Foreign Market Entry

I had dinner with 2 friends recently. The Company which they represent was founded after World War 2 and has the distinction of being the first to produce injectable medicines making it the pioneer for the prescription market in the country concerned.

The second generation, in the mid-2000's, took over the management of the Company. Success was built upon success and today, from my understanding, the Group is now one of the top leading pharmaceutical Companies in the country.

In natural corporate growth and development, the Group is now looking beyond its shore, into different geographies, though some of the Group's products are already present, albeit small market shares, for some of these market economies. For further expansion and growth, the Group has to have more affirmative actions to establish its' footprints in the region and beyond.

In my mind, assuming that the market had been identified and selected for entry, and, depending on the appetite for risks, there are numerous approaches for foreign market entry, setting aside entry barriers like regulatory and legal requirements, for the time being, which will be addressed separately.

My immediate response, though not exhaustive, would be 1) to identify and appoint a local partner as agent to import its potential products into the country. The agent will initiate product registrations, possesses resources for sales & marketing including logistics in warehousing and distribution. It is important to motivate and incentivise the agent with an attractive "Gross Margin" to ensure the agent's interest is sustained 2) the risk in establishing a "full sales & marketing team" in its initial market entry carries high risk. I believe that the "learning curve" must be learnt prior to committing such an investment into a matured market  3) Instead of the ethical products, especially generics, unless they have unique USPs, where competitors are already "killing one another in the "red ocean", do consider the "non-ethical" products for market entry 4) For high volume, bulky liquid and competitive priced products, consider local OEM as there is a strong possibility of price advantage. 6) Purchase or Joint venture with a Manufacturing concern in the target market? This would be too "quick and drastic" unless there is an "irresistible buy" and it helps its existing manufacturing capacity or strategic business plan in the region. This is also dependent on its desire for "speed to market entry". 5) Malaysia, a PICs country, can offer a credible platform for any Company to be a launch and trajectory pad to the other countries as well. This is because, from feedbacks, the Regulatory Authority in Malaysia is known, in the international arena, for its "best in class" approvals for product registrations.

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