SG7001 Managing Strategy Operations and Partnerships

Megatrend	Key issues affecting the industry	Impact and Implication

Growth of substandard and falsified medicines in Morocco	One major issue is that the distribution of falsified / counterfeit medicines. These are the one’s whose active ingredients have been copied illicitly by a manufacturer without the permission of the original author. The results in deteriorated quality of the drug. Morocco has reported a growth in the trend of the usage of such medications according to data.	Indirect impact could be degradation of Morocco’s pharmaceutical industry’s reputation in the international markets. This is already reported by the BMI’s or Business Monitor International’s review of Moroccan drugs which states that the drugs already fall below the acceptable European quality standard. This is an obvious threat to the industry The direct impact is borne by the consumer of the medication as this purchase is critical to healthcare. The factors responsible for this threat are trafficking of medicines through informal supply routes. These are in-accessible to the government’s departments like the Moroccan National Laboratory for the Control of Medicines (LNCM) which are responsible for conducting check on medicines safety and quality. Hence, growth of illicit trade is a factor which would hinder the response to the threat.
Government encouraging generic and biosimilar medicines.	High cost of patent license fees, lack of manufacturing sovereignty	In Morocco patented represent only about 40% of the total market share. Patented medications pose a mild threat to the industry as they require paying a larger sum of license fees to the patent holder. This also increases the burden of bearing higher costs of purchasing for the consumer. This share is further likely to decrease when the government pushes companies to manufacture generics. Generic medicines have a similar chemical structure to the original medicine; however, they can be manufactured after the license expires without using the brand name. As an implication, we are seeing that a large part of the market in concentrated towards manufacturing of the generics and biosimilars. Currently 80-90 % of the public sector manufactures generics. In the private sector, this number is 25 % which is likely to go further up.
International alliance for Drugs trade	Response to sudden vaccination demand	Sweden’s CDMO (Contract Development and Manufacturing Organization) has signed an memorandum of understanding (MoU) with the Moroccan king for setting up of fill finish factories in Morocco. Fill finish is a manufacturing process for pharmaceutical industry. The MoU will see an investment of 500 million dollars by the Moroccan government for the setting up of vaccination and biotherapeutics in Morocco. This can be seen as an opportunity for companies like Sothema as they are heavily involved in the manufacturing of sterile needles which are used for vaccinations. As an implication to this, higher vaccination in African region. This is of great importance specially when the vaccinations are made domestically (i.e., vaccination sovereignty).
sustainability	Potential legislation to reduce the use of plastic.	Include: · The potential impact. · Whether it is a high priority to address (threat or opportunity) Identification of factors typically within the industry that would aid or hinder a response to the opportunity or threat.

3b.

Identification of the industry in question.	Moroccan Pharmaceutical Industry
Environmental Factor Political / Economic etc	Issue(s) pertinent to the industry. How might organisations in the industry be affected?	Implications for the industry What should the organisations in the industry do?
Government attempts to achieve Vaccine sovereignty	Intellectual Property Rights is the issue here – The cost of acquiring patent licences is high both in terms of time and money. This a major issue for the industry as it is not able to tap into the vaccination market. Issue is further aggravated by the fact that Morocco exports pharmaceutical goods to the sub-Saharan Africa. These countries may not value getting vaccinated after the pandemic waves have mellowed down. Further, it goes against the vision of the company of making Africa sovereign (and many other exporting companies) in terms of medication access.	Morocco should join forces with developing countries like India to fight for getting the vaccination patent wavier. Developing countries, including sub-Saharan countries, are already taking the issue with the WTO (World Trade Organization) for the cause. Morocco holds a major shake in this cause since it is responsible for exporting pharmaceuticals to the sub-Saharan (i.e., the African countries). According to data b the WTO, the fight has been fruitful since China and USA, the two countries with the maximum number of patents, have agreed on the patent wavier. An implication for this would be two-fold – a higher revenue as a larger population of South Africa would get the vaccine, and, reduction in “vaccine apartheid”. However, the apartheid may be completely removed if the countries agree on a complete patent wavier.
Population demographic	Primary demographic of the country is young. Only 25% of entire population have access to health insurance.	According to data majority of Morocco’s population is under the age of 30 years. The direct implication is that the domestic population may hinder the generation of great revenues as older population consume significantly a greater number of drugs than the youth. However, according to data, Morocco’s population is ageing consistently. The number of people above the age of 70 years will increase by a factor of 21 % by the year 2021. Hence, this is an opportunity for the pharmaceutical industry to tap into future profits. The company should encourage governments to make youth health insurance mandatory. This increases the purchasing power of medicines easier for the said population and ensure the company’s sustainability in the coming decade.

Porter’s Force	Strength	Justification/ Reasons for your decision about the strength
Power of buyer	High	Morocco is a politically stable country with a middle-income range. Further, domestic healthcare spends amount to a little under 2 billion dollars. Also, the pharmaceutical expenditure is of an indispensable nature. There are also government policies in place which mandate health insurance. This indicates a high-power o purchase for the average domestic consumer. Morocco also exports its drugs to other countries. Infect, 10% of the annual produce is exported.
Power of Suppliers:	Low	Most of the raw material for producing drugs is common to many chemical industries. The pharmaceutical industry does not seem to be using any specialized raw materials for which a novel supplier is required. For example, sulfuric acid , hydrochloric acid, calcium etc. are very common commodities required by various industry. For this reason, their suppliers seldom have much power. Packaging required material like polyethylene and aluminium for which the same logic applies.
Risk of Substitutes:	Moderate	Here we can find a mixed bag of cases. Some new drugs may have been recently granted approval and they may as well be patented. In this case, substitution is not possible. This is because even if a potential substitute wants to enter the market, it’ll have to pay the original patent owner a hefty patent license fee. Thus, the profits will be directly or indirectly made by the original drug which has the patent. The cost of acquiring the patent is high. On the other far end of the spectrum, we have two categories – biosimilars and generics. Generics can be manufactured by any company after the patent privileges of the original inventor have expired.

Potential of New Entrants into an Industry	High	According to data, 1.5 billion dollars in sales is generated form the sales in pharmaceutical industry in Morocco. This is about 1% of the whole country’s GDP. The government isn’t going to let such a huge be driven by a monopoly. The competition n the Moroccan pharmaceutical industry is fierce with several companies operating in the region. Another factor that ensures the entrance of a new company periodically is the generics. Whenever a pharma patent expires, several rival companies enter within the same time frame to take advantage of the free licence to manufacture the drug. Hence, potential of new entrants is high.