Essay About Main Subindustries And Traditional Medicine

Traphaco : Choices for the Future
APPLIED STRATEGIC MANAGEMENT :Traphaco : Choices for the future[pic 1]Overview of the companyCreated in 1972, Traphaco is working in the Pharmaceutical Industry, which count three main subindustries as represented on the adjacent diagram.  The purpose of this study is to define which direction the company should take for the future. Since the Traditional Medicine is the main revenue of Traphaco but also the main focus when the company started which is included in the Over-The-Counter sub-industry, I will do the Porter’s 5 forces analyze on the Traditional Medicine in Vietnam.Porter’s 5 forces analyseTraditional medicine in the Pharmaceutical industry in VietnamThreat of new entrantsLOW. Really challenging to enter this market. The major barriers for a new company are :Technology to extract active ingredients from the plants. Having the license to manufacture and distribute.Few company with strong brand name already on the market.Everything based on traditional knowledge and research with Vietnamese universities.Power of suppliersMEDIUM. The suppliers do have an influence on the sub-industry. The main reasons are :90% of active ingredients are sourced in Vietnam.Large portion of raw materials are imported.Only need to harvest once the seed is planted. No need for another « specialized » company.Power of buyersMEDIUM. The buyers do have an influence on the sub-industry. The main reasons are :Method of preparation does not appeal young generation.Look for quality and dosage.People diagnostic themselves and request drugs.40% people live with less than 2USD per day and drugs are expensive cause of devaluation.SubstitutionLOW. The risk of substitution can come from : There is a higher quality with western products, but they are expensive.In some country drugs are way cheaper, example with Chinese drugs, but the quality is low.Using modern medicine or simple other Over-The-Counter drugs.CompetitionHIGH. Tough competition on this market. The main reasons are :Imitation of the packaging by other companies.There is close to 80 manufacturers in Vietnam, highly concentrated in the South.Market size not that big, 40% of OTC market, which is 28% of total pharmaceutical market.Highly recognize companies with strong brand name.