Pfizer and Hisun Joint Venture Analysis

This assignment analyzes the joint venture between pharmaceutical giants Pfizer and Hisunchem. It delves into their respective strengths, weaknesses, opportunities, and threats (SWOT analysis). The value chain of Hisun is examined, and a Charles Handy organizational culture model is applied to understand the dynamics within the partnership. The analysis highlights key factors contributing to the success or failure of this joint venture.

Running head: DOING BUSINESS GLOBALLY & INTERNATIONALLY
Doing Business Globally and Internationally
[Business Partnership Between of Pfizer Inc. with Zhejiang Hisun Pharmaceuticals]
Name of the student:
Name of the university:
Author note:

1DOING BUSINESS GLOBALLY & INTERNATIONALLY
Executive summary-
The study is aimed at understanding the different factors, which influence the business performance.
The purpose is being served through the example of joint venture between Pfizer and Hisun. The
venture has however failed to deliver on the set expectations. The paper identifies few reasons for
failure. Cultural difference in specific the organizational culture is being shown as one of the reasons
for failure.

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Table of Contents
Introduction-....................................................................................................................................4
Part A: Answer to Question 1-.........................................................................................................4
1.1 Important external issues & trends driving the partnership-.............................................4
1.2 Area of expected benefits & synergies for both the companies-.......................................6
1.3 Reason behind the involvement of Chinese and US governments-...................................7
2. Describing the partnership-......................................................................................................8
2.1 Explaining the associated risks-.........................................................................................8
2.2 Comparing & contrasting this with Pfizer Inc.’s recent partnership with Hospira-..........9
2.3 Justifying the views-..........................................................................................................9
3. Analyzing the cultures involved-.............................................................................................9
3.1 Corporate culture in Pfizer and Hisun-............................................................................12
3.2 Organization culture:.......................................................................................................13
3.3 Impact on the partnership-...............................................................................................14
4. Critical discussion of the possible effects of the exchange rate behavior-............................15
Part B:............................................................................................................................................16
5. Three challenges of doing business internationally-.............................................................16
5.1 Impact of challenges on a learner-...................................................................................17
5.2 Impact on the future of international business-...............................................................18
Conclusion-....................................................................................................................................18

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References-....................................................................................................................................20
Appendix-......................................................................................................................................28
1. Hofstede’s cultural dimension for the United States and China-..........................................28
2. PESTEL analysis of the USA pharmaceutical industry-.......................................................28
3. PESTEL of China pharmaceutical industry-.........................................................................31
4. Porter's five forces of pharmaceuticals industry in China and USA-....................................34
China:-...................................................................................................................................34
USA:-.....................................................................................................................................36
5. VRIN analysis of Pfizer and Hisun-......................................................................................37
6. Value chain for Pfizer and Hisun-.........................................................................................39
7. SWOT analysis of Pfizer & Hisun:-......................................................................................42
8. Charles Handy Model:...........................................................................................................45

4DOING BUSINESS GLOBALLY & INTERNATIONALLY
Introduction-
The partnership working is a boom in the global pharmaceutical industry. There can be many
reasons for it; however, moving beyond the patent medicine concept is one of those that attract
Multinational Corporation towards it. Multinational companies wish to continue with their highest
selling product even after the expiring of patent medicine. Commercializing the off-patent medicine
has become a source of good business (Lezaun & Montgomery, 2015). The same purpose has driven
the interest of Pfizer and Hisun for a collaborating business. Both the companies have analyzed the
business opportunities with the off-patent medicine. The result of such interest has produced one of
the most notable joint venturing the global pharmaceutical industry has ever witnessed
(Press.pfizer.com, 2017). The main purpose of this assignment is to analyze the challenges, which is
there in partnering business.
Part A: Answer to Question 1-
(Refer to Appendix 2)
The analysis does provide some supportive facts that may prove the business relationship of
Pfizer with Hisun a success. Developing countries such as China is a potential market for generic
medicines. The reasons behind the facts include the stable local government policies for off-patent
medicines, developing infrastructure, demand for such medicines etc. However, the business
relationship needs to have a plan to counter the various environmental challenges such as proper
disposal of unwanted medicines as these are extracted through urination. A significant amount of
medicines is disposed through urination and pollute the rivers and the surrounding environment. Eco-
friendly drugs will be the potential answer to the identified challenge (Cameron et al., 2012).
1.1 Important external issues & trends driving the partnership-

