Organizational Redesign in a Pharmaceutical Company

SAIDAL Group, the biggest national pharmaceutical company in Algeria (mdipi.gov.dz, 2010) develops drugs in highly specialized areas such as oncology, hematology, immunology, neuroscience, infectious diseases, cardiovascular and metabolic diseases. SAIDAL is increasingly turning towards innovation and becomes nowadays open to new strategies of research and development, combining biotechnologies, artificial intelligence, analysis of real-life data and risk detection of pathologies. New concerns about customer satisfaction, market penetration, and global growth are being raised suggesting business strategies to be optimized and the company’s organizational structure to be adjusted.

The aim of this article is on one hand to draft a new organizational structure that enables the company to implement the strategy developed in part one (01) to cope effectively with the new business challenges and on the other hand, to evaluate this structure, identify its negative aspects, and the ways to overcome them.

Organizational transformation is the starting point for any business change (Nadler & David, 1995). It involves rethinking an organization’s structure, operations, and business practices to perform better. Organizational transformation is a continuous and evolutionary process whose center is the employee, where his commitment is the key element of success.

Being a company with more than 30 years of history it had a greater structure of work dividend which had brought the company to the current level. After the implementation of changes to the structure in the year 2010 with the newly appointed top management, everything seems to be running with little ups and downs eventually turning it to a big mess with a lot of revenue loss as mentioned in detail in part 1 of the assignment.

How Organizational Structure Affect the Performance?

The term “organizational structure” refers to the hierarchical framework that defines and structures the internal activities of a company (John, 1972). An organizational structure is used to structure a company according to its objectives (e.g. increase production, reduce costs, growth). It helps to clarify the following elements: functions, departments, responsibilities, relationships, and workflow (Van Der Aalst, et al., 2004).

The organizational structure thus provides a general overview of performance and tasks inside the company, as well as a basis for all standard procedures and routines. Depending on the objectives pursued by the company, the organizational transformation process can vary considerably.

Figure. A typical drug manufacturing process (Maniruzzaman, et al., 2018)

As given in the figure above the drug manufacturing process of all 3 of the subsidiaries of SAIDAL group are similar and therefore currently only focused on the production aspects.

Current Organizational Structure of SAIDAL GROUP

Figure. The Organizational Structure of SAIDAL SARL (SAIDAL, 2014).

The current organizational structure of SAIDAL group is a centralized one surrounding a board of directors where they control all of the divisions within the organization itself. The structure has two types of divisions but all one and those are the direct functional divisions and indirect functional divisions.

The advantage of the above organizational structure is that it is easily scalable where employees can specialize in their field, and thus work more efficiently. Clear areas of competence and responsibility would help to avoid activity duplication such as accounting in different departments. At the same time, the functional structure allows for quick decision making as the span of control is lesser in a certain division and therefore decisions have to be approved by only one boss. It is therefore particularly suitable for small companies that produce a relatively small range of standardized products in big quantities and at low costs.

One disadvantage is the communication barriers that could arise between the various functional areas in such a rigid structure. The more a department works for itself, the less its ability to communicate and its coordination with the other departments is reliable. Consequently, confusion, conflict of interests and reduced productivity might occur. The lack of orientation towards a specific market, target group or product, as well as the high degree of standardization and formalization also limits the potential for innovation (Desreumaux, 1996).

In conclusion, we can decide that this organizational structure is suitable for a small scale organization only and for SAIDAL like an organization with more than 2300 employees in it there must be a much of differentiation and changes needed to proceed ahead.

The impact of the current structure on the global performance

For several years, SAIDAL SARL has kept the same strategic objective of consolidating its position as a leader in the production of generic medicines, the group also contributes to the implementation process of the drug policy established by the public authorities (Boukhari, 2012).

Year 2009 2010 2011 2012 2013
Products sold 226 232 227 192 169
Source : Université Abou Bekr Belkaid de Tlemcen

Table 1. Number of products (therapeutic class) sold during the period 2009-2013 by UCE-SAIDAL

Figure. The number of products (therapeutic classes) sold between 2009-2013 by UCE-SAIDAL.

We can see in Figure 3 that the number of products (therapeutic classes) sold has decreased significantly after the year 2010 and reached 169 products in 2013, a decrease of 25% compared to 2009.

This could be interpreted as the result of a very limited number of new products introduced in the market, a failing marketing strategy, failure to cope with the current competitive environment, the withdrawal from the market of several specialties: Paralvic, Tenobiotic, Camphobiotic, and the ineffective strategic decisions of the company including production shutdown in Solupharm, AGD Pharma and the Batna production unit. This sharp reduction in the number of products did not have a direct impact on the annual revenues but could have a negative impact on the company’s image in the long term if the problems mentioned are not rapidly solved (Boukhari, 2012).

When dug down to the core reason for the above decline and the bankruptcy as described in part 1 of the report, it can be analyzed departments have worked separately without any coordination and especially the Research & Development division with much employee turnover and the decline of their progress due to malfunctioned work alignment.

Organization Design for Implementing Management Change

Businesses need a clear structure to operate smoothly and grow at the same time. Without structure, there is no clear goal, neither for management nor for employees. This creates confusion and stress and would potentially generate many conflicts in the sharing of responsibilities. The result is a lack of coordination and slow decision-making processes, which could have a long-term impact on the economic efficiency of a company.

A well-thought-out organizational structure, which defines the chains of direction, margins of control and communication channels in a comprehensible manner makes it easier to align the company’s capabilities with its objectives. This could be achieved, for example, by clarifying the value chain, creating an overview of work areas and even reducing organizational costs. This also helps new employees to orient themselves within the company, to know their superiors and subordinates, and to understand the overall situation and their career prospects within the company. A clear organizational structure thus contributes to improving employees’ sense of security and their satisfaction.

Therefore, a redesign in the structure as well the value chain of the SAIDAL group is essential to get the 100% out of the new structure and the organizational performance with innovation included.

Redesigning a New Organizational Structure of SAIDAL Group SARL

It is not so easy to design the right organizational structure and present it in a clear organizational chart. The greatest challenge here is to achieve a solid and reliable structure despite the complexity of the current environment.

Currently, the organizational structure of SAIDAL Group has 18 divisions working with their own separate goals without a communication within them. This is the main thing that needs to be corrected. Other than those following objectives need to be set prior to restructuring,

  • Increasing the communication within the organization (inter and intra-divisional)
  • Decentralization of the span of control
  • Restructuring inside of the Research and Development division
  • Introduction of a division for International Business
  • Introduction of an outsourcing management division
  • Increasing Innovation strategies

A “Mixed” organizational structure (Matrix + Divisional Organizational Structure)

As in the previous details that to avoid the communication problem, we have to go towards matrix organization structure, but total conversion to matrix means it makes the structure much complicated. Therefore, a mix of matrix and current divisional structure is essential.

Figure. SAIDAL SARL new organizational structure

This structure provides an innovative organizational structure that allows the company improve its global performance by separating the R&D department center from the functional directions and splitting it into highly specialized and independent units, reducing administrative costs and improving competitiveness through a targeted research and development approach based on market demand. This indirectly adds Innovation to spread throughout the System.

The above structure will increase the overall performance of the company by improving production and distribution methods, efficiency and productivity, administrative and procurement costs, employee job satisfaction and business relationships.

Span of Control

Divisions, networks, and funds should be better adapted to the company’s objectives rather than traditional functional hierarchy. The corresponding concepts are usually grouped under the term “flat hierarchies” and presented, for example, in the form of a circle (e.g. in the case of circular organizational structures):

Figure. A flat hierarchy within a matrix organizational structure

Management is not represented at the top but in the middle of the organization. The CEO intervenes less directly in the work of his employees and instead communicates his corporate visions from the inside. There are only a small number of levels in middle management so that each of the department heads is responsible for a larger number of employees, but the management chains are shorter.

Flat hierarchies are therefore increasingly based on personal initiative and individual responsibility of employees (Hunter, 2002).

At the same time, they make it possible to provide feedback directly to the right person instead of having to transmit ideas through traditional and sometimes tedious procedures. While traditional concepts provide for a relatively tight separation between semi-autonomous departments especially the R&D ones, the boundaries are less strict within flat hierarchies.

R&D center shall be divided into highly specialized units, responding to the market demand. This allows greater flexibility in work organization and would potentially increase the employees’ motivation.

Advantages of the Restructure

Once the restructure in place following advantage can be gained,

  • Increased communication within the organization
  • Higher work efficiency
  • Supporting innovation
  • Increased employee satisfaction
  • Greater collaboration and motivation within the team

Possible Disadvantages

Risk of conflicts and communication problems and unsuitability with decentralized operations. Decision-making circuits can become very long.  Without unity of command, it sometimes becomes difficult to make decisions or reach compromises to develop a common vision.

Challenging the principle of the hierarchy can lead to numerous conflicts between managers and thus hamper the implementation of the strategy in question (Larson & Gobeli, 1987). Greater difficulty in establishing a global corporate culture, redundancy of posts and higher costs (Fairfield, 2016).

Other than that when implementing this kind of structural change it is essential to follow a method of change management like Kurt Lewi’s Change Management Model. If not cultural and hierarchical issues may arise as this will become a radical change in the terms of this organizational context when implemented.

Changes to Value Chain Structure

As provided in the suggestions it is needed to implement changes as well to the value chain ones the restructuring is done in order to gain the maximum efficiency and the effect for productivity. Therefore, following value chain in proposed for action in terms of combining human resource management and finance division as a collaboration for the activities of pharma production.

This structure will create the coordination between each division of the traditional chain while adding the expertise of Human Resource Management for outsourcing and getting the open innovation to the organization and with the Finance division to get it at a highest profitable and efficient manner.

Conclusion

This restructuring is done with the effort into a development effort. R&D remains more rooted in organizational charts than in reality. Organizational Change is inevitable for the survival of SAIDAL SARL in so far as it facilitates the implementation of the business strategy discussed in part 1. It has also a positive impact on global performance.

First of all, change is expected at the employee level since the employee is at the heart of the company well-supported change will have positive effects on him/her: motivation, involvement, development of knowledge and skills through learning and cooperation.

It can be concluded that a mixed organization structure of both matrix and divisional features is ideal for the SAIDAL Group while having a change in the value chain.

References

Boukhari, M., 2012. Performance et restructuration: Le cas SAIDAL. es cahiers du cread, Issue 101.

Desreumaux, A., 1996. Nouvelles formes d’organisation et évolution de l’entreprise. Revue française de gestion, Issue 107, pp. 86-108.

Fabre, P., 2016. L’open innovation, un levier majeur pour nos chercheurs, une chance supplémentaire pour les patients. [Online]
Available at: https://www.pierre-fabre.com/en/node/2119
[Accessed 12 February 2020].

Fairfield, K. D., 2016. Understanding functional and divisional organizational structure: A classroom exercise. Management Teaching Review, 4(1), pp. 242-251.

Hunter, J., 2002. Improving organizational performance through the use of effective elements of organizational structure. Leadership in Health Services.

John, C., 1972. Organizational structure, environment, and performance: The role of strategic choice. sociology, 6(1), pp. 1-22.

Larson, E. W. & Gobeli, D. H., 1987. Matrix management: Contradictions and insights. California management review, 4(29), pp. 126-138.

Le Figaro, 2010. GSK et Pfizer s’allient dans les traitements contre le sida. [Online]
Available at: https://www.lefigaro.fr/societes/2010/03/13/04015-20100313ARTFIG00125-gsk-et-pfizer-s-allient-dans-les-traitements-contre-le-sida-.php
[Accessed 10 February 2020].

Maniruzzaman, M., Nokhodchi, A. & Williams, R. O., 2018. Process engineering and pharmaceutical manufacturing technologies. pp. 1593-1594.

mdipi.gov.dz, 2010. Rapport sectoriel de l’industrie pharmaceutique. [Online]
Available at: http://www.mdipi.gov.dz/IMG/pdf/Rapport_sectoriel_-Industrie_Pharmaceutique-_PDF.pdf
[Accessed 15 01 2020].

Nadler & David, A., 1995. Discontinuous change: Leading organizational transformation. San Francisco, CA: Jossey-Bass, Inc. Publishers.

Ouchalal, H., Khelfaoui, H. & Ferfera, Y., 2005. situation de la R&D dans l’industrie Algérienne.

Pfizer, 2016. Modèle R&D. [Online]
Available at: https://www.pfizer.fr/r-d/partenariats-de-recherche/notre-modele-de-rd
[Accessed 15 February 2020].

