Economy figures of Australia Essay

The background is about the Electric Bicycles that we take from China, import them, and sell the products in Perth (Australia). We also have our own website that we can sell online to people and ship our bicycles to any where in Australia. In CIA Factbook, Australia is regarded as an example of a prosperous Western-style capitalist economy, with a per capita GDP at the level of the four dominant West European economies. Since Australia has many natural resources, the country becomes a major exporter of agricultural products, minerals, metals, and fossil fuels. Commodities account for 57% of the value of total exports, so that a downturn in world commodity prices can have a big impact on the country’s economy. In addition, the report from CIA also notes that Australian government is pushing for increased exports of manufactured goods, but competition in international markets continues to be severe. While Australia has suffered from the low growth and high unemployment characterizing the OECD countries in the early 1990s and during the recent financial problems in East Asia, the economy has expanded at a solid 4% annual growth pace in the last five years. Below is economy figure of Australia. Table 1 Economy Figures of Australia Population: 21,007,310 (July 2008 est. ) Age Structure: 0-14 years: 18. 8% 15-64 years: 67. 9% 65 years and over: 13. 3% (2008 est. ) Literacy: definition: age 15 and over can read and write total population: 99% male: 99% Female: 99% (2003 est. ) GDP: Purchasing power parity – $773 billion (2007 est. ) GDP – real growth rate: 4. 3% (2007 est. ) GDP – per capita: $37,300 (2007 est. ) GDP – composition by sector: agriculture: 3% industry: 26. 4% Services: 70. 6% (2007 est. ) Inflation rate (consumer prices): 2. 3% (2007 est. ) Industries: mining, industrial and transportation equipment, food processing, chemicals, steel Industrial production growth rate: 4. 1% (2007 est. ) Exports: coal, iron ore, gold, meat, wool, alumina, wheat, machinery and transport equipment Exports – commodities: coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment Exports – partners: Japan 18. 1%, US 8. 7%, China 8. 4%, South Korea 7. 4%, New Zealand 7. 4%, UK 6. 7% (2003 est. ) Imports: $160 billion (2007 est. ) Imports – commodities: machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products Imports – partners: China 14. 3%, US 12. 9%, Japan 9. 6%, Singapore 6. 1%, Germany 5. 2%, UK 4. 4%, Thailand 4% (2007) Source: Central Intelligence Agency (CIA), 2008 The above statistics show that selling bicycle in Australia is attractive since Australia rate China as main import partners. In addition, the market for electric bicycle is quite enormous considering that the number of people at age 15-64 year accounts 67. 9% of total Australian population. 1. Technology The development of technology in Australia is extensive as Australian university encourages the innovation and invention in all aspects. In addition, the country also consider the intellectual property, which help Australian business to establish and maintain international markets for new technology (IDC, 2008). 2. Legal and Political The International trade laws and regulations assembled by a country emerged from various national backgrounds. Countries possessing different geographical structure for example, would produce different export commodities, thus results a different ‘tone’ of trade laws. Other factors such as the culture of citizens and national politic tendencies have also significant contributions in making a country’s international trade laws. The trade between Australia and China is also based on the free trade agreement commencing in 2005 in which a study conclude that there would be significant economic benefits for both Australia and China through the negotiation of an FTA. Australia’s export and quarantine laws are design to meet certain standard of quality exports goods. It emphasizes on protection towards Australia’s animals, plants, human health and the overall environment. It also emphasizes strict standard regarding certain quality requirements to meet foreign countries’ satisfaction. They believe that export trade is vital to Australia’s prosperity and high standard of living. The commitment to ensure export goods and services quality goes all the way, as Australia implement their steps of ensuring quality, which are: a. In cooperation with the industry involved AQIS makes standard requirements on export goods and services and state them in the legislation. b. Industry are guided to implement management systems to achieve compliance with the stated laws c. AQIS systems are obligated to verify the compliance between the goods/service and the laws by investigations. d. AQIS takes a final action of allowing exports activities or not allowing, in case of non compliance. 3. Culture The Australian culture is considered as the most diverse culture in the world due to the people of Australian historically comes from English People; thus the main culture in Australia is â€Å"Anglo Celtic†. However, as the globalization occurs in Australia, the country’s culture tends to be more Americanized. It suggests that product offering in Australia would in some level follow the trends in the U. S. (Mapsofworld. com, 2008). 4. Ethical Considerations and their management The last mentioned issue in international trade that will be mentioned in this paper is ethics. Business ethics refers various moral and ethical problems that can arise in business activities. The study focuses on how each individual involved within trade activities are burdened with special duties and obligations that must be performed. It emphasizes the importance of ethical guidelines in making business decisions. Some might even say that ethics form the very foundation of international economic activities. What we have been surely witness is the increasing attention on business ethics and its applications in line with the more complicated nature of business and business activities. The importance of ethical guidelines has been increasingly popular lately because of several reasons. First, there is s growing public awareness that societies have the right to expect business to function within ethical boundaries. A company is a part of its community that must live in harmony with the surrounding environment like all individuals and organizations. Furthermore, companies take their resources from their environment, which implies that these companies give something back to their community. For the least, there is an invisible social contract between business and its societies that all business activities will honor and accord with the limitations of justice (England, 2008). In the light of this growing awareness of corporate positions in the community, most companies generate and implement a code of conduct that guides their behavior to internal as well as external parties. The code of conduct represents corporate assessment of what behavior is expected out of employees and managers. Furthermore, the latest development in international business revealed the consensus upon the necessity of an international code of ethical practice to survive the global economy. These global ethical guidelines consist of the following principles: a. Integration, which means all business activities must never be out of the ethical context b. Implementation, which means changing all existing activities to match the ethical standards c. Internationalization, which demands integrity throughout the entire chain of global partnership, frees from cultural sentiments and directed toward the global context (England, 2008). Reference A Successfull Global Trader. Retrieved October 29, 2008 from http://www. dfat. gov. au/facts/search Central Intelligence Agency (CIA).(2008). World Fact book 2004: Australia. Retrieved October 29, 2008 from http://www. cia. gov/cia/publications/factbook/geos/as. html England, Lizabeth. Principles of Business Ethics. Retrieved October 29, 2008 from http://exchanges. state. gov/forum/journal/bus1background. htm IDC. (2008). Innovation & Technology Australia. Retrieved October 29, 2008 from http://www. innovation. org. au/ Mapsofworld. com. (2008). Australia Culture. Retrieved October 29, 2008 from http://www. mapsofworld. com/australia/australia-culture/.

