Global And Regional Economic Development

The Pharmatec Group, a supplier of pharmaceutical equipment, systems and services, has its head office in London and primary production facilities in the US. The company also has a successful subsidiary in South Africa, which was established in 1990. Pharmatec South Africa does not carry out primary production of pharmaceuticals; rather, it makes up products from imported primary materials - and packages and distributes these products. Pharmatec South Africa buys its primary materials from its UK parent and sells its products not only to the large South African market (which absorbs 6% of all the pharmaceuticals sold by Pharmatec), but also to the rest of Africa.
The Pharmatec Group is now considering a proposal to expand the activities of its South African subsidiary into primary production of pharmaceuticals, particularly in anti-retroviral drugs, which slow down the production of HIV and give the body a chance to build up its CD4 or "white blood" cells, crucial to fighting Aids.
At a recent conference organised by the World Health Organization, on the needs of HIV/AIDS sufferers in Africa, several proprietary drugs were identified to be particularly effective in combating HIV, of which the most effective is PAP-10, produced by Pharmatec.

Since its emergence over two decades ago, AIDS has gone from being the scourge of relatively select groups, such as homosexuals and intravenous-drug users in rich countries, to arguably the biggest threat to life and prosperity in the developing world. In its annual report on the AIDS epidemic, UNAIDS - the United

Nations agency monitoring AIDS - estimates that a shocking 40 million people are infected with HIV, including 2.5 million children.

In 2003 alone, 5 million people were newly infected. South Africa alone has 5 million AIDS/HIV sufferers, comprising one in nine of the country's population - making it the country with the highest rate of infection in the world. AIDS/HIV is South Africa's biggest social, economic and political problem. An estimated 600 to 1,000 people die each day from the disease. By 2001, 360,000 adults and children had died from AIDS-related causes, resulting in 660,000 children orphaned by AIDS in 2001.

In the Soweto township of South Africa, experts fear there will be 25,000 AIDS orphans in two years' time. The vast majority of South Africans cannot afford the expensive anti-retroviral drugs, as more than 10% of the population lives on less than US$0.50 cents per day. South Africa has a highly unequal distribution of income amon its population, with an average monthly salary of just US$100.
Compare that to the current price of one day's supply of PAP-10, which is equivalent to US$30. At these prices, most of South Africa's AIDS/HIV victims are not able to afford the drug.

A generic equivalent to PAP-10, if one were available, would cost only a fraction of the amount charged for the proprietary drug. The South African government, has a mixed record in this area, but is gradually moving towards respect of intellectual property rights, partly under pressure from multinationals, the World Trade Organization and the US, partly in the hope of fostering a secure environment for research-based investment in pharmaceuticals.
Anxious to make medical services and drugs available to South Africa's poor, the South African Ministry of Health has encouraged local production of the drugs. However, South Africa's dire economic situation (falling exports, a Rand under pressure, the financial sector in crisis) has led to radical cuts in public spending - and leaves the government's hands tied.
The South African government, through its Ministry of Health, has asked Pharmatec South Africa to supply the anti-retroviral drug, PAP-10. It has also been invited to consider local production of PAP-10. Pharmatec South Africa, however, is not in a position to make an investment decision of this magnitude without consulting Pharmatec UK.
An investment decision by Pharmatec South Africa is complicated by the politics of poverty and inequality, as well as the usual considerations of costs and benefits arising from foreign investment. Technology transfer, local employment issues, balance of payments, transfer pricing and monopoly profits are just some of the issues that the company will have to weigh. Moreover, the drug is patent-protected and Pharmatec is anxious to make the maximum possible worldwide profits from its successful drug to meet the ever-increasing costs of research and development.

The CEO of Pharmatec PLC in the UK has called a board meeting to consider proposals to undertake further foreign direct investment in South Africa. He is very much aware of the conflict of interests presented by the proposed investment - Pharmatec South Africa obviously has interests that overlap with those of its parent company, particularly in relation to profits; Pharmatec South Africa, however, also has an interest in the expansion of its own local activities, which Pharmatec UK, looking at matters more globally, may not share. Pharmatec South Africa, therefore, may well find itself tacitly allied with, say, the South African government, in pressing for more local investment.
You are the assistant to the CEO and he has asked you to prepare a brief for him that will cover the key issues involved in this decision. It is therefore expected that your recommendations will be based on a meticulous treatment of both ethical and commercial interests involved in this investment decision.

Although you are free to adopt any approach you like based on the enormous resources that are available on foreign direct investment (FDI), the AIDS crisis, the South African economy and pharmaceutical companies, you are advised to address the following issues when preparing your report:

• The key areas of stakeholder conflict in this FDI decision

• The main issues facing Pharmatec and the South African government

• Whether drugs should be viewed like any other globally marketable product, in terms of pricing and profitability decisions

• The extent to which traditional FDI theories help explain an investment decision beset with moral issues

   Related Questions in Mathematics

  • Q : Numerical solution of PDE i want you to

    i want you to solve this assignment. this consist of two parts theoretical and coding. the code has to be created by you. no modified or copying code. you have to mention the exact solution and the proportion error. also you have to explain the sketch that you get from the code. these information

  • Q : Problem on reduced row-echelon The

    The augmented matrix from a system of linear equations has the following reduced row-echelon form.

    280_row echelon method.jpg

  • Q : Problem on augmented matrix Consider

    Consider the following system of linear equations.


     (a) Write out t

  • Q : Competitive equilibrium 8. Halloween is

    8. Halloween is an old American tradition. Kids go out dressed in costume and neighbors give them candy when they come to the door. Spike and Cinderella are brother and sister. After a long night collecting candy, they sit down as examine what they have. Spike fi

  • Q : The mean of the sampling distribution

    1. Caterer determines that 87% of people who sampled the food thought it was delicious. A random sample of 144 out of population of 5000 taken. The 144 are asked to sample the food. If P-hat is the proportion saying that the food is delicious, what is the mean of the sampling distribution p-hat?<

  • Q : Probability assignments 1. Smith keeps

    1. Smith keeps track of poor work. Often on afternoon it is 5%. If he checks 300 of 7500 instruments what is probability he will find less than 20substandard?

    2. Realtors estimate that 23% of homes purchased in 2004 were considered investment properties. If a sample of 800 homes sold in 2

  • Q : What is limit x tends to 0 log(1+x)/x

    What is limit x tends to 0  log(1+x)/x to the base a?

  • Q : Properties of a group How can we say

    How can we say that the pair (G, o) is a group. Explain the properties which proof it.

  • Q : Logic and math The homework is attached

    The homework is attached in the first two files, it's is related to Sider's book, which is "Logic for philosophy" I attached this book too, it's the third file.

  • Q : Budgeted cash disbursements The ABC

    The ABC Company, a merchandising firm, has budgeted its action for December according to the following information:

    • Sales at $560,000, all for cash.

    • The invoice cost for goods purc

2015 ©TutorsGlobe All rights reserved. TutorsGlobe Rated 4.8/5 based on 34139 reviews.