pharmaniaga
TRANSCRIPT
BUSINESS & MARKETING
OVERVIEW ANALYSIS
PHARMANIAGA MOHD RIZAL KISMATH BATCHA (2007)
Part A: Pre-trip preparation
1. Preparation for the interview session
Before our group decided to go for a two days trip to Kuala Lumpur, our group had
collected much information about the company through Internet, magazines, papers and
from peers.
The information that we had collected from
Wikipedia (http://en.wikipedia.org/wiki/UEMGroup) and the
official website of the company (http://www.pharmaniaga.com.my:/) are as follow:
1. Pharmaniaga is one of UEM subsidiary company and a public listing company in the
Main Board Bursa Malaysia Securities (BMS) with the vision to be Malaysia's
foremost integrated healthcare solutions provider, contributing significantly to
improving wellness of people by providing high quality products and services.
2. Pharmaniaga vision is to be the preferred brand in healthcare in the market we choose
to serve and the Pharmaniaga mission is to deliver maximum value to our customer
through superior quality products and services by committed professional and caring
employees.
3. Its core business is manufacturing generic pharmaceutical, logistics and distribution,
sales and marketing, supply medical product and services, hospital equipment.
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Before the trip to Kuala Lumpur, our group had prepared few questions as below:
a) What is Pharmaniaga core business?
b) What is Pharnaniaga strengths, weaknesses, opportunity, treats (SWOT)?
c) Pharmaniaga emphasizes more on revenue oriented or service oriented?
d) How Pharmaniaga control the quality of pharmaceutical product?
e) What is the challenges face by Pharmaniaga?
f) What is Pharmaniaga marketing mix?
g) How Pharmaniaga run their operation?
h) What is Pharmaniaga target market?
i) How many employees in Pharmaniaga?
j) What is Pharmaniaga employees’ welfare?
k) Pharmaniaga is under government or private?
l) Is there any government subsidiary to Pharmaniaga?
m) Is it Pharmaniaga is market leader in the pharmaceutical industry?
n) What is the marketing strategy applied by Pharmaniaga? E.g.: Marketing mix
o) What are future plans by Pharmaniaga?
p) Who are the competitors of Pharmaniaga?
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2. Pharmaniaga Overview
In pharmaceutical industry, there are two main pharmaceutical companies in Malaysia:
a) Pharmaniaga Berhad
Pharmaniaga is the largest integrated local healthcare public listed company in the Main
Board of Bursa Malaysia. Its core business is manufacturing generic pharmaceutical,
logistics and distribution, sales and marketing, supply medical product and services,
hospital equipment. The Pharmaniaga Berhad subsidiaries companies are:
i) Pharmaniaga Logistics Sdn Bhd
ii) Pharmaniaga Marketing Sdn Bhd
iii) Pharmaniaga Manufacturing Berhad
iv) Pharmaniaga Diagnostics
v) Pharmaniaga Research Centre Sdn Bhd
vi) Safire Pharmaceuticals (M) Sdn Bhd
vii) Pharmaniaga LifeScience Sdn Bhd
viii) Pharmaniaga Diagnostics Sdn Bhd
ix) Pharmaniaga Intermational Corporation
x) PT Millennium Pharmacon International Tbk (Indonesia)
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xi) Pharmaniaga Pegasus (Seychelles) Co. Ltd
Pharmaniaga’s range of products can be divided into generic pharmaceuticals product (27
types of bio-equivalent products) and non-prescription product (vitamin, herbal, tropicals
and Pharmaceuticals). Pharmaniaga had been awarded by IMS Healthcare 2007 with:
No.1 Anti-Infectives (Various)
No. 1 Cholesterol Drug (Simvastatin)
No. 2 Antiplatelet (Ticlopidin)
No. 2 Diabetes (Metformin)
No. 2 Dry Cough (Russedyl)
b) APEX Berhad
APEX is one of listed pharmaceutical company on the Main Board of Bursa
Malaysia. Its core businesses are manufacturing, wholesaling, distribution and
marketing of pharmaceutical and consumer healthcare products. The APEX Group's
major wholly-owned subsidiaries are
i) Xepa-Soul Pattinson (M) Sdn Bhd
ii) Apex Pharmacy Marketing Sdn Bhd
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iii) Apex Pharma Marketing Pte Ltd,
iv) ABio Marketing Sdn Bhd,
v) Apex Pharmacy Corporate Sdn Bhd
vi) Apex Pharmacy International Sdn Bhd.