Pfizer, 2016. Une structure organisationnelle innovante. [Online]
Available at: https://www.pfizer.fr/a-propos-de-pfizer/pfizer-dans-le-monde/structure-organisationnelle
[Accessed 15 February 2020].

Pfizer, 2020. Organisation. [Online]
Available at: https://www.pfizer.fr/a-propos-de-pfizer/pfizer-en-france/organisation
[Accessed 15 February 2020].

SAIDAL, 2014. ORGANISATION. [Online]
Available at: https://www.saidalgroup.dz/fr/notre-groupe/organisation
[Accessed 14 February 2020].

Van Der Aalst, W., Hee, K. M. V. & Hee, K. v., 2004. Workflow management: models, methods, and systems. MIT press.




Strategic Management & Leadership Analysis in a Pharmaceutical Company

SAIDAL SARL Group is a pharmaceutical manufacturer in Algeria which has a history of more than 30 years. But after 2010 the company has faced financial crisis slowly which brought it to the level of bankruptcy. This was a gradual change and at a glance, it can be identified that if closely monitored the disaster would have been controlled. Now that it has happened, it needed to implement a strategical plan to set SAIDAL in a new direction to get its body back on track with a greater goal to achieve more.

Recent studies have shown that the main reasons for the disaster are:  the inappropriate resource allocation or investments, lack of monitoring of finances, structural errors of the newly appointed top management in 2010, also strategic decisions, errors in the value chain, etc. These were obtained by the external and internal environment analysis.

The aim of this work is above all to formulate a new business strategy R&D-open-innovation-oriented and focused on biotechnology to face challenges affecting the company’s global performance. Through critical analysis, I’ll try to highlight the relationships that might exist between this strategy, stakeholder expectations and the organizational effectiveness, and thus elaborate based on other similar and successful business models a reasonable implementation plan for the real-world environment that would make such a transition possible.

Introduction

What is SAIDAL Group?

SAIDAL Group is a pharmaceutical company in Algeria currently with a Capital of 2.5 Billion Dinars. 80 percent of SAIDAL Group’s capital is owned by the state and the remaining 20 percent were sold to institutional investors and individuals in 1999. The restructuring process in 1997 contributed to its development into a manufacturing company with three divisions (Pharmaceutical, Antibiotics, and Biotech).

Mission

  • Ensure strategic stability and profitability in safeguarding its financial flexibility, maintaining constant development of its goods ‘ quality, attaining its growth targets and improving its human capital.
  • Achieve the State’s defined goals as the primary owner/shareholder.

Why SAIDAL Group?

SAIDAL group is a company with a greater history in the pharmaceutical industry of Algeria as well in the international context. From its starting in the year 1985 up until around 2010 it performed well, but now the company is in a phase of declining where the strategic decline has commenced due to several reasons. Therefore, for the assignment this organization becomes an ideal candidate and in the next chapters’ evaluation of the current strategic position of the company will be analyzed along with the pros and cons that will give out good understanding where the company will be heading. Next, strategic suggestions and a fully pledged plan will be presented.

Current Strategic Position of the Company

SAIDAL Group was performing well in the initial stages prior to 2010 before the restructure was introduced. In the year 2017, the company revenue was only estimated at 84 USD Million and that was not enough to cover their investment made from the year 2010 150 USD million per annum. Therefore, by the year 2017 SAIDAL group is at a level of bankruptcy. At that moment the company had 2357 employees on board  (SARL, 2017).

Figure 2- SAIDAL Group Revenue 2006 – 2017

The concept of a firm in difficulty has only recently been introduced. Although this term has taken over from the traditional term “bankruptcy”, the two terms are not superimposable and do not in any way reflect the same legal approach. A firm goes through several stages before reaching the irremediable stage of bankruptcy.

A failure is first and foremost an economic event since it is the result of the company’s economic and financial difficulties. However, it is also a legal event, given the importance of the law in initiating recovery measures. Thus, it seems appropriate to devote a part of the present work to the legal framework of the Algerian company in difficulty.

SAIDAL group was performing well in the earlier stage but the turning point of this kind of bankruptcy occurred at the point of changes that were introduced in the year 2010 by the change of the top management.

SAIDL was it running smoothly?

The concept of a firm in difficulty presupposes that the firm has ceased to operate smoothly. A break in the continuity of its operations has occurred, will occur or is likely to occur. Similarly, SAIDAL was operating much smoothly prior to 2010 as the company was having three subsidiaries to operate separately in the pharma sector, antibiotic sector and biotic sector. During that time, their operation was much successful and the sales were growing rapidly with each year 1.23% increase in acquiring the international market especially in the South Asian region which was a much difficult entry for the other competitors. At the beginning of the year, 2017 firm was therefore not yet in a state of cessation of payments, characterized by the impossibility of meeting current liabilities out of available assets.

Jean Brilman adopts a fairly broad concept of a company in difficulty: “it is not only a company that is in financial difficulty (the immediate consequence of other, much deeper problems), it is also a company that, encountering or anticipating difficulties, takes immediate action to avoid financial problems: little or no profitability, difficult economic conditions, declining business volume, deterioration in the social climate, conflicts, etc.” (Brilman, 1978). Similar is what happened for SAIDAL at the initial stages there financial states were at a greater level as they had a lot of financial reserves stored from the earlier profit. Their liquidity ratios were at a greater level with a value of more than one  (SARL, 2017).

Beyond that, the notion of a company in difficulty does not necessarily refer to the idea of financial difficulties but reflects a different approach to the operating incidents that companies may encounter. Indeed, it incorporates an essential idea: prevention. SAIDAL management understood the situation by the year 2015 and took action to fix the issue but the prevention was not done. Actually what lacked in risk management. Therefore we can conclude that SAIDAL SARL was running very well and had a greater throwback due to some reason, that is what needed to be analyzed using this report.

The failure process of SAIDAL Group

Figure 3 – Failure process in a nutshell

As per (James Kolari, 2002) failure process of a large organization happens first in terms of economic, commercial and then followed by financial decline. SAIDAL group is an ideal example for such a consecutive failure or bankruptcy in their domain and the saddest part it while all of this process is happening none of the top management noticed any of these or no action was taken to fix this. Following are the details of the step by step financial failure of SAIDAL group according to their report (SAIDAL SARL, 2017).

Economic regression

The company’s performance is based on three factors which are: production cost, quantities sold and prices. Each of these factors is subject to the constraints of environmental variations. Depending on the nature of its activity and its situation in its environment, the company’s performance is more or less sensitive to some events: increase in the prices of raw materials, wage increases, competition, technological innovation.

Table 1- The most important investments in the pharmaceutical sector in Algeria (Ghebbi, 2010)

Company Country Investment in USD Rank
Sanofi-Aventis France 320 Million #1
Hikma Pharma Jordan 165 Million #2
Saidal Algeria 149 Million #3
GSK United Kingdom 142 Million #4
Novartis Switzerland 129 Million #5
Pfizer United States 111 Million #6
Novo Nordisk Denmark 85 Million #7
MSD United States 85 Million #8
Roche diagnostics France 85 Million #9

The new management program was appointed in the year 2010, established with the aim of expanding the business at SAIDAL. The directorial board took some kind of regressive investment decisions to work in line with the other competitors in the industry and come ahead of the competition.

  • Increasing investment to establish a new factory with USD 100 million
  • Increased Research and development investment up to 40 USD million from 20 USD million which was the earlier

While all of that investment was increased there was an increase in the mineral prices where the materials needed for pharmaceutical manufacture like Rutile, Zincite, Periclase, Hematite, etc were increased in price due to new tax revisions. Therefore the economic regression began for the SAIDAL.

Table 2 – SAIDAL  R & D Expediture Chnage – 2001 -2008

Indicator 2001 2008
Workforce by category

·                     Executives

·                     Supervisors

·                     Agents

 

1103

1371

938

 

1883

2004

583

% of employees in R&D 4,86% 6%
Average monthly gross pay per employee, DA 32,000 DA 57,000 DA
% of trained employees in one year 40.41% 39.71%
% Training expenses 0.59% 0.39%
Training budget/Wage bill % 2.36% 1.47%
Average training expenditure per trained employee, DA 22,480 DA 25,352 DA
Number of accidents at work weighted by severity rate 20.8 12
Source: academia.edu

Commercial decline

It may be abrupt, gradual or latent and concealed. It is characterized by a fall in sales or a drop in the gross margin rate, or both successively or simultaneously. Due to the above-mentioned reasons, the cost of production increased at SAIDAL making the average margin per pharmaceutical, biotic, and antibiotic to decline up to 17%, 19%, 15% respectively. Earlier these values were 38%, 43%, 32%. That became a huge drop for the company and gradually up until 2017 these values have dropped gradually. As the sales volume increased a little there was a remarkable revenue but that was not enough to cover the cost of the sales and the investment.

Financial decline

If the company does not react, is not flexible and cannot find new markets, while reducing its structural costs, then a financial decline might begin. It is most often the consequence of an uncontrolled commercial decline. The insufficient margin no longer allows the company to cover its structural costs (Senturk, et al., 2006). Similarly, SAIDAL lost the margin making the path to loss of markets and the works part is that there their investments has gone wrong making company much more susceptible for the bankruptcy. By the year of 2017, their liquidity has gone down, having a very low quick ratio in terms of finance and the top line bottom both growths has declined.

Strategic Management

According to Alfred Chandler, a strategy is an act of determining the fundamental long-term goals and objectives, putting in place the actions and allocating the necessary resources to achieve those goals (Chandler, 1990). Prior to developing a strategy, we should find out where an organization lies now and what are the factors that will affect the current status and successful strategic management in managing these factors effectively and efficiently to gain competitive advantage and bottom-line growth.

Strategic Management Process

The strategic management process consists of five main steps: 1) Initial analysis (understanding the strategic context) 2) Internal and external analysis (planning the strategic approach, analyzing environment, resources, identifying opportunities, threats, strengths, and weaknesses) 3) Formulation of the business strategy (developing a strategy) 4) Implementation 5) Evaluation of the results (Figure 1).

Figure 4. Business Strategy Framework

Strategic management is a continuous and systematic process during which the company’s leaders make decisions that will have consequences in the future, develop plans and programs to implement the decisions and achieve the set objectives, and finally, evaluate performance. It is also a unique opportunity to unite management, employees and various stakeholders as well as customers in a common reflection to understand where is the company and where it wants to go (Nag, et al., 2007).

Throughout the strategic management process, the company must focus on the needs (expressed and experienced) and expectations (expressed and unexpressed) of customers (current and future) and stakeholders (suppliers, human resources, management, partners, shareholders) in order to offer them satisfactory products and services meeting their needs and expectations (Riege, 2005).

Environmental Analysis of SAIDAL Group

Figure 5. The Components of a Business Environment

The survival of the company is directly linked to its dependence on external actors. The importance of the company’s external environment can be understood here in terms of the extent to which it has developed a certain degree of dependency on its environment.

Macro Environment

A company’s analysis of the environment has a twofold objective:

  • to evaluate the various elements that may affect its activity;
  • to identify environmental opportunities or threats;
  • to identify external factors over which the company has no control and which also influences its orientation.

We must therefore briefly analyze the external environmental factors (micro) that have or could have an influence on the company’s growth and profitability prospects as well as on its situation in the market. The analysis of the external environment will lead to identifying external market opportunities as well as external threats that could affect the company’s operations in the short, medium or long term.

PESTLE Analysis of SAIDAL Group

In business strategy, the PESTLE analysis (political, economic, sociological, technological, environmental and legal) is a model for identifying the influence (negative/positive) that macro-environmental factors can exert on a company (Holland, et al., 2004). However, the PESTEL or PESTLE analysis is not a reference, but a mnemonic tool that makes it possible to carry out an external analysis more simply and thus be able to produce a SWOT matrix.

SAIDAL and its competitors are generally companies that are not really known and established in a specific field that is difficult to grasp, partly because of the complexity of the products manufactured and sold and partly because of their equally difficult environment.

Policy

A company like SAIDAL is present in multiple countries and is also active in a market that is facing both globalization and health issues.

Thus, in addition to having to deal with the political environments of trade and tax laws, SAIDAL must also comply with the social protection requirements of the countries it serves.

Economic

The growth rate is gradually picking up again in most countries in the world, even if it remains insignificant (in Algeria, it is around 1.5% according to World Bank (WorldBank, 2019)). On the other hand, developing countries are an increasingly important target for any market, and even more so for pharmaceutical companies.

