A survey of the strategic implications of the enactment of the industrial property bill on the pharmaceutical firms in Kenya case of pharmaceutical manufacturers and distributors

Abstract

This study sought to investigate the strategic responses deployed by pharmaceutical firms as a result of enactment of Kenya Industrial Property Act. The research was conducted between May and August 2002: The sampling frame comprised one hundred and seventeen (117) pharmaceutical firms dealing with manufacturing of brands, manufacturing of generics and distribution of drugs. Sixty (60) firms were selected using stratified sampling. There were three stratas identified in the pharmaceutical industry that is, brand manufacturers (multinationals), generic manufacturers and distributors. A lot of changes have taken place in the Kenyan business environment, this situation is not expected to change. The Kenyan economy has been liberalized. Conditions governing free markets have given rise to new opportunities and challenges. The Industrial Property Act came as a result of HIV/AIDS pandemic which was declared a national disaster. Many consumer pressure groups raise an alarm for the easy accessibility of essential drugs to HIV/AIDS. This brought another change in the pharmaceutical business environment. The legislation ofIndustrial Property Act has the following implications:- the removal of the patents protection of the mY/AIDs related drugs, the allowance of the generic manufacturing and legalisation of parallel importation. This will definitely result in stiff competition hence reducing profitability. As a result of this, pharmaceutical firms are working around the clock to see how to respond to this act in order to survive and remain profitable. The study had the following objectives:- -- Vll 1. To identify the strategic responses by pharmaceutical manufacturers of branded drugs, generic drugs and distributors as a result of the enactment ofIndustrial Property Bill. 2. To identify some of the factors influencing their strategic responses. Primary data was collected using a questionnaire comprising of two parts: first the information background and the strategic responses of the firm. The techniques of analysing the data comprised the use of descriptive statistics such as charts, tables and percentages. The study found out that all firms are aware of Industrial Property Act and due to their mother company influence and resource capability they responded by: 68% of manufacturers of brands (multinationals) are to franchise to the local companies and 57% of the generic manufacturers are to start manufacturing unpatented drugs and all the distributors are set to expand their businesses (distributorship). The study findings reported represented the population of the pharmaceutical industry. It is through the action and decision of these respondents that we are able to measure, learn, make conclusions and recommendation on how firms should respond to the external environment in which they operate. It is paramount that firms should have a strategic fit between their organisations and the environment they operate.