vii) Apex Healthcare Berhad
The Xepa range of products includes antibiotics, anti-ulcerants, anti-hypertensives,
neuromuscular agents, corticosteroids, cough mixtures and antihistamines in the form of
tablets, capsules, oral liquid and suspension, creams and sterile eyedrops. Best selling
products developed in the last few years include the antihistamines ezede® and Adezio®,
CovastinTM, a lipid lowering drug and AvexusTM a new macrolide antibiotic, while the
range of cough preparations including Sedilix®-DM continue to be the market leader.
From the information above, our group had defined Apex (M) Berhad as the main
competitor to Pharmaniaga. However, Pharmaniaga has been defined as the market leader
in the pharmaceuticals industry with positive growth trend which will enable
Pharmaniaga to take advantage of the opportunities available and enhance their status as
the leading player in this industry. In addition, due to Pharmaniaga new product launched
(7 new products registered, 4 new products launced, 3 new bio-equivalent products
approved, 50 products registered in international markets in 2005) which are already in
the pipeline, thus marketing team of Pharmaniaga has been strengthen. As a result,
Pharmaniaga is able to gain market share in the coming year.
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Part B: Detailed trip log book
1. Perception and Expectation before the Trip
Well, before we went for the trip, we were tried to relate Pharmaniaga with the 8P that
we have studied in Service Marketing which are price, promotion, place and time,
products, process, physical environment, productivity and quality as well as people. We
were thinking if Pharmaniaga could be explained by these 8P. Moreover, we would like
to seek answers if there is any advantage to embed those elements in developing a
strategy. In our perceptions, we may interpret that Pharmaniaga is a monopoly company
in Malaysia in which there are no competitors for them. Under our perceptions,
Pharmaniaga may be one of the company in which high profitability is generated since it
is interpreted as a government’s subsidiary company. This is due to the fact that more
than fifty percents of the medicines and equipments are supplied to the government
institutions by them.
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2. Information Obtained
Basically, we were invited to the Biomedical Department which only represents one of
the departments of this company. We realized that most of the equipments that we can
see in hospitals are actually made by them. We were exposed to the external environment
such as the appearance of buildings, interior furnishing, equipment and other visible cues
that provide tangible evidence regarding their service quality.
Moreover, this is surprising where a superior system which is Automated
Storage and Retrieval System (ASRS) is allocated in their warehouse. ASRS is successful
in optimizing space utilization at central warehouse which aids to store and remove
inventory automatically from their warehouse. Thus, works could be done efficiently and
effectively since Pharmaniaga is able to optimize their usage.
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3. Evaluation and Perception
Basically, we would like to say that it is an awesome company. Through the detail
analysis by the hosts, we can actually understand their products and services more
deeply. We have a good feedback for Pharmaniaga since it still able to maintain good
performances although they have to control every department thoroughly.
Besides, systematic storage which is ASRS has opened our eyes to
the excellent performances with less effort and less human energy to achieve it. We
would like to say that Pharmaniaga is an advance and successful company with
continuous improvement and expansion throughout worldwide.
In addition, strong and motivate marketing team that has been formed is crucial in
promoting and advertising their products and services. Pharmaniaga’s has the largest
sales team among local generic healthcare companies which is beneficial and relevance in
persuading and urging customers to make an order.
4. Critical Analysis
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Our group has defined few problems for Pharmaniaga Company before the trip which is:
a) Advance technology in pharmaceuticals field
As we know, now is the age of technology, thus it is necessary for Pharmaniaga
Company to follow the trend and fulfill the customer’s expectation. However,
advance technology involving high cost to fulfill customer’s expectation to get the
cheap yet high quality pharmaceutical products.
b) Control inventory in pharmaceutical product
With increasing availability of generic products in the Malaysian market, it is
imperative to ensure that these generic products are of high level of quality, efficacy
and safety of pharmaceuticals products to safeguard the public. Drugs have the expiry
date thus it is imperative for Pharmaniaga to avoid the expiry date. Therefore
providing pharmaceuticals product just in time will be one of most important issue to
fulfill the customer need.
