The impact of research on innovation, productivity, and societal progress has been profound – from groundbreaking inventions shaping the 21st century to the challenges faced by professional research companies in the digital era. It is worth delving into the evolving research landscape, market dynamics, and the critical role of effective marketing in a rapidly changing economy.
How research has improved people’s lives
Research is at the core of innovation, and new products and services drive productivity, progress and new experiences. It is possibly one of the most undervalued activities in the economy.
A phenomenal journey toward the 5th industrial revolution
There have been many groundbreaking inventions that directly impacted the quality of societal life. The accompanying graphic shows some of the top inventions of the 21st century. In this era, we take for granted the invention of penicillin without which, people used to die from common colds. These inventions range from the printing press to the worldwide web; from typewriters to smart devices such as tablets, laptops, and phones; and from automobiles to airplanes.
Among those, the Visual Capitalist calls the transistor, which was successfully demonstrated on 23 December 1947, at Bell Laboratories in Murray Hill, New Jersey, the greatest invention of the 20th century. This non-mechanical tiny electric switch can be turned on and off by simply applying a small voltage to its base.
The importance of research
As Plato said, necessity is the mother of invention. Research follows the necessity to find solutions to a problem or satisfy a need. Advances in knowledge produced by research findings enhance productivity and reveal potential for wealth creation. Most research is hidden by large companies who conduct research in-house and protect the progress of their findings until marketability is reached, a time when IP protection will be sought for their inventions. Some companies are active in professional research aimed at converting data into useful and strategically relevant information for companies to develop markets, understand their competitors, and identify opportunities for their products and or services.
21st-century inventions have created new challenges for research companies to stay ahead of the pack. The proliferation of big data, search optimisation algorithms and online search trends have forced many research companies to innovate to create awareness about their service and draw potential clients.
Understanding the mind of a target market is key to successfully navigating the flood of information that is directed at the broad market. Smaller companies tend to rely on the internet and newer technologies to conduct their research to minimise costs and go to market sooner rather than later. Given the global economic downturn and associated job losses, the small business sector is growing, compelling research companies to adapt in order to meet the needs of this sector.
Points to consider on affordable options.
An example of the dangers of ineffective marketing is found in a Forbes article on The Cost-Performance Paradox of Modern Digital Marketing by Augustine Fou, who explains: “When marketers buy digital ads, some of that money goes towards showing ads and some of it goes to the ad tech companies whose technologies are used as the “pipes” to target and serve the ads – i.e. the programmatic “supply chain”. The portion of every dollar that goes through to the publisher/website is the portion that is used to show the ads. The rest of that dollar goes towards the revenue and profitability of the ad tech middlemen.
It is worth noting that according to Fou, ‘only half of the dollar goes through to the publisher, for showing ads. “on top of that 15% of the ad spend goes missing and cannot be accounted for. This is far worse than TV ads, for example, where agencies generally take about 16% cut of the ad budget.
Astuteness and cost-effective management of online marketing and advertising is what will produce results.
Research is one of the undervalued business activities, but it has a profound impact. It helps companies see the potential and necessity of new inventions and approaches to doing business. In today’s era, climate change and carbon footprint are driving transformation and forcing businesses to find novel products and services to remain attractive and competitive. Research propels industries and society forward, steering us forward and mapping a future shaped by innovation, productivity, and enduring societal progress.
South Africa’s toy and game manufacturing landscape points to the seismic shift happening in the global market – the rise of non-fungible tokens (NFTs) originally associated with digital art, are now making waves in the world of toys and games. The ability to tokenise ownership is offering new possibilities for creators and consumers. How will this technological revolution impact South Africa’s toy and game industry? The mainstream view of NFTs has been that of avatar pictures and generated image collections and the astronomical values that people have been placing on these images.
In August 2021, the Toybook website published an article stating that: “from movie studios and comic book artists to food brands and, yes, toy companies —non-fungible tokens (NFTs) were offered for consumers to purchase or bid on. Whilst this is a new phenomenon and might not replace traditional toys, it is worth keeping an eye on.
