Specify the types of country risks that pharmaceutical firms face in international business. How do the political and legal systems of countries affect the global pharmaceutical industry?
The different types of country risks for the pharmaceutical firms are:
1. Pricing: Many Asian and African countries are poor and cannot afford the costly medicines. The Pharmaceutical firms spend vast amounts on R&D in creating and marketing drugs, thus charging high prices enables for cost of capital recovery and profit generation. 2. Patent related and Generic Competition: The developed countries like US and Europe have strong patent protection laws which gives a lot of benefits for the pharmaceutical companies. But, the patent laws in other countries are not strong enough and thus they face a risk of loss. 3. Counterfeit Drugs: Some developing countries have weak regulations when it comes to counterfeit drugs from generic manufacturers. More than 30% of medicines sold in these countries are fake and results in the death of thousands of people. 4. Political: The political situation in different in every country and the growth of the pharmaceutical firms in these countries depends on political atmosphere. Some governments do not want the foreign companies to operate and they encourage the local companies. The local pharmaceutical companies may not serve the purpose completely. The global pharmaceutical industry is dominated by USA and Europe. Corruption in many third world countries like bribery, kickbacks are the major risks for the pharmaceutical firms. 5. Legal System: Similar to the political system, the legal system also function in the same lines. Sometimes, the politicians can take law in their hands and may not follow the legal system, resulting in bribes and corruption. Some legal system does not have a strong patent protection. This is one of the biggest risk faced by the pharmaceutical firms.
People need medications, but the poor often...
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