Caffeine C and E

What Do I Get From My Morning Coffee Some people are morning people, but I am not one of those people. Every morning it seems as if I am in a fog until that warm cup of coffee touches my lips. Similar to a drug habit, the more a person drinks coffee, the more it seems like that person cant function without it. But what are you really getting from your coffee? Along with other factors, coffee can have both positive and negative effects on your health. Coffee improves the bodys tolerance to glucose by increasing metabolism or mproving its tolerance to insulin.People who drink four cups of caffeinated coffee each day had shown to be 56 percent less likely to develop diabetes than were non- drinkers. Diabetes is the most common risk factor of liver cancer, so American adults may have something to celebrate as they sip their morning cup. A study of one hundred twenty-four older adults, ages sixty-five to eighty-eight, with mild cognitive impairment found that caffeine and coffee intake wa s associated with a reduced risk f developing Dementia and early onset Alzheimer's.Coffee is known to be problematic for acid reflux and heartburn. Acid reflux and heartburn can be caused by coffee due to the way it relaxes the lower esophageal sphincter (muscle that closes the airway). This small muscle should remain tightly closed to prevent the contents of your stomach from coming back up into the esophagus and burning its lining with hydrochloric acid. Drinking a lot of coffee will promote the release of the stress hormones cortisol and epinephrine.These hemicals increase your bodys heart rate, blood pressure and tension levels – the old fight or flight' response. All of this depends on how much coffee and caffeine your body can handle at one time. Although your shoe size isn't a factor that affects coffee, there are a number of other things that do, these include: your age, gender, how long you have drinkin coffee, and what kind of coffee you drink. Some studies show tha t drinking decaffeinated coffee does not have the same effects of drinking regular coffee. So it might Just be time to switch that morning cup.