Socio-cultural

In Algeria, as in other countries, the consumption of medicines is an increasingly important part of health care expenditure and weighs heavily on health insurance, household, and state funds. This growth is the result of several factors and particularly of the socio-cultural transition that has characterized the Algerian society in recent years (Farida & Brahim, 2012).

Technological

Technology is the source of business power. In order to control the local pharmaceutical market, SAIDAL uses the latest technology, its control over the sources of supply of raw materials and intermediate products and over marketing networks, its management machine, its easy access to financial markets, etc. However, the industrial capacity of its subsidiaries operating outside the country is oriented towards products that consume imported pharmaceutical substances at prices that are often abusive.

Ecological

This is one of the black spots: the company being in the ecological trend, the synthetic drug has a bad image, in addition to coming from production lines mixing non-renewable elements such as solvents, or organic waste.

Legal

Fortunately, the pharmaceutical market is closely monitored in many aspects. SAIDAL’s business is significantly affected by patents, drugs, and their respective marketing authorizations, either under medical prescription or over-the-counter. It is one of the most challenging environments in which to operate, without a doubt.

Also, the newly introduced tax system for the pharmaceutical raw materials has become much of a burden for the industry.

Porters Five Forces Analysis of SAIDAL Group

Porter’s Five forces is a model that defines and analyzes five strategic powers affecting any market and helping to identify the vulnerabilities and strengths of a business. The study of the Five Forces is also used to describe the function of a market when deciding on business strategy. When it comes to strategic position determination of an organization like SAIDAL this step is very crucial to get an understanding of the current pharmaceutical industry status in Algeria.

Bargaining power of the buyers

The bargaining power of the buyers is very high as the number of patients, doctors and hospitals is very high throughout Algeria and also in the international context. Other than that the switching cost from one brand to another is very low in this industry in the majority of the drug types. It can be concluded that the bargaining power in this industry is very high.

Bargaining power of the suppliers

The bargaining power of the suppliers is very low in this context and that happens as there is much more possibility for the import of raw material rather than sourcing locally. But the same thing caused the decline of SAIDAL due to tax changes.

Threat of substitutes

This is very low in this industry as most of the products are generic items and the only limited number of alternative treatments available such as implants, surgery, homeopathic therapies, etc.

Risk of new entrants

There is a long lead time involved in the research and development in this industry, thing SAIDAL SARL has successfully completed years ago, other than that need of distribution channels, marketing teams, patent portfolio databases along with higher investment make new entrants a nightmare to this industry.

Rivalry among established firms

There are more than 20 players registered in this industry of Algeria which is considered as large scale / commercial pharmaceutical producers. Therefore the price competition is so much along with the new product introduction which makes the company with the highest technological Research & Development teams win. Also one of the major rules in this industry is the ‘first to market’ rule that makes a company succeed as well as decline fast.

So it is evident that SAIDAL group has taken above strategic decisions by identifying how the market works but the problem is that they didn’t identify the other factors and the internal environment of the business.

Micro Environment

SWOT Analysis of SAIDAL Group

Table 3- SWOT Analysis of SAIDAL Group

Strengths Weaknesses Opportunities Threats
Market leader in the latest generation of antibiotics

 

Sales Increase

Financial stability (lexpressiondz.com, 2017)

Decrease in R&D

 

Higher employee turnover ( lower retentions)

Increase in health issues

 

Rising population and living standards

 

The exponential growth of products on the biopharmaceutical market (vaccines, biotechnologies, etc.)

 

International possibilities in the Asian region

Generic drugs

Complex and rigorous regulations related to drug registration

 

Increase in counterfeiting

 

The government revised the tax system

 

 

The strategic management key is to converts threats and weaknesses of the SAIDAL Group into opportunities in order to get out of the level of bankruptcy.

Business Strategy

Strategic Objectives

The following objectives were set in order to get out of the current financial situation by taking the strategic planning duration to be five years. Findings from the internal and external analysis have been used for the formulation,

  • Increase the profit margin of every product type to be more than 30% by adapting an operational optimization process by the year 2022
  • Reach the net profit of 400 USD million by the year 2022
  • Increase the efficiency of the R & D division by innovation-based techniques with the aim of giving out minimum new product per year
  • Increase the local market share to 40 % by the year 2022 (currently 16% market share)
  • International market acquisition in terms of 20% total sales acquisition by the end of the year 2022

A Research and Development strategy (Functional Strategy) to Face the Current challenges

SAIDAL group, as well as the others in the pharmaceutical industry traditionally intensively based on R&D, has gone through a series of institutional and technological “shocks”. However, the core leadership of the respective department has remained sufficiently small and stable over a long period of time.

Industrial dynamics in the pharmaceutical industry are intimately linked to three specific key factors:

The nature of drug discovery processes, otherwise the properties of the technological opportunity space and the research procedures by which firms explore this space.

The fragmented nature of the relevant markets where research activities are relatively limited. Specifically, innovation processes are characterized by a long period of time during which the cumulative dimension is quite small and by “quasi-random” research procedures (random screening). Thus, innovation in one market (or therapeutic class) does not induce a greater probability of success in another market.

The type of competition and the role of patents. The pharmaceutical field is representative of those sectors where patent applications or models reasonably affect the competitive process.

Therefore, the major task for achieving the strategical success of the SAIDAL group depends on the hands of the research and development team and therefore this strategic plan mainly focuses on creating R&D stronger to gain the above mentioned SMART strategic objectives.

Biotechnology, a strategic field to exploit

The future of the pharmaceutical industry is thus taking on a new face, that of the “multi-buster” model, manufacturing specialty products, more oriented towards personalized medicine focused on small populations. The first discoveries on the human genome have given new directions to pharmaceutical R&D. As a result, nearly half of the new treatments launched on the market since 2003 are derived from biotechnology (Bertrand, 2000).

Figure 6- Top 10 drug sales by Evaluate Pharma

This chart from a report of Evaluate Pharma, one of the top 10 pharmaceutical producers in the United States shows that the top 10 drugs by sales are all biotech products, in red sales in 2018, and the shadow in grey represents the sales in 2017.

Therefore the SAIDAL group has a greater opportunity to enter into biotech products which will be the greater solution for their financial crisis as when biotechnology is involved, the cost of production as well the demand rises up.

The strategic choice of open innovation in biotechnology

Biotechnology has created an unprecedented innovation crisis in the pharmaceutical industry. The skills required are more advanced and diversified, and competition is upstream. Due to employee turnover, many of the skilled employees has left the R&D division making a challenge for them to engage in innovation bases biotechnological pharmaceutical formation.

To stay in the race, the best option is to turn towards open innovation, through various practices: alliances with start-ups, research partnerships with peers and many more.

Competition is becoming more and more established upstream of the innovation process, making the need for an innovation cycle to be narrow or shorter so that it will keep SAIDAL in the loop. The competition takes place in the acquisition of scientific and technical knowledge, which is often present outside the company’s borders. Thus, even the most competent R&D organization needs to connect to external sources of knowledge in order to innovate. This is the theoretical concept of open innovation.

There are 26 universities within Algeria itself and among that there are 14 universities that have biotechnology facilities which make eventually the best hub for open innovation.

Redesigning the Value Chain

The traditional value chain of the SAIDAL Group is just straight forward and only involves very small parties and that makes loopholes which eventually lead to loss of revenue as well the inconsistencies in raw material acquisition.

Even though there are around 2300 employees in SAIDAL their distribution is therefore restricted mostly for procurement, production, and marketing which are the primary value chain components. But it needs to be incorporated also with other supporting activities. The modified value chain can be generated as follows:

Figure 7 – Proposed Value Chain of SAIDAL Group

This will include a direct involvement of human resource division for the handling of the talent acquisition and monitoring of the R&D and other major divisions and also the involvement of the Finance and control division to handle all of the financials Realtime allowing the use of resources effectively and efficiently.

The implementation plan

The creation of an implementation plan is structured along several axes that define the growth of the company. It is defined by the act of determining the fundamental long-term goals and objectives, implementing actions and allocating the resources needed to achieve those goals.

Gantt Chart of Implementation

Table 4 – SAIDAL Strategic Change Implementation Plan – Gantt

4.1 Resources allocation

Human resources: The pooling of the brainpower of researchers from the ‘Inflammation and Immunology’ Division, they will be assigned to work in cooperation with the chosen startup on the biosimilar drug with collaborative research with selected 5 universities in Algeria

 

Physical and technological resources: The pooling of devices and all materials to conduct research and development in a cooperative context along with the reach of international partnership with SAIDAL and the other giants in the western countries like USA and Germany.

Financial resources:

To establish the estimated cost of the project, a list the direct and indirect costs should be established:

Direct costs

  • Salaries of internally mobilized human resources, according to the hours planned for them to work on the project;
  • The cost of external human resources;
  • The cost of purchasing and/or renting equipment, supplies, and materials (rooms, computers, software, building materials, tools…);
  • Any travel expenses.

Indirect costs

  • Overheads (or operating costs): these are all costs of the project other than labor and material costs, i.e. accommodation, heating, communication, external services, etc.;
  • Management costs such as salaries for the company’s transversal services (administration, marketing, finance, accounting, etc.).

Conflicts and Issues in Implementation

This process becomes a radical change that needs to be implemented quickly in order to take back SAIDAL to the prosperous age that it had earlier giving up bankruptcy. Therefore, some kind of theory like Kurt Lewin’s Change Management needs to be adapted.

Kurt Lewin’s Change Management Model use in SAIDAL

Kurt Lewin’s change model has three steps that include unfreezing, change and refreeze.

Figure 8- Kurt Lewin’s Change Model

In the environment of SAIDAL this can be implemented in order to get the desired change, First, need to be done the unfreezing by first making the employees aware of what the situation that SAIDAL is currently in and why this change is needed. Then with the involvement of the top management itself, change can be introduced to the employees and they will embrace it willingly. Once the change is established it can be made to refreeze by providing some kind of incentives, bonuses, etc to them.

Projected Profit & Loss Account

Table 5- Projected Profit & Loss Account for SAIDAL Group 2020 – 2023

USD Million
  2020 2021 2022 2023
Income 450 640 850 1000
Cost of Sales 150 220 350 350
Gross Profit 300 420 500 650
Administration expenses 60 70 73 80
Marketing & Promotion 50 50 60 70
Other (20) (20) (30) (40)
130 140 163 190
Net Profit 170 280 337 460

Conclusion

It can be concluded that SAIDAL group was a very well-established group that had fallen finically up to bankruptcy due to lack of monitoring of their process and also due to value chain changes and the investments that are done without considering other factors. These reasons were justified with the internal and external analysis conducted and can be concluded that the organization needs a strategic change.  This change can be successfully implemented by doing a change to the structure of the company by paying more attention to the research and development department but with much monitoring of resource and fund allocation. The next strategic change is to implement structural change, involving human resource management to monitor and control talent acquisition and finance division to real-time control finance allocation. After implantation of these strategic changes successfully, it can be guaranteed that SAIDAL can reach the given strategic objectives in no time.

References

Barney, J. B. & Hansen, M. H., 1994. Trustworthiness as a source of competitive advantage. Strategic management journal , 15(S1), pp. 175-190.

Berman, et al., 1999. Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management journal, 42(5), pp. 488-506.

Bertrand, J., 2000. Génome humain: l’épopée du séquençage. Biofutur, 200(2000), pp. 25-31.

Bogdan, R., 2013. Possibility of Implementing a Modern System of Reporting Performance Indicators at the Level of Tourism Units. Revista tinerilor economişti, Issue 21, pp. 56-64.

Bonhomme, Y., Corbel, P. & Sebai, J., 2005. Différences entre «big pharmas» et «biotechs».. Revue française de gestion 2, Issue 2, pp. 117-133.

Boukhari, M., 2012. Performance et restructuration: Le cas SAIDAL. es cahiers du cread, Issue 101.

Brilman, J., 1978. Le redressement d’entreprises en difficulté. Hommes et Techniques.

Brulhart, F. & Gherra, S., 2013. Management des parties prenantes, pro-activité environnementale et rentabilité : le cas du secteur des produits de grande consommation en France. [Online]
Available at: https://journals.openedition.org/fcs/1336
[Accessed 08 February 2020].

Chandler, A. D., 1990. Strategy and structure: Chapters in the history of the industrial enterprise. Vol. 120 ed. s.l.:MIT press.