c) Government policies
Malaysia is an Islamic country; therefore it is vital to make sure all edible products in
Malaysia are halal. That serves as one of the challenges for Pharmaniaga to make sure
that all pharmaceutical products in Malaysia are Halal. Some of pharmaceutical
product may need the “non-halal” ingredients to product it; it is one of the challenges
for Pharmaniaga to modify them into halal products.
d) Meet the Malaysian customer demand
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Pharmaceutical products are not like other normal products which have standard and
average demand. Therefore our group have defined balancing Malaysian customers’
demand may be one of the problems to Pharmanniaga. Furthermore Pharmaniaga
company holds national emergency such as bird flu, therefore it is important for
Pharmaniaga to prepare them in order to meet customer’s expectation.
5.Problem Statement
a) Barriers in patent
Pharmaniaga Company manufactures division and produces high-quality off-patent
pharmaceuticals for domestic and export markets. Barriers in patent pharmaceutical
product will be one of the problems to Pharmaniaga. Pharmaniaga need to wait for
the pharmaceutical product off-patent to be released before producing and selling
them in domestic and export markets.
b) Formulate new product
To compete with other international Pharmaceutical company, Pharmaniaga need to
be involved in the R&D to formulate the new product in order to fulfill customers’
expectation. To be the first to launch new product enables them to capture market
share, but high costs and time consuming are involved to formulate a new product.
Thus, it will cause the pharmaceutical products to be more expensive. As a result, it
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fails to fulfill Malaysian expectation in getting cheap and high quality pharmaceutical
products.
c) Capacity Limitations
Pharmaniaga is one of the fast growing corporations in Malaysia with 24.3% growth
per year. But with broad range of product and the capacity limitations in
Pharmaniaga, it is difficult to expand their business in pharmaceutical industry.
6. SWOT analysis
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a) Strength
Integration of different field helps to run the production and services more
smoothly.
Integration of manufacturing, marketing, logistics, medical planning, equipping and
distribution, information technology as well as research and development aid in meeting
customers’ expectancy or exceed their expectation. Better quality of life is emphasized
yet affordable products and services are provided. Because of the integration,
Pharmaniaga is able to control their own productions thus demands from different level
of customers can be fulfilled thus shortage of the products are reduced. As a result,
Integration of different field
helps to run the production and
services more smoothly.
Outstanding quality
Innovative thinking which
enhance their market leader
status
Research and Development
Seek opportunities for
geographical and strategic
expansion
Competitors
Challenges in maintaining
profitability
High operation and
maintenance costs
Strength Weakness
Opportunity Threat
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different field is responsible to achieve their mission and vision as well as objectives of
the company.
Innovative thinking which enhance their market leader status
Studies regarding human behaviour are well designed to understand their potential
customer thoroughly. This is due to the fact that different people tend to hold different
perception and belief in decision making. Thus, innovation and creativity are greatly
applied into marketing strategy which enables them to become a potential market leader.
As a consequence, Pharmaniaga is growing rapidly in domestic as well as international
market in which it has been internationally recognised as a healthcare solutions provider.
Outstanding quality
Pharmaniaga is emphasizing in delivering value to their customer through superior
quality products and services which is stated as the mission of their company. Therefore,
efforts and guidelines have been made or complied to achieve their desire mission.
Hence, Quality Management System is maintaining at the excellent level without any
deviation in production of quality products. Their Quality Management System is
certified to the ISO1990 standards, which is the essence of effective quality management.
b) Weaknesses
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High operation and maintenance costs
Next weakness is related to the high costs that Pharmaniaga has to cover such as
maintenance and operation costs. Therefore, relevant strategies have to be planned and
launched to make sure that maximum capacities can be operated without wasting their
resources. Moreover, budget for the maintenance costs have to be planned carefully since
profitability is affected if maintenance costs are not spent accordingly.
c) Opportunity
Research and Development
Pharmaniaga invest a lot of efforts in research and development field in which an amount
of money spent to investigate and plan for the best strategy for advance development. As
a result, successful scale-ups of products and speedier product development can be
developed and new products can be promoted in the market faster in cost-effective
manner as compared to their competitors.
