Introduction:

We have selected pharmaceuticals industry to invest as a foreign company. Bangladeshi

industry in this sector is quite developed. For the last ten years, Bangladesh is exporting

medicine to various countries. The reason is that still now, the tax and restrictions of laws are

not those much strict in this sector. Though these weaker restrictions are causing some

problems, government is trying to help to develop this sector providing various supports.

We have selected this industry because we have seen some opportunity in this sector to be

invested. To be honest, Bangladesh is not a very investment friendly country. Many foreign

companies and not agreed to invest here as there are so many problems like crooked

authority, lack of resources, unstable political and economical situation are making things

worse. Still we believe that in this sector, investment can be possible.

The environment investigation:

Pfizer Inc. is the world’s most profitable privately funded research based biomedical

organization. After its merger with Warner-Lambert in July 2000, Pfizer became the world’s

largest pharmaceutical company. Pfizer has a valuable and resourceful R&D division, huge

global sales, popular products which made this company profitable. The secret behind the

success is that Pfizer follows some criteria in operation of the business. These are,

Maximizing near and long-term revenues.

Establishing a lower and more flexible cost base somewhere in Asia.

Creating smaller, more focused and more accountable operating areas.

Engaging more productively with customers, patients, physicians and other

collaborators.

Making Pfizer a great place to work.

By the end of the year 2007, Pfizer has changed the business process along with the change

of global business climate. This company now operates in places there are less restrictions,

less bureaucracy and less cost in operating. Pfizer has restructured their cost base to operate

with flexibility. On the other hand, this company is currently simplifying the R&D division to

create collaboration in all the research teams who are specialized in different sides to in

crease productivity by using all the research team in working together in any given prioritized

work base.

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The growth trend of the industry has a major impact on the firm’s international strategy.

Pfizer is known as the parents of unorthodox and specialized products which fulfill special

needs of some people. As the world market is changing, the strategy of this company has

changes. In the last ten years, this company has made two acquisitions and two mergers with

some popular and local companies which were making wide-ranging products with mass

production in the market. As this company is now thinking of new innovations along with

cost cutting and low cost base of production, it is true that this organization is going through

the market trend.

Political Analysis:

System of government:

Our government system is in a framework of a parliamentary representative democratic

republic, whereby the Prime Minister of Bangladesh is the head of government, and of a

multi-party system. Executive power is exercised by the government. Legislative power is

vested in both the government and parliament. The Constitution of Bangladesh was written in

1972 and has undergone fourteen amendments.

Government policies:

FDI Policy for Pharmaceuticals sector:

Some of the major incentives are tax exemptions for pharmaceuticals, import duty

exemptions for export processing, an exemption of import duties for export oriented

industries, and tax holidays for different industries. Double taxation can be avoided by

foreign investors on the basis of bilateral agreements. Facilities for the full repatriation of

invested capital, profit and dividend exist.

An import duty, at the rate of 5 percent ad valorem, is payable on capital machinery and

spares imported for initial installation. For 100 percent export oriented industries, no import

duty is charged in the case of capital machinery and spares. Duties and taxes on the import of

goods that are produced locally are higher than those applicable to imports of raw materials

for the production of such goods.

Export Policy:

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Pharmaceuticals have gradually evolved from an import-based industry to a self-

manufacturing one exporting to 70 countries with a market size of over $750 million. Foreign

investments either in the form of joint ventures with Bangladeshi companies or other

partnerships whereby research and development is run in laboratories in India with

complementing manufacturing plants in Bangladesh should be welcomed. These companies

could utilize the competitively priced labor in Bangladesh and use cost advantages to capture

the export market.

Since Bangladesh has received exemption from Trade Related Intellectual Property Rights till

2016, manufacturers' ability to continue to produce pharmaceuticals products till the expiry of

the exemption period increases the incentives greatly. We must ensure maximum use of local

raw materials in the production of export goods and encouraging establishment of backward

linkage industries. We will take necessary steps to assist procurement of raw materials by the

export-oriented industries at world price.

Political stability:

Political conflict in Bangladesh has led to corruption, poverty and severe problems in the

whole system. The country is facing increasing instability. A political power vacuum is being

filled by radical Islamists, posing a threat to the secular-democratic system. But the situation

is not irredeemable. The article argues that Bangladeshis can work with foreign powers to

bring about much-needed political reform.