EU Law Essay Example | Topics and Well Written Essays - 2500 words

EU Law - Essay Example Charles clearly falls under this head. The next step would be for him to establish that the Directive is â€Å"clear, negative, unconditional, containing no reservation on the part of the Member State and not dependent on any national implementing measure,: Alfons Là ¼tticke GmbH v. Hauptzollamt Saarlouis [1966] relied on in Van Duyn v Home Office [1974]. Whilst we do not know the precise wording of the Directive we can deduce the phrase â€Å"prohibit discrimination in the workplace on the grounds of age† meets the criteria for the Directive to be directly applicable. However this is not true for Dilshad who is employed by a private company. As seen in Marshall v Southampton and South-West Hampshire Area Health Authority (Teaching) [1986] the Court of Justice does not allow the direct horizontal enforcement of Directives. However, in Marleasing SA v La Comercial Internacionale de Alimentacion SA [1990] two private individuals sought a remedy which was not included in the Directive. The Court held that a non implemented Directive could be relied upon in a case between individuals. The House of Lords confirmed this view in Webb v EMO Cargo [1994] in a case dealing with sexual discrimination. [†¦] interpret their national law in the light of the wording and the purpose of the Directive in order to achieve the result referred to in the third paragraph of Article [249]. Von Coulson and Kamann v Land Nordrhein-Westfalen [1984] 2 This is known as indirect effect. Both Charles and Dilshad could seek redress with a view to having the national court declare age discrimination in the workplace unlawful in the UK. The national court would be at liberty to provide an adequate and effective remedy. An advantage of this approach is that unlike direct effect the provisions in question do not have to be clear, precise, unconditional and require no further implementation. Assuming the worst case scenario that both Charles and Dilshad are denied a remedy through

Ways To Improve Starbucks' Services Essay Example | Topics and Well Written Essays - 1000 words

Ways To Improve Starbucks' Services - Essay Example Indeed, Starbucks needs to drastically change the way they distributes their service so as to increase customer satisfaction to remain competitive in the particular industry. Starbuck was founded in 1971 as a Seattle coffee bean retailer and roaster and since then has expanded quickly. Thus Jerry Baldwin, Gordon Bowker and Zev Siegel obtained the idea from Peet Alfred(of the famous Peet’s coffee)/.Initially the store just sold coffee making equipment and coffee beans as opposed to selling drinks, of which they have become popular globally. After a decade, Schultz Howard was contracted as a Director of Retail Operations and concluded that they ought to be selling drinks instead of machines and beans. Failing to convince the owners, they parted ways and Howard started the II Giornale series of coffee bars in the year 1986. The following year, Baldwin and company decided to sell Starbucks to Schultz who immediately changed the name of his II Giornale locations to Starbucks and began expanding. After dominating Seattle the chain of coffeehouses spread throughout the US and later on became international. Over the length of time, Starbucks has been in e xistence, it has acquired and bought companies such as Seattle’s and Peet’s Best Coffee and taken over several locations of Coffee people and Diedrich Coffee stores. From 1987, Starbucks has been opening 2 new stores everyday on average. The first ever store outside of the US or Canada was opened in 1996 in Tokyo and it Starbucks still maintains a considerable presence in Japan even to date. Today Starbucks has been able to expand to more than 17,200 stores in more than 55 nations worldwide. They have the biggest presence in the US, which has over 11,200 stores. Starbucks can be located in such diverse nations as Romania, Chile, Bulgaria and Bahrain. The very recent expansion took place in Budapest. Presently the overseas stores make up about one third of Starbuck’s