5DOING BUSINESS GLOBALLY & INTERNATIONALLY
a) Macro & micro environmental analysis-
Macro environmental analysis-
(See Appendix 2 & 3)
Micro environmental analysis-
(See Appendix 4)
b) Internal analysis-
VRIN of Pfizer & Hisun-
(See Appendix 5)
Value chain of Pfizer & Hisun-
(See Appendix 6)
c) Analysis based on SWOT, PESTEL, 5 Forces, Value Chain and VRIN-
(See Appendix 2 to 7)
The joint venture between Pfizer and Hisun is one of the biggest deals in the global
pharmaceutical industry. The deal has probable been done to satisfy the needs of individual. Pfizer
has probably done the deal after getting encouraged from the prospects of generic medicines in
developing nations such as China. China is one of the biggest platforms for generic medicines. Hisun
is the leader in generic medicines in China. The mentioned facts have probably attracted Pfizer
towards the deal (Cameron et al., 2012). However, it could not turn up as expected. The dropping
profits of Hisun especially in the US market have probably encouraged the deal to fail. The huge

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reduction in supply of doses is probably one of the reasons. However, Pfizer has ensured that the
company will keep on providing the technological and legal support to generic drug manufacturing at
the global platform. The generic drugs will now be manufactured locally in China (Huang et al.,
2013). The joint venture deal had looked a potential move due to the fact that Hisun is a leading firm
in China in manufacturing of generic drugs and the generic drugs are picking up in demand at the
global level especially in the developing nations. The deal would have benefitted Hisun from the
technological and the legal perspectives both in China and at the global level. However, it could not
prove wonder for Hisun as the supply of doses had dropped in US and that had encouraged Pfizer to
move out of the deal (Fiercepharma.com, 2017).
1.2 Area of expected benefits & synergies for both the companies-
Following are the expected benefits of the joint venturing in between the Hisun and Pfizer:
 Will be one of few resources to provide high-quality and inexpensive medicines to the people
at the global platform (Press.pfizer.com, 2017)
 Joint venture will be benefitted by Pfizer through an efficient R&D process, international
standard for market promotion, operational capabilities and manufacturing quality
management (Press.pfizer.com, 2017)
 Joint venture will be benefitted in China as the country has 70% of the entire domestic
pharmaceutical industry for off-patent medicines (Press.pfizer.com, 2017)
Synergies:
(See appendix 7)
The joint venturing was a result of mutual benefits for both Pfizer and Hisun. Hisun had
aimed to get benefits of research & development (R&D) expertise, the technological background and

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the legal supports at the global platform. In this way, Hisun could have expanded in few other
markets at the global level. On the other hand, Pfizer had aimed to get a good understanding of
Chinese market for generic drugs. Nevertheless, China is a highly potential market for generic drugs.
Hisun is a leading name in China in terms of manufacturing the generic drugs. In this way, the joint
venture had probably happened to get the expected benefits to both the partnering companies.
1.3 Reason behind the involvement of Chinese and US governments-
There can be many reasons such as the prospering demand for the off-patent medicine in the
world especially in emerging countries. China is a highly potential market for generic medicines
probably because such medicines are cost-effective and high in quality (Hassali et al., 2014).
Pharmaceutical industry is a key sector, which significantly contributes in the local economy. Hisun
is a leading name in China for generic drug manufacturing. The joint venture was supposed to allow
a wider exposure to different market, access to advanced research & development (R&D) process
and the legal support at the global platform. Additionally, the joint venture will allow increased
investments by Pfizer in generic manufacturing. This was thought as a better opportunity to produce
an advanced in technology and cheaper generic medicines to both the Chinese and the global
customers. Such facts had probably attracted the Chinese government to support the joint venture
between Pfizer and Hisun (Barber et al., 2013).
External circumstances in the United States were not so favorable at the time when the joint
venture between Pfizer and Hisun had happened. Customers were found eager for such medicines as
they had found supports on chronic diseases like cardiovascular system at a much cheaper rate.
However, the manufacturing of generic medicines was not supported full heartedly. This is because
the manufacturers in the US were asked to prove their stand as much profitable as the expensive
branded patent medicines (Comanor & Scherer, 2013). This has probably prepared a platform to look