Chesbrough, H., 2006. Open innovation: a new paradigm for understanding industrial innovation. Open innovation: Researching a new paradigm, Issue 400, pp. 0-19.

Cohen, W. M. & Levinthal, D. A., 1989. Innovation and learning: the two faces of R & D. The economic journal 99, Issue 397, pp. 569-596.

Das, T. K. & Teng, B.-S., 1998. Between trust and control: Developing confidence in partner cooperation in alliances. Academy of management review, 23(3), pp. 491-512.

Desreumaux, A., 1996. Nouvelles formes d’organisation et évolution de l’entreprise. Revue française de gestion, Issue 107, pp. 86-108.

Fabre, P., 2016. L’open innovation, un levier majeur pour nos chercheurs, une chance supplémentaire pour les patients. [Online]
Available at: https://www.pierre-fabre.com/en/node/2119
[Accessed 12 February 2020].

Fairfield, K. D., 2016. Understanding functional and divisional organizational structure: A classroom exercise. Management Teaching Review, 4(1), pp. 242-251.

Farida, Z. & Brahim, B., 2012. La Consommation De Médicaments En Algérie Entre Croissance, Financement Et Maîtrise. Algerian Scientific Journal Platform, 12(2), pp. 191-209.

GaBi Online, 2019. Generics and Biosimilars Initiative. Biosimilars of bevacizumab. [Online]
Available at: www.gabionline.net
[Accessed February 2020].

Gherra, S., 2010. Stratégies de développement durable. Combiner les parties prenantes et les ressources et compétences de l’entreprise. Revue française de gestion, 204(5), pp. 141-153.

Gond, Jean-Pascal, Mercier, S. & (Toulouse), L. i. d. r. s. l. r. h. e. l., 2005. Les théories des parties prenantes: une synthèse critique de la littérature. Toulouse: LIRHE.

Holger, E., Hoyer, W. D. & Rübsaamen, C., 2010. Sales, marketing, and research-and-development cooperation across new product development stages: implications for success. Journal of Marketing, 74(5), pp. 80-92.

Holland, Sarah & Bátiz-Lazo, B., 2004. The global pharmaceutical industry. General Economics and Teaching, Issue 405002, pp. 1-24.

Hunter, J., 2002. Improving organizational performance through the use of effective elements of organizational structure. Leadership in Health Services.

James Kolari, D. G. H. S., 2002. Predicting large US commercial bank failures. Journal of Economics and Business, 54(4), pp. 361-387.

John, C., 1972. Organizational structure, environment and performance: The role of strategic choice. sociology, 6(1), pp. 1-22.

Kilpatrick, S., 1997. Education and training: Impacts on profitability in agriculture. Australian and New Zealand Journal of Vocational Education Research, 5(2), p. 11.

Larson, E. W. & Gobeli, D. H., 1987. Matrix management: Contradictions and insights. California management review, 4(29), pp. 126-138.

Le Figaro, 2010. GSK et Pfizer s’allient dans les traitements contre le sida. [Online]
Available at: https://www.lefigaro.fr/societes/2010/03/13/04015-20100313ARTFIG00125-gsk-et-pfizer-s-allient-dans-les-traitements-contre-le-sida-.php
[Accessed 10 February 2020].

lexpressiondz.com, 2017. “Le groupe Saidal est leader sur le marché national”. [Online]
Available at: http://www.lexpressiondz.com/nationale/le-groupe-saidal-est-leader-sur-le-marche-national-259990
[Accessed 14 February 2020].

Maniruzzaman, M., Nokhodchi, A. & Williams, R. O., 2018. Process engineering and pharmaceutical manufacturing technologies. pp. 1593-1594.

mdipi.gov.dz, 2010. Rapport sectoriel de l’industrie pharmaceutique. [Online]
Available at: http://www.mdipi.gov.dz/IMG/pdf/Rapport_sectoriel_-Industrie_Pharmaceutique-_PDF.pdf
[Accessed 15 01 2020].

Nadler & David, A., 1995. Discontinuous change: Leading organizational transformation. San Francisco, CA: Jossey-Bass, Inc. Publishers.

Nag, R., Hambrick, D. C. & Che, M., 2007. What is strategic management, really? Inductive derivation of a consensus definition of the field. Strategic management journal, 28(9), pp. 935-955.

Ouchalal, H., Khelfaoui, H. & Ferfera, Y., 2005. situation de la R&D dans l’industrie Algérienne.

Pfizer, 2016. Modèle R&D. [Online]
Available at: https://www.pfizer.fr/r-d/partenariats-de-recherche/notre-modele-de-rd
[Accessed 15 February 2020].

Pfizer, 2016. Une structure organisationnelle innovante. [Online]
Available at: https://www.pfizer.fr/a-propos-de-pfizer/pfizer-dans-le-monde/structure-organisationnelle
[Accessed 15 February 2020].

Pfizer, 2020. Organisation. [Online]
Available at: https://www.pfizer.fr/a-propos-de-pfizer/pfizer-en-france/organisation
[Accessed 15 February 2020].

Riege, A., 2005. Three‐dozen knowledge‐sharing barriers managers must consider. Journal of knowledge management.

SAIDAL, 2014. ORGANISATION. [Online]
Available at: https://www.saidalgroup.dz/fr/notre-groupe/organisation
[Accessed 14 February 2020].

SARL, S., 2017. Financial Statement Report, ALGER: SAIDAL GROUP.

Senturk, et al., 2006. Detect financial problems with six sigma. Quality progress, 39(4), p. 41.

TRONEL, B., 2009. Comment sauver une entreprise en difficulté financière?. [Online]
Available at: http://www.essensysgroup.com/essensys/web.nsf/0/3D83BD457014F464C12575D0004C8FB6?Open&FFR
[Accessed 06 February 2020].

Van Der Aalst, W., Hee, K. M. V. & Hee, K. v., 2004. Workflow management: models, methods, and systems. MIT press.

WorldBank, 2019. Algeria’s Economic Update – April 2019. [Online]
Available at: https://www.worldbank.org/en/country/algeria/publication/economic-update-april-2019
[Accessed 14 February 2020].




Hydroxychloroquine: Mechanism of Action

Introduction

Hydroxychloroquine (HCQ), is an aminoquinoline used for the prevention and treatment of uncomplicated malaria (caused by P. falciparum, P. malariae, P. ovale, or P. vivax) in areas where malaria is vulnerable to chloroquine. Other applications may include the treatment of rheumatoid arthritis, lupus, and porphyria cutanea tarda. It is taken by mouth. HCQ is being investigated for the prevention and diagnosis of coronavirus disease 2019 (COVID‐19) High-quality epidemiological care (Stein, et al., 2000).

The FDA approval for emergency use of hydroxychloroquine and chloroquine in COVID-19 treatment was revoked on 15 June 2020 (FDA.gov, 2020).

Hydroxychloroquine obtained approval from the FDA on 18 April 1955 (FDA.gov, 1955).

A recent research recorded a COVID-19.10 fatality in the hydroxychloroquine treated population (Chary, et al., 2020).

Figure 1. Structure of HCQ
Figure 1. Structure of HCQ

Pharmacodynamics

Hydroxychloroquine affects both lysosomes function and plasmodia in humans. Changing the pH of the lysosomes decreases the low-affinity self-antigen presentation in autoimmune diseases and interferes with plasmodia’s ability to proteolyze hemoglobin for its energy needs. Hydroxychloroquine has a long duration of action, as for some indications it might be taken weekly. Hydroxychloroquine can lead to serious hypoglycemia and thus it is recommended that diabetic patients control their blood glucose levels. Hydroxychloroquine in areas where chloroquine resistance has been identified, is not effective against malaria (Wolpin, et al., 2014).

Pharmacokinetics

Absorption

Hydroxychloroquine is bioavailable in 67-74 percent. Bioavailability of the enantiomers R and S did not vary significantly. Following an oral dose of 200 mg, hydroxychloroquine reached a Cmax of 129.6ng / mL with a blood Tmax of 3.26h and a plasma Tmax of 50.3ng / mL with a plasma Tmax of 3.74h. Following intravenous doses of 155 mg and 310 mg, blood Cmax ranged from 1161-2436ng / mL with an average of 1918ng / mL.

Volume of distribution

55,22 L (blood) and 44,257 L (plasma)

Protein binding

In general, hydroxychloroquine is protein-bound in plasma by 50 percent. The hydroxychloroquine S enantiomer is 64 percent plasma bound protein. It is bound to serum albumin by 50 percent and alpha-1-acid glycoprotein by 29 percent. The R enantiomer is plasma-bound protein by 37 percent. It is linked to serum albumin by 29 percent and alpha-1-acid glycoprotein by 41 percent.

Metabolism

Hydroxychloroquine is N-dealkylated by CYP3A4 to the active metabolite called desethylhydroxychloroquine and to the inactive metabolites desethylchloroquine and bidesethylchloroquine. The main metabolite is desethylhydroxychloroquine.

Figure 2. HCQ metabolites. Source (drugbank.ca)
Figure 2. HCQ metabolites. Source (drugbank.ca)

Route of elimination

40-50 percent of hydroxychloroquine is excreted by the kidney, while only 16-21 percent of the dose is excreted in the urine as an unchanged drug. 5 percent of the dose is sloughed off in the skin and 24-25 percent is eliminated in the feces.

Half-life

Oral hydroxychloroquine has a half-life of 3-4 hours of absorption. A 200 mg oral hydroxychloroquine dose has a half-life of 22.4 days in blood, and 123.5 days in the plasma. A 155 mg dose intravenous (iv) has a half-life of 40 days.

Clearance

96mL/min

Mechanism of Action

The precise mechanism of action of HCQ is unknown. Hydroxychloroquine has been shown to accumulate in malaria parasite lysosomes, elevating the pH of the vacuole. This behavior interferes with the ability of the parasite to proteolyze hemoglobin, preventing its normal growth and replication. Hydroxychloroquine may also interfere with the action of parasitic heme polymerase, causing the toxic substance beta-hematin to accumulate.

Hydroxychloroquine concentration in human organelles often raises their pH, which inhibits the processing of antigens, prevents dimerization of the alpha and beta chains of the major histocompatibility complex ( MHC) class II, inhibits the cell’s antigen presentation and decreases the inflammatory response. High pH in the vesicles may alter the recycling of MHC complexes to present only the high-affinity complexes on the surface of the cells. Self-peptides bind to low-affinity MHC complexes and therefore are less likely to be exposed to autoimmune T cells. Hydroxychloroquine also lowers cytokine releases, such as interleukin-1 and tumor necrosis factor, probably by Toll-like receptor inhibition.

The elevated pH in endosomes prohibits the use of virus particles (such as SARS-CoV and SARS-CoV-2) for fusion and cell entry.

Hydroxychloroquine also blocks the terminal glycosylation of ACE2, the receptor that targets SARS-CoV and SARS-CoV-2 for cell entry. ACE2 which is not in the glycosylated state may interact less efficiently with the spike protein SARS-CoV-2, further inhibiting viral entry.

References

Chary, M. et al., 2020. COVID-19: Therapeutics and Their Toxicities. J Med Toxicol.

FDA.gov, 1955. [email protected]: FDA-Approved Drugs. [Online]
Available at: https://www.accessdata.fda.gov/scripts/cder/daf/index.cfm?event=reportsSearch.process&rptName=1&reportSelectMonth=4&reportSelectYear=1955&nav
[Accessed 2020].

FDA.gov, 2020. Coronavirus (COVID-19) Update: Daily Roundup June 15, 2020. [Online]
Available at: https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-daily-roundup-june-15-2020
[Accessed 2020].

Stein, M., Bell, M. J. & Ang, L.-C., 2000. Hydroxychloroquine neuromyotoxicity. The Journal of rheumatology, 27(12), p. 2927.

Wolpin, B. M. et al., 2014. Phase II and pharmacodynamic study of autophagy inhibition using hydroxychloroquine in patients with metastatic pancreatic adenocarcinoma.. The oncologist, 19(6), p. 637.




PS4 – Mean, Median and Mode

Central tendency

A central tendency could be defined as a central value for a probability distribution. The central tendency could be also called the center of a random variable distribution to cluster around its mean, mode, or median.

Mean

The mean usually called ‘average’, is the sum of all the data points over the number of data points. It is calculated using the following formula:

Where:

  • is the mean for a population
  • is the mean for a sample
  • N is the number of items in the data set (population)
  • n is the number of items in the data set (population)
  • is the sum of all the data points

Example

Given the data set [10, 12, 14, 16]. Calculate the mean?

