Whilst developments in Mexico are very encouraging, as a general qualification in respect to the issue of preferred supplier status (as noted in the SBN review of operations), it should be understood that preferred supplier status does not necessarily mean that the supply of a particular product is on an exclusive basis since this would simply not be risk averse for the customer (who would be incorporating the product type in its application, service or program).
With few exceptions, a preferred supplier list would always boast a pool of products that more or less achieve the same outcome and objectives. Strangely enough, the only exception to this notion of preferred supplier status that I can think of would be for a company in the process of establishing its footprint for their products/services in a over regulated country such as China. Here, as we already know with Oraline, regulatory approval is processed so stringently that once approval is granted, a preferred supplier status would at the very least, deliver to the company in question, first mover advantage since any other company with similar products desiring to market and distribute its products, would be required to go through the same channels for such approval.
There is absolutely little doubt that any regulatory approval in China for a small company like SBN will become a company maker because of the compliant nature of process and the exclusivity afforded to the company in such an event.
Simply stated, I would expect a number of different products to be offered preferred supplier status in countries such as Mexico but not so for those developing countries such as China where preferred supplier status may mean very few competitor products?
cheers
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