8DOING BUSINESS GLOBALLY & INTERNATIONALLY
for other markets. Nevertheless, to the United States government, the joint venture between Pfizer
and Hisun was a much better deal as this will allow to flourish the business prospect of Pfizer and
hence the economy of the US. Moreover, the deal was supposed to be a productive option in terms of
getting access to the manufacturing of generic medicines. This will allow them to supply medicines
at the global platform especially in emerging nations (Comanor & Scherer, 2013).
2. Describing the partnership-
The partnership had looked indeed a potential move. This will help Hisun to reach to a global
platform, which has not happened before due to the incompetent efficiency. However, the company
will now have the advanced R&D and lot more in the form of Pfizer (Press.pfizer.com, 2017). This
will provide opportunity to the company to operate at a global platform. Additionally, the company
will also grow in the domestic market (Comanor & Scherer, 2013).
This was a positive move for Pfizer as well. The company got the opportunity to enter the
Chinese market. The country has a wider prospect for the generic drugs (Sun, 2013). Pfizer had
supposedly got a potential market. This was supposed to be beneficial for both the company and the
United States. The success of joint venturing was also supposed to be good for relationship between
the United States and China that has never been friendlier (Lieberthal & Jisi, 2012).
2.1 Explaining the associated risks-
There are several associated risks with such joint venturing between Pfizer and Hisun. One
of such risks can be the difference in the organizational culture that can also affect the objectives
behind the joint venturing. Both Pfizer and Hisun have different objectives behind the joint
venturing. Sufficient leadership tends to miss at the earlier stages of the relationship (Zhao, Hwang &
Yu, 2013).

9DOING BUSINESS GLOBALLY & INTERNATIONALLY
2.2 Comparing & contrasting this with Pfizer Inc.’s recent partnership with Hospira-
The Pfizer’s Inc. recent partnership with Hospira may be different to the joint venturing
relationship between Pfizer and Hisun in following ways:
 Hospira is a United States based company and hence, there will not be many cultural
conflicts as it is in case of Pfizer-Hisun (Jackson & Wang, 2013)
 The partnership will provide Pfizer a dominant position in producing the generic sterile
injectables (Pfizer.com, 2017)
 The market is expected to grow for generic sterile injectables by 2020. The estimated value
could be around $20 billion in 2020 (Pfizer.com, 2017). On the other hand, the partnership
business with Hisun is surrounded by certain risk factors such as the cultural differences
(Jackson & Wang, 2013)
 Additionally, Pfizer and Hospira will be together to manufacture a difficult to produce life-
saving sterile injectables (Pfizer.com, 2017)
2.3 Justifying the views-
Cultural differences are a barrier to business success (Gesteland, 2012). Additionally, the
relationship between China and the United States may also affect the joint venturing. Hospira has lost
its stock trading on the New York Stock Exchange (Pfizer.com, 2017). This will indeed be beneficial
for Pfizer as the company will have a much-needed control in the joint operation. This is never
possible in the joint venturing operation with Hisun, which had a 51% shares in the venturing
(Pfizer.com, 2017).
3. Analyzing the cultures involved-

10DOING BUSINESS GLOBALLY & INTERNATIONALLY
Hofstede's cultural dimension- a comparative analysis of business cultures in the United States and
China has been attached to the appendix section.
Power Distance-
China scores double to the United States in terms of power distance, which means that
leadership is much respected in China. This further means that an easy interaction with the leaders
will be comparatively tougher in China. The cultural dissimilarities in between the United States and
China might bring communication gap, which is not a very good sign for a progressive business.
Americans are very casual while interacting with the leaders. They might find this difficult to interact
with the counterpart in China (Jackson & Wang, 2013). An integrated approach is indeed required to
run a successful joint venturing (Damanpour et al., 2012).
Individualism-
Individualism is very low in China in comparison to the United States. This means that self-
values are least addressed in China. This discourages the making of innovation. This is highly
evitable in terms of joint venturing. Joint venturing is not just a collaboration of two companies. It is
rather a collaboration of two distinguish culture. China differs to the United States in a large degree
in terms of individualism. Chinese are less expressive; however, the Americans are high in
expressions. The collaboration of innovation will there be of no mean in the joint venturing of Pfizer
with Hisun (Pudelko Tenzer & Harzing, 2014).
Masculinity-
Both China and the United States are more or less equal in terms of masculinity. This means
both the countries are competitive in nature. Competitive skills will probably help the joint venturing;
however, the other identified differences might not allow flourishing the partnership business.

