ENTERPRISE RISK MANAGEMENT IN PHARMACEUTICAL COMPANY

ENTERPRISE RISK MANAGEMENT IN PHARMACEUTICAL COMPANY (A CASE STUDY OF FIDSON HEALTHCARE LIMITED)

ABSTRACT

Risk is at the center of life itself. How pharmaceutical companies successfully implements an Enterprise Risk Management (ERM) programme, to identify and manage potential risks, can mean the difference between financial freedom and financial despair. As a practical option for managing risk, it is associated with a number of factors that hamper its smooth flow. These difficulties manifest when companies lack knowledge of ERM Frameworks; still using the traditional ways of risk management. The problems become more compounded when the adopted ERM frameworks would not fully be utilized; as in the case with pharmaceutical companies in Nigeria. The researcher then quickening to use this piece of study, to evaluate the use of ERM in pharmaceutical companies, with its associated prospects, challenges and problems. The researcher sourced data from the primary and secondary sources of data for this work, using works by other authors and information from the oral interview carried out on the respondent. Despite the new accreditation guidelines and a provincial strategy for managing risk, adherence to effective risk management remains suboptimal in our pharmaceutical companies and in many industries. It was discovered that although ERM is being implemented in Nigerian pharmaceutical industry, the level of implementation is either very low or cannot be easily ascertained. Also, it was further discovered, that there exist an insignificant but positive relationship between ERM and total assets and liabilities as proxies for firm size and leverage. The researcher made recommendation from the findings of this works that there is need to encourage and adopt the full use of ERM frameworks in industries and there is need for more explicit measures in identifying firms that engage in ERM and those that do not.

TABLE OF CONTENTS

TITLE PAGE

Inside Title Page ii

Approval Page iii

Dedication iv

Acknowledgement v

Abstract vi

Table of Content vii

CHAPTER ONE: INTRODUCTION

1.1 Background of the study 1

1.2 Statement of the Problems 4

1.3 Objectives of the Study 5

1.4 Relevant Research Questions 6

1.5 Scope and Limitations of the Study 6

1.6 Significance of the Study 7

1.7 Definition of Terms 7

CHAPTER TWO: LITERATURE REVIEW

2.0 Introduction 10

2.1 Concept of Risk 10

2.2 Objectives and Principles of Risk Management 13

2.3 Historical Context of ERM 16

2.4 The ERM Frameworks of Pharmaceutical 18

Companies

2.5 Risks in Pharmaceutical Companies 23

2.6 The ERM process for Pharmaceutical Companies 27

2.7 Risk and Economic Capital Models 30

2.8 Risk Tolerance in Pharmaceutical Companies 31

2.9 Main Risk and Regulatory Requirements 33

2.10 Problems and Challenges in Pharmaceutical 37

Companies

2.11 How Pharmaceutical Companies manage these 39

Main Risks

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 Introduction 42

3.1 Research Design 42

3.2 Population of the Study 43

3.3 Sources of Data 43

3.3.1 Primary Data 44

3.3.2 Secondary Data 44

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.0 An Overview 45

4.1 Introduction 45

4.2 Analysis 46

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION

5.0 Introduction 60

5.1 Summary of Findings 60

5.2 Conclusion 63

5.3 Recommendation 65

5.4 Suggestions for Further Studies 66

REFERENCES 68

APPENDICES