Harvard Case - The Sri Lankan Health Crisis and the Middleman
"The Sri Lankan Health Crisis and the Middleman" Harvard business case study is written by Stephen Grainger. It deals with the challenges in the field of International Business. The case study is 6 page(s) long and it was first published on : Jun 30, 2016
At Fern Fort University, we recommend a multi-pronged approach to address the Sri Lankan health crisis, focusing on strengthening the local pharmaceutical supply chain, fostering innovation, and promoting transparency and accountability. This strategy involves a combination of government intervention, private sector collaboration, and international partnerships.
2. Background
The case study 'The Sri Lankan Health Crisis and the Middleman' highlights the challenges faced by the Sri Lankan healthcare system in the wake of the 2009 civil war. The country's reliance on imported pharmaceuticals, coupled with a complex and opaque distribution network, has led to drug shortages, price gouging, and a lack of access to essential medicines for the population. The case focuses on the role of middlemen in the supply chain and the potential for corruption and inefficiencies.
The main protagonists are:
- Dr. Senanayake: The Minister of Health, grappling with the crisis and seeking solutions.
- Mr. Perera: A local pharmaceutical manufacturer struggling to compete with imported drugs.
- Mr. Silva: A middleman operating within the complex distribution network, facing accusations of unethical practices.
3. Analysis of the Case Study
This case study can be analyzed using the Porter's Five Forces framework to understand the competitive landscape of the Sri Lankan pharmaceutical industry:
- Threat of New Entrants: High due to the lack of stringent regulatory barriers and the potential for foreign companies to enter the market.
- Bargaining Power of Buyers: Moderate, as consumers have limited choices due to the reliance on imported drugs. However, government procurement plays a significant role, influencing pricing and availability.
- Bargaining Power of Suppliers: High, as the pharmaceutical industry is dominated by multinational corporations with strong bargaining power.
- Threat of Substitute Products: Moderate, as alternative therapies and traditional medicine practices exist.
- Competitive Rivalry: High, with both local and international companies vying for market share.
Furthermore, the case highlights the following key issues:
- Supply Chain Inefficiencies: The complex and opaque distribution network, with multiple middlemen, leads to delays, price markups, and potential for corruption.
- Lack of Transparency and Accountability: The absence of clear regulations and monitoring mechanisms allows for unethical practices and hinders effective oversight.
- Limited Domestic Manufacturing Capacity: The reliance on imported pharmaceuticals makes the country vulnerable to global supply chain disruptions and price fluctuations.
- Financial Constraints: The government's limited resources and budgetary constraints hinder investments in strengthening the healthcare infrastructure and promoting local production.
- Lack of Innovation: The focus on imported drugs stifles innovation in the local pharmaceutical industry, limiting the development of affordable and effective solutions.
4. Recommendations
To address the Sri Lankan health crisis, the following recommendations are proposed:
Government Intervention:
- Strengthening Regulatory Framework: Implement stricter regulations for the pharmaceutical industry, including licensing requirements for middlemen, price controls, and transparent procurement procedures.
- Promoting Domestic Manufacturing: Provide incentives for local pharmaceutical companies to invest in research and development, manufacturing facilities, and capacity building. This can be achieved through tax breaks, subsidies, and access to government grants.
- Investing in Healthcare Infrastructure: Increase public spending on healthcare infrastructure, including hospitals, clinics, and essential equipment, to improve access and quality of care.
- Developing a National Drug Policy: Formulate a comprehensive national drug policy that prioritizes affordability, accessibility, and quality of essential medicines.
Private Sector Collaboration:
- Partnerships with International Pharmaceutical Companies: Encourage partnerships between local companies and multinational corporations to transfer technology, knowledge, and manufacturing expertise.
- Developing Strategic Alliances: Foster collaboration between local pharmaceutical companies, research institutions, and healthcare providers to develop innovative solutions and improve drug accessibility.
- Promoting Transparency and Accountability: Encourage the adoption of ethical business practices and promote transparency in the supply chain through independent audits and public disclosure of information.
International Partnerships:
- Seeking Technical Assistance: Collaborate with international organizations like the World Health Organization (WHO) and the United Nations Children's Fund (UNICEF) to obtain technical expertise in pharmaceutical regulation, supply chain management, and healthcare infrastructure development.
- Accessing International Funding: Secure funding from international development agencies and private investors to support initiatives aimed at strengthening the healthcare system and promoting domestic manufacturing.
- Participating in Global Trade Agreements: Leverage international trade agreements to facilitate access to affordable generic drugs and promote fair trade practices.
5. Basis of Recommendations
These recommendations consider the following factors:
- Core Competencies and Consistency with Mission: The recommendations align with the government's mission to improve public health and ensure access to affordable healthcare.
- External Customers and Internal Clients: The recommendations prioritize the needs of patients and healthcare providers while fostering a competitive environment for local pharmaceutical companies.
- Competitors: The recommendations aim to create a level playing field for both local and international companies, promoting fair competition and innovation.
- Attractiveness: The recommendations are expected to yield positive outcomes in terms of improved access to essential medicines, reduced healthcare costs, and strengthened domestic pharmaceutical industry.
Assumptions:
- The government is committed to implementing the proposed reforms and providing the necessary resources.
- Local pharmaceutical companies are willing to invest in innovation and capacity building.
- International partners are willing to provide technical assistance and funding.
6. Conclusion
Addressing the Sri Lankan health crisis requires a comprehensive and collaborative approach. By strengthening the local pharmaceutical supply chain, promoting innovation, and fostering transparency and accountability, the country can improve access to essential medicines, reduce healthcare costs, and create a more sustainable healthcare system.
7. Discussion
Alternative solutions include:
- Nationalization of the Pharmaceutical Industry: This approach could lead to inefficiencies and stifle innovation.
- Complete Reliance on Imports: This option leaves the country vulnerable to global supply chain disruptions and price fluctuations.
Risks and Key Assumptions:
- Implementation Challenges: Implementing the proposed reforms requires political will, bureaucratic efficiency, and sufficient resources.
- Resistance from Middlemen: The middlemen may resist efforts to regulate their activities and increase transparency.
- Lack of Private Sector Investment: Local pharmaceutical companies may be hesitant to invest in innovation and capacity building due to market uncertainty and regulatory challenges.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and responsible parties for each recommendation.
- Establish a task force: This task force should be composed of government officials, industry representatives, and international experts to oversee the implementation process.
- Monitor progress and make adjustments: Regular monitoring and evaluation are essential to ensure that the recommendations are achieving the desired outcomes.
By taking these steps, Sri Lanka can overcome the challenges posed by the health crisis and build a more resilient and equitable healthcare system.
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Case Description
In 2015, many people in southwest Sri Lanka were experiencing severe health problems as a result of poor water sanitation, decaying pumps and pipes, and the resultant unsanitary water. With Sri Lanka's dubious credit record and extremely poor economy, the country's government was unsure of how to raise the US$70 million that was required to build new sanitation plants and replace many aging pipes throughout the region. Would it have to accept the first offer of support or would its long-time allies from other foreign governments come to the rescue? There was little doubt that Sri Lanka would be faced with a number of caveats and conditions as part of any agreement to secure the necessary funding. Furthermore, even if the country could find the funds, would the designated officials use them appropriately without falling prey to corruption? As in any developing country, there were many concerns that needed to be addressed, and very few resources with which to address them.
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