The CEE Generics Pharmaceutical Sector: Ways to Minimise Cultural Heritage Barriers to Mergers and Acquisitions
Mergers and acquisitions (M&As), which became extremely common in the branded industry in the 1990s, have recently seen a parallel development in the generics medicines industry. However, generics M&As are more susceptible to impact from cultural barriers. These may become apparent post merger, but can also dramatically affect the success of the negotiations. The reasons for this are discussed and several proposals are made for risk reduction through recognising the importance of the culture differences in play and taking adequate measures to reduce their impact.
Privatization and Corruption in Transition Economies
"If you think privatization is corrupt, try without it." --Anonymous official, in response to the Ukrainian parliament's decision to halt the privatization program on the grounds of possible corrupt methods (1994) Introduction and Initial Conditions Background The scale of privatization now underway in the transition economies of the former Soviet Union (FSU) and Central and Eastern Europe (CEE) is historically unprecedented. During the decade of the 1980s, about 6,000 firms were privatized throughout the world. During the first half of the 1990s, in contrast, well over 50,000 medium- and large-scale enterprises have been privatized in these transition economies--almost 10 times the number in half the time. Furthermore, these figures do not include hundreds of thousands of small-scale enterprises also privatized in the CEE/FSU region during the period--over 75,000 in Russia, 35,000 in Ukraine and 22,000 in the Czech Republic.(2) The perception has emerged, in parallel with this historic ownership transfer, that corruption has reached endemic levels in the transition economies of the FSU and CEE alone.(3) While empirical evidence is naturally elusive for such activities, some micro-surveys as well as anecdotal evidence--much of it widely reported in the freer press--is suggestive.(4) Moreover, empirical evidence now exists tracing the evolution of the unofficial component of the transition economies.(5) For the FSU, the share of the unofficial economy's contribution to the overall economy (unreported value added as a percentage of GDP) is estimated to have increased almost three-fold over the 1989-1994 period, from 12 percent to 33 percent. Although overall output has contracted sharply during the transition, the unofficial economy has grown significantly, in absolute as well as real terms. While the increase in its share in the CEE countries was smaller, the overall share of the unofficial economy there still exceeds 20 percent.(6) By comparison, similar measures for industrialized countries suggest that in most countries the share of the unofficial economy in GDP is in the single digits or teens. It is reasonable to assume some positive correlation between the relative magnitude of the unofficial economy and corruption in a country, considering the practical necessity of obtaining informal support from government officials for these unreported activities. For example, an enterprise survey of 200 firms in Ukraine and Russia indicates that firms that significantly underreport their activities have also had to make higher extra-legal payments than those that underreport less.(7) Against this background, it is not surprising that privatization and corruption have been perceived as closely linked in the FSU and CEE economies.(8) For these countries, privatization, in its many forms and variations, places a substantial share of the entire wealth of the economy "on the table" for sale or transfer from state to private interests. At the same time, the fiduciary controls that ordinarily operate to ensure that government transactions are fair and transparent have been largely crippled.(9) In this article we examine the relationship between corruption and privatization. Without privatization, the transition economies had no real hope of climbing out of the bankruptcy into which they had been placed by the central planners, with their politically-inspired, monumentally inefficient allocation of resources.(10) At the same time, there is a growing consensus today that corruption has negative effects on the costs of doing business, on aggregate investment, and on growth.(11) Is corruption the inevitable price to be paid for privatization? Where the transition continues, as it must, does broad-based privatization result in greater corruption than where privatization is delayed, partial or absent? Can privatization programs be designed to lessen the corruption that occurs during their implementation? …
The politics of corruption
These four volumes offer a guide to the literature on corruption. They do not purport to be comprehensive because the literature has expanded so rapidly in recent years. Volumes Two and Three illustrate and explain the scope, incidence and consequences of corruption in a variety of political settings in the developed and developing world. Volume Four presents the variety of prescriptions that have been presented as ways of controlling corruption.