Seek opportunities for geographical and strategic expansion
Since Pharmaniaga has operating warehouses in 36 sites across 4 countries which is
Malaysia, Indonesia, Vietnam and China. With the rapid growth and development, they
have the opportunity to expand their businesses into other Asian countries and USA.
Therefore, efforts to increase their productivities and improving profitability must be
realized since this is a golden opportunity for Pharmaniaga to expand their strategies and
businesses worldwide.
d) Threat
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Competitors
Although Pharmaniaga has become a potential market leader in Malaysia but they still
have to compete with other competitors in order to strive and attain their goal. This is a
challenging as well as threatening task for Pharmaniaga since customers are more likely
to compare the similar products with respect to the different price and quality offered.
However, Pharmaniaga may view this as a challenge to improve their company’s
performances.
Challenges in maintaining profitability
There is always a balancing state in the demand and supply of a product. Companies tried
to reach the break-even point in order to gain profit when sufficient products are supplied
to meet the customers’ demand for a particular product. This is due to the fact that excess
demand or excess supply may affect the profitability of a company. However, it is a
challenge for Pharmaniaga in maintaining profitability associated with a fluctuating rate
7. Critical Success Factor
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In our group’s opinion, critical success factor of Pharmaniaga is the effectiveness in the
implementation and integration of strategies. This is a unique strategy in where
competitors cannot compete easily since Pharmaniaga is sustaining their efforts from
manufacturing their own products until they are successfully delivered to the customers.
Therefore, products can be produced in low cost as intermediate expenses could be
reduced under this circumstance. Moreover, customers are glad that they are actually
paying less thus this would be the crucial success factor for Pharmaniaga.
However, Pharmaniaga does have weaknesses like other
companies too. For instance, demand and supply is always in a fluctuation rate thus it is a
big challenge for many types of capacity-constrained service organization to balance the
demand and supply level. Pharmaniaga may face this trouble in balancing the demand
and supply in order to obtain an optimum level.
Moreover, this is not an easy task to formulate a recipe. A long period of
time may be taken to reach a desired end. Expert advices or opinions should be inquired
to increase the likelihood that a particular formula can be launched successfully.
However, it is a costly yet difficult task in which company have to pay an amount of
money constantly even though there is still no result generated especially for the demand
of products.
8. Applied Theory
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8Ps of Service Marketing
Place and time
Since Pharmaniaga have their own logistic department thus methods and channels to
deliver have to be well decided. As we know, customers can actually place their order
through electrical channel since there is a stable network to support and manage the order
from customers. Moreover, an alternative network has been designed to avoid network
being jammed thus customers can make an order either through physical channels or
electrical channels since both channels are reliable and easy to use.
Price
Pharmaniaga maintains a good price strategy since the reduced prices are reaching the
final customer and not being absorbed by resellers in the marketing channel. In fact, this
will enable Pharmaniga to gain more profits as intermediate costs could be eliminated.
On the other hand, customers can keep away from bearing the higher prices as they are
paying wholesaler prices instead of retailer prices. As a result, customers pay less but
qualities of the products are assured and customer’s satisfaction can be increased.
Product elements
Pharmaniaga is a medicine provider in which medicine is a core product while other
supplementary services like logistic, marketing or information technology are offering
value added to fulfill customers’ needs. This is due to the fact that customers are used to
judge a performance based on the whole value of the core product instead of merely
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concentrating on a sole product. Thus, Pharmaniaga has successfully implemented their
product strategy by adding value through welcomed enhancements.
Physical environment
Customers were first exposed to the physical appearance of a company once they step in.
Visible cues such as equipment, employee’s uniform or decoration of the building may
influence customers’ perception. For example, customers would likely to have a good
feedback if the building of the company is indeed dazzling and beautiful. Hence, efforts
have to be made in order to enhance the supplementary services which will absolutely
add value to the core product.
Promotion and Education
No marketing programme can be successful without effective communication. Therefore
promotion and education play important roles to provide related health information and
advice, and develop strong relationship with customer through effective communication
channels. Pharmaniaga have organized several campaigns such as ‘Mesti Ambil
Tahu!’(MAT) and Skuad Operasi Sihat (S.O.S) to provide related health information and
advices to public. At the same time Pharmaniaga also placed importance on corporate
social responsibility besides promotion and education.