Median

The median of a data set is the value separating the higher half from the lower half, otherwise, when we line up all the data points in the set from least to greatest, it may be thought of as the “middle” value when we look at the number or pair of numbers in the middle.

Example 1

Given the data set [1, 3, 3, 6, 7, 8, 9]. Find the Median.




21st Century Globalization

Summary

The term globalization refers to the process by which relations between nations have become interdependent and have transcended the physical and geographical boundaries that may have existed before (Al-Rodhan, et al., 2006). Investopedia defines the term Globalization as “the spread of products, technology, information, and jobs across national borders and cultures” (KOPP, 2019), otherwise, an interdependence and commonwealth of worldwide nations fostered through free trade.

In this report, I’ll discuss how the key elements of Globalization like cost, competitive, market and government drivers are affecting the pharmaceutical industry in Algeria, then I’ll describe how unbearable inequalities between and within countries have been impacted by Globalization as well as the main challenges those companies might be facing overseeing the activities of their employees in various locations around the world.

Keywords : Drivers of Globalization, Algeria, Pharmaceutical Industry, Inequalities, Expatriation.

Full Article in PDFthe-impact-of-the-21st-century-globalization-on-the-pharmaceutical-industry-in-algeria

Introduction

Algeria has made significant progress in terms of economic openness. Over the last two decades, it has developed many business relationships with several friendly and neighboring countries through the conclusion of many free trade agreements which link it to more than 55 international strategic businesses and give it access to a market of more than one billion consumers (commerce.gov.dz, 2005).

The opening of the Algerian economy to its global, Euro-Mediterranean, Arab and African environment is already well underway. In terms of Free Trade Agreements (FTAs), Algeria is a champion. These agreements constitute an opportunity for Algeria to improve its exports by reducing reliance on crude oil as a major source of national income and conquering new markets they aim to remove exchange barriers and boundries at all levels, facilitate cross-border trade in goods and services, and increase investment opportunities for foreign companies. Furthermore, it is also a way for domestic companies to become more competitive and open to the rest of the world.

Kairos and Exigency

However, the impact of globalization on the Algerian economy has recently resulted in a number of serious issues that have significantly affected the drug manufacturing business environment, consequently, local companies specializing in biotechnology and pharmaceutics,  have reported a rapid decrease in domestic production and exportation accompanied by an increase in importation of pharmaceuticals and a significant rise in prices and expenditures, an issue of huge concern for SAIDAL one of the biggest national pharmaceutics manufacturers.

Audience and Stakeholders

Politicians, competent authorities, as well as pioneering industrial actors (including my company leaders), are called upon to take action in regards to the negative effects of globalization on the local economy in order to rapidly restore stability and trade equilibrium.

Methodology

In my opinion, finding ways to solve the issue globally, long-term is the most likely convenient solution. Many published resources could be used as references to analyze in-depth the situation and elaborate clear approaches including:

  • Newspapers
  • Open Access Research Resources
  • The University of Algiers e-Library (books and articles)
  • Authority websites (e.g. the government’s official websites)
  • Online inquiries

The potential impact of globalization on the pharmaceutical industry 

Health is becoming one of the major challenges of globalization: millions of people in the least developed countries do not have access to healthcare services. The pharmaceutical industry seems to be flourishing more than ever, posting more record profits than ever before, while health needs continue to grow, which still promise good prospects in the future.

Such a paradox between the misery of countries deprived of healthcare and the unbridled industry development seems to overwhelm the economy. But to what extent can the pharmaceutical industry really be held responsible for this situation?

Figure 1. Yip’s Framework – Globalizations Drivers (Shaoming & S. Tamer, 1996)

Cost

The future of drug manufacturing in Africa is most likely promising in view of the exiting potentials at all levels. The pharmaceutical sector which is the central component of healthcare is growing by more than 10% a year and is expected to reach 33 billion Euros by 2020, according to an estimate by IQVIA Health as local production continues growing. Ghana, for example, manufactures 25% of its generics consumption. On the Asian side, China is increasingly dominating the market of raw materials and India finished products (IQVIA, 2019).

This raises the question of integrating good practices into the manufacturing process. In 2007, the United Nations Industrial Development Organization, the WHO and the African Union thus inaugurated a “Pharmaceutical Manufacturing Plan for Africa”. However, in 2013, as the operational phase begins, logistical and regulatory obstacles remain. A sign that GMPs, unlike the market, are not yet globalized!

Government

Inserting Algeria in the world economy is, first of all, knowing the globalization game rules. This strategic renewal must necessarily go hand in hand with a global re-engineering which will rely on several levers, mainly:

  • The knowledge of the culture of international business,
  • Managing the reform process,
  • The implementation of an economic information and technology monitoring system.

Foreign Direct Investment (FDI) is one of the main driving forces of globalization and an important element in the process of restructuring, modernization and possible reorientation of the world economy. But contrary to a widely held idea, more than 75% of FDI is concentrated in the North of Algeria, 25% in the South, with China capturing more than 50%, leaving the rest of the South with only 25% being taken by emerging countries such as India, Brazil, Turkey, Russia, Mexico, and other Asian countries such as Malaysia and South Korea (andi.dz, 2012). From this point of view, Algeria has a lack of attractiveness for FDI and, in general, for investment other than hydrocarbons, which can be partly explained by the presence of several structural constraints:

  • Governance and transparency issues;
  • The lack of coherence and visibility in the economic policy approach;
  • Unstable legal framework
  • Sclerotic financial system
  • Training that is poorly adapted to the new changes that have focused on quantity instead of quality.
  • An underdeveloped tertiary sector
  • And finally the narrowness of local markets.

Competitive

In the last decade, most developing countries have been engaged in an acute competition to attract multinational groups, the traditional vehicle of FDI, and at the same time promote a win-win partnership. The few successful experiences carried out by SAILDAL SPA (Algerian pharmaceutical group created in 1982 and local leader in the production of medicines) must be analyzed and evaluated in-depth, to serve as “references” for future forms of partnerships. It is urgent for Algeria now to go global in terms of business strategy with the following objectives:

  • Stabilize and modernize the economy
  • Access to advanced technologies
  • Learning the market and targeting non-hydrocarbon exports (Oil and gas export earnings made up more than 97% of total exports) (export.gov, 2019)
  • Stimulate competition and the global competitiveness
  • Consider FDI as a resource for privatization.
Company Country Investment in USD Rank
Sanofi-Aventis France 320 Million #1
Hikma Pharma Jordan 165 Million #2
Saidal Algeria 149 Million #3
GSK United Kingdom 142 Million #4
Novartis Switzerland 129 Million #5
Pfizer United States 111 Million #6
Novo Nordisk Denmark 85 Million #7
MSD United States 85 Million #8
Roche diagnostics France 85 Million #9

Table 1. The most important investments in the pharmaceutical sector in Algeria (Ghebbi, 2010)

Figure 2. Market shares of the biggest companies investing in pharmaceutics in Algeria (2010)

In terms of guarantee and protection of patents and intellectual properties, it is more important to focus on enacting laws and policies for the implementation of national and international commitments in compliance with the relevant agreement between Algeria and the European Union of 01 September 2005 and the Algiers declaration of march 2006 of the European international movement.

The table 1 shows clearly that the French Sanofi-Aventis dominated the market with a market share value of 25% more than twice that of SAIDAL that possessed only 12% in 2010 (mdipi.gov.dz, 2010).

Market

Globalization creates business opportunities through, among other things, access to new resources such as traditional medicines and pharmacopeias from Europe, Asia, and North America. It also allows the employment of talents from all over the world, which encourages “scientific cross-fertilization” which is highly beneficial for research.

On the other hand, despite the government’s objective-oriented strategy that consists of developing and promoting the local industry to reduce the import bill and thus become a platform for the development of local pharmaceutical production of generics, a large part of the market is based on imports. The importation of pharmaceutical products has significantly increased between 2001 – 2009 (+365,65%) (Figure. 2).

Figure 3. Pharmaceutical products import from 2001 to the first half of 2010 in millions of USD

2001 2002 2003 2004 2005 2006 2007 2008 2009 Q1 2010
492 620 743 977 1.073 1.189 1.448 1.851 1.742 698,34

Table 2. Pharmaceutical imports from 2001 to the first half of 2010 in millions of USD. Under the Ministerial Order of 30 October 2008 establishing technical conditions for the importation of pharmaceutical products and medical devices for human medicine, the government has taken new measures, requiring pharmaceutical operators to invest obligatorily in local production. It has also banned the importation of locally produced medicines. Through these new regulations, the government wants to reduce the cost of frequently used medicines by the restriction of imports of those products. Consequently, imports of medicines fell by 23.74% from $915.78 Million in the first half of 2009 to $698.34 million in the first half of 2010 (mdipi.gov.dz, 2010).

Globalization has also increased the risk of fraudulent exploitation and the spread of smuggled drugs. The enormous diversification of distribution channels has introduced less scrupulous, less controlled producers onto the market, making counterfeit medicines a global phenomenon: copied packaging, misuse of brand names or, even worse, the original active ingredient replaced by a substance that is either of no therapeutic value or harmful.

It also refers to the risks of global misinformation, including the dissemination of false rumors for instance, by publicizing a potential side effect, the image of a product under development can be permanently affected in the eyes of consumers.

The major challenges facing the global pharmaceutical industry

In my personal point of view, the most beautiful industry is an industry whose reason of existing is to improve and promote the health of citizens. Should an industry worth more than US$140 M, based on science and innovation, adapt to this globalization”?

Does globalization increase inequalities?

Globalization has ushered in a new era in international cooperation and trade, goods are moving more freely than ever before. Some developing countries have thus taken advantage of this new context to become powerful exporters. But in the industrialized countries, relocation has hit the working classes hard. Is this movement to be seen as a process of global redistribution that helps to reduce inequalities on a global scale? Is this vision, on the contrary, illusory?

We are used to reading and hearing that the globalization of trade over the last 25 years, with the fall of the Soviet Union and the rise of India and China, has lifted hundreds of millions of people out of poverty. So has capitalism succeeded where Soviet communism and the “self-centered” development policies of many Third World countries have failed?

Today, we have enough data to know on the one hand what exactly lies behind this convergence, and on the other hand, to discover that there are in fact losers and winners in the second globalization era, just as there were in the first. We now have access to household surveys in most countries of the world, where households are asked about their disposable income (wherever it comes from) and consumption. Since the fall of communism and the opening up of China, we can access these data that were previously kept secret.

Figure 4. the x-axis illustrates the change in real income (in %), measured in USD (constant rate). The y-axis shows the position in percentile in the global income distribution.

“The compilation of data from about 130 countries over 20 years, between 1988 and 2008, shows that income growth has been very strong for two categories of the world’s population: first, the one in the middle of the income scale (between the 40th and 60th percentiles – that is, 40% of the world’s population earns less than them, and 40% more; second, the one at the very top of this scale, the last decile, and in particular the richest 1%. The first category has seen its income increase by 70 to 80%; the second, by 65%. In contrast, income growth was less than 10% between the 75th and 95th percentiles. It was zero for households at the 80th percentile” (Higher School of Economics, 2008).

Impact of Globalization on Inequalities

Inequality is one of the most crucial issues facing the global world of today. Leaving aside the issues of measuring inequality, which are hotly debated among economists and necessarily lead to different conclusions, some observations can be made overall.

Inequality between countries (the richest 10% and the poorest 10%) has undeniably increased. If we consider household incomes rather than countries themselves, we come to the same conclusion. Globalization increases inequality. But does this delegitimize it?

Jean-Paul Fitoussi, Professor at the Institute of Political Studies in Paris sees that “globalization, as it is occurring today, can, in fact, aggravate two categories of inequality: structural inequalities, those that separate social groups; and dynamic inequalities, those that break up homogeneous social groups – for example, unemployment creates inequality within the employee group itself” (Fitoussi, 1997).

Since the early 1990s, globalization has been blamed for increasing inequality in developed countries because of the pressure from low-wage countries that puts local workers’ wages under unfavorable conditions that might cause employees (especially local workers) to be facing bad and unfair working environment to the extent that the least qualified worker finds it difficult to change activity or may be forced to accept lower-paid jobs (the United States) or suffer periods of unemployment (France). Moreover, globalization stimulates the demand for skilled workers in rich countries, leading to higher incomes and inequality.

International trade is not the only nor the central factor underlying the evolution of inequalities. In France, for example, imports from low-wage countries, which account for a small share of total national trade, can explain only a small part of unemployment.

