Adcock Ingram Integrated Report 2018

NATURAL CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS Interruptions of 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 and boreholes allow for continuous production during periods of interruption. All manufacturing sites in South Africa have been declared National Key Points. STRATEGIC PILLAR IMPACTED Build on foundation (Operational Excellence) Growth and expansion Transformation SOCIAL AND RELATIONSHIP CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS Customer, supplier and partner relationships Customers are the cornerstone of our business. Our customer relationship management has been, and continues to be a key focus area. Management of the expectations of our business partners is an ongoing focus for our autonomous Divisions. The relationship foundations created are continuously nurtured to ensure sustainable business growth. Schedule 0 (S0) SEP exemption The exemption for S0 medicines with regards to the SEP legislation is reviewed by the regulatory authorities on a periodic basis, currently every three years. Removal of this exemption could place further pressure on margins. Management utilises the three-year excemption granted during 2016. This allows S0 products to be subject to“free-pricing”strategies. STRATEGIC PILLAR IMPACTED Build on foundation (Operational Excellence Growth and expansion STRATEGIC PILLAR IMPACTED Build on foundation (Operational Excellence Growth and expansion INTELLECTUAL CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS 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. Information technology infrastructure upgrades Adequacy and effectiveness of IT governance, and integration of IT systems. Through the use of best practice project management methodology as well as highly skilled human resources, implementation of new and improved information technology infrastructure is successfully achieved. The Committee reviewed its investment in regulatory capacity and capability, which it considers to be a significant strength of the Group. STRATEGIC PILLAR IMPACTED Build on foundation (Operational Excellence Growth and expansion MANUFACTURED CAPITAL KEY RISKS CONTROLS IN PLACE TO MITIGATE THE RISKS Product portfolio Components of the portfolio consists of relatively old molecules. Continuously seeking opportunities with regards to less regulated products as well as entering into partnerships with multinational principals to broaden the product portfolio. Plant mechanisation Stock levels and order infill rates may be put under strain in the event of a critical plant breakdown. Robust maintenance plans, where possible dual site manufacturing, as well as mechanisation upgrades mitigate this risk. ADCOCK INGRAM  Integrated Report 2018 49