), India (340.09 million)3. We established a manufacturing plant in Mexico to serve Mexico and the US. Pharmaceutical manufacturing costs are 17.1% cheaper in Mexico compared to the US4, and per NAFTA exports and imports between the US and Mexico move tariff free. We also established a manufacturing plant in India to serve the Indian market. We incur a 10% tariff on raw material exports5 and a 12% Good and Service Tax on manufactured drugs6. However, incurring these additional costs is justified by Indian pharmaceutical manufacturing costs being 65% cheaper than those in the US7.



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