Peoples Republic of China Essay Example | Topics and Well Written Essays - 2000 words

Peoples Republic of China - Essay Example Globalization has been instrumental in guiding business operations around the world in the modern business environment. But there are scholars such as Ghemawat (â€Å"Cosmopolitan† 3) and Khan, Palepu, and Sinha who still believe that most countries would have their operations rooted in their countries. The authors note that just as 90% of people fail to leave the countries where they were born, organizations concentrate most of their operations in the countries of their origin. For example, in 2004, the US companies that operated in foreign countries were less than 1% with 60% and 10% of those with foreign operations being based in Canada and the UK respectively. In this paper, the People’s Republic of China, PRC would be analyzed based on four key aspects: dimensions of distance, institutions, diffusion of technology and its industrial clusters. Four dimensions of distance suggested by Ghemawat (â€Å"Distance† 138) have been adopted in analyzing the aspect of distance and include cultural, administrative, geographic and economic, CAGE distance. This framework has been noted to be important in helping managers point out and assess the effect of distance to their organizations. Different industries would be affected differently by these four dimensions. These dimensions encompass varied factors ranging from the readily apparent to the quite subtle. The cultural distance of a country largely determines people’s interaction with each other and with institutions and companies. Distance could arise due to the difference in race, religious beliefs, language and social norms, which affect trade. According to Ghemawat (â€Å"Distance† 140), with all factors held constant, trading between countries that share a language would be three times better than between counties without a common language. The unpopular Man darin being the official language in China has significantly hindered international trade in the region.

Strategy in action Essay Example | Topics and Well Written Essays - 1500 words

Strategy in action - Essay Example Despite the challenge, interventions have been developed to help in organization of knowledge especially based on new technologies. Knowledge management systems have been embraced by many organizations in an effort to ensure that the dynamics of knowledge are controlled. Researchers have developed divergent views concerning knowledge management. They attribute it to performance, market share, competitive advantage, market positioning, and sustainability of the organization. Despite all these benefits, knowledge management is seen as a thorn in the flesh of large and complex organizations. Large and complex organizations depict complexities and bureaucracy in the management of knowledge. The management of knowledge in large and complex organizations is a tedious process that involves a number of processes, usually involving several people. The involvements of many people in the process create a scenario where knowledge does not reach on time or is corrupted in the process. In order for any knowledge to be approved from the lower cadres to the management of an organization, there is likelihood of conflicts based on the influence of decisions made. According to Franz et al (2002), knowledge ‘islands’ are inevitable in large organizations where there are parities in the knowledge that is embraced by a given group based on common aspects such as being in the same office, department or team. It is noteworthy that the organization has to share common goals; hence, the knowledge at their disposal should ideally be similar. However, complex organizations may serv e different purposes, which may require them to adopt some knowledge that varies from the other teams. The management of knowledge in large organizations is cumbersome based on the view that knowledge can occur in various forms. As well put by Nonaka and Takeuchi (1995, p.9) in their model, there are two types of knowledge.

Security Risk Assessment Term Paper Example | Topics and Well Written Essays - 1750 words

Security Risk Assessment - Term Paper Example Today’s business world is constantly changing — it’s unpredictable, volatile, and seems to become more complex every day. By its very nature, it is fraught with risk. Risk assessment provides a mechanism for identifying which risks represent opportunities and which represent potential pitfalls. Done right, a risk assessment gives organizations a clear view of variables to which they may be exposed, whether internal or external, retrospective or forward-looking. For risk assessments to yield meaningful results, certain key principles must be considered. A risk assessment should begin and end with specific business objectives that are anchored in key value drivers. These objectives provide the basis for measuring the impact and probability of risk ratings. Southern California Design (SCD) has been determined to be a Major System and has been determined to have a low security categorization. I prepared this Security Assessment Summary Report based on the security template by Stallings and Brown (Stallings and Brown, 2012, p. 454 - 475).The results captured in this report summarize the risks associated with the vulnerabilities identified during the system’s Security Test & Evaluation, Network Perimeter Assessment, PC Security, User Authentication and Access Controls, and other risk assessment activities. In determined that the company does not have the technical capability to implement a security control and the manager may have made a risk-based decision not to implement stricter security measures due majorly to the cost or feasibility of implementing the control relative to risk. SCD is a company that specializes in landscape and outdoor space for commercial and condominium communities. It is rated fairly high in the regions markets. Manager and founder Mary Smith has employed a total of 7 staff, consisting of four full-time architects and three part-time employees. The firm

