Table of Contents 1. The Pharmaceutical Industry and Corporate Governance: setting a global field ................. 7 1.1.1 A Brief historical framework ........................................................................................ 7 1.1.2 Issues in a global marketplace: R&D decline and regulatory changes ....................... 11 1.1.3 The last pharmaceutical paradigm: the overwhelming rising of Emerging Markets............. 17 1.1.4 The global pharmaceutical market: competitive analysis ........................................... 29 1.1.5 Five Forces Analysis ................................................................................................... 32 1.1.6 Industry Leaders ......................................................................................................... 35 1.2.1. The remarkable role of corporate governance in the globalisation process ............... 40 1.2.2. The relation between emerging markets and corporate governance ........................... 45 1.2.3. The process of convergence towards archetypical models ......................................... 48 2. The Republic of Korea .......................................................................................................... 53 2.1 Corporate governance evolution ....................................................................................... 59 2.1.1 Regulatory elements ................................................................................................... 62 2.1.2 Code of Best Practice of Corporate Governance ........................................................ 64 2.1.3 Ownership structure .................................................................................................... 67 2.2 The Korean Pharmaceuticals Industry ............................................................................... 70 2.2.1. Background ................................................................................................................ 70 2.2.2. Regulatory framework ................................................................................................ 72 2.2.3. Business environment ................................................................................................ 75 2.2.4. Healthcare system ...................................................................................................... 76 2.3. Pharmaceuticals market overview...................................................................................... 79 2.3.1. The Over-the-counter products market ...................................................................... 84 2.3.2. The Biotech Market .................................................................................................... 86 2.3.3. Industry Leaders ........................................................................................................ 89 2.4. Corporate Governance Issues ............................................................................................. 91 2.4.1. Corporate governance profile in Industry Leaders ..................................................... 92 LB 2011\2012 1 2.4.1.1. Ownership structure .................................................................................................... 92 2.4.1.2. Board of directors ....................................................................................................... 93 2.4.1.3. Directors’ Independence and position held in other companies ................................. 95 2.4.1.4. Compensation ............................................................................................................. 96 2.4.1.5. Committees ................................................................................................................. 97 2.5. Concluding remarks .......................................................................................................... 98 3. People’s Republic of China: road towards economic leadership ....................................... 101 3.1. The Corporate Governance Evolution ............................................................................. 106 3.1.1. Regulatory elements ................................................................................................. 111 3.1.2. The CSRC Code of Corporate Governance for Listed Companies in China............ 114 3.1.3. Ownership structure .................................................................................................. 116 3.2. The Chinese Pharmaceuticals Industry ............................................................................ 122 3.2.1. Background ............................................................................................................... 122 3.2.2. Regulatory framework .............................................................................................. 125 3.2.3. Business environment ............................................................................................... 127 3.2.4. Healthcare system ..................................................................................................... 130 3.3. Pharmaceuticals market overview.................................................................................... 133 3.3.1. The Over-the-counter products market ...................................................................... 138 3.3.2. Industry Leaders ........................................................................................................ 140 3.4. Corporate Governance Issues ........................................................................................... 145 3.4.1. Corporate governance profile in Industry Leaders.................................................... 145 3.4.1.1. Ownership structure .................................................................................................. 146 3.4.1.2. The Board of Directors and the Supervisory Board .................................................. 150 3.4.1.3. Directors’ Independence and position held in other companies ............................... 154 3.4.1.4. Compensation ............................................................................................................ 157 3.4.1.5. Committees ................................................................................................................ 159 3.5. Concluding remarks ........................................................................................................ 161 4. The Republic of India: one of the fastest growing economies ............................................ 164 4.1. Corporate governance evolution ...................................................................................... 170 2 LB 2011\2012 4.1.1. The Clause 49 of Listing Agreement of Stock Exchange ............................................ 175 4.1.2. Ownership structure ..................................................................................................... 177 4.2. The Indian Pharmaceuticals Industry ............................................................................... 179 4.2.1. Background .................................................................................................................. 179 4.2.2. Regulatory framework .................................................................................................. 180 4.2.3. Business environment ................................................................................................... 182 4.2.4. Healthcare system ......................................................................................................... 183 4.3. Pharmaceuticals market overview.................................................................................... 187 4.3.1. The Over-the-counter products market ........................................................................ 192 4.3.2. Industry Leaders ........................................................................................................... 194 4.4. Corporate Governance Issues ........................................................................................... 197 4.4.1. Corporate governance profile in Industry Leaders ...................................................... 197 4.4.1.1. Ownership structure .................................................................................................... 197 4.4.1.2. Board of directors ....................................................................................................... 199 4.4.1.3. Directors’ Independence and position held in other companies ................................. 200 4.4.1.4. Compensation ............................................................................................................. 202 4.4.1.5. Committees ................................................................................................................. 204 4.5. Concluding remarks ........................................................................................................ 205 5. Conclusions ......................................................................................................................... 208 6. Appendix ............................................................................................................................. 214 7. Reference List ..................................................................................................................... 218 3 LB 2011\2012 4 LB 2011\2012 Abstract The pharmaceutical industry has historically

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