Trends in the toys and gaming industry
The latest WOW report on the manufacturing and retail of toys and games in South Africa reveals two compelling truths. The first is that globalisation and the disruptions to supply chains compelled industries to find innovative ways to navigate turbulent waters to remain competitive. The second is the pervasive cultural dominance, particularly emanating from the entertainment giant, the United States (US), and how it casts its shadows on the diverse fabric of global preferences.
Opportunities for the South African toys and gaming industry
Despite the various barriers in the global market, the size of a reachable market makes it worthwhile for the industry to keep innovating.
The WOW report highlights how the relatively small size of the South African economy prevents the local manufacturing of toys and games from developing to its full potential. The size of the market in South Africa also hampers growth compared to a country like the US, where making one successful item would set one up for life. This is not the case in South Africa and other small countries.
The international entertainment industry is dominated by the US, given its size and track record with well-established trusted brands and characters that are popular and therefore drive storylines that are imbibed by, and influence, other cultures. As explained in an article in the Journal of Applied Behavioral Science, “beliefs compose a general category that includes at least the following: Stories that describe what has happened, expectations that describe what will happen, causal perceptions and, theories that describe how and why things happen, concepts and labels that divide perceptions into categories, and values that state preferences. Ideologies are logically integrated clusters of beliefs. Share beliefs create culture”.
South Africa’s competitive advantage in the toys and gaming industry
Economic constraints, a rich cultural heritage and the South African spirit of innovation and resilience make the journey unique and promising. The WOW report has unveiled the intricate factors shaping local manufacturing of toys, which makes us reflect on the industry’s future trajectory. From a relatively small country’s perspective, it’s just a bit harder and might take longer to pierce the culturally-dominant barriers to get product appeal across cultures and geographies. Lego started its business in 1932.
Headwinds in the toy world include the rise in video games and one of the biggest US toy companies, Toys R Us going bankrupt in 2005 due to loss of sales and high debt incurred for growth that did not materialise.
The WOW report refers to Statista forecasts that the South African toy market would grow at a CAGR of 1.77% between 2023 and 2028 compared to 9% globally. No wonder Microsoft made an offer to buy Activision Blizzard.
The interesting aspect about video games and the borderless internet is that it requires way less investment in physical and production assets. It is an attractive market for bright minds, which South Africa has, to develop video games.
The future of NFT’s
As globalisation faces disruptions and supply chains navigate turbulent waters, the trending topic of NFTs reflects on a technological wave, challenging traditional norms in the toy and game industry. South Africa, with its bright minds and unique perspectives, is well placed to play a significant role in this digital revolution.
The pharmaceutical industry in South Africa, like in many other countries, is made up of a mix of local and international owners. Over the years, multinational pharmaceutical companies have established significant presence in South Africa, with some establishing subsidiaries or partnerships with local companies.
This involvement has largely been in the manufacturing, distribution, and marketing of pharmaceutical products. While the local manufacturing of medicines contributes meaningfully to the economy, the pharmaceutical terrain favours financially strong players. COVID-19 vaccines brought this into sharp focus, with developing countries experiencing unexpected market challenges. Looking at the market caps, strategic trajectories, and the high-stakes game of pharmaceutical research, a complex picture emerges in South Africa’s pharmaceutical landscape.
Local and international ownership in South Africa’s pharma sector
Manufacturing medicines locally is positive for the local economy as it creates jobs and stimulates industrial activity. It also does away with the need to spend foreign currency to import, alleviating strain on the country’s trade and payments balance.
“In the South African pharmaceutical manufacturing context, we have observed that generic medications are produced locally more so than original branded pharmaceuticals. The local pharmaceutical manufacturing context faces noticeable challenges when it comes to capacity, cost and ensuring robust regulation, access and quality. While 60-70% of pharmaceutical products are produced locally, almost 98% of active pharmaceutical ingredients (APIs) are imported, and this results in capacity challenges.”