One Independent Federal Law Enforcement DHS Agency Assignment

One Independent Federal Law Enforcement DHS Agency - Assignment Example Introduction As a response to the September 11 terrorist attacks, the U.S. government signed the Homeland Security Act in 2002, establishing the Department of Homeland Security (DHS) charged with primary responsibilities in terrorism prevention and response alongside emergency planning and response (DHS, 2002). This important agency operates through various divisions including U.S Customs and Border Protection, U.S Coast Guard, U.S Secret Service, Federal Emergency Management Agency and the U.S Citizenship and Immigration Services. This study narrows down to the operations of the U.S Customs and Border Protection (CBP) division, noting the primary and subsidiary roles of the agency and how these two roles impact on the agency’s ability to execute its primary responsibility. Further, preparation of agents for operations and how the agency interacts with state and local law enforcement agencies is analyzed. 1. The CBP division of the DHS is primarily charged with preventing terr orists and terrorist weapons from having access to the United States. To pursue this role, the CBP guards about 9000 miles of land border (Canada and Mexico- 7000 miles) and water border (coastal waters-2000 miles). Further, the agency collaborates with the U.S Coast Guard division of the DHS to guard 95,000 miles of maritime border. The operations of the CBP in counterterrorism are geared towards the official ports of entry in the borders while air and marine patrols are undertaken to further deter terrorism. The CBP also undertakes prevention and response against agro-terrorism and bioterrorism. At the points of entry, the CBP undertakes a number of field activities to prevent terrorism including cargo inspection, immigration inspection program and automated targeting systems. Between the border points of entry, mobile units for patrol purposes are deployed. On the air front, the agency utilizes 700 pilots and 290 airplanes several types including unmanned ones. Lastly, the marine front is backed with 360 marine agents who work in coordination with the air division to interdict and repulse any terrorist activities (CBP, 2010). With all this capacity, the CBP is an important division of the DHS in terms of the objectives of the latter’s formation in counterterrorism. It maintains the largest law enforcement manpower in the USA indicating prioritization made about terrorism. 2. The CBP agency also undertakes several other roles besides its primary counterterrorism activities. 3. One of these non-counterterrorism roles of the CBP are in terms of trade. Through maintenance of close relationships with the government, trade parties and foreign governments, the CBP facilitates the occurrence of legitimate trade through serving as a U.S trade laws enforcement agency. This is undertaken through prevention of counterfeit trade at the official points of entry and through patrolling non-point of entry areas. The CBP not only inspects arriving cargo (about 25 mill ion containers arriving each year at U.S seaport, airports and through rail) but also ensures revenue for these is properly collected (CBP, 2010). To further support its roles in trade, the CBP maintains a trade support network, provides traders with information for locating ports of entry, publishes trade newsletters, maintains information about import trends, commodity status reports, tariff rates, quota

Alternative Solutions Analysis Essay Example | Topics and Well Written Essays - 1000 words