11DOING BUSINESS GLOBALLY & INTERNATIONALLY
Competitiveness can become productive if both the partners are walking down the same line. Both
Pfizer with Hisun has different strengths. A collaboration of different strengths will probably serve to
the good outcome; however, the identified cultural differences might impose stoppages to the
objective (Vaara et al., 2012).
Uncertainty Avoidance-
Uncertainty avoidance states the level of ignorance that a culture has for an uncertain future.
The United States is little ahead of China in avoiding the unexpected future. Ignoring the unexpected
future can prove to be a good mean to success. This is because such cultures will be progressive in
their purpose. Thinking much about the unexpected future might hamper the making of creative
skills, which has become a key to success in the contemporary business world (Vaara et al., 2012).
The joint venturing between Pfizer and Hisun needs a lot of creative strategies as both the companies
have different capabilities. Utilization is possible only when both are progressive and less worrying
about an uncertain future. This is indeed not the case in the joint venturing of Pfizer and Hisun.
Long-term Orientation-
Chinese is much more focused on the long-term orientation. This means they are focused on
long-term business objectives. On the other hand, business in the United States is more inclined
towards short-term goals. This is indeed a threatening signal for the venturing between the two
different companies. There are ample of cultural differences between the United States and China. In
such scenario, this can be assumed that Pfizer can think of quitting the joint venturing business with
Hisun at any point in time. If the expected success is not attained Pfizer can opt the exit from the
partnership business (Kvedaraviciene & Boguslauskas, 2015).
Indulgence-

12DOING BUSINESS GLOBALLY & INTERNATIONALLY
This is another big cultural difference between the United States and China. China is less
indulgent, which means that the people of the country spend less time on leisure time. On the other
hand, the US believes in spending significant times on leisure moment. Such cultural differences will
make things danger for integration. Integration is indeed required. Hisun might not be able to utilize
the expertise of Pfizer in such case (Bauer, Matzler & Wolf, 2016).
3.1 Corporate culture in Pfizer and Hisun-
Pfizer:-
They believe in creating a pulsating culture both in the workplace and the community
they live and work. They believe in developing utmost cultural beliefs in staffs, which is why
they have created Mentor Match. This is an online tool that enables the development of
mentoring capabilities. Moreover, staffs at the different parts of the world will be able to get
trained when there is a need for such thing. Community building is an integral asset of Pfizer.
They offer a scholarship program to students. They also sponsor various health fairs to support
the health wellbeing of a diverse population (Pfizer.com, 2017).
Hisun:-
They give high values to their shareholders, staffs and the influencing communities. They
believe in collaboration works, which is good for diverse culture in the workplace. They give
high respect to honesty, which can be effective in maintaining a good relationship with the
business partners. They seek to improve their innovation capabilities, which will open up doors
to collaborate with others that are well versed with innovative capabilities. They want to enhance
their capability in technological innovation. This can be realistic through effective joint ventures
both at the domestic and the global platform (Hisunchem.com, 2017).

13DOING BUSINESS GLOBALLY & INTERNATIONALLY
3.2 Organization culture:
Charles Handy Model of Organization Culture-
(See Appendix 8)
According to Charles handy, there exist four types of organizational culture such as
power culture, task culture, role culture and person culture (do Carmo Silva & Gomes, 2015).
Power-
The model denotes that there are organizations where decision making and other
important activities are related with one or few power. The power can be in the form of the CEO.
It further means that the CEO least bothers for other’s suggestions. Such cultures do not
encourage a contributive effort in making a decision.
Task culture-
Task culture according to the model is assigned to targets. It encourages the division of
employees into different separate teams. All the teams will then need to meet the set target that
also means all the team will contribute to a set goal.
Person culture-
According to the model, such culture may suffer the loss as it enables individual to feel
bigger than the organization. Individual in such culture does not bother for the organizational
values. They rather keep on fulfilling their thoughts and needs.
Role culture-