MAT is the campaign that inculcates consumers’ awareness on the importance of proper
medicine management. In its effort to make it easily accessible to the general public,
Pharmaniaga has compiled “Mesti Ambil Tahu!” booklets and made them available in
health clinics. Several activities have be organized under MAT such as:
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Kempen Kenali Ubat Anda, Melaka (29 Jun 2007)
Activities included distribution of MAT Health Education Brochures, MAT Quiz
and prizes for participants.
Karnival Sihat Sepanjang Hayat, University Utara Malaysia
Program “ Jom Tak Nak” di IPTA - Kubang Pasu (28 Julai 2007) Activities included
distribution of MAT Health Education Brochures, Quiz and prizes for participants and
the hand over of bicycle to the bicycle club.
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For the S.O.S campaign, mobile clinics act to provide health screening services and
resources as well as building awareness for rural populations in promoting healthy
lifestyle. Several activities have be organized under S.O.S.
SOS Mission at Agensi Antidadah Kebangsaan in collaboration with
MERCY Malaysia Kuala Lumpur on 13 Feb 2008.
Activities included, counseling by AADK, medical care by MERCY Doctors, medicine,
clinic and administration staff by Pharmaniaga.
People
People is one of the valuable assets to company and that they can make a significant
impact on business. Despite technology advances, many services will always require
direct interaction between customer and service personnel. The nature of these
interactions strongly influences how customers perceive service quality. In Pharmaniaga
there are about 1900 employees and in 2005 Pharmaniaga have invested about RM 40000
per year in training, educating and learning the employee.
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Process
Creating and delivering product elements requires effective design and implementation of
the processes. In Pharmaniaga logistics, customer can make their order through
Pharma*Net that is Pharmaniaga had subscribe the Pharma*Net to Telecom Malaysia and
Time Telecom. When customer service order management (CSOM) had received the
customer order through the e-ordering they will send the order to the warehouse in
picking out the product through Automated Storage Retrieval System (ASRS). After the
products have been picked up, the product will be put at staging area for shipping to the
destinations.
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Staging area
Delivery Order
Customers
Pharma*Net
Pharma*Net
Automated Storage Retrieval System
(ASRS)
RFPicking
RFPut away
e- Ordering
SCM
CSOM
Shipping
PHARMANIAGA MOHD RIZAL KISMATH BATCHA (2007)
Productivity and Quality
Improving productivity is an essential strategy for reducing costs, and improving the
quality should be defined from a customer perspective for building customer satisfaction
and loyalty. In order to control the Pharmaniaga product, Pharmaniaga have their own
R&D and corporate R&D. Pharmaniaga Quality Control and Research & Development
Laboratories are accredited to the ISO/IEC 17025 Laboratory Accreditation Scheme.
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Payment Payment
Information
Information
Billing Billing Order Taking
Order Taking
Consultation
Consultation
HospitalityHospitality Exceptions Exceptions
Safekeeping Safekeeping
CORE:
PHARMANIAGA
PHARMANIAGA MOHD RIZAL KISMATH BATCHA (2007)
9. The Flower of Service
Figure: The Flower of Service: Core and Supplementary Elements
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The above Flower of Service features a core product which is surrounded by a cluster of
supplementary services. Eight clusters are displayed as petals in which they were used to
support and enhance as well as aid the use of core product.
Information
Customers are likely to seek information regarding to the products and services before
making a decision. Thus, Pharmaniaga has been developing a marketing team to aid in
promoting and providing relevant information for their favor customers. Moreover,
customers can easily gain information through their website as well as words from
mouth. This is due to the fact that customers especially new customers are information-
hungry thus precious advices are necessary to avoid misunderstanding regarding to the
service provided.
Consultation
Consultation has a strong influence in enhancing supplementary services. Customers are
more likely to get responses from the service provider especially when there is variety of
products or services which tend to confuse them. Therefore, Pharmaniaga has been
applying effective consultation scheme to guide their customers in improving their
relationship with the company. When customers have a better understanding towards the
products, they will be loyal to such assurance.
Order taking
Order taking took place when customers decided to buy a product or service.
Pharmaniaga is successful in handling this element since the process is fast, accurate and
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timely. For example, ASRS aids to store and remove inventory automatically thus there is
a low probability for Pharmaniaga to make a mistake or delay customer’s order.
