The key to the continued survival and growth in the profitability of any business is in its ability to expand and exploit new markets. Globalization, a process characterized by a major integration of economies and cultures, is becoming rife and with it, a shift in the way business and societies operate.
As such, businesses are struggling to reach into the new global market that is filled with opportunity. Cardinal Health is one such company that is seeking to become a more global company by reaching even more nations that it currently does. This paper shall assess the activities that Cardinal health is currently engaging in to make it more global as well as the problems that Cardinal health currently faces in its efforts.
Cardinal Health is an American based company that engages in the provision of medical products to a wide variety of clients ranging from clinical laboratories to pharmacies and hospitals (Cardinal Health, 2010). Cardinal Health also engages in the provision of high-technology medical devices such as those devices used in respiratory care and in intensive care units.
The rationale behind Cardinal Health’s expansion and its subsequent successes to date is the fact that access to the needed drugs is fundamental to the proper performance of any nation’s health care system (Govindaraj, Reich & Cohen, 2000).
Currently, Cardinal Health boasts of having a consumer base in over 100 countries. Considering the fact that the developing nations rely on foreign pharmaceutical companies for up to 93% of their medical projects, Cardinal Health should focus on tapping into this market (Cultural Survival Quarterly, 2010).
One of the major deterrents to Cardinal Health as it ventures to develop countries is that the governments in the developing countries have difficulty in assuring the quality of pharmaceuticals within their spheres of influence. As such, there are widespread cases of counterfeit drugs and poor manufacturing processes as well as the presence of unregulated prescriptions and a platform for informal drug sales (Govindaraj, Reich & Cohen, 2000).
This is especially an issue for Cardinal Health since the company subscribes to Advamed’s code of Ethics which stipulates stringent ethical activities that the member companies can engage in (Advamed, 2010).
Health care is a capital intensive industry and companies that deal with health care such as Cardinal Health invest millions to billions of dollars in the sector. The different shareholders of the company expect to be rewarded for their investments by having their capital restores and profits made.
In most developing nations, this cannot be guaranteed as a result of high levels of government instability. Most nations, especially in Africa, are plagued by civil wars, political unrest, and an occasional coup. While some of this phenomenon do diffuse amicably with relatively limited loses, some lead to the wanton destruction and therefore untold loses for pharmaceutical investors.
Another major issue that could affect any attempts by Cardinal Health in its attempts at penetrating the developing nations is patent laws. In the United States and other developed nations, strict patent laws exist that ensure that pharmaceutical companies are able to recoup the huge amounts of money that they used in research to come up with new drugs (Balasubramaniam, 2000). Patents ensure that companies are protected from having their products copied and sold off at relatively cheaper prices by other companies.
This not only encourages pharmaceutical companies to engage in research for better drugs but it also ensures that high-quality drugs are delivered to the consumers. In developing countries, pharmaceutical companies do not enjoy the same protection.
Under the banner of the “Essential Drugs Programme” (EDP) started by the WHO to ensure that developing nations were capable of meeting the need for essential drugs by their population, developing nations have a significant growth in generic drug markets at the expense of the patented drugs (Balasubramaniam, 2000). Cardinal Health would, therefore, be unprotected from these generic drugs which would significantly decrease its market.
Most third world country governments are infamous for their high levels of corruption. A report by CSQ reveals that some corrupt governments give contracts to companies who sell banned or restricted drugs to the population. These companies also disregard safety standards and regulations and in most cases recommend the wrong dosages to people so as to increase their sales (Cultural Survival Quarterly).
Most third world politicians and planners also come up with policies that do not take into consideration the long term well being of the people. In such an environment, Cardinal Health may be forced to offer bribes to corrupt officials so as to obtain contracts in the country. This will be against the ethical conduct for which the company is well known.
From this report, it is clear that Cardinal Health will face some significant obstacles in its efforts to provide pharmaceuticals and medical supplies to third world countries. Most of these problems are as a result of poor governance and lack of stability in most developing countries. For Cardinal Health to reach into the new global market that is filled with opportunity, ways of mitigating or eliminating these problems will have to be identified and subsequently implemented.
References
Adva Med. (2010). Code of Ethics. Web.
Balasubramaniam, K. (2000). A Healthy Drug Policy for the Third World. Web.
Cardinal Health. About Cardinal Health. Web.
Culture Survival. (2010). Medicinal Drugs in the Third World. Cultural Survival Quarterly Issue: 5:4. Web.
Govindaraj, G., Reich, M. R. and Cohen, C. J. (2000). World Bank Pharmaceuticals. Health, Nutrition and Population (HNP). Web.