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Role culture encourages the utilization of every single employee through exploiting the
individual’s skills and potentials. Individual under this culture are given enough opportunity to
utilize their expertise in the right direction.
Pfizer-
Pfizer follows the role culture of Charles Handy model. The company gives value to
every single employee. It encourages employees to take the ownership in decision making by
giving their valued ideas. In this way, Pfizer gives utmost value to innovation (do Carmo Silva &
Gomes, 2015).
Hisun-
The power culture of Charles Handy model looks feasible to the organizational
culture at Hisun. It does not mean that it does not give values to thought process. It rather means
that employees are given least importance in decision making process. They are authorized to
fulfill the set targets for them (do Carmo Silva & Gomes, 2015).
3.3 Impact on the partnership-
Cultural perspectives of failure of joint venture:
There are contrasting difference between the national and organizational culture of
China and the United States. The organizational culture in Hisun is like power culture of Charles
Handy model as depicted in (Appendix 8), which means that the decision making is orients from
the top management only (do Carmo Silva & Gomes, 2015). Employees are not given equal
opportunity. They are not either given importance. Interestingly, they are put for extensive work
pressure. The culture is extremely different to what Pfizer has. Pfizer follows the role culture of

15DOING BUSINESS GLOBALLY & INTERNATIONALLY
Charles Handy model, which is common at workplaces in the United States (do Carmo Silva &
Gomes, 2015). Such culture gives values to every single employee and decision making process
is shared with them. Moreover, there are huge cultural differences between the workplace at
Hisun and Pfizer (do Carmo Silva & Gomes, 2015). This could have also troubled the
relationship. The cultural conflict would have allowed no or probably very less chance of
understanding the each other’s potentialities. Cultural conflicts might have happened at the
managerial positions. This could also have happened among the employees. The cultural
differences might probably have challenged a smooth flow of business between either of the
companies. The two kinds of organizational and the national cultures in China and the US have
crashed to produce nothing.
4. Critical discussion of the possible effects of the exchange rate behavior-
There exist three kinds of exposures that can affect the joint venture between Pfizer and
Hisun. A system of accounting, which is done by calculating the change in the combined
financial statements due to a changed behavior of exchange rates, is known as translation
exposures. Impact of outstanding obligations, which is set before an expected change in
exchange rates but is settled once the change has happened to the exchange rates, is known as
transaction process. An unexpected change in exchange rates that affects the expected cash flows
is termed as economic exposure (Combes, Kinda & Plane, 2012).
The complexity of exchange rates can be understood with the help of a theory popularly
known as Purchasing Power Parity (PPP). According to this theory, goods and services should cost
the same in irrespective of the countries if the measuring parameter is based on the use of same
currency. The theory of Purchasing Power Parity states that if the purchasing power is same in both

16DOING BUSINESS GLOBALLY & INTERNATIONALLY
the countries then the exchange rates behavior of two currencies will be in an equilibrium state
(Giovannetti, 2013).
The exchange rate will produce both the positive and the negative impacts on the business
deal between the Pfizer and Hisun. The fluctuating behavior of exchange rates will bring both the
advantages and disadvantages as well. Pfizer will provide its R&D and manufacturing capabilities in
the deal. The business operation will be in China and the manufactured products will be available for
both the domestic and the international markets. The global dealing will be in flash due to the
fluctuating behavior of exchange rates. This will be affected due to the purchasing capability of the
target market. If the purchase power parity is weaker in the target market, then this will be beneficial
for the country that manufactures the product. On the other hand, if the purchase power parity is
stronger in the target market then this will be a loss in the profitability of the business (Cheung &
Sengupta, 2013).
Part B:
5. Three challenges of doing business internationally-
There are ample numbers of challenges in doing business globally. Following are the three
challenges that a global operation provides:
Political issues-
This is a very vital factor of consideration while operating at the global platform. This is even
bigger when it is related to business in the United States and China. There have been political
tensions in between the United States and China. The emergence of China as a developing country
has caught the attention of global countries. China is the one country where the United States has less
success. Walmart could not also solve the issue. The fear to lose the dominance in the hand of China