Economic Analysis:

Economic Indicators:

GDP Growth:

The World Bank in its latest report on global economic prospects has projected a steady

economic growth for Bangladesh in the next two years. GDP in Bangladesh would increase

to 6.1 per cent at the end of this year and 6.3 per cent by 2012 from the last year's 5.8 per

cent.

The World Bank also placed Bangladesh at a better position in managing government deficit

compared to the regional countries even with India.

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Bangladesh's overall government deficit is more manageable at an estimated 2.5 per cent

compared to the Maldives' deficit of 22.4%, and those in India (9.6 %), Sri Lanka (8 %),

Pakistan (6.3 %), and Bhutan (6.1 %). In that case, increasing GDP rate will be very much

profitable for Pfizer.

FDI Inflow & Outflow:

The country’s overall FDI inflow rose by $ 228.58 million or 66.79 per cent, to $570.80

million during the January-June period of 2010 over the corresponding period of 2009 due

mainly to significant increase of equity capital inflow, the findings of the latest survey by

Bangladesh Bank. The inflow of equity capital marked a 253.99% increase during the

January-June period 2010, despite a significant fall in reinvested earnings and intra-company

loans by 14.04% and 68.28% respectively during the same period, said the survey report on

‘Foreign Direct Investment in Bangladesh’. For this reason any type of Pharmaciticles

Company will feel lucrative to take the advantage of high FDI inflow of Bangladesh. In the

consideration of FDI outflow, it is not increasing at all. So, FDI outflow will not be very

much effective for Pfizer.

Position of the country in world competitive ranking:

Bangladesh is dropped by one position, ranked 107th in GCI 2010-11In the same set of

countries as of 2009-10 (133) Bangladesh’s ranking would move up to 103rd. Bangladesh’s

GCI score has increased by 2.5% whereas overall score is 3.64. Scores increased for Basic

Requirements by 3%, Efficiency Enhancers by 2.3% and Innovation and sophistication by

0.3%. Highest score was obtained in health and primary education (4.96) and it has increased

the highest percentage point (10.5%). Hence, the consumer market of Bangladesh will be

competitive for Pfizer. Pfizer must have to consider the 4.96% increase in health sector.

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Purchasing Parity:

Per capita income: The per capita income crossed the $700 mark in the current fiscal year,

mainly because of a healthy GDP growth. The people of lower strata have got a share of the

rise in the income as small-scale industries have shown a rapid growth and employed the

poor segment. The per capita income has reached $750 this fiscal year from $676 last year.

For Bangladesh to graduate to a mid-income country, its per capita income should be $975

now.

Living cost: After the world economic recession, in each and every country cost of living is

increasing. As a developing country living cost of Bangladesh is also increasing day by day.

The overall cost of living index is comprised of the prices for defined quantities of the same

goods and services across all 13 Basket Groups. Dhaka is currently ranked 253 overall, most

expensive places in the world for expatriates to live, out of 282 international locations. Pfizer

will target the Dhaka city for bigger segment of consumers. Though, Pfizer’s product is

expensive for the consumers and they will be able to buy it because they are already paying

the higher living cost of the country.

Social / Cultural analysis:

Pfizer Incorporated is a global pharmaceutical company, ranking number one in sales in the

world. The company is based in New York City. It produces Lipitor, the oral antifungal

medication, the antibiotic Zithromax, Viagra for erectile dysfunction, and the anti-

inflammatory Celebrex. Pfizer was established in Belgium, Brazil, Canada, Cuba, Iran,

Mexico, Panama, Puerto Rico, Turkey and the United Kingdom. Now they are opening a new

branch in Bangladesh. Some analysis is needed to do start the business in Bangladesh.

Social and culture: Like other country Bangladesh also have some specific culture as well as social believes.

Hierarchy:

Bangladesh is a hierarchical society.

People are respected because of their age and position.

Older people are naturally viewed as wise and are granted respect.

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Bangladeshis expect the most senior male, by age or position, to make decisions that

are in the best interest of the group. This is also valid in businesses, the majority of

which will be family owned or run.

Language: As Pfizer is opening its new branch in Bangladesh the most important part is the

language. All most every people of this country speak and communicate with this language.

The official language is Bangla, also known as Bengali. It is the first language of more than

98 percent of the population. It is written in its own script, derived from that of Sanskrit.