Hospitality
Under hospitality element, service provider has to provide an ideal environment and
procedure to attract new customers yet to retain old ones. In our opinion, Pharmaniaga
managed to provide such an environment since their employees are well trained and the
systems that they are using are in advance. Moreover, well managed logistic systems may
aid in increasing customers satisfaction as they save times and efforts in order to deal
with Pharmaniaga.
Safekeeping
Safekeeping service has been provided by Pharmaniaga to enhance their core product.
For example, their products are well taken care of in terms of packaging, products are
reliable and have been certificated, efficiency of the logistics system to deliver the core
product and so on. Through safekeeping services, customer’s satisfaction may be
increased since Pharmaniaga is paying attention closely to their safety and security
aspects.
Exception
Exception is a supplementary service that falls outside the normal routine. Pharmaniaga
have to design guidelines in advance to avoid unanticipated circumstances. For instances,
special requests from the customers have to be taken care, problem or complaint
regarding to the services provided have to be handled as soon as possible. Besides, the
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company should be held reliable for any mistake and should compensate for any loss,
damage or injury in serious cases.
Billing
Pharmaniaga has to make their billing timely and effectively since convenient and easy
billing methods are requested by customers nowadays. Pharmaniga is supplying their
products either to government or private hospital in large amount. Therefore, bills have to
be clear with completing information on how the total was calculated.
Payment
Customers are expected to take action once they have received the billing notices. Credit card and
debit card as well as transfer of cash or checks are accepted as long as the payment method is
convenient and easy for customers. Pharmaniaga have to control their account receivable and
account payable in order to reduce overload debt. Thus, customers have a variety of choices in
deciding the way to make their payment.
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10. Solutions and Recommendations
There have few recommendations we would like to suggest for Pharmaniaga Company.
i) Improve and maintain research
Pharmaniaga is one of strong growing company in Malaysia with the 24.3% growth
per year, therefore maintaining and improving the research procedures to produce
new product is needed to maintain Pharmaniaga market share in Pharmaceutical
industry. Moreover, customers’ expectation and demand should be examined in order
to understand their customer thoroughly to achieve higher profits.
ii) Use Western Country as the guidance
To expand the Pharmaniaga business to penetrate new and untapped markets in other
regions of the world, it is imperative for Pharmaniaga to absorb western style as the
guidance to improve quality and performance. As we know, most of Pharmaniaga
export partners are developing country and undeveloped country. Therefore,
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Pharmaniaga can use other pharmaceutical company in developed western country as
the guidance to expand the export partner.
iii) Aim to become Asian market leader
Since Pharmaniaga is the market leader in Malaysia, thus Pharmaniaga should aim to
achieve the status as Asian market leader. Therefore, Pharmaniaga should expand
their businesses in other regions of the world, not only focusing in domestic markets
Conclusion :
Pharmaniaga, a market leader and it has been internationally recognised as a healthcare
solutions provider. “Quality is our virtue” is the company’s vision in which Pharmaniaga
is emphasizing in quality management. Though there are problems occurring such as
customers would like to pay less but higher quality is expected but, Pharmaniaga is able
to enhance their concepts with successful handling in those kinds of problems. This is
pretty true since Pharmaniaga aims to provide the greatest quality of their products to
their favour customers. Next, SWOT analysis of Pharmaniaga has been defined in which
strength and opportunities are favourable situations and are likely to increase company’s
profitability while weaknesses and threat are unfavourable situations in which it might
harm the company’s profitability. In our group’s opinion, integration of different fields is
critical in meeting customers’ demands and needs other than the strengths of the
company. The solutions and recommendations that have been mentioned above are
realistic because Pharmaniaga’s vision and mission have stated that quality is their virtue.
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Since this is the first time we were exposed to a company which have different
department to handle and promote those particular products, thus we would like to
conclude that Pharmaniaga is indeed a successful company. This is due to the fact that
innovative yet creative thinking may help them to differentiate their company with other
competitors. Moreover, it is easier for them to maintain customer’s loyalty compare to
competitors since they have their unique strategies. Therefore performances may be
enhanced and granted directly. In addition, continuously improvement is emphasized to
achieve the company’s vision and mission as well as customer’s expectation.
Pharmaniaga logistics and distribution warehouse
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