17DOING BUSINESS GLOBALLY & INTERNATIONALLY
is probably the one factor that has maintained the long-fought political battle between the United
States and China (Shambaugh, 2012).
Cultural issues-
There are ample of cultural differences in between the United States and China. One of the
major differences is the setting of business objectives. China believes in setting long-term goals
whereas the US believes in setting short-term goals. This means that Pfizer will look for quick
success. On the other hand, Hisun might have a resistive approach towards the goal. A conflicting
approach towards the business objectives is highly expected. If the joint venturing is not able to attain
a quick success then the future of the partnership working will be under threat. Another notable
difference is the style of work, which is highly distinguishing in nature in both the companies.
Americans love to reserve time for leisure moments whereas the Chinese do not. This may hamper an
integrated approach towards the business objectives (Qiu, Lin & Leung, 2013).
Leadership quality-
This is another very important factor to consider while operating on the global platform. The
leadership style in China is authoritative. This means they believe in putting ample pressure on the
staffs. Such working atmosphere is entirely against the work-life balance, which is a widely
discussed topic at the global platform. The United States, on the other hand, provides supportive
leadership experience to its staffs. The workforce in the United States can also avail sufficient time
for their leisure purpose. These are few such differences that might test the patience of American
staffs at their work while they are working for a Chinese company (Swaine, 2012).
5.1 Impact of challenges on a learner-

18DOING BUSINESS GLOBALLY & INTERNATIONALLY
Such challenges can test the patience level of learner if the learner gets an opportunity of
working in different countries. The learner will find this difficult to interact with the others people
who are from different cultures. This may prevent the learner from being in a comfortable zone with
the other employees. The identified cultural & language barriers may resist the expressiveness, which
can prove to be fatalistic as sustenance in such circumstance will be challenging. Moreover, the
learner might end up quitting the job and return back to its comfort zone, which is the learner's home
country (Vaara et al., 2012).
5.2 Impact on the future of international business-
The cultural differences have remained a problem for organizations. An extensive marketing
research is therefore conducted prior to entering a new market (Deng, 2012). In future, there will be
more such practices. Consequently, the international business will witness an increasing number of
merger & acquisition process (Ferraro & Briody, 2017). However, it seems that franchising will be
one of the emerging choices to respond to the identified cultural challenges at the global platform.
Franchising is indeed a good strategy because this enables the conduction of business with the help
of local business. Moreover, foreign companies will, therefore, be prevented from facing the cultural
challenges (Alon, Ni & Wang, 2012).
Conclusion-
The joint venture is now a failure due to a reducing supply of doses in the United States.
Moreover, Hisun had to suffer a huge loss in US. Consequently, Pfizer has decided to sell its entire
shares in the joint venture between Pfizer and Hisun. The company will still maintain the
manufacturing of generic medicines in China locally. The joint venture was adopted as a strategy;
however, merger & acquisition was avoided. This was due to the direct advantages of joint venture
and on the other side, the direct risks of merger & acquisition. Joint venture provides working in

19DOING BUSINESS GLOBALLY & INTERNATIONALLY
collaboration with other, which means there will be an exchange of expertise from both the end.
Merger & acquisition on the other hand means that a company is acquiring the entire shares of other.
In the joint venture, both the partnering parties will be able to access the leverages of others such as it
happened in the joint venture between Pfizer and Hisun. Pfizer could access to generic drug market
and the leading manufacturers. On the other side, Hisun could access to technological capability in
research & development (R&D) process and the legal support at the global platform. The risks
involved in joint venturing are lower than merger & acquisition as both the partnering firms make
more or less equal investments. On the other side, the failure in business after adopting the merger &
acquisition strategy will mean a complete loss of shares. This will be much bigger than it could be
with the joint venture.

20DOING BUSINESS GLOBALLY & INTERNATIONALLY
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Appendix-
1. Hofstede’s cultural dimension for the United States and China-
Figure 1: Hofstede’s Cultural Differences between United States and China
(Source: Jackson & Wang, 2013)
2. PESTEL analysis of the USA pharmaceutical industry-
Political  Generic medicines can be a good
prospect for the US healthcare industry;
however, the political situations are not
very friendlier to the concept (Hartung et
al., 2015)

29DOING BUSINESS GLOBALLY & INTERNATIONALLY
 The United States Food and Drug
Administration (FDA) has taken a
restricted approach so far. They want the
generic manufacturers to prove the
profitability of generic medicines. Only
then the concept will be supported on big
platform (Hartung et al., 2015)
Economic  The economic development due to
generic medicines has been felt in US
(Lee et al., 2017)
 The use of generic medicines has helped
to save $1.68 trillion in between 2005
and 2014 in the United States Healthcare
Sector (Lee et al., 2017)
 The use of generic medicines has
prepared a ground for its development;
however, everything will depend on how
the generic manufacturers prove their
prospects (Hartung et al., 2015)
Social  Chronic diseases such as cardiovascular
and central nervous system are two future
markets for generic medicines (Lee et al.,
2017)
 Chronic diseases as mentioned above are