Alternative Solutions Analysis - Essay Example Following are three alternative solutions to the problem identified by the management and employees of Carriage Enterprises, Inc. A task force is in place and will meet to determine which solution will be implemented as the primary plan. Implementation of the plan will require management and direct reports to cooperate and accept the necessary changes for growth and productivity. The management at of Carriage Enterprises, Inc. would like to issue a formal apology to the candidates involved in the hiring misunderstanding. Management does however, understands that an executive management position requires the chosen candidate to possess certain expertise in place usually before the position is given. In this case, management and the chosen candidate both employed recognized that more training in various departments would be necessary, to maintain the position. Therefore, Aa management mentor will work very closely with the individual to strengthen those needednecessary skills in the areas of communication, incentives and public relations. This situation has afforded management provided the opportunity to make rightcorrect the wrong harm done to those employees directly affected by the decision. Our management team has put in place a contingency plan do due to this dilemma., The plan requires the person hired will have to commit to increased training that must be completed satisfactory within one year. This The new manager must also grasp andfully comprehend the strict guidelines required to maintain the position. The management team will also monitor the candidate's through performance on various tests to ensure this personhe/she can handle the upcoming required work schedule and responsibilities. One of theAnother ideas to solve the recent promotion problem at Carriage Enterprises, Inc. , is to promote the more qualified candidate and demote the less qualified candidate. Two key terms will guide the organizations' decision to accept or reject this alternative. These terms are identified and defined by Gomez-Mejia an d Balkin (2002) as decision quality (or the facts used to make a decision), and decision acceptance, which ""is based on people's feelings: decision acceptance happens when people who are affected by a decision like it."". In Tvalidating the quality of this decision, two factors are must be considered in determining whether this would be a sound basis for the decision. FThe first, is a fact based comparison of the qualifications of the two candidates should be made. Unfortunately, since an offer has already been tendered and accepted for the position, it would be risky for there is significant risk for the organization to admit they performedthat less than acceptablepoor quality research on the candidatewas performed prior to making the offer of employment. Secondly, a decision to demote an employee based on job performance is not only reasonable but accepted in the business worlda perfectly acceptable business practice. But Nevertheless, it is too early in this

Capital Structure of Company Accor Assignment Example | Topics and Well Written Essays - 1250 words

Capital Structure of Company Accor - Assignment Example Accors optimal capital could be achieved when the marginal cost of each source of finance is the same. There is on optimal capital structure for all firms for all times. The financial managers should try to develop an appropriate capital structure. That ha these features. Simple in the initial stages by limiting the number of issues and types of securities. This will avoid investors becoming hesitant from investing in the company. Preferably Accor should issue equity and preference share in an attempt to develop an optimal capital structure. Retaining the ultimate control of accompany with the equality shareholder who have the right to elect directors/control in management is important.Accor should issue less equity shares and preference share and debentures in large numbers to the public because these carry limited voting rights whole debentures don't have any.Companys capital structure in such away which would favourably affect the voting structure of existing shareholders and increase their control on the company's affairs. Liquidity can be achieved for the solvency of corporation Accor should avoid all such debts which threaten the solvency of the company. A proper balance between fixed and current assets is maintained according top the nature and size of business. Flexibility in capital structure enables the company to make necessary changes in it according to the changing conditions and make it possible to procedure more capital whenever required or redeem the surplus capital. Capital structure of such a company will also follow the policy of conservatism, this helps in maintaining the debt capacity even in unfavourable circumstances. Accor needs to maintain a good balance for optimum capital structure as both over capitalization and undercapitalization are disastrous to the financial interests of Accor. A sound capital structure attempts to secure balance leverage by issuing both types of securities i.e. ownership and creditor ship securities. Debentures are issued when the rates of interest are low cost of debt is one of the components of cost of capital incurred by an organization. Cash generated in an organization as profits are used to pay for taxes and interests on types of securities acquired for the company. It is obligatory for the corporation to pay interests to money lenders like debenture holders and even preference shareholder. If Accor maintains more debt, it means that it will be overburdened in servicing the debt needs with interests and eventually pay the equity shareholders earning that were ploughed back. To assess whether Accor maintains a capital structure for Accor, we should consider both internal and external factors. These include: - internal factors. Nature business when a company is getting stable earning then it can afford t raise funds through sources involving fixed charges, public utilities, finacing and merchandising enterprises are more stable in their earning and enjoy greater