Similarly, in the United States, international trade only very partially explains the opening up of the wage range, however, immigration could be identified as a stronger competitive factor that seriously affected low-skilled workers.

Moreover, various studies have in fact identified technical skills and competences as the main driving force behind the relative evolution of wages.

New technologies are spreading across all activities, they require high levels of training, as a result, the combination of technological change and international competition has led in many industries to the adoption of management methods that encourage performance through special remunerations.

All in all, the role of globalization is ambiguous and complex, it stimulates innovation and growth but parralelly, contributes to the weakening of the least qualified personnel by reinforcing the unequal pressures of competences.

Inequalities between world countries are much higher than inequalities within advanced countries. These international inequalities have grown almost continuously since the beginning of the 19th century and the acceleration of growth in the industrialized countries.

During the internationalization phase at the end of the 19th century, the incomes of some European countries had caught up with the then leaders, the United Kingdom and the U.S, thanks to the massive emigration of Europeans. Conversely, Spain’s economic isolation at the time could explain its poor performance.

In the recent period, the increase in international inequalities has also been the result of catching up and distance between countries. The number of the poorest, who live on less than $1 a day, increased by 16 million between 1987 and 1990 to reach 1.25 billion, but their share of the world population fell from 24% to 20% (figure 5). They live mainly in Africa, as well as in rural India and China. In contrast, urban areas in India and China have been growing rapidly in recent years. As in the 19th century, the recent increase in global inequality is largely due to the growth of developed countries and the catching-up of emerging countries (World Bank, 2019).

Figure 5. The number of the poorest, who live on less than $1 a day, increased by 16 million between 1987 and 1990 to reach 1.25 billion and dropped from 1.25 billion in 1990 to 986 million in 2004 (the latest year for which data are available) .

The globalization-innovation dynamic also explains the creation of new fortunes in the United States or India, where information technology, for instance, is increasingly being considered as a viable industry to contribute massively to the local economy. On the other hand, globalization does not explain the lack of take-off of the poorest countries, which are often isolated from trade flows, either voluntarily or involuntarily.

Reducing global inequality will largely depend on the development process of the poor countries. Does this ambition imply an increase in inequalities within rich countries?

Between the two world wars, protectionism and trade decline didn’t only prevent international inequalities from growing but also slowed growth in all the world. Resolving the apparent contradiction between the interests of the “rich” and the “poor” requires a combination of aid measures with the objective of integrating countries excluded from globalization into trade flows and national redistribution and training policies aimed at involving the least qualified in the growth dynamic.

Globalization has all the potential to set many poor countries on the development path. This requires support from the international community, in particular by reviewing policies imposing stricter limits on commercial exchange.

Public policies, in the North as well as in the South should work on reducing negative aspects of globalization rather than amplifying its positive effects. From this perspective, the debate should be more focused on conciliating globalization and the diversity of development strategies. The policies that had facilitated trade liberalization after the Second World War needed to be renewed in the context of globalization. For poor countries, the strengthening of economic, political and social institutions should help to put globalization at the service of development and prosperity.

Finally, even if inequality is increasing at both ends across the social spectrum, this does not necessarily mean that inequality has become generalized across all segments of the population. If we take as a measure the richest and the poorest 20% instead of 5% we could arrive at very different conclusions. That is why it makes no sense to talk about increasing inequality without saying which inequalities we are talking about.

 

 

IHRM, Expatriate Management, and Globalization

As a result of the world’s economy globalization, expatriation is nowadays a more significant concern for many businesses, to carry on, directly or indirectly, part of their activity outside their territory, as well as on the employees’ side, for whom international experience becomes an asset and even an unavoidable step to move their careers to the next level.

Today, expatriation has become complex with the evolution of cultures. Indeed, in the European Community, for example, work travel is becoming more and more common, many employees pass the week in another country and return back to their homes and families on weekends.

Workers’ mobility is perceived as a classic mutation within companies that have decided to go global in terms of business strategy, it is provided for by a clause in the employment contract. As a result, such companies must adapt to change. It is a question of taking into account the specificities of every destination. In addition, it is important to succeed in the different steps that surround departures abroad such as training, international career, and return management.

Changes in expatriation

Expatriation, today, no longer offers the same attractive financial compensation as before, family problems as a consequence of expatriation becomes the most challenging problem. As a result, mid-career managers no longer want geographic mobility. This is why lots of companies, like SONATRACH (the Algerian Leader in the Oil and Gaz Industry) for example rather prefer functional or organizational mobility.

Expatriation should not be confused with international mobility. However, some authors use these notions interchangeably. For example, Jean Luc CERDIN, in his doctoral thesis in Management Sciences, University of Toulouse 1, “Mobilité Internationale des cadres : Adaptation et décision d’expatriation“. 1996, states that he uses the terms expatriation, international transfer or international mobility interchangeably to represent temporary international mobility within a company whereas R.A GUZZO states in “The Expatriate Employee”,  that “an expatriate is a person who temporarily leaves the company in his home country for a 2 to 3-year assignment in a foreign country with a strong prospect of return”.

There is an evolution in language. There is more talk of international mobility because the target population and statuses are changing as a result of the globalization of the economy.

Reasons for international assignments

International companies are becoming increasingly aware that expatriate employees need to feel supported in order to successfully carry out their assignments.

Given that 40% of overseas assignments are considered failures, the cost of such a setback is high – indeed, the average cost associated with an expatriate assignment can be as high as $311,000 per year (MacLachlan, 2018).

Why International Mobility should contribute to the development of corporate talent

On a purely financial level, it is relevant for companies to ensure that they have properly prepared and accompanied their employees before, during and after their expatriation assignment.

Companies that send their employees to work abroad have a moral responsibility as well as a duty of care to ensure that they understand the laws and cultural differences of the country to which they are going.

The following services are among the essential services that should be provided to any expatriate sent on an international assignment:

  • A medical examination prior to departure in order to determine whether the employee is fit to carry out the assignment.
  • Intercultural training for the whole family
  • Extremely comprehensive travel and health insurance
  • Access to Employee Assistance Programs (EAP) throughout the mission

Prepare the employees for a mission abroad

Preparation is a key phase without which the success of an international mission cannot be achieved. It should be possible to provide unfailing support to the expatriate throughout the project. International Human Recourses Managers are responsible for:

Careful selection of employees

The success of an expatriation depends largely on the choice of the right candidate, and therefore on recruitment. But to be efficient, one can accompany this “best candidate” with specific training.

An employee who is successful in his or her home country does not always achieve the same results abroad. It is important to take soft skills into consideration, such as flexibility, autonomy, tolerance, ability to manage change and ambiguity. These qualities play a major role in increasing expatriate’s chances of success in the new environment.

Prepare them well for departure

Companies rarely take the time to deploy an intercultural and language training programme upstream of the project, whereas it is essential that this support is developed and financed by the organisation.

Giving support

The fact that the company is proactive and provides unconditional support to the employee while reacting effectively to his or her requests can significantly increase the success rate of expatriation assignments. This is why this type of support should be an integral part of the program.


 

Preparing them well for the return

This aspect is very often neglected, although it is crucial to the success or failure of an international mission. Expatriates, like their families, need sufficient time to prepare for the new environment that awaits them back home.

Challenges

Learning a new language, one of the biggest challenges of expatriation!

For many expatriates, living in a foreign country implies a change in lifestyle, eating habits or even clothing. It is often useful to learn the language of the host country in order to better communicate with the local population and, above all, to facilitate their integration.

Why is English not enough?

After Mandarin, Spanish is one of the most widely used languages in the world, well ahead of English, which is spoken daily by 322 million people (ethnologue.com, 2019). Expatriates are therefore more likely to live within a Spanish, Portuguese, or Arabic-speaking population than within an English or French-speaking one. In many cases, therefore, it is not enough to know English to be able to communicate with others, it is important to become familiar with the local language.

It is clear that integration often involves learning the language of the country of expatriation. There are several ways for an expatriate to learn a new language, watching television, listening to the radio or reading newspapers in the local language is one of the best ways to progress.

Additionally, new technologies could play a major role to help acquire the basics and advance in learning. Whether it’s websites or smartphone applications, these technological innovations offer the advantage of making it easier for expatriates to learn a foreign language.

The language might be the main challenge at the beginning. However, it is important to take into consideration that it is also the most efficient integration tool. Moreover, the mastery of the host country’s language is an essential factor for integration and therefore for the success of the expatriation process.

Speaking the language of the host country is also an excellent way to reduce feelings of isolation and frustration. It is an opportunity for expatriates to increase their autonomy in everyday life.

Culture

The local culture is also considered as a major challenge to overcome for almost half of the expatriates. Recent survey notes that there is considerable geographic variation in these results: expatriates have far greater managerial difficulties in North America or Western Europe than North Africa and the Middle East (Price Waterhouse Physical, 2020).

Overall, apart from the problem of administrative procedures, the main difficulties lie in cultural adaptation on the linguistic, managerial and social levels. These difficulties can be reduced with a professional approach to cultural interactions. However, cultural adaptation issues are not necessarily an indication of a deficiency in the company’s ability to manage its expatriates, as the individual character and personal investment are fundamental to developing adaptive capacities.

Intercultural training helps expatriates become familiar with the culture of the host country. Being fully aware of the local culture and customs is of utmost importance insofar as it would make it a lot easier for them to react appropriately to a given situation, to better manage local staff, to administrate, negotiate, etc.

At SAIDAL, international mobility responds to a desire to mix cultures. Despite its increasingly localized HR policy, SAIDAL is committed to responding to all individual requests for international mobility. This principle is based on the fact that cultural mixes are positive. SAIDAL, therefore, encourages mobility, especially when it comes to positions of responsibility and strategic functions. The mobility policy at SAIDAL is to move its staff every 4 to 5 years, it essentially takes the form of secondment contracts (local employment contracts) rather than expatriation because these formulas are much more expensive and complex.

Social protection

In terms of social protection, expatriate employees are covered by the local scheme and pay their contributions in the country where they work. They benefit from the provisions of the international social security instrument signed by Algeria and the country of expatriation.

However, risk coverage is often insufficient, which is why the expatriate has to seek additional coverage for both his family and himself by joining one of the voluntary insurance schemes managed by the government.

The expatriate is covered by the unemployment insurance scheme on his return to Algeria if his contract is concluded with a company located in Algeria. As for the secondee, he theoretically retains the affiliation to his original scheme for a variable period of time depending on the country.  For instance, there is no social harmonization in terms of social protection in the European Union. Similarly, there is no harmonization with regard to the tax rate, so the different systems must be studied in order to offer compensation to losing employees.

For the expatriate employee, the salary paid is taxed according to the rules and in the country of the employee’s activity, while the seconded employee remains fiscally domiciled in Algeria, and his salary is subject to Algerian taxation.

Communication: maintaining contact

Once the employee or the expatriate has settled abroad, it is then essential that the company, and more specifically HR Managers maintain close contact with him. To do this, various means are proposed: internal communication, new IT like live online chat platforms and mentoring systems. Thanks to internal communication, Philips, for example, sends all its mobile executives a weekly press review of the company with job offers. In France, for example, Lafarge and AXA groups use “mentoring programs”, which allow to assign each expatriate a mentor, who must understand the context of the assignment and its difficulties, be informed of its progress and refer it to the director of the parent unit, and maintain permanent contact. He or she then becomes a “reintegration sponsor” responsible for exposing the professional development possibilities to his or her “tutor” and promoting his or her application.

With the new media tools, such as groupware solutions, which allow several people to work together on the same project, freeing them from the constraints of location and time, it can prove to be an indispensable means of communication with expatriate employees. In addition, Intranet is an interesting tool for companies to keep in touch with their employees abroad and establish a permanent link with them. At the same time, it allows expatriates to stay informed about the company’s news on a daily basis.

Expatriation and women Today

Women are 18% of the working force today (El Watan, 2018).  Since the 2000s, the working population in Algeria has become mixed.  There has been a shift from “housewives” to “female managers”.  Women have become a driving force in the business world and have gained access to positions of responsibility formerly reserved for men.  However, managerial functions are still mainly reserved for men, as only one woman in ten is a manager or exercises an intellectual profession. Looking mainly at multinationals, the share of women in senior or managerial positions is no more than 2 or even 3%.  Expatriation is still a typically male phenomenon.