30DOING BUSINESS GLOBALLY & INTERNATIONALLY
a health burden for larger population
(Lee et al., 2017)
Technology  Generic drug manufacturers are
technically efficient and have understood
the complexity of manufacturing the
generic medicines (Lee et al., 2017)
 They need to enhance their technological
capability and also have a large market to
enhance the proximity level of profit.
This will encourage investing much on
research & development (R&D) process.
The joint collaboration between Pfizer
and Hisun will, therefore, be an effective
move to the generic manufacturers in
USA (Lee et al., 2017)
Environmental  Recycling of patent medicines is largely
felt. This is due to the effectiveness of the
medicines. Expiry of such medicines will
create the importance recycling, which
will be better achieved in the form of
generic medicines (Wellington et al.,
2013)
 Generic drugs are a good source for a
sustainable drug manufacturing industry

31DOING BUSINESS GLOBALLY & INTERNATIONALLY
(Wellington et al., 2013)
Legal  The legal situations are not very
favorable for the generic drugs
consumers (Lee et al., 2017)
 The Hatch-Waxman Act has given a
period of 180 days in which there cannot
enter other generic manufacturers if one
manufacturer is still there. This move
will be beneficial for a single
manufacturer; however, the consumers
will get a monopoly market where the
purpose of cost-effectiveness will not be
achieved (Lee et al., 2017)
Table 1: PESTEL of USA Pharmaceuticals Industry
(Source: created by author)
3. PESTEL of China pharmaceutical industry-
Political  China is a very stable country in relation
to off-patent drug development (Zeng,
2013)
 The local Chinese government supports
the infrastructure development (Wei et

32DOING BUSINESS GLOBALLY & INTERNATIONALLY
al., 2012)
 The transition post-1980s from state-
owned property to privately owned did
help the pharmaceutical industry to
flourish (He & Wang, 2012)
 Significant transition at the global
pharmaceutical platform is also
happening (Jungmittag, Reger & Reiss,
2013)
Economic  China is one of the few emerging nations
that have shown resilience for improving
the R&D capability of the pharmaceutical
industry (Qiu et al., 2014)
 A decreased approval of medicine has
hampered the improvement of R&D
capability (McCarthy, McLeod &
Ginsburg, 2013)
 China has indeed attracted several
foreign countries towards it
 Reasons being the favorable national
policies, ageing population, global trend
and economic growth (Shi, Hu & Wang,
2014)
Social  Increased demand for cheaper medicines

33DOING BUSINESS GLOBALLY & INTERNATIONALLY
especially in the developing countries
(Cameron et al., 2012)
 Increased demand for medicines at the
global platform
 Customers prefer cheaper medicines
specifically in the developing countries
and hence, a good platform for generic
medicines (Cameron et al., 2012)
Technology  Different countries across the globe are
in search of potential markets
 Generic medicines are a potential
business option in China (Cameron et al.,
2012)
 R&D improvements are also in picture
(Liu & Chen, 2012)
Environmental  Correct disposal of unwanted medicines
is a challenge (Boxall et al., 2012)
 Need to have eco-friendly drugs (Boxall
et al., 2012)
 Conducting an environmental risk
assessment (ERA) is another challenge to
the pharmaceutical companies (Boxall et
al., 2012)
Legal  Government regulations are very crucial

34DOING BUSINESS GLOBALLY & INTERNATIONALLY
for the drug industry as it lengthens the
duration of new concept in the industry
(Xie & Tian, 2013)
 Regulations encourage the production of
safe drugs (Xie & Tian, 2013)
 Compliance with federal safety laws is
utterly required (Xie & Tian, 2013)
Table 2: PESTEL of China Pharmaceuticals Industry
(Source: Daemmrich & Mohanty, 2014)
4. Porter's five forces of pharmaceuticals industry in China and USA-
China:-
Bargaining power of suppliers  Bargaining power of suppliers is
medium. The pharmaceuticals industry
is highly competitive in China. The
generic drug industry is one of the most
developed in the world. However,
common people have their faiths also in
the foreign made branded medicines.
Moreover, a sustainable generic
industry will be challenged by future

