Paper Example on Pharmaceutical Companies in Saudi Arabia

Introduction

Sustainability involves fulfilling the needs of the current generation without jeopardizing the ability of future generations to achieve their needs (Epstein & Buhovac, 2014). Sustainability for businesses includes areas such as social responsibility, environmental protection, and stakeholder management as well as the contribution to the economic and social development of the society (Epstein & Buhovac, 2014). Sustainability and ethics have become part of the strategic management process for businesses. According to Wells (2013), managers should no longer think of ethics and sustainability as conflicting the goal of shareholder wealth maximization. Embracing ethics and sustainability entail balancing between the short-term and long-term profitability of the company (Thomson, 2015). Sustainable business practices benefit the individual firms and the society as a whole. According to O'Neill, Herschauer & Golden (2009), sustainability is not just about environmental protection. It entails other aspects such as efficient financial management, management of company's assets, among other aspects that increase the value of the business.

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Consumers and employees have become more aware of the need for ethics and sustainable business practices (Baker, 2009). It implies that firms have to do more than complying with the laws imposed by relevant authorities. However, most individuals and businesses tend to ignore rational and sustainable practices without sufficient regulation. If they were free to do anything, most companies would concentrate on short-term gains rather than long-term sustainable growth. Regulatory initiatives ensure the interests of the public and future generations are protected.

Saudi Food and Drug Authority (SFDA) was founded in 2013 to regulate the food and pharmaceutical industries. It ensures the safety of food, drugs as well as medical devices. The authority licenses the manufacturing, distribution, and marketing of drugs and other medical devices (SFDA, 2018). It assesses the quality and safety of medications and inspects the manufacturing of medicines and healthcare products (SFDA, 2018). The Saudi pharmaceutical industry is a large market with about 27 firms manufacturing drugs in Saudi Arabia. Imported pharmaceutical products constituted 80% of the Saudi domestic market as of 2014 (Arab News, 2017). The leading companies in the industry include SPIMACO ADDWAEIH, Sanofi Aventis, Tabuk Pharmaceuticals, SAJA Pharmaceuticals and AJA Pharma, among other companies.

Ethical and sustainable practices are essential in the pharmaceutical industry due to its importance to the economy and society. Drug manufacturing involves the use of chemicals that may be harmful to the community if not handled with care. The SFDA provides several standards, guidelines and regulations that ensure that the operations of the pharmaceutical firms are sustainable and not harmful to the society (SFDA, 2018). It provides standards for manufacturing, storage, and transportation of drugs and medical equipment.

Pharmaceutical companies in Saudi Arabia are also subject to various environmental legislation enacted to ensure environmental protection. Some of the environmental standards include Wastewater Discharge Standard of 2012, Hazardous Waste Disposal Standards and National Ambient Water Quality Standard of 2012, among other laws. The Kingdom has made significant steps to protect the environment considering the scale of construction projects and manufacturing it is undertaking. In 2014, the (PME) Presidency of Meteorology and Environment ordered all companies to adhere to new water, air, and noise pollution standards by 2019 (McCullough, 2014). The government has also developed initiatives to reduce energy waste and the environmental impact of its growth and industrialization (Oxford Business Group, 2015). These steps are significant in matching the Kingdom's companies with the rest of the world.

Over the last years, many Saudi businesses have embraced ethics and sustainability though it is yet to match the Western standards (Ali & Al-Aali, 2017). Most firms engage in environmental protection activities although the concept of corporate social responsibility is not well-developed (Ali & Al-Aali, 2017). Very few Saudi companies do sustainability reports just like their counterparts in Jordan and other Middle East countries (Rahahleh & Sharairi, 2008).

Benefits of Ethics and Sustainability - A case of SPIMACO ADDWAEIH

Saudi Pharmaceutical Industries & Medical Appliances Corporation (SPIMACO) is a Saudi company that develops, manufactures and sells pharmaceutical products as well as medical devices (SPIMACO, 2018). SPIMACO is one of the largest pharmaceutical firms in Saudi Arabia and is revered both locally and internationally. It has adopted sustainable practices and engages in environmental protection as well as community development. The company believes that it has a social and humanitarian responsibility beyond its core manufacturing business (SPIMACO, 2018). It makes charitable contributions in the form of cash and free medicines to several charities both in Saudi Arabia and in other foreign countries facing natural disasters (SPIMACO, 2018). Other corporate social responsibility initiatives of SPIMACO include education and rehabilitation of the young Saudis. It provides scholarships and job training in partnership with the Human Resources Development Fund (SPIMACO, 2018). I February 2018, SPIMACO sponsored the International Conference on Community Pharmacy held in Saudi Arabia (SPIMACO, 2018). Prince Qassim also honored the company for its sponsorship of the graduation of charity of the Holy Quran (SPIMACO, 2018).

