Product details

This case finds Afriplex, a South African pharmaceutical and product manufacturer, two days before they meet with investors to pitch their strategy for diversifying into medical cannabis products in November 2019. An internal task force has been researching the market, industry, regulations, and operational requirements since South Africa legalised medical cannabis in September 2018. The value chain for cannabis-derived products broadly consists of cultivation of the plant, extraction of chemicals from the dried plant for processing, and branding and marketing of the final product. As a manufacturer with extensive experience cultivating, lab testing, processing, and packaging botanical-based products for the complementary and alternative medicine (CAM) market, Afriplex must decide how and to what extent to integrate their cannabis operation. They are also one of the first movers in South Africa. However, as the experience of their prospective competitors indicates, a great deal about the industry is still unknown and securing investment appears to be the biggest hurdle. The key team members - CEO Danie Nel, financial manager Arno Roux, and regulatory and compliance scientist Bella Dorrington - have different opinions of a full integration strategy, which they discuss throughout the case. Readers are left to consider the different arguments and data supporting the various integration options to decide what strategy Afriplex should pitch to win over investors. The case highlights the complexities of making strategic decisions in undefined markets, like the medical cannabis industry in South Africa in 2019.