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At present, Adcock Ingram faces the following major operational and strategic risks:
COMMERCIAL
MANAGEMENT OR CONTROL
Market share
The actions of our competitors may erode our market share and potentially
jeopardise our growth.
Robust sales and marketing efforts, customer relationship management
and customer service delivery, assist the Company in combatting
competitor actions.
Customer and partner relationships
Customers are the cornerstone of our business. Our customer relationship
management has been, and continues to be a key focus area.
Constant management of the expectations of our business partners is
an ongoing focus for our business divisions. The relationship foundations
laid down in previous years are continuously nurtured to ensure
sustainable business growth.
FINANCIAL
Foreign exchange
The uncontrollable currency volatility and the ongoing Rand
weakness impacts the purchase price of active pharmaceutical
ingredients (APIs), specialised machinery and finished goods
sourced internationally, in turn putting margins under pressure.
Forward cover is taken out for all firm import orders.
Supply and cost pressure
There are a limited number of suppliers of APIs and finished goods,
and many of these supplies are sold in a foreign-denominated
currency.
Where available, multiple suppliers of APIs are sourced and
stockholding of strategic raw materials or finished goods are
maintained.
Economic environment
Economic data indicates very little, if any, growth in the economy
resulting in the trading environment remaining difficult and will
probably deteriorate.
The Group trades across many price-points and therapeutic
categories.
COMPLIANCE
Regulatory
The complex and ever-evolving regulatory environment in which the
Group operates, provides challenges which are common throughout the
pharmaceutical industry.
Through continuous monitoring, a rigid approach to quality control and
assurance, and a prudent business approach, compliance is continuously
achieved through the ongoing combined efforts of various operational
and technical teams.
SUSTAINABILITY
Human capital
Critical skills shortages and the ability to recruit top talent in
certain areas of the business, are a reality in the current economic
environment. The need to attract and retain top talent, is intensified by
our transformation strategy.
Appropriate incentive schemes, competitive remuneration packages
and investment in skills development of employees are used to
provide a sustainable pipeline of talent for the future.
Plant mechanisation
Stock levels and order infill rates may be put under strain in the event
of a critical plant breakdown.
A robust maintenance plan, dual site manufacturing as well as
mechanisation upgrades mitigate this risk.
Interruptions of resource supply by utility providers
The interruption of supply of water and electricity poses the threat of
suspending production and compromising order infill rates.
Back-up power supplies as well as on-site water storage facilities
allow for continuous production during periods of interruption.
Occupational health and safety risks
Occupational injury of employees who are key to the performance
of the group.
Continuous improvement of safety practices in the work place;
stringent policies and procedures aligned to best practice; and
robust training and awareness programs.
Information technology infrastructure upgrades
Adequacy and effectiveness of IT governance, and integration of
IT systems.
Through the use of best practise project management methodology
as well as highly skilled human resources, implementation of new and
improved information technology infrastructure is successfully achieved.
FIVE
SIX
THREE
ONE
FOUR
TWO
OUR STRATEGY TO SUSTAIN VALUE
(continued)
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Integrated Report 2016