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- Issue 81: April 2009
- Issue 80: March 2009
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Deglobalisation....Commentary by James Ellerson

Pharmedia News Reports
Commentary on Media Reports Worldwide that Affect Pharmacy

Issue 80: March 2009
Page: 1 of 1 Author's Profile | Send to a Friend | Printer Version

The following article appeared in Economist.com recently, and is concerned with a new buzz word - "deglobalisation".
In December, we reported on the move by the European Union to halt the process of pharmacy liberalisation is and that we could be witnessing a sea change in terms of EU decision making.
The EU does seem to be slowly moving away from favouring excessive deregulation towards a "slower and more considered approach“ with all the costs and benefits this brings for EU consumers and patients.
In other words, pharmacy ownership by pharmacists.
These thoughts are being internationally adopted,it seems, as various economies come to grip with the fact that globalisation had its "good bits", but now are outweighed by the "bad bits".
If the deglobalisation process begins to take effect, it could favour SME's, including pharmacy.
And are not these SME's the entities that have the best result in terms of overall employment and job satisfaction?.
Read on, and also absorb the commentary by James Ellerson:

"Globalisation
Turning their backs on the world
Feb 19th 2009
From The Economist print edition

The integration of the world economy is in retreat on almost every front

THE economic meltdown has popularised a new term: deglobalisation. Some critics of capitalism seem happy about it—like Walden Bello, a Philippine economist, who can perhaps claim to have coined the word with his book, “Deglobalisation, Ideas for a New World Economy”. Britain’s prime minister, Gordon Brown, is among those who fear the results will be bad.
But is globalisation really ending? The world’s economies are certainly slowing fast. And the speed and scale of this recession are raising doubts about the assumptions that had underpinned the drive to integrate world markets. At the end of 2008 the IMF said the world economy would grow 2.2% in 2009, less than half the rate in 2007. Now it thinks growth will be just 0.5% this year, the lowest for 60 years. Even that may be optimistic; in the last quarter of 2008, some economies shrank at annualised rates of over 10%.
Nobody ever said globalisation had ended economic ups and downs, but this feels different: prima facie evidence of big problems at least, and possibly of the failure of globalisation to deliver many of its advertised benefits, especially to the poor. True, economic slowdown is not the same as deglobalisation. And the slowdown has yet to affect one thing. For years, poor countries have been growing faster than rich ones; so far, they still are. The gap between real GDP growth in emerging markets and in rich countries widened from nothing in 1991 to about five points in 2007—and, says the IMF, it will stay at 5.3 points in 2008 and 2009. Helping poorer countries catch up has long been among the benefits touted for globalisation.

And yet the process is going into reverse. Globalisation means the global integration of the movement of goods, capital and jobs. Each of these processes is now in trouble. World trade has plunged. As recently as the first half of 2008, boosted by rising commodity prices and a falling dollar, trade was growing at an annualised 20% in dollar terms. In the second half of 2008, as commodities sagged and the dollar rose, growth slowed fast; by September, says the IMF, it was in reverse. In December, says the International Air Transport Association, air-cargo traffic (responsible for over a third of the value of the world’s traded goods) was down 23% on December 2007—almost double the fall in the year up to the end of September 2001, a result affected by the 9/11 terror attacks.
The downturn has been sharpest in countries that opened up most to world trade, especially East Asia’s tigers. Singapore’s exports are 186% of GDP; its economy shrank at an annualised rate of 17% in the last three months of 2008. Taiwan’s exports are over 60% of GDP; and its economy may fall as much as 11% this year. The downturn has also hurt rich countries that specialise in staid old-fashioned manufacturing—supposedly a safer activity than the reckless delusions of finance. On average, says the IMF, rich countries will contract 2% this year. But Germany and Japan, big exporters of capital goods, cars and electronics, will do worse, their economies shrinking by 2.5% and 2.6% respectively. In the last quarter their economies contracted alarmingly, falling at an annualised rate of 8% in Germany and by 13%—the worst since 1974—in Japan."
To read the full article go to this link.

