Country Analysis Report - South Korea Essay

2201 Words Apr 19th, 2006 9 Pages
Country Analysis Report
In the fiscal period from year 2000 to 2004, Allergan Inc. has seen a continuous rise in sales and profits. In the year ended 2004, net income reached a high of $377 million and there is certainly no reason to believe that number won't continue to grow . Although most of our company's sales comes from our line of eye care pharmaceuticals, It is the BOTOX/neuromodulators line that sees the most promise in growth.
With 80% of our BOTOX products being used for cosmetic purposes, a great market potential is seen in South Korea where the demand for skincare and cosmetic products is soaring. With sales capabilities in over 100 countries, direct sales offices have only been established in a little over 20
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Many companies in Korea had high debt and weak profits, many of which were caused by very stringent labor laws. Many of those companies, even the successful ones could not pay the large interest payments on those debt. South Korea had experienced their own accounting scandals which led to the market being on edge. From these events, it was clear that there was not enough transparency in the financials of many firms. Many economists agree that the financial market in South Korea is underdeveloped because of these reasons6. What these things mean to our company is that financing this expansion may be difficult as many foreign banks are reluctant to loan to companies operating in South Korea. If Allergan is to proceed with this plan, a secure means of obtaining financing is needed.

Legal Conditions: Marketing pharmaceuticals in any country can always be difficult depending on the laws and regulations of those countries on drugs. Currently, South Korea has one of the largest pharmaceutical markets in Asia valued at over $5 billion2. Recent reforms such as the Actual Transaction Pricing (ATP) and A-7 policies have required many drugs to be priced at the level of advanced countries, creating a level playing field for foreign drugs to compete with domestic onces. Foreign companies must be aware of intellectual property laws in Korea. Unlike the U.S. where intellectual property rights are usually granted based on "first

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