A Case Study of Generoso Pharmaceutical and Chemical Incorporation

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University of Southeastern Philippines

Sto. Tomas External Studies Program
Sto. Tomas, Davao del Norte
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In Partial Fulfillment of the Requirements for the Degree of

Bachelor of Science in Business Administration major in Business Economics

Submitted to:

GERARDO M. DAGONDON, MBA

Instructor

Submitted by:

Dennis Cubijano
Mike Vincent Pal
Jemar O. Toledo

October 2019
I. Summary

Mr. David Generoso is the President of Generoso Pharmaceuticals and Chemicals

Inc. He married Elizabeth Reyes, a nurse and a certified world accountant and they
have been blessed with 5 children.

After 5 years of combing the Central Luzon region, in 1978, David established a
company called Generoso Pharmaceuticals and Chemicals (GPC) with Elizabeth
and a business associate Mr. Rafael Buenaventura, the team do up shop at the
Generoso residence in Tarlac. An initial capitalization of P300 started the business
with a dozen bottles from the pharmaceutical firms which they had been machine-
accessible with before. David initial success in his attempt on manufacturing
chemicals on veterinary medicine encouraged him to start his own specify of
pharmaceutical in 1983.

There is a fast turnover of participants in the industry. It is very difficult to expand.

Small companies always constantly struggle the stigma of being a local company
with inferior quality. Small manufacturers tend to cost cut in production costs in the
absence of economies of scale. GPC suffers in their costly promotion expense with
buyers including doctors, pharmacists and hospitals.

In 1988, the American principal offered his plans to David of GPC engaging in the
contract manufacturing of pharmaceutical products for both the domestic and export
markets. The proposed project was to compound locally all products that it will
manufacture and sell, importing only the active ingredients and bulk materials that it
is unable to produce locally. The American principal dropped his plans to David
which came in time with the Generics bill. The only thing that made David sad is that
they need to hire a German expatriate to oversee the problem and the additional
budget for the project. No Filipino chemist who specialize the technology of the
project could qualify for GPC to remain competitive. That is why they need to hire
German expatriate to oversee the project. The lack of qualified chemists is an
industry problem for which GPC has not been spared. The company was now a
going concern valued at P40 million. The proposed project would cost approximately
P135 million.
II. Statement of the Problem

The problem on this case study is on how the Generoso Pharmaceuticals &
Chemicals, Inc. (GPC), determine the possible actions should take in order to stay in
competition, where to find additional capital, on how to hire German emigrant to
oversee the project and how to produce such amounts of products needed in the
local and international market at the minimum of cost.

III. Alternative Courses of Action

 In the local market, the project will position itself as a specialty pharmaceutical
manufacturer which can manufacture products not currently available from the
industry’s contract manufacturers.
 The need to hire a German expatriate to oversee the problem and the
additional budget for the project. No Filipino chemist who specialize the technology
of the project could qualify for GPC to remain competitive
 The company was now a going concern valued at P40 million. The proposed
project would cost approximately P135 million.

SWOT Analysis
Strength
 Liquidity of the Company
 A wide supply for raw materials
 Ready for expansion
 Optimal and better product quality
 A good leader
 A conservative cash management
 Reputation of good customer service
 A good relationship of partnerships with suppliers and marketing allies.

Weakness
 Less quality of their products
 Expansions are too expensive
 Lack of additional capital and financial stability
 Poor management
 Capital constraints to finance future projects
Opportunities
 American principal proposed project to GPC
 Generic Bill Act advantage to the firm
 Business expansion
 Ability to grow rapidly in the business industry
 Opening to exploit emerging new technologies

Threats
 Risky project because it’s too costly
 Fast turnover of participants and competitors in the industry
 Entry and increasing rivalry of new competitors
 Costly regulatory requirements
 Stability of the economy

IV. Recommendation

We, therefore recommend that the best solution of this case study is to accept the
proposal of American principal of the project for Generoso Pharmaceuticals &
Chemicals, Inc. in order for them to stay in competition and reputation and to be able
to stand and grow in the business industry. The company can borrow financial from
creditors or other financial intermediaries that will provide the needed budget. The
company will hire experienced German Chemists, who can make the company stays
in the competition and can achieved high quality of products.

V. Conclusion

We, conclude that Generoso Pharmaceutical and Chemical Inc. (GPC) can pursue
the proposed budget if they have sufficient financial sources to supervise the project.
Accepting the proposal of American principal could make the Generoso
Pharmaceuticals & Chemicals, Inc. stay and remain in the competition and grow in
the business industry. Borrowing financial from the financial institutions will fulfill their
financial needs in order for them to finance their business.