SOUTH AFRICAN MULTINATIONAL PHARMACEUTICAL ORGANISATION: FACING CHALLENGES

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ORGANISATIONAL TRANSFORMATION

Transformation has become a corporate strategy for organisations coping with the turbulence that characterises today’s environment. The need for transformation stems from this environmental turbulence and can render current organisational practices valueless. To respond, leaders must transform their organisations. A transformation creates a jump to a new level of organised complexity that provides added value for all organisational stakeholders. Corporate strategy is an integral part in the managed care business transformation diamond model (Fig 4.2) Corporate strategy is part of the research problem of this thesis. As stated in the research problem the second purpose was to determine the possible impact that the change in the environment, brought about by managed health care, will have on the modus operandi of multinational pharmaceutical organisations in South Africa. What should the pharmaceutical organisation’s corporate strategy be to adapt to the change envisaged by managed health care?
Corporate strategy must be driven by a point of view about the future of the industry: How do we want this industry to be shaped in five or ten years? What must we do to ensure that the industry evolves in a way that is maximally advantageous for us? What skills and capabilities must we begin building now if we are to occupy the industry high ground in the future? How should we organise for opportunities that may not fit neatly within the boundaries of current business units and divisions? Since most companies do not start with a shared view of the future, senior managers’ first task is to develop a process of pulling together the collective wisdom within the organisation. Concern for the future, a sense of where opportunities lie, and an understanding of organisational change is not the province of any group; people from all levels of a company can help define the future (Hamel and Prahalad 1994:127).
Any company that is more of a bystander than a driver on the road to the future will find its structure, values, and skills becoming progressively less attuned to an ever-changing industry reality. Such a discrepancy between the pace of change in the industry environment and the pace of change in the internal environment spawns the daunting task of organisational transformation.
The organisational transformation strategy agenda typically includes downsizing, overhead reduction, employee empowerment, process redesign and portfolio rationalisation. As important as these initiatives are, their accomplishment cannot restore a company to industry leadership, nor ensure that it intercepts the future (Hamel and Prahalad 1994:6) Organisational transformation is a living methodology.
Every day we learn more and more about business transformation – about what works, and what leads to dead ends; about how strategies and visions can be translated into action programmes at every level of an organisation; and about the role of business leadership, in the alchemy of transformation. For most companies, the organisational transformation agenda is reactive rather than proactive.
Successfully managing the task of organisational transformation can make a firm lean and fleet footed; it cannot turn a firm into an industry pioneer. And although being a fast follower is better than being a slow follower, neither is a recipe for extraordinary growth and profitability. To be a leader, a company must take charge of the process of industry transformation (Hamel and Prahalad 1994:19). The requirement for organisational transformation presents a troubling paradox for would-be leaders of change. To achieve significant and lasting transformation, everything about the organisation must change (Spector 1995:382). Smith (1993:378-379) warns that fundamental organisational transformation does not take place quickly. Smith warns further that executives should not rush out and hire consulting firms to redefine or to transform the organisation, but that internal learning should precede the use of consultants.
A transformative change, however, is accompanied by a fundamental shift in consciousness, values, attitudes and perceptions. In a very real way, it is a constitutional change of the individual or the organisation. This level of change entails a profound transmutation of the prevailing vision ofreality. This fundamental paradigmatic shift occurs only when the boundaries of the current frames ofreference are pushed back to embrace a new vision of what is possible. This process is what Rossiter and Aucamp (1990:21) see as organisation transformation.