Many people in Bangladesh also speak English and Urdu. Bengali or Bangla (Bengali: বাংলা,

baŋla) is an eastern Indo-Aryan language. It is native to the region of eastern South Asia

known as Bengal, which comprises present day Bangladesh. All most every people of this

country speak and communicate with this language.

Bangla vocabulary shows many influences. These include a strong Islamic influence seen in

the greetings of "Salaam aleykum" (Peace be unto you) and "Khoda hafez" (God Bless you)

and nouns from the Arab world such as "dokan" (shop), "tarikh"(date), "kolom"(pen) and

"bonduk" (gun). In West Bengal the Hindu influence is greater with the use of the Hindu

greeting "Namashkar".

English has also had an influence on Bangla. During the days of the Raj many words of

English origin such as "tebil" (table), "tiffin" (archaic in modern day English meaning snack

box) entered Bangla. In more recent time the ever rising global nature of English has lead to

words such as "television", "telephone", "video" and "radio" being adopted by Bangla.

However, unlike India, there has never been the need for English as a lingua franca and thus

Bangla is the state language of Bangladesh.

Religion:

The majority of Bangladeshis are Muslim. Here the second religion is Hindu, christen,

Buddha. However, most still very much mix this with pre-Islam folk traditions.

Bangladeshis identify with the folk traditions of Bengali culture. This includes belief

in shamanism and the powers of fakirs (Muslim holy men who are exorcists and faith

healers), ojhaa (shamins with magical healing powers), and Bauls (religious

mendicants and wandering musicians).

Here is a strong tradition of music, dance, and literature that includes classical

devotions of Hindu and Muslim music.

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Education: The educational system in Bangladesh is three-tiered and highly subsidized. The

government of Bangladesh operates many schools in the primary, secondary, and higher

secondary levels. It also subsidizes parts of the funding for many private schools. In the

tertiary education sector, the government also funds more than 15 state universities through

the University Grants Commission.

The three main educational systems in Bangladesh, ordered by decreasing student numbers,

are:

General Education System

Madrasah Education System

Technical - Vocational Education System

Other systems include a Professional Education System.

Each of these three main systems is divided into four levels:

Primary Level (years 1 to 5)

Secondary Level (years 6 to 10)

Higher Secondary Level (years 11 and 12)

Tertiary Level

Non-formal primary education

Social Strata: Society in Bangladesh in the 1980s, with the exception of the Hindu caste

system, was not rigidly stratified; rather, it was open, fluid, and diffused, without a cohesive

social organization and social structure. Social class distinctions were mostly functional,

however, and there was considerable mobility among classes. Even the structure of the Hindu

caste system in Bangladesh was relatively loose because most Hindus belonged to the lower

castes.

Ostensibly, egalitarian principles of Islam were the basis of social organization. Unlike in

other regions of South Asia, the Hindu caste-based social system had a very limited effect on

Bangladeshi Muslim social culture. Even the low-caste jolhas (weavers) had improved their

social standing since 1971. Although several hierarchically arranged groups--such as the

syeds (noble born) and the sheikhs, or shaykhs (also noble born)--were noticeable in

Bangladesh Muslim society, there were no impenetrable hereditary social distinctions.

Rather, fairly permeable classes based on wealth and political influence existed both in the

cities and in the villages.

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Traditional Muslim class distinctions had little importance in Bangladesh. The proscription

against marriage between individuals of high-born and low-born families, once an indicator

of the social gap between the two groups, had long ago disappeared; most matrimonial

alliances were based on wealth and power and not on the ties of family distinction. Also,

many so-called upper class families, because of their traditional use of the Urdu language,

had become alienated in independent Bangladesh.

Although Hindu society is formally stratified into caste categories, caste did not figure

prominently in the Bangladeshi Hindu community. About 75 percent of the Hindus in

Bangladesh belonged to the lower castes, notably namasudras (lesser cultivators), and the

remainder belonged primarily to outcaste or untouchable groups. Some members of higher

castes belonged to the middle or professional class, but there was no Hindu upper class. With

the increasing participation of the Hindus in nontraditional professional mobility, the castes

were able to interact in wider political and socioeconomic arenas, which caused some erosion

of caste consciousness. Although there is no mobility between Hindu castes, caste

distinctions did not play as important a role in Bangladesh as in they did in the Hindu-

dominated Indian state of West Bengal. Bangladeshi Hindus seemed to have become part of

the mainstream culture without surrendering their religious and cultural distinctions.

