Analysis,

Business Models
& Recommendations

By Violeta Kotvitska

MSTCO104 Business Model Course

Submitted to: Dr. Christian Viladent

2 5 th o f O c t o b e r 2 0 2 0
Masters in Innovations & Entrepreneurship
1
 About the company [2]

• founded in MISSION
1925 The company makes it possible to treat with
modern effective drugs
• leader on
Ukrainian
VISION
pharmaceutic
al market The company values its reputation as a
responsible business and a reliable partner.
• export leader Most of Farmak's profits are reinvested
annually in growth and development, thus
• 20 production enabling the business to expand in line with
lines European standards and change its position in
the international arena.

2
Porter’s 5 Forces [1]
COMPETITORS IN THE INDUSTRY POTENTIAL OF NEW ENTRANTS
o Profitable business for the Ukrainian economy o Pharmaceutical market entry barriers are high
o $ 2.2 billion in 2019 [8]
o Drug development requires a lot of capital
o Import Competitors
o
investment
o imported drugs occupy half of the domestic Market is occupied with huge pharma
market [5] companies & hard to compete
o Importance of making domestic market on a same o Pharmaceutical consolidation [4]
level with foreign o exchange of shares between small and large
o Farmak is the leader on the Ukrainian maket businesses with the transfer of management to

o Low competative rivalry

the main office

o Farmak is offering better quality for lower prices [2]

o 4 main competitors on domestic market:
o "Sanofi", "Arterium", "Darnitsa", "Bayer” [7]
3
Porter’s 5 Forces
POWER OF SUPPLIERS
o High dependance on the supplier
o Dependence on imported raw materials [7]
o Major Raw Material Suppliers (API - Active
Pharmaceutical Substance) - India and China
o Domestic suppliers = impossibly high prices =
increase in the price of drugs
POIWER OF CUSTOMERS
o High power of customers
o Huge dependence on the industry
o Leader on the domestic pharma market
o Export leader
o International certification of Farmak

THREAT OF SUBSTITUTES
o Medium power of substitutes
o Each pharmaceutical company has its own
drugs, protected by law and legally
registered
o Similar drugs but different API may have
same pharmaceutical effect
4
SWOT ANALYSIS [6], [2],[3] *
STRENGTH WEAKNESSES
o Civil society & media partnership o Financing social programs only at the expanse of
o Implementation & publication of social projects the company’s personal funds

o Integration of social responsibility policy into overall o Lack of spare money

strategy of the company o Lack of needed amount of modern technology
o Qualified specialists o Dependance on import
o Scientific & educational preparatory base o From time to time threr is no financial stability
o A strong reputation for quality pharmaceutical
manufacturing
o Specific marketing strategy
o Availability of projects with a social focus
o Professional development of employees
o Consultations & explanations on the peculiarities
of the consumptions of drugs
5
*SWOT analysis completed based on the information provided in the reference [2], [6], [3].
SWOT ANALYSIS *

OPPORTUNITIES THREATS
o Involvement of local authorities and other business o Import dependence
companies and organization’s in social responsibility
movements
o External competitors

o Representative offices of the company outside

o Internal competitors

Ukraine borders o Exchange rates & pressure on national currency

o Investments to the domestic market = development

of the domestic industry

*SWOT analysis completed based on the information provided in the reference [2], [6], [3].
6
ANALYSIS & CONCLUSION
ü There is 5 leaders on Ukrainian pharmaceutical
market and Farmak is one on the top of them
ü Farmak’s creating posotive impact on the
economy of Ukraine
ü Company is following the Europian standarts of
quality
ü There is a challenge with suppliers due to the high
dependance of the import of API
ü Low threat of new entry due to the require high
capital investments

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RECOMENDATIONS
o It is important for a company that is a leader in the
domestic market to be confident in its suppliers and not
to be heavily dependent. My recommendation for
Farmak is to invest in the domestic market to produce
raw materials and avoid imports at least partially.
o Foreign & domestic investors
o Attracting investors both from within and from outside
the country will have a positive impact on the
development of domestic business
o Digital marketing should become a main choice in the
advertisement of medicines.
o At the time of pandemic face-to-face marketing
strategy is failing

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REFERENCES
[1] Chappelow, J., 2020. Porter's 5 Forces. [online] Investopedia. Available at: <https://www.investopedia.com/terms/p/porter.asp> [Accessed 24
October 2020].

[2] Farmak. 2020. Farmak. [online] Available at: <https://farmak.ua> [Accessed 24 October 2020].
[3] Gurochkіna V.V. Ocіnjuvannja realіzacії principіv korporativnoї socіal'noї vіdpovіdal'nostі na vіtchiznjanih pіdpriєmstvah / V.V. /Gurochkіna //
Mіzhnarodnij naukovij zhurnal Kiїvs'kogo unіversitetu rinkovih vіdnosin: «Ekonomіka, bіznes-admіnіstruvannja, pravo» - Vipusk № 2 (2). - 2017. -
290 s. – S. 162-173. ISSN 2519-2647.

[4] LDaily. 2020. Development Trends And Structure Of The Pharmacy Business In Ukraine - Ldaily. [online] Available at:
<https://ldaily.ua/ru/ldaily/tendencziyi-rozvytku-ta-struktura-aptechnogo-biznesu-ukrayiny/> [Accessed 24 October 2020].
[5] Lomiychuk, V., 2020. Ukrainian Pharmaceutical Market Overview. [online] NB Business. Available at: <https://nv.ua/biz/experts/kak-
farmacevtika-v-ukraine-perezhivaet-krizisy-i-uspeshno-rastet-50031532.html> [Accessed 24 October 2020].
[6] Mindtools.com. 2020. SWOT Analysis: – How To Develop A Strategy For Success. [online] Available at:
<https://www.mindtools.com/pages/article/newTMC_05.htm> [Accessed 24 October 2020].

[7] Orlovskiy, M., 2020. Domestic Pharmaceutical Companies: Expanding Their Presence During A Pandemic. [online] Economic truth. Available at:
<https://www.epravda.com.ua/rus/projects/farmak/2020/04/1/658687/> [Accessed 24 October 2020]
[8] Smd.net.ua. 2020. SMD. [online] Available at: <http://smd.net.ua> [Accessed 23 October 2020].