Coca-Cola Fizz Factor Essay Example for Free

Coca-Cola Fizz Factor Essay 1) The Coca-Cola Company in my opinion has all the resources listed in the chapter. They have been such a successful organization over the years that they posses; financial, physical, human, intangible, and structural-cultural resources. It is because of their Global nature that I believe that they have these resources, and these are needed to for organizations to have capabilities and core competencies. Understanding that because Coca-Cola is such a global brand it means that their capabilities must stretch through culture so I do believe it is very hard to develop unique resources and distinctive capabilities. However, because of the resources behind them in some ways it is easier to develop strategies and gain that competitive advantage. 2) Coca-Cola has a number of distinctive capabilities. Its brand is one by itself, they have created a competitive advantage just by their name, Coca-Cola is known globally and it is a testament to the organization that it is so powerful. Another distinctive capability would be the shape and design of their bottles and cans, it may not seem like much but it can create nostalgia for and again turn in to a competitive advantage. Also with the patent for their designs it makes it impossible for competitors to imitate and take away that competitive advantage. 3) 127 Years of Happiness – This is a major strength; Coca-Cola’s history and tradition automatically give it credibility and make customers trust the brand. Other newer competitors just cannot compete with this, however it is extremely important that they continue to change and innovate. 200+ countries – This may mean a global organization, but this brings about some weaknesses. You have to deal with so many different cultures, languages, climates, and beliefs that it can be very difficult to keep everyone happy and keep providing a quality product. 3500 products worldwide – Again this is like the example above, it can be very challenging due to the diversity and target audience of all the products. However, it can be an advantage because of the variety of products you provide sets Coca-Cola apart from it competitors, giving them yet another competitive advantage. 1,322,000 Tweets per quarter – Twitter is becoming huge, and we saw during the Superbowl blackout how powerful a marketing tool it can be. Oreo cookies tweeted â€Å"Power out? No problem. You can still dunk in the dark† so in my eyes I see this growing number to be a huge positive on a marketing front. Although on the other hand, social media can be very damaging, and if Coca-Cola does something bad, a negative reputation could spread around the world in a matter of moments. Protest Group of 100,000 people wanting the original Coke back – this shows that if you get it wrong you can face a major backlash from your customers. But this also showed how loyal people were to the original Coke, yes it was a negative result but it really highlights to the Coca-Cola Company what a great product they have. 4) It has to be the capabilities assessment profile, by following the five steps of this option Muhtar Kent can truly analyze the strengths and weaknesses of the organization on a global scale. The key competencies and capabilities are what set Coca-Cola apart and they need to continue to focus on these aspects, it creates the competitive advantage and this must be maintained in the future. This is vital if Coca-Cola want to remain up there as on of the most popular brands in the world.