Sustainable practices are beneficial to the company. According to Tencati & Perrini (2011), ethics and sustainability help a company to improve its image and competitive advantage. In this modern era, consumers and other stakeholders are more concerned about sustainability such as ethics and corporate social responsibility (Baker, 2009). Some customers, especially corporations in the Western world do not do business with companies that do not comply with ethical and sustainable standards. This enables a business to attract customers and boost its revenues. SPIMACO's total revenue increased from $454.1 million in 2015 to $490.8 million in 2016 (Statista, 2018). It has risen to become one of Saudi Arabia's biggest pharmaceutical company. It has also improved the firm's reputation beyond Saudi Arabia. SPIMACO also operates in the US, Switzerland, Austria, among other regions. Accessing western markets without sufficient compliance with ethical standards is difficult. However, this improvement is attributed to a myriad of factors besides its ethical and sustainable actions.

Sustainable operations enhance innovation thereby improving the efficiency of a company's activities (Abaza, 2017). Innovation is crucial to building and maintaining a competitive advantage in the market. It enhances the productivity as well the quality of products and services. In most markets, competition is based on either price or quality. Innovative measures help a company reduce the cost of production thereby enabling it to charge competitive prices. It helps not only the company but also the company. This explains why some governments are introducing incentives to motivate businesses to invest in innovation. For instance, the fiscal policies and other incentives helped boost the economies of Baltic States (Sirbu, Crudu & Ignatov, 2017). Some of the highly experienced professionals consider sustainability an important issue and do not accept work in organizations that engage in unethical practices. SPIMACO has taken innovation seriously and deems it critical to improving the safety of drugs. It is implementing Fedegari State-Of-The-Art Contamination Control Systems, which enhances product safety and cost-effectiveness (Pharmaceuticalonline.com, 2016).

According to Baker (2009), upholding ethical standards helps a company to attract skilled employees and investors. Sustainability is a broad area that includes employee issues and the return on investments, among other aspects. Businesses applying sustainable standards consider the welfare of their employees. Such firms do not compromise the well-being of either the shareholders or employees. A favorable reputation in the job market assists in attracting and retaining skilled and experienced employees. Besides, the efficient management of the company attracts investors making it easy for the firm to raise capital. For instance, companies have to adhere to the highest standards of ethics to be listed on the capital markets in Europe and the USA. SPIMACO employs some of the most qualified professionals in the pharmaceutical industry. It employs 500 highly skilled professionals in its Al-Qassim Pharmaceutical Plant alone. An experienced and motivated workforce is critical to quality products and services as well as continued innovation.

Conclusion

Encouraging a culture of ethics and sustainability assists a business in complying with the relevant regulations. Business ethics require adherence to the existing laws. Violating rules leads to adverse consequences including fines, revocation of licenses, among other penalties. Certain violations can also damage the reputation of the company among its consumers thereby causing revenue losses. SPIMACO's culture of sustainability has enabled it to comply with all the regulations, including the SFDA's standards. SPIMACO has not been involved in any significant breach of the law in Saudi Arabia and other countries.

References

Abaza, W. (2017). Comparing internal and external impacts of sustainable innovation: an exploratory study. Journal Of Global Entrepreneurship Research, 7(1), 1-18. http://dx.doi.org/10.1186/s40497-017-0061-7

Ali, A., & Al-Aali, A. (2017). Corporate Social Responsibility in Saudi Arabia | Middle East Policy Council. Mepc.org. Retrieved 22 March 2018, from http://www.mepc.org/corporate-social-responsibility-saudi-arabia

Arab News. (2017). Saudi Arabia aims to boost pharmaceutical industry. Arab News. Retrieved 22 March 2018, from http://www.arabnews.com/node/1052366/saudi-arabia

Epstein, M., & Buhovac, A. (2014). Making sustainability work: Best practices in managing and measuring corporate social, environmental, and economic impacts (2nd ed.). Sheffield, UK: Greenleaf Publishing.

McCullough, D. (2014). Saudi Arabia's green decree brings hopes of sustainability. the Guardian. Retrieved 21 March 2018, from https://www.theguardian.com/sustainable-business/saudi-arabia-green-construction-oil-sustainability-environment

O'Neill, G., Herschauer, J., & Golden, J. (2009). The cultural context of sustainability entrepreneurship. Greener Management International, 55, 33-46.

Oxford Business Group. (2015). Saudi Arabia seeks to reduce energy waste and environmental impact. Oxford Business Group. Retrieved 22 March 2018, from https://oxfordbusinessgroup.com/overview/recycling-resources-new-strategy-national-development-seeks-reduce-energy-waste-and-environmental

Pharmaceuticalonline.com. (2016). SPIMACO To Implement Fedegari State-Of-The-Art Contamination Control Systems. Pharmaceuticalonline.com. Retrieved 22 March 2018, from https://www.pharmaceuticalonline.com/doc/spimaco-to-implement-fedegari-state-of-the-art-contamination-0001

Rahahleh, M., & Sharairi, J. (2008). The extent of social responsibility accounting application in the qualified industrial zones in Jordan. International Management Review, 4(2), 5-17.

SFDA. (2018). About us. Sfda.g...