Today we visited a pharmaceutical company in the city of Buenos Aires that produces various cosmetic products such as lotions and creams and other medical products. The majority of their lotions and other cosmetic products can be found in almost any pharmacy throughout Argentina and can be bought over the counter, whereas all their pills and other dermatological products cannot be and has a label saying prescription only on every package. While Andrómaco has a strong presence on a national scale, they are facing challenges concerning their profitability and the status of the Argentinian economy. One of the major challenges of the pharmaceutical industry is that the profitability of the industry is declining as the costs of inputs are rising and therefore making production much more expensive. This challenge is a result of their volatile economy and high inflation rates that make purchasing goods that serve as inputs significantly more expensive. However, the Argentinian government on the other hand is decreasing the industry’s profit margin with possible new legislation that will make pharmaceutical goods more affordable for the country’s population. The passing of this legislation would make it more difficult for the pharmaceutical industry to make a profit and therefore serves as a major challenge. The volatile economy also makes it difficult for the company to make strategic decisions for the company as predicting the inflation rates and other costs is close to impossible; this also a problem for many businesses in the industry and is even reflected in their hand-written, but easily adjustable, menu pricing.

            In addition to the potential loss of industry profitability, Andrómaco faces the challenge of losing profit through its use of sample products. In order to entice consumers of cosmetic products, the company dedicates 30% of its products to customer samples. However, this is necessary for most companies in the industry and is more of an investment in order to help create a brand for the company and eventually ensure customer loyalty. Ultimately, the most major challenge for Andrómaco and other companies in the pharmaceutical industry comes from the instability of the country’s economy and the inability to make long-term decisions.