Genetic Polymorphism Governing the CYP2D6 Cytrochrome

Genetic Polymorphism Governing the CYP2D6 Cytrochrome Genetic Polymorphism Governing the CYP2D6 Cytrochrome P450 Enzyme Subfamily in Drug Metabolism I. Abstract The decoding of the human genome has opened up an immense opportunity for further research in designing treatment plans that can be more personalized. The composition of a persons genome varies amongst individuals and also within populations. Individual responses to drug are inherited. The clinical implication of inter-individual variations is implicit in Cytochrome P450 enzymes that are prominent in drug metabolism. Polymorphism of over 20 enzymes involved in drug metabolism has been characterized and most of these involve the Cytochrome P450 enzymes. The Cytochrome P450 enzymes have been subjected to numerous evolutionary pressures over time, consequently producing various isoforms. The frequency of variant alleles can alter the pharmacokinetic parameters of the drug, especially of a drug with a narrow therapeutic index. These alleles can either have heightened responses to certain drugs causing toxicity or show very low compliance leading to therapeutic failure. Specifically, CYP2 D6 is known to vary tremendously amongst different ethnic groups. Polymorphism of drug metabolizing enzymes such as CYP2D6 can severely affect the clinical outcome in regards to drug response. CYP2D6 gene is shown to have 74 variant alleles, when expressed in homozygous or heterozygous manners give rise to four distinct phenotypes. In this new era of genomic advancements, there is much hope to decipher variations pertaining to drug metabolism and gear the focus towards individualized medicine. Patient selection can be drastically improved by the employment of genotyping. Innovative technologies have made genotyping prevalent and we have come a long way since the advent of pharmacogenetic in the early 19th century. Sir William Osler (1849-1919) documented that variability is the law of life, and as no two faces are the same, no two bodies are alike, and no two individuals react alike, and behave alike under the abnormal conditions we know as disease. II. Personalized Medicine and Pharmacogenomics A. Pharmacogenomics The human genome project has it made possible for researchers to comprehend the complexity of biological pathways involved in disease states and focus on variations amongst individuals in regards to drug regimens (Ginsburg and Willard, 2009). The pharmacokinetic aspect of the bodys way of dealing with the drug such as adsorption, distribution, metabolism and elimination of the substrate factors into the variability of individual drug response (Kroemer and Meyer zu Schwabedissen, 2010). The pharmacogenetic variation in absorption and elimination are quite rare compared to the variation seen in drug elimination (Nebert, 1999). According to Nebert et al. (2004) Clinical pharmacology is any particular response seen after a drug is administered. However, this phenotypical drug response is rather ambiguous and has various biological and environmental influences as illustrated in Fig.1, which can lead to a gradient in drug efficacy and toxicity (D. R. Nelson et al., 2004). The phenomenon of genetic variability causing different reactions to drugs has been recognized for awhile as seen in Fig 2 but only recently has the idea become prevalent (March, 2000). In 1902, Sir Archibold Garrard regarded enzymes as vital endogenous biochemical substances required for detoxification in alkaptonuria (Hood, 2003). Sir Archibold Garrard later exemplified the enzyme deficit leading to adverse drug reactions as in born errors of metabolism (Hood, 2003). An inherited difference in tasting ability of phenylthiocarbamide was first discovered by a chemist, Arthur Fox in 1931. Arthur Foxs finding in 1931 on genetic variability was considered a breakthrough finding in the field of pharmacogenetic (Hood, 2003). During World War II, the antimalarial drug such as primaquine showed differing results in Caucasian soldiers compared to the African American soldiers; African American soldiers showed greater occurrences of hemolytic anemia when administered drug (March, 2000). Metabolism as a conce pt became prevalent in mid 19th century when scientists began to decipher the excretory metabolites of consumed substances (Nebert and Vesell, 2004). Pharmacogenomics, the term coined in 1995, focuses on a persons genetic composition, gene and respective gene products, and illustrates how this variability affects drug metabolism (Nebert and Vesell, 2004)(Maria Almira Correia, 2009). The two major aspects of pharmacogenomics are a) To recognize the genes that are affected in a disease state; and b) To focus on the variant alleles that alter our response to the drugs (Wolf, Smith, and Smith, 2000). Figure 1 Factors influencing individual drug response. Reprinted from Pharmacology, pharmacogenetics, and pharmacoepidemiology: three Ps of individualized therapy By S. Dawood , 2009, Cancer Investigation, 27, 809-815 Figure 2 Favism is implicit in certain population that consume fava beans A Greek philosopher Pythagoras first noted this phenomenon that was later found to be associated with acute hemolytic anemia in people who consume the legumes. These people have deficiency in glucose-6-phospahte dehydrogenase and can show altered response to antimalarial drug Reprinted from Pharmacogenomics: the promise of personalized medicine by Hood Emily, 2003, Environ Health Perspect.; Aug;111(11):A581-9. Pharmacogenomics encompasses the whole human genome, DNA, RNA and the associated gene products involved in the study of drug metabolism, drug transport, target proteins (receptor, ion channels, enzymes) and links these