Indeed, women represent a very small fraction of Algerian expatriates (El Watan, 2018).  Companies are finding it very difficult, if not reluctant, to abandon the traditional pattern of the expatriate working 15 hours a day while his spouse looks after the children and the home.

In fact, only 1% of men follow their wives abroad for about 93% of female spouses. Very often the obstacles to expatriation come from the organization and not from the spouse. But this is far from being the only explanation: women are reluctant to apply for these positions for fear of destabilizing the family unit.

In general, few women are willing to change jobs, or even stop working altogether to keep up with their families. “Society’s view is much harder on women who stop their careers and lose their social status than it is on men,” notes Pascale Teyssier, head of international mobility at Leroy Merlin (lexpress.fr, 1999). However, it seems that young female graduates now and in the next 10 years will reverse the trend. They are more mobile and when they leave school, they look for their first job directly abroad.

In addition, more women than men follow a long course of study, so the balance should change between male and female expatriates. Companies also seem inclined to restore parity among high-potential young executives: today, international executive search firms such as EMDS receive as many offers for men as for women and at the same time, there is a growing trend towards the creation of a gender balance.

Virtual expatriation: a new source of savings for companies

Thanks to the development of the Internet, more and more executives are carrying out international assignments from their home countries. Indeed, companies, increasingly anxious to reduce their operating costs, have just discovered a new source of savings: virtual expatriation.

This trend is widely analyzed by Price Waterhouse every two years (International Assignments-European Policy and Practice), which conducts a survey of 184 companies located in fifteen European countries and representing 6.5 million employees, including 33,000 expatriates. The study indicates an increase in the total number of physical expatriations, but this increase was reduced after the arrival on the scene of virtual expatriation: 70% of the companies that took part in the survey have executives in this situation. In 43% of the cases, these virtual expatriations replace physical expatriation (Price Waterhouse Physical, 2020).

The movement is expected to continue to grow, with 53 of the companies surveyed expecting an increase in this type of assignment in the next five years. However, the phenomenon needs to be qualified. Firstly, it is more prevalent in certain sectors than in others. Virtual secondments are more common in the banking and high-tech sectors. On the other hand, it remains less significant in heavy industry, which requires a permanent presence of production staff on building sites or in factories.

The benefits of a mission abroad

The opportunity to expand into new and existing markets through building a team of talented employees abroad would allow the company to strengthen its influence and profits on a global scale. International experience can help train employees in leadership and prepare them for future executive or managerial positions.

Moreover, if a company wishes to carry out rapid action on a foreign market, sending an employee of the parent company to the field can help to simplify operations, it can also help to import new perspectives, ideas and best practices.

Conclusion

Globalization has created tremendous opportunities for many businesses across the globe, at the same time, many complex geopolitical, cultural, religious and ideological challenges should to be studied before going further in order to establish strong global strategies that would benefit those companies. HRM plays a major role in establishing a work force balance across the borders, that would reliably contribute to realizing the company’s objectives of growth and prosperity.

The economic reforms have significantly contributed to connect Algeria to the world economy and consequently helped to improve growth rate and reduce poverty. Even though we made progress in trade openness and globalization, we remain a poor country, measured in terms of per capita income and other social indicators.

SAIDAL as a multinational pharmaceutical company seeking to adapt the structure of its research activities (as a key element of its development strategy) to globalization, might face a major challenge: the movement towards the internationalization of research and development activities which remains very limited and uncertain. Historically, major technology transfers have taken place from the United States to Europe through company acquisitions, alliances, and laboratory relocations. The race for innovation and the increasing confrontation between national and foreign governments policies, cultures and industrial environments might lead us to reconsider our vision towards globalization, and therefore, in my opinion, we should rather focus on acquiring knowledge, prioritize innovation and new technologies rather than importing finished products, training employees and seeking for strategic alliances and partnerships abroad in which I see the best way to be more competitive and independent in terms of technical ability and know-how in the long term.

References

Al-Rodhan, RF, N. & Stoudmann, G., 2006. Definitions of globalization: A comprehensive overview and a proposed definition. Program on the Geopolitical Implications of Globalization and Transnational Security, 6(1), p. 21.

andi.dz, 2012. Bilan des réalisations des investissements-Période 2002-2012. [Online]
Available at: http://www.andi.dz/index.php/fr/bilan-des-investissements
[Accessed 15 01 2019].

commerce.gov.dz, 2005. ACCORDS D’ASSOCIATION AVEC L’UE. [Online]
Available at: https://www.commerce.gov.dz/rubriques/accords-d-association-avec-l-ue
[Accessed 19 Janvier 2020].

El Watan, 2018. «En Algérie, les femmes représentent 18% de la population active». [Online]
Available at: https://www.elwatan.com/edition/actualite/en-algerie-les-femmes-representent-18-de-la-population-active-17-09-2018
[Accessed 17 January 2020].

ethnologue.com, 2019. What are the top 200 most spoken languages. [Online]
Available at: https://www.ethnologue.com/guides/ethnologue200
[Accessed 16 January 2020].

export.gov, 2019. Algeria – Oil and Gas – Hydrocarbons. [Online]
Available at: https://www.export.gov/article?id=Algeria-Oil-and-Gas-Hydrocarbons
[Accessed 15 01 2020].

Fitoussi, J.-P., 1997. Mondialisation et inégalités. Futuribles, pp. 5-16.

Ghebbi, 2010. s.l.: Ministry of Interior Development.

Higher School of Economics, 2008. hse.ru. [Online]
Available at: https://economics.hse.ru/data/2016/03/11/1124888188/gpol12032.pdf
[Accessed 15 January 2020].

IQVIA, 2019. Differentiate and Win in The African Pharma Market. [Online]
Available at: https://www.iqvia.com/locations/middle-east-and-africa/library/white-papers/differentiate-and-win-in-the-african-pharma-market
[Accessed 15 01 2020].

KOPP, C. M., 2019. Investopedia. [Online]
Available at: https://www.investopedia.com/terms/g/globalization.asp
[Accessed 10 01 2020].

lesechos.fr, 1998. Expatriation : les Français de plus en plus tentés. [Online]
Available at: https://www.lesechos.fr/1998/02/expatriation-les-francais-de-plus-en-plus-tentes-787115
[Accessed 16 January 2020].

lexpress.fr, 1999. Quand le travail sépare les couples. [Online]
Available at: https://www.lexpress.fr/emploi/quand-le-travail-separe-les-couples_494861.html
[Accessed 17 January 2020].

MacLachlan, M., 2018. Pourquoi 40% des missions à l’étranger échouent et comment y remédier. [Online]
Available at: https://insights.learnlight.com/fr/articles/missions-etranger-echec/
[Accessed 16 January 2020].

mdipi.gov.dz, 2010. Rapport sectoriel de l’industrie pharmaceutique. [Online]
Available at: http://www.mdipi.gov.dz/IMG/pdf/Rapport_sectoriel_-Industrie_Pharmaceutique-_PDF.pdf
[Accessed 15 01 2020].

Price Waterhouse Physical, 2020. Talent Mobility 2020. [Online]
Available at: https://www.pwc.com/gx/en/managing-tomorrows-people/future-of-work/pdf/talent-mobility-2020.pdf
[Accessed 17 January 2020].

Shaoming, Z. & S. Tamer, C., 1996. Global strategy: a review and an integrated conceptual framework. European Journal of Marketing, 30(1), pp. 52-69.

World Bank, 2019. Poverty. [Online]
Available at: https://www.worldbank.org/en/topic/poverty/overview
[Accessed 15 January 2020].




PS3 – Histograms and Stem-and-leaf plots

Histogram

A histogram also called a frequency histogram could be defined as an accurate graphical representation of the distribution of numerical data set. It is an estimate of the probability distribution of a continuous variable which is why there are no gaps. Histogram differs from a bar graph in the sense that a bar graph relates two variables, but a histogram relates only one.

It is preferable to use a histogram instead of a bar graph when you have too many data points to plot individually.

Example:  you want to use census data to make a graph of the number of people of each age at a home party. Before creating the histogram, you might first group together 0 − 14 year-olds, 15 − 29 year-olds, 30 − 49 year-olds, etc. Each of these ages intervals should have the same size or length.

Ages 1-5 6-9 10-13 14-17 18-21 22-25
Number 5 11 23 24 9 4

Table 3.1. The distribution of people ages at a home party.

Figure 1. The way the data (people ages) is spread out in the histogram is called the distribution.

Relative frequency histogram

We can transform the data table 3.1 into a relative frequency histogram by converting the numbers into frequencies. Frequency histogram is the same as a regular histogram, except values are displayed as percentage of the total of the data.

Ages 1-5 6-9 10-13 14-17 18-21 22-25
Frequency 0.0658 0.1447 0.3026 0.3158 0.1184 0.5263

Table 3.2. The frequency distribution of people ages at a home party.

Stem-and-leaf plot

A stem-and-leaf display or stem-and-leaf plot is just another way to present quantitative data in a graphical format, similar to a histogram because both types of charts group together data points, to assist in visualizing the shape of a distribution, they are very helpful ways in exploratory data analysis to visualize how many data points fall into a certain category or range.

Example: let’s say we have the finishing scores of golfers in a round of tournament golf: 66, 67, 67, 68, 68, 68, 68, 69, 69, 69, 69, 70, 70, 71, 71, 72, 73, 75, 101, 102, 111

Stem Leaf
6 6, 7, 7, 8, 8, 8, 8, 9, 9, 9, 9
7 0, 0, 1, 1, 2, 3, 5
10 1,2,11

Table 3.3. A stem plot of the scores, the “stems” are the numbers on the left whereas the “leaves” are those on the right

Key: 7|0 = 70

 




PS2 – Data distributions

Joint distribution

It is a data table (similar to a relative frequency table) that shows the distribution of one set of data against the distribution of another set of data in percentages.

    Weight lost (lbs)
    0-2 2-4 4-6 6-8 +8
Miles walked per day

 

1-3 4% 2% 21% 1% 1%
3-5 12% 8% 6% 2% 8%
5-7 1% 12% 1% 0% 10%
+7 2% 3% 4% 1% 1%

Table 2.1. a data table of a group of 50 individuals, measuring the average number of hours each participant spent walking each day over the course of the study, data about the total number of pounds of weight lost in total by each participant was gathered over that same period of time.

The table 2.1 is an example of joint distribution, it shows that 4 % of the group, which would be 2 out of the 50 people studied, spent between 1 and 3 hours per der exercising, and lost between 0 and 2 pounds.

Marginal distribution

If we add totals (by totalling up the data in each row and column) to the table 2.1. we get the following data table:

    Weight lost (lbs)
    0-2 2-4 4-6 6-8 +8 Total
Miles walked per day

 

1-3 4% 2% 21% 1% 1% 29%
3-5 12% 8% 6% 2% 8% 36%
5-7 1% 12% 1% 0% 10% 24%
+7 2% 3% 4% 1% 1% 11%
Total 19% 25% 32% 4% 20% 100%

Table 2.2. data table with marginal distributions.

Conditional distribution

Conditional distribution is the distribution of one variable, while the other variable value is already known.

    Weight lost (lbs)
    0-2 2-4 4-6 6-8 +8 Total
Miles walked per day 1-3 44% 22% 21% 11% 2% 100%
3-5 51% 19% 15% 14% 1% 100%
5-7 61% 19% 10% 0% 10% 100%
+7 22% 38% 14% 5% 21% 100%

Table 2.3. data table with 4 different conditional distributions.

The data table 2.3 shows that people who spent 1 − 3 hours walking per day, 44 % of them lost 0 − 2 pounds, 22 % of them lost 2 − 4 pounds, 21 % of them lost 4 − 6 pounds, 11 % of them lost 6 − 8 pounds and only 2 % of them lost +8 pounds. This distribution is conditional on 1 – 3 walking hours.

If we flip the two distributions, taking the miles walked per day distribution versus each weight loss variable and we calculate the percentages of each conditional variable. We will get the following data table:

    Weight lost (lbs)
    0-2 2-4 4-6 6-8 +8
Miles walked per day

 

1-3 40% 52% 21% 15% 11%
3-5 12% 8% 16% 29% 8%
5-7 10% 33% 3% 31% 21%
+7 38% 7% 60% 25% 60%
Total 100% 100% 100% 100% 100%

Table 2.4. data table with 5 different conditional distributions.

 




PS1 – Data Visualization

This article is Chapter I from the author’s book Statistics and Probability Flashcards.

Definitions

Individuals and variables

In a dataset, the individuals are the items with one or more properties, called variables. Individuals can be events, cases, objects, people, etc.