Technological analysis:

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Pfizer is looking forward to spread their existing market in Bangladesh and to do that they

will surely have to read the business criteria needed to work in Bangladesh and also the

people’s nature and behavior, which will surely going to affect their market situation in

future. At first, they must think about their competitors, the companies which have already

gained huge profit and redeem themselves easily in the people’s mind in the case of over

competition. Companies named SQUARE, BEXIMCO, SK+F, RENATA, ACI etc. are some

of the well structured and leading pharmaceutical companies in Bangladesh and they do

occupy a huge share in the market.

Human Resource management:

Though, there are some positives also for Pfizer as Bangladesh is still a developing country

and consist huge amount of manpower to work abroad to earn foreign currency and also

locally to improve economical growth of the country. Firstly, huge amount of working

resources and also their low cost may help their initial entry in the Bangladeshi market. A day

laborer may be hired at a very cheap cost to work for whole day, which certainly represents

the big picture of hiring huge number of worker at a very low amount of money. It can surely

help any company to start their campaign in a cost saving way.

Secondly, a company needs land, to build their factory and start their production. The

product, which they are going to launch in the market, will come as a new product to

the people or a product, which is not new but has several options, existed. To

differentiate their product from others, they will surely need technologies which may

help them in order to use new ideas as input and bring out new and efficient products

as output. To apply all of these, they must choose suitable place and easy to access

area to start their production works. In Bangladesh, PHIZER should find lands which

are infertile lands to build their factory at a very low cost. Lands specially in the

suburbs of Dhaka for example: Savar, Ashulia, Gazipur, Munshigonj, etc. do consist

huge amount of lands which can be a good option for a company like PHIZER to start

up their production work.

Technology:

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As a developing country, Bangladesh does provide new technologies to work with,

initially for a pharmaceutical company like Pfizer. Initial tools needed for production,

can be found at a very cheap cost in Bangladesh as many of them are produced

locally with a low production cost.

Establishing a factory in a new country involves several things including sufficient land,

enough resources, suitable location, technology needed to work smoothly and cost efficiently,

easy access to the market etc. it is important for a company of any nature, to understand the

basic needs to acquire a solid foundation which includes choosing the best technology, best

environment, and also understanding people’s preferences

Porter’s Diamond Model:

The Country and Porter’s National Diamond

The findings show that Bangladesh has a preferable factors condition. Availability of cheap

and highly competent skilled labor, good company infrastructure makes the country

preferable in this case. Even though the communication system is not very top class, but new

technologies are yet to be established and lot of foreign bidders are willing to buy it. Foreign

companies, who are already using these facilities, are getting benefited. This has been

reflected by the increasing market share gaining by the companies over time.

Factor condition: Factor condition in the country is good. Cheap labor, good infrastructure,

skilled people etc are among that condition.

Cheap labor: The price of the labor of the country is cheaper among the world. We can get

labor at a cheap cost which is the one of the main factors for investing in the country. This

would be our competitive advantage across our rivals. The quality of labor is quite good. By

giving proper training, we can make them more efficient which help us to become more

efficient in the industry.

Good infrastructure: The infrastructure of that sector is also good. There are several

pharmaceutical firms are in Bangladesh which are exporting their medicines in27 countries

around the world. The demand of their products is also good. They have a good market in

international medicine market. Without proper infrastructure, it could not be happened. For

these things, we can say the infrastructure of the sector in Bangladesh is good quality which

inspires us to invest in here.

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Transportation and communication sector: The transportation system of the country is

also superior. We can use the port of Chittagong for bringing raw materials and for exporting

our products in abroad. The quality of transport from Dhaka, the capital of Bangladesh from

Chittagong is also standard and the cost of transportation is also cheap. The

telecommunication sector of the country is also standard. It is easier to communicate any

person from abroad or anywhere in Bangladesh. It is also cheaper among the others. The

telecommunication sector is helping other business sectors by providing opportunities. We

can also use this kind of benefits to enhance our efficiency.

Human resource management: The quality of technician and pharmacists is fair. They are

working for these companies which are exporting medicine in abroad. A good number of

fresh pharmacists are coming in this sector by completing their education in pharmacy. We

can engage these kinds of skilled people in our production process at a cheaper cost. That

could be another advantageous factor for us. If we confer them proper training, they would be

our assets.