35DOING BUSINESS GLOBALLY & INTERNATIONALLY
development of foreign branded
medicines (Uzuner et al., 2012).
Bargaining power of buyers  Customer’s perception is a highly
decisive factor. They are much in favor
of generic medicines because of its
cost-effectiveness. However, they are
also in favor of foreign manufactured
patent medicines. Moreover, one
particular industry will be skeptic about
the future trend (Uzuner et al., 2012).
Industry rivalry  Competition s very high. There is tough
competition between the generic drug
manufacturing companies and the
foreign manufacturers of patent
medicines (Uzuner et al., 2012).
Threat of new entrants  This is higher. As stated earlier,
Chinese people have in them a high
attraction for foreign-made patent
medicine. The market is indeed very
uncertain (Uzuner et al., 2012).
Threat of substitute  It is low. This is because the generic
medicines are the latest substitute. The
future might witness various therapies,

36DOING BUSINESS GLOBALLY & INTERNATIONALLY
which can be a threat to generic drugs.
Even then the market will need generic
drugs for chronic diseases such as
central nervous system (Uzuner et al.,
2012).
Table 3: Porter’s five forces of pharmaceuticals industry in China
(Source: created by author)
USA:-
Bargaining power of suppliers  The bargaining power of suppliers is
low. This is because the suppliers have
inadequate resource of materials for
few generic medicines. Companies may
opt to move to a different country to get
better resource (Lee et al., 2017).
Bargaining power of buyers  This is higher because customers are in
the hunt for cheaper medicines for
complicated chronic diseases like
cardiovascular. Generic medicines are
effective in few like such purposes as it
will be available for customers even

37DOING BUSINESS GLOBALLY & INTERNATIONALLY
after the expiry of patent medicines
(Lee et al., 2017).
Industry rivalry  Industry rivalry is high. There is huge
competition between the patent
medicines, the generic medicines and
the therapeutic options (Lee et al.,
2017).
Threat of new entrants  This is high as the demand for generic
medicines is increasing in the United
States. However, it does not have
adequate suppliers. Moreover, the
generic industry can be a good prospect
provided it gets some external resource
as well (Lee et al., 2017).
Threat of substitute  It is low as the country is already
equipped with the different types of
treatments such as patent medicines,
generic medicines and the therapeutic
ways (Lee et al., 2017).
Table 4: Porter’s five forces of pharmaceuticals industry in USA
(Source: created by author)

38DOING BUSINESS GLOBALLY & INTERNATIONALLY
5. VRIN analysis of Pfizer and Hisun-
Pfizer:-
Valuable (V) Rare (R) Inimitable (I) Organized (O)
Competitive
disadvantage
NO
Competitive parity YES NO
Temporary
competitive
advantage
YES NO YES
Unused
competitive
advantage
YES NO YES YES
Sustainable
competitive
advantage
YES NO YES YES
Table 5: VRIO of Pfizer
(Source: Laslett et al., 2012)
The above results show that the competitive disadvantage will not hamper the business as Pfizer
can take the benefits from several opportunities such as the manufacturing of generic medicines.
The temporary competitive advantage will keep on producing results provided that Pfizer takes
suitable approaches towards the unused opportunities such as the enhancement of Research &
Development (R&D) technology and the production of generic medicines (Laslett et al., 2012).

39DOING BUSINESS GLOBALLY & INTERNATIONALLY
Hisun:-
Valuable (V) Rare (R) Inimitable (I) Organized (O)
Competitive
disadvantage
YES
Competitive parity YES NO
Temporary
competitive
advantage
YES NO YES
Unused
competitive
advantage
YES NO YES YES
Sustainable
competitive
advantage
NO NO YES YES
Table 6: VRIO of Hisun
(Source: Zhang et al., 2012)
The competitive disadvantage is a threat because of the increased market competition. The temporary
competitive advantage may prove to be useful in acquiring the unused opportunities such as to enter
a new market or to produce various new products or services. The sustainable competitive advantage
is not competent because of its weaknesses such as the increasing competition, the future
productivity and the lower profitability venture (Zhang et al., 2012).