Student (individuals) Height (variables)
John 190 cm
Ali 175 cm
Paul 165 cm
Clara 160 cm

Table 1.1. example of a data set with items and variables.

Individuals and variables are called data. Table 1.1 is called a data table.

Here’s another example of a data table containing other variables:

Student Height Weight Likes football
John 190 cm 100 kg Yes
Ali 175 cm 90 kg No
Paul 165 cm 60 kg No
Clara 160 cm 63 kg Yes

Table 1.2. example of a data set with items and more than 1 variable category.

Variables can be categorical or quantitative. In table 1.1 there’s one quantitative variable: the height whereas in table 1.2 there are two quantitative variables (height and weight), and one categorical variable (likes football).

Quantitative variables are numerical variables: counts, percents, or numbers.

Categorical variables are non-numerical variables. Their values aren’t represented with numbers: words, not numbers.

This data set presented in table 1.1 and table 1.2 is called one-way data because we have just a single individual (item) that has one or many properties attached to it.

How to build a data table?

When you build a data table, it is important to think about whether you have more individuals or more variables.

In tables 1.1 and 1.2 the number of individuals listed was greater than the number of variables. If we have many variables but only a few individuals, it is advisable to list the individuals across the top and the variables down the left side.

John Ali
Height 190 cm 175 cm
Weight 90 kg 75 kg
Likes football Yes No
Likes pizza Yes Yes

Table 1.3. Since the number of variables is bigger than individuals, listing the variables vertically would make the data table more appropriate than if we had tried to list all the variables horizontally.

Data visualization

Bar graphs and pie charts

Two of the simplest ways to summarize and graphically represent data are bar graphs and pie charts.

Bar graphs apply a series of rectangular bars to show absolute values or proportions for each of the data categories whereas pie charts show how substantial each data category represents as a part or proportion of the whole, by using a circular format with different-sized “slices” for different percentages of the total.

Rank Country Oil production (bbl/day)
01 USA 15,043,000
02 Saudi Arabia (OPEC) 12,000,000
03 Russia 10,800,000
04 Iraq (OPEC) 4,451,516
05 Iran (OPEC) 3,990,956
06 China 3,980,650
07 Canada 3,662,694
08 United Arab Emirates (OPEC) 3,106,077
09 Kuwait (OPEC) 2,923,825
10 Brazil 2,515,459

Table 1.4. Top 10 world Oil producers (“Production of Crude Oil including Lease Condensate 2019” U.S. Energy Information Administration)

Figure 1. Bar chart – Top 10 world Oil producers (“Production of Crude Oil including Lease Condensate 2019” U.S. Energy Information Administration)

Notice that we have a list of the Oil producers (countries) across the bottom of the bar graph, with the count of the Oil production (bbl/day) up the left side.

The countries are the individuals, and the count is a quantitative variable because it represents the numeric property of each of the individuals. The bar graph is one of the best ways to represent this data because it is possible to get quickly an overview of which countries produce the most oil.

Figure 2. Pie chart – Top 10 world Oil producers (“Production of Crude Oil including Lease Condensate 2019” U.S. Energy Information Administration)

Now we can quickly see that the United States produces the most of the total oil daily, biggest than any other country, Saudi Arabia occupies second place, and Brazil is the 10th world’s biggest oil producer.

Venn diagrams

A Venn diagram is a diagram that shows all possible logical relations between a finite collection of different sets from a two-way table.

Good Cheap Fast Total
Expensive 10 0 10 20
Low quality 0 10 10 20
Slow delivery 10 10 0 20
Best choice 10 10 10 30
Other 20 20 20 60
Total 50 50 50 150

Table 1.5. two-way data table

Figure 3. Venn diagram

Box-and-whisker plots

Box-and-whisker plots (also called box plots) are a great method for graphically depicting groups of numerical data through their quartiles. It is very useful when you want to show the median and spread of the data (see chapter IV) at the same time.

Assuming that we have the following data set: [1, 2,2, 2, 3, 3, 4, 6, 8,8, 10, 11, 11, 16]:

Figure 4. Box-and-whisker chart

The horizontal line in the center of the box is the median of the data set, so the median of the data set represented in the chart above is 5.

The dot at the end of the bottom whisker is the minimum of the data set, and the dot at the top of the right whisker is the maximum of the data set. So in this plot, we can say that the minimum is 1, that the maximum is 16, so the range would be 16 − 1 = 15.

The IQR (interquartile range) is given by the ends of the box. Since the box above extends from 2 to 10.25, the IQR is 10.25 − 2 = 8.25.

We can summarize the information given by the Box-and-whisker chart above in the following table:

Min Q1 Median Q3 Max
1 2 5 10.25 16



Dietary supplements and functional foods

Food supplements are foodstuffs intended to supplement the normal diet, the constitute a concentrated source of nutrients or other substances having, alone or in combination, a nutritional or physiological effect. They are marketed in many forms (capsules, pastilles, tablets, powder packets or ampoules).

The nutritional or health claims they claim have, since July 2007, been very strictly regulated under the European Regulation 1924/2006, which requires scientific proof to be provided to the European Medicines Agency (EMA).

Functional foods are not defined by legislation. They are considered common foods intended for consumption as part of a balanced and varied diet. Their particularity lies in the fact that they contain biologically active compounds that have beneficial effects on one or more target functions of the body, beyond the basic nutritional effects, in order to improve health and well-being and/or reduce the risk of disease.

Dairy products, especially yogurts, are the most abundant probiotic foods, with Danone’s Activia® and Actimel® products leading the way.

Like many foods, functional foods and probiotics are subject to safety and labeling rules, in particular with regard to claims used by the food industry as a selling point.

Recently, new guidelines have tightened the regulations around these probiotic foods because their health benefits were difficult to recognize.

European Union Regulation No 432-2012 of 16 May 2012 establishes a list of authorized health claims on foods and specifies that health claims must be based on generally accepted scientific evidence.

Probiotics fall into two types of claims: function claims and therapeutic claims:

Claim Any representation that states, suggests or implies that a food has particulate qualities related to its origin, nutritional properties, nature, processing, composition or any other quality.

Health claim refers to any representation in labeling and advertising that states, suggests or implies that there is a relationship between the consumption of a food or food constituent and a person’s health.

Functional claim refers to a health claim that describes the physiological effects of food or food constituents on the body’s normal functions or biological activities associated with health or performance. Functional claims can be made about the physiological effects of probiotic microorganisms in foods (e.g., “promotes regularity” and “improves nutrient absorption and aids digestion”). Function claims must include a specific, scientifically substantiated physiological effect associated with good health or performance and providing useful information to consumers.

Therapeutic claim refers to the treatment or mitigation of a disease or health disorder or related to the recovery, correction or modification of bodily functions. For example,”[name of food or food constituent] lowers blood cholesterol”.

The assessment of probiotics for food use is described in the report of the Joint FAO/WHO Expert Consultation (Food and Agriculture Organization of the United Nations and World Health Organization).

Specific labeling guidelines are outlined in the Canadian Food Inspection Agency’s (CFIA) Guide to Food Labelling and Advertising, which applies to all products containing probiotic microorganisms. According to the appropriate description of a probiotic product, as indicated on the label, should include the following points:

  • Strain Identification: Any claim for a probiotic must be accompanied by the Latin name of the microorganism (i.e. genus and species), as well as the name of the strain of the microorganism. For consistency, it is recommended that the strain should be identified by the number assigned by an internationally recognized culture bank, such as the American Type Culture Collection.
  • Quantity declaration: The quantity of the probiotic microorganism(s) present in the product must be indicated in colony-forming units (CFU) in a specified portion of the food. This statement must appear next to the Nutrition Facts table or ingredient list, or in close proximity to the claim.
  • List of ingredients: Any food containing probiotic microorganism(s) must display a list of ingredients in accordance with the sections of the Food Regulations. The probiotic microorganism must be designated by its common name or by the class name.



Probiotics

The notion of probiotics has recently developed and most pharmacists have not been trained in these new food supplements.

From birth, our gastrointestinal tract is colonized by many microorganisms that constitute the digestive microbiota. This complex and diversified ecosystem, unique to each individual, contributes to the proper functioning of the intestine through the many activities it carries out. However, the balance of the microbiota is sensitive and its rupture occurs in the pathophysiology of various intestinal disorders, hence the idea of positively modulating a microbiota unbalanced by the administration of probiotics.

The term “probiotic” means “for life” and refers to living microorganisms that, when ingested in appropriate amounts, produce a benefit to the health of the host that goes beyond basic nutritional functions.

Probiotics are often lactic acid bacteria (lactobacilli and bifidobacteria) or yeasts introduced into the diet in the form of fermented milk products or food supplements.

These microorganisms strengthen the intestinal and vaginal flora. Their presence makes it possible to fight against the proliferation of pathogenic bacteria.

Several clinical studies have already demonstrated the efficacy of certain probiotics in the treatment of systemic and infectious diseases such as acute diarrhea and Crohn’s disease.

Other studies have suggested a potential application for the treatment of urogenital infections, colon cancer, atopic dermatitis and allergic diseases including food allergy such as lactose intolerance.

History

The definition of probiotics has evolved over time according to researchers, scientific knowledge and technological advances.

In the 20th century the Nobel Prize winner, Elie Metchnikoff, observed that a surprising number of people in Bulgaria lived for more than 100 years. This longevity could not be explained by the advances in modern medicine, because Bulgaria, one of the poorest countries in Europe at that time, did not benefit from such advances. Dr. Metchnikoff found that Bulgarians consume large quantities of yogurt, he associated the increase in longevity observed with the consumption of living microorganisms from fermented dairy products. Although Metchnikoff saw germs as rather harmful to human health, he considered it beneficial to replace bacteria in the gastrointestinal tract with yogurt, including the Bulgarian bacillus. He then explained the better beneficial effect of this bacteria by the absence of alcohol production (harmful to longevity), compared to bacteria present in other fermented milk such as kefir or kumys. In addition, he assumed that the lactic acid produced, as well as other unidentified factors, would act synergistically to inhibit the growth of putrefaction bacteria in the colon.

At the same time, in 1906, the French pediatrician Henry Tissier observed that the stools of children with diarrhea contained a small number of bifidobacteria compared to the stools of healthy children. He then suggested that these bacteria be administered to diarrheal patients to help them restore a healthy intestinal microbiota.

Metchnikoff and Tissier are therefore the first to put forward the idea of administering exogenous microorganisms to compensate for a possible dysfunction in our intestinal ecosystem. The concept of “probiotics” was born.

Nevertheless, it was not until 1954 that the term probiotics was introduced into the literature by Ferdinand Vergin in a paper entitled “Anti-und Probiotika”. This term derived from the Greek “pro bios”, which literally means “for life” as opposed to the harmful effects of antibiotics

In 1965, Lilly and Stilwell, in the journal Science, defined probiotics as substances produced by microorganisms capable of stimulating the growth of other microorganisms.

In 1989, Fuller highlighted the microbial nature of probiotics by redefining the term as a “living microbial nutritional supplement that has a positive effect on the host animal by improving its intestinal balance”.

In 1992, Havenaar and Huis in’t Velt further refined the term to “a viable culture composed of one or a mixture of bacteria that, when applied to animals or humans, has a beneficial effect on the host by improving the properties of native flora. ».

In 1998, Guarner and Schaafsmaa specified that probiotics are “living microorganisms, which, when consumed in adequate amounts, have a beneficial effect on the health of the host”.

In 2002, the World Health Organization (WHO) and the Food and Agriculture Organization of the United Nations (FAO) formalized the definition of probiotics to avoid any drift.

Probiotics are therefore defined as “living organisms that, when ingested in sufficient quantities, have a beneficial effect on the health of the host”.

History, therefore, underlines that the current definition could still evolve, as there are still many fields of research to better understand and understand the action of probiotics.

Regulation

The conditions and marketing authorization of probiotics are defined according to their drug or food application. Most probiotics are functional foods or are used as food supplements. These “healthy foods” are at the border between the drug and the traditional food and are governed by food legislation.

Probiotic foods

The global market of probiotic foods has been growing rapidly since the early 2000s, particularly in Europe. This dynamic is supported in particular by the link between food and health benefits.

Probiotics used as food supplements, as well as functional foods, are considered as food and are governed by the relevant legislation. They are different from dietary foods that are intended for a particular food and require a specific formulation or manufacturing process to differentiate them from the common food, and from medicinal products.