Etienne Dreyer, PwC South Africa healthcare consulting leader
The advances in research and technology to treat difficult and new diseases require deep pockets and long-term investments. A most recent example was the COVID-19 vaccine, where wealthy countries led the way in rapidly developing and producing vaccines. The same countries then bought up and administered those vaccines to their populations and even ordered boosters for already-vaccinated people. Meanwhile, many developing countries struggled to deliver even one dose to most of their populations. The perceived threat was so great that enormous resources were allocated with standard approval processes not followed.
The Biggest companies in the pharmaceutical industry
While the industry favours big players, they are not immune to the intricacies of this industry. Pfizer, as well as its rivals, experienced financial difficulties. The hoped for annual sales of the COVID vaccine did not materialise due to resistance to the new application of mRNA vaccine carriers. This led to about US$150bn loss in market value for Pfizer. In 2023, Bayer was in a similar predicament with an unsuccessful phase 3 trial of a new medicine, resulting in several billion euros of losses in market value, on top of its legal battles in respect of Roundup, a widely used herbicide.
Aspen, the second biggest local pharma, fought hard to get a production licence for the COVID-19 vaccine, only to now experience abysmal sales.
The market caps of the international players all range in the US$70bn (ZAR 1,330bn) to US$250bn (ZAR4,750bn), and if they discover a successful medicine, this value can jump, as is the case with Eli Lilly and its obesity drug, which saw the company’s value outpace Johson and Johnson to over US$500bn (ZAR 9,500bn) in 2023. In comparison, the two biggest South African pharmaceuticals’ current market values are US$8.9bbn (ZARZAR 169bn) (ZAR 89bn) and US$4.7bbn for Adcock Ingram and Aspen respectively.
Partnerships in the pharmaceutical industry
What seems to be driving pharmaceutical industries globally is the shift towards value-based healthcare and medicine, whereby there is coordination among healthcare professionals to ensure patients receive comprehensive and personalised care that meets their specific needs This forces the industry to improve the effectiveness of medicine and therapies to remain competitive.
Local and international players have started forging meaningful partnerships. This was accelerated by the Covid-19 pandemic which brought about triumphs and challenges for the industry. As the global industry evolves towards value-based healthcare, the need for evidence-based practice and decision-making remains. Evidence based medicines have been consistently linked to improved quality of care, patient safety, and many positive clinical outcomes in isolated reports according to the National Centre for Biotechnology Information (NCBI). South Africa can also benefit from the synergies between academic research and local pharmaceuticals to drive impactful research in this dynamic sector.
The contributions of multinational pharmaceutical companies are significant, despite the criticism leveled against them about drug pricing, access to medicines, and the potential influence of these companies on healthcare policies. Balancing the interests of multinational companies with the healthcare needs of the local population is an ongoing consideration for policymakers in South Africa and globally.
I am pleased to report that, thanks to you, WOW comfortably exceeded our budget to the six months ending September 2023 for both turnover and profit. We employed two additional team members in 2023 bringing our permanent employee count to 28 and who are complemented by 15 contract researchers.
This year we have been exploring the use of AI on the WOW database. While its use in producing quality research currently still appears limited, it could significantly improve users’ interrogation capabilities on our research.
AI at this point can’t replace the human attributes of creativity, subjectivity and initiative, amongst others. A few years ago, when Maria Ramos was Absa’s CEO, we asked AI who she was. The answer came back that she was the branch manager at the Absa branch in Maputo. This is a good example of AI not distinguishing between corroborated and uncorroborated data. However, when used on corroborated data such as the WOW database, it introduces an entirely new search dimension. As an example, if one uses AI to ask WOW’s research database how many listed company directors’ options are maturing in the next six months, it returns an answer in seconds for a task that could take much longer to complete if performed manually. The working title for this initiative is AI@WOW. Preliminary results are exciting, and we hope to roll out pilot testing early in the new year. Watch this space.
The WOW offices will close on Friday, December 22nd and re-open Wednesday, January 3rd.
Have a safe and restful holiday season and I hope all your expectations for 2024 will be met.
