USA alliances with Japan, North American neighbors - pharmacy-related industry, North American Chain Pharmacy Alliance conference - International Retailing

This is the second in a series of articles which focus on international issues impacting the pharmacy-related industry.

A single action or brief period of time is often cited as a major crossroads in the flow of history, significantly altering the future course of human events.

The American pharmacy-related industry has created within the past two months such a crossroad in international trade relations by initiating two multinational and multi-sector alliances: the North American Chain Pharmacy Alliance and the Japan-U.S. Pharmaceutical Committee. Both of these initiatives were developed by the National Association of Chain Drug Stores (NACDS), whose international members in the three countries organized the national delegations.

The North American Chain Pharmacy Alliance, for the first time, brought to one table 32 representatives from all sectors of the pharmacy-related industry of Mexico, Canada and the United States at the first council meeting on April 22 in Palm Beach, Fla. Participants were selected from members of existing national associations in each country.

The council members realistically dialogued to achieve the objectives of the alliance: to evaluate and implement potential business opportunities between all participants, to review reciprocal cross support through exchange of technical and professional information, to examine NAFTA legislation and regulations in order to advise each government of the industry's collective views, and to seek ways for maximizing the pharmacy-related industry's contributions to each country's health care system.

The council proposed a program of actions to achieve these objectives, including organizing a study mission for U.S. and Canadian executives to Mexico; establishing subcommittees to study source tagging, international standards, elimination of unfair pricing and other issues; as well as creating a system for cross-border exchange of professional information.

The alliance then informed ranking officials of the three governments, who had previously endorsed the concept of the alliance, of the deliberation and programs to be developed.

One month later, on May 19, Ronald L. Ziegler, president and chief executive officer of NACDS, announced at a major Japanese pharmaceutical conference in Tokyo the formation of a Japan-U.S. Pharmaceutical committee. Prior to this announcement, the Prime Minister of Japan, Kiichi Miyazawa, met Ziegler in private audience. In perfect English, the Prime Minister heartily endorsed this initiative and, with American irony, observed that it took Americans to bring together for the first time to one table different sectors of the Japanese industry--manufacturers, wholesalers and retailers. He said he hoped this would favorably equalize the Japanese-U.S. balance of trade.

The American Ambassador to Japan, Michael H. Armacost, also received Ziegler and expressed his endorsement to this bilateral alliance. He reiterated the Prime Minister's praise of this initiative uniting different sectors of the Japanese industry--which traditionally have never communicated--and in creating a trans-Pacific dialogue for a "win-win" situation.

The ambassador praised the unique character of this multi-sector unification: manufacturers, wholesalers and retailers. For years, pharmaceutical manufacturers worldwide have successfully cooperated, but only within their own sector of manufacturing and often relative to a specific aspect, such as harmonization.

Reflecting upon long experience in Japan, the ambassador expressed amazement that more American retailers did not penetrate the lucrative Japanese marketplace. He cited the exceptional success of American Domino's Pizza and Pizza Hut operations, which gross over $1.5 billion annually in Japan. And they earn this under a guaranteed delivery system in Tokyo, the most traffic-jammed city in the world!

Toys "R" Us entered the market successfully, but due to the high price of real estate in Tokyo the company settled in other cities and in peripheral locations. He noted that the most high profile companies in America--McDonald's and Coca-Cola--are making more profits overseas than at home.

While large U.S.-style malls have not yet taken root in Japan, he believes there is a definite market, especially for mini-malls wherein American drug stores would have a significant potential. As the legislation starts to change, American pharmacy-drug stores have an opportunity now to discuss joint ventures with Japanese partners. "After all," he noted, "look at what American chains they have bought--such as 7-Eleven, Red Lobster, Brooks Brothers and so many more."

The American culture has profoundly affected traditional Japanese culture: it is a blue jean and U.S. television era. In the same manner, traditional ways of doing business are slowly being modified. Strategically, Japan is the powerhouse of the Pacific Rim: 2.5 percent of the global population generates 15 percent of the total world product. Just as our economies are irrevocably intertwined, so America's interests in the area are allied with Japan.

So the ambassador concluded, mutual bashing is a negative force; only positive cooperative initiatives, such as the Japan-U.S. Pharmaceutical Committee, will materially achieve our common national goals and advance business interests.

The bottom line contributions of these two historic alliances include:

* Industry leaders dedicating their time and resources to advance the collective interests of all.

* Council members pledging to keep the industry informed of their deliberations and results.

* Representatives from all sectors of the industry in the alliance countries meeting together for the first time to discuss common problems and opportunities.

* Mexican, Canadian and Japanese companies inviting American counterparts to join in these international alliances and to openly discuss cooperative ventures of all kinds.

* Endorsement of these two alliances by the government heads of Mexico, Canada and Japan.

Both initiatives are the first steps and springboards to create for all the pharmacy-related industry an All-American Hemisphere Alliance and a Pan-Pacific Alliance, wherein America fulfills its leadership destiny--at a major crossroads in the flow of history.

Editors Note: Edward Pope, senior consultant o international relations at NACDS brings over 35 years continuous experience overseas, working in 30 countries in many business sectors. He was ranking executive with nine multinational companies and for 10 years civilian international/public affairs adviser to the U.S. Commander-In-Chief--Europe and chairman, U.S. Inter-Agency Working Group (Europe, North Africa, Middle East), reporting to the National Security Council under three administrations.

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