Demand condition: The demand condition is very high. The customer perfection to our

products is very high. We have a standard image in the international sector. The huge

population of the country also indicates the high demand for medical products. If we charge

low for our products, we can capture high market share in Bangladesh. We can also export

our products in abroad from there.

Related and supporting industries: For our reputation, we can borrow money for this

project from the financial institutions from Bangladesh and others countries. The supporting

sector of the pharmaceutical sector is also helpful for us. As an example, we can say about

Bangladesh Association of Pharmaceuticals Industries (BAPI). The UNICEF and WTO also

help the pharmaceutical sector of Bangladesh which would be another advantage for us.

Firm strategy, structure and rivalry: There are more than 200 pharmaceutical companies in

the country, of them 20-30 are big and all these big ones have a quality manufacturing

capacity. Among the leading companies that invested heavily in quality control in recent

years are Square Pharmaceuticals, Novartis, Beximco Pharmaceuticals, Acme, Opsonin,

Incepta, ACI, Roche, Renata and Orion. The Bangladesh pharmaceutical industry now

accounts for 95 per cent of the domestic medicine market. For these reasons, we can say that,

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there is a fair competition among the pharmaceutical firms. There is a great chance to enter

the market and capture the huge market share, if we provide standardized product at a

cheaper cost. The population of Bangladesh is around 160 million which indicates the big

market of medical product. If we could capture the market, that would be a huge amount of

profit for our company.

Government: The FDI policy of the government for investing in this sector is very easier.

The rules and regulations of government are quite good for investing in pharmaceutical

sectors. The investment policy of Bangladesh government is helpful for the foreign investor.

The government wants the foreign investor invest in Bangladesh. For attracting the foreign

investors, the Bangladesh government is providing some opportunities like good

infrastructure, good location for foreign industry, good security, good transportation system

etc. In these ways, we can say, the government policy for investing in Bangladesh is

favorable for us. We can get benefits from the government if we invest in Bangladesh.

CHANCE: The population of Bangladeshi is around 160 million. It means the market size

for medical product is around 160 million. There are 230 pharmaceutical firms in Bangladesh

at present. They are also producing good medicine. 95% of the medicine from that industry is

fulfilling the demand of local market of Bangladesh; another 5% is exported in abroad. In

these circumstances, we can say, there is a fair competition in that particular market. But, if

we provide our medicines at a lower cost, we could capture the market share. That would be a

large profit for our company. For these reasons, we want to invest that particular country.

Name of the conditions Situation

Factor condition Cheap labor, good infrastructure, well transportation and communication system, well human resource management, skilled people

Demand condition High demand

Firm strategy, structure and rivalry Fair

Government Helpful for foreign investors

Chance Good

Decision:

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There are some different entry strategies available to Pfizer Inc. to consider. Strategies which

are available are here:

FDI – Foreign Direct Investment

Joint venture

Acquisition / Merger

The most appropriate one would be acquisition / merger because it seems to be the easiest

one to do and sure to be profitable. We are recommending acquisition / merger because it

takes time to build up any state of the art infrastructure which will increase the basic cost of

the product and investment. In Bangladesh, it takes time to build and making it function as

there are so many restrictions.

On the other hand, an acquisition will give Pfizer the advantage of having an ongoing

structure from where Pfizer can run the minimal operational scale to penetrate the market. As

Pfizer can have all the advantage with an existing market.

Conclusion:

Pfizer is the leading pharmaceutical company in the world. Now they are trying to enter in

the Bangladeshi market which is quite lucrative in some extent. In this country the second

largest pharmaceutical company named GlaxoSmithcline is operation for over 15 years.

Pfizer will face competition along with an open market. All Pfizer has to do is penetrate the

market with the unique and necessary product line required for this country/continent.

Bibliography:

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http://en.wikipedia.org/wiki/Pfizer

www. pfizer.com /responsibility/cr_report/access.jsp

http://media.pfizer.com/files/responsibility/protecting_environment/

Pfizer_Green_Buildings.pdf

http://en.wikipedia.org/wiki/Pfizer_Inc

http://media.pfizer.com/files/annualreport/2008/financial/financial2008.pdf

http://hbswk.hbs.edu/archive/docs/11_F_101000_PFIZER-Clark.pdf

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