CHAPTERl  BACKGROUND AND AIM OF STUDY
l.1 INTRODUCTION
1.2 THE NEED FOR A NEW PARADIGM IN THE SOUTH AFRICAN HEALTH ENVIRONMENT
1.2.1 The impact of health care inflation
1.2.2 The South African health care environment
1.2.3 The introduction of managed health care as a cost saving initiative
1.3 SOUTH AFRICAN MULTINATIONAL PHARMACEUTICAL ORGANISATION: FACING CHALLENGES
1.4 THE RESEARCH PROBLEM AND ITS SETTING
1.5 THE METHODOLOGY OF THE STUDY
1.6 BASIC OVERVIEW OF THE STUDY
1.7 CONCLUSION
CHAPTER2 THE SOUTH AFRICAN HEALTH CARE ENVIRONMENT
2.1 INTRODUCTION
2.2 DRIVING FORCES BEHIND THE CHANGES IN THE SOUTH AFRICAN HEALTH CARE SCENARIO
2.2.1 Trends in the Macro-environmental health care system.
2.2.1.1 Economic Factors
2.2.1.2 Demographic Factors
2.2.1.2.1 Demographic Pro.file
2.2.1.2.2 Urbanisation
2.2.1.2.3 AIDS
2.2.1.2.4 Socioeconomic living conditions
2.2.1.2.5 Technology
2.2.1.2.6 Health status
2.3 SYNOPSIS OF THE CURRENT SOUTH AFRICAN HEALTH CARE SYSTEM
2.3.1 Health resources
2.3.1.1 Fragmentation
2.3.1.2 Hospital beds
2.3.1.3 Human resources
2.3.1.4 Financial Resources
2. 3.1. 5 lhe South African Medical Schemes Industry
2.3.1.5.1 Income and Expenditure
2.3.1.5.2 Membership profile
2.3.1.5.3 Number of medical schemes
2.3.1.5.4 Provider reimbursement
2.3.1.5.5 Types of Medical Schemes
2.3.1.5.6 lhe legislative environment of medical schemes
2.3.1.5.6.1 lhe Medical Schemes Amendment Act, 59of1992
2.3.1.5.6.2 lhe Registrar and Council for Medical Schemes
2.3.1.5.6.3 Registration of Medical Schemes
2.3.1.5.6.4 lhe Rules of a Medical Scheme
2. 3.1.5. 7 Unfunded Liabilities within Medical Schemes
2.3.2 The new medical schemes bill of 1998
2.3.3 Comments on the new medical schemes bill
2.4 ASSESSMENT OF THE CRITICAL PROBLEMS IN THE ORGANISATION AND DELIVERY OF HEALTH CARE
2.4.1 The public/private mix in health care
2.4.1.1 Problems and challenges corifronting the public health sector
2.4.1.2. Problems and challenges confronting the private health sector
2.5 CONCLUSION
CHAPTER3 BACKGROUND TO THE INDUSTRY
3.1 INTRODUCTION
3.2 A BRIEF OVER VIEW OF THE SOUTH AFRICAN PHARMACEUTICAL INDUSTRY
3.3 THE NEW MARKETPLACE
3.3.1 Cost reducers
3.3.2 Usage regulators
3.3.3 Capitation
3.4 BUSINESS IMPLICATIONS FOR THE PHARMACEUTICAL INDUSTRY
3.4.1 New pharmaceutical product innovation
3.4.2 The marketing of pharmaceutical products
3.5 NEW RULES FOR A NEW MARKETPLAC
3.5.1 Product innovation is no longer the only determinant t business succes
3.5.2 Medical practitioners are no longer the only customer
3.5.3 Competition goes beyond innovation
3.5.4 Operating cost are crucial
3.5.5 Satisfying the new managed health care customer needs
3.6 PHARMACEUTICAL ORGANISATIONS MUST CONSIDERNEW DYNAMIC STRUCTURE
3.6.1 Structural drivers for the pharmaceutical industry
3.6.1.1 Access to customers
3.6.1.2 Access to technology
3. 6.1. 3 Competition
3.7 NEW MARKET MODELS
3.7.1 Market share drivers
3. 7.2 Premium players
3. 7 .3 Disease managers
3. 7 .5 Commoditors
3.8 THE KEY TRENDS FOR THE YEAR 2000 AND BEYOND
3.9 THE WINNERS AND LOSERS IN A NEW HEALTH CARE MARKET
3.10 THE PHARMACEUTICAL INDUSTRY’S RESPONSE TO THE NEW HEALTH CARE ENVIRONMENT
3.10.1 The restructuring of the pharmaceutical organisation
3.10.2 The transformation of the pharmaceutical organisation
3.10.2.1 Time-to-market
3.10.2.2 Pharmaceutical manufacturing
3.10.2.3 Sales and marketing
3.10.3 Reshaping the pharmaceutical organisation
3.10. 3.1 Creating a new value proposition
3.10.3.2 Outcomes
3.10. 3. 3 Opportunities
3.10.3.3.1 Capitation
3.10.3.3.2 Disease management
3.11 SURVIVAL OF THE PHARMACEUTICAL INDUSTRY
3.12 NEW CHALLENGES FOR THE PHARMACEUTICAL
INDUSTRY
3.13 CONCLUSION
CHAPTER4 THEORETICAL FOUNDATION
CHAPTERS THE NEED FOR RESTRUCTURING THE NATIONAL HEALTH SYSTEM IN SOUTH AFRICA
CHAPTER6 MANAGED HEALTH CARE AS AN ALTERNATIVE HEALTH CARE SOLUTION FOR SOUTH AFRICA

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SOUTH AFRICAN MULTINATIONAL PHARMACEUTICAL ORGANISATIONS: FACING CHANGE AND FUTURE CHALLENGES IN A MANAGED HEAL TH CARE ENVIRONMENT