James Ellerson comments:
The first attempt to come to grips with globalisation in Australia from a pharmacy perspective was a small article in Computachem E-Newsletter (the precursor of i2P E-Magazine).
In edition number 2 in the year 2000, we reflected the uneasiness that was felt by business leaders here in Australia, at a time when Australian pharmacy was blissfully unaware of the issues surrounding globalisation.
In part, it was reported "In 1999 a little known German supermarket chain called Aldi announced that it was going to set up shop in Australia.
The then group managing director of Woolworths, Mr Reg Clairs, made the pronouncement that Aldi could not be successful in Australia given the strength of Coles, Franklins and Woolworths and their grip on the supplier trade.
It is now early in 2000 and Aldi have purchased a modest number of sites in metropolitan Sydney.
At a recent Queensland Grocery Industry Association luncheon, Mr Clairs reversed his earlier statement and sounded alarm bells for the supermarket industry.
It appears that globalisation has become a reality in the past 12 months and what were regional players, have now become completely global. Mr Clairs said,"Our supply base will be in tatters and our retailers stranded." He further stated,"I was wrong.Over the past months I have had exposure to some of the thinking now starting to emerge as the concept of globalisation hits home. The strategies being put into place to support globalisation of retailing are sinister. It is my guess now that Aldi will be successful through a modus operandi unknown to us in Australia."

To read the full story, revisit Computachem E-Newsletter at
http://computachem.com.au/enewsletter/ed2.html#4

It is almost eight years to the day since the Computachem article was published, and what a transformation has taken place since then.
We saw Woolworths attempt to understand the globalisation process and their strategy for investing in Information Technology systems to control overheads and gross profit within their businesses.
What a success that was!
We have seen Franklins dismembered and almost disappeared, and we have seen Coles enter into a spiralling demise that only recently was checked, but not necessarily solved to this point.
Conversely, we have seen Aldi quietly and systematically opening more stores, and today they are a recognised force in Australia's retailing industry.
All this within an eight year timespan!

Sadly, during that time, pharmacy leaders (through the Pharmacy Guild of Australia) have opted for the status quo, preferring to build a pseudo-strength through protective legislation rather than build real strength by gradually exposing pharmacies to real competition and building management control through Information Technology solutions.
This could have been achieved without relinquishing pharmacist control of pharmacies.

Now, since the global financial crisis has impacted on every country in the world, we are seeing the process of deglobalisation gradually come into effect. Political leaders are saying, in effect, we no longer trust the "big end of town" to manage our finances. With globalisation came the realisation that entire industries throughout the world could be manipulated from a single source.
Greed, corruption and the leverage of valueless products became the rule.
How uncompetitive is that!
Exactly the opposite effect that was the promise of globalisation i.e.cheaper goods and services integrated into every country in the world.
Political thinking is slowly reversing to include not only finances but other major markets such as energy, agriculture, manufacturing and health with climate change as the second driver.
But deglobalisation will not eliminate the efficient operators who have established themselves with real underlying strength. Companies such as Aldi and Woolworths will continue to thrive and expand through all manner of economic circumstances.
And fortunately (or unfortunately) this emerging political feeling of protectiveness will serve to reinforce PGA protectionism policy.
As this will be by default it will still leave pharmacy with a faulty infrastructure and no clear guide as to what path to tread
Meanwhile, Australian pharmacy is worse off than it was eight years ago with a lopsided industry approach dominated by the PGA with no investment in real pharmacy clinical services.
A total lack of planning that is starting to creep into the consciousness of both major pharmacy organisations - the PGA and the PSA.
Meanwhile, as we lurch towards 2010 (with some areas of government still hell bent on pharmacy deregulation), no one is feeling confident in the ability of current pharmacy leaders to guide us through what is yet to come.

 


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