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Transcription of this question: 5.N-Pharma marketing manager recently returned from the USA where he met representatives Ofthe animal drug company, -.4nigam. Following his visit, he prepared a report recommending thatN-Pharma should diversify into the production and distribution Of animal health productsby subcontracting to Anigam before completing a full merger with the company (Option 3).He believes that N-Pharma should initially target the “companion animal market” (the pet market),but prepare for growth into Other animal species sectors once the N-Pharma brand is established.The following are key findings Of the marketing manager’s report:• In 2009, the global animal health industry was worth almost USS18 billion (Item 1) with agrowth rate over the previous year Of 4.70/0.• Since 1999, the “companion animal health market” has grown by 6.6% per year. It now has ashare Of almost 42 % (Item 2) Of global animal pharmaceutical sales.• Increasing numbers Of pets are being treated for the same conditions that affect their owners,such as heart disease and obesity (Item 3). For example, the world’s biggest pharmaceuticalcompany Pfizer sells Slentrol, the world’s first anti-obesity drug for dogs.• Pharmaceutical companies are creating a range Of “crossover products”, adapting existinghuman drugs for animal markets. Selling animal health products would minimize the time andcost Of research and development (R&D), as N-Pharma could simply adapt and develop itsexisting human drug portfolio, such as Pharmaflo and Pharmaslim.The marketing manager knows that several directors are concerned about the risks Of thisdiversification as well as merging with Anigam, which has a corporate culture based on projectteams and matrix structures. Like N-Pharma, Anigam has recently been accused Of unethicalanimal experimentation.(a)(b)(c)(d)Identify two benefits for N-Pharma Of subcontracting production to Anigam.Explain the role Of a “Kaizen approach to change the corporate culture andencourage ethical practices” (line 104) within N-Pharma.Examine how the use Of Porter’s five forces model can help N-Pharmaunderstand its competitive position before it enters the animal health market.Using a decision-making framework and using information contained inthe case study and Items I to 5, evaluate N-Pharma’s diversification into theanimal health market and its possible merger with Anigam (Option 3).[2 marks/[7 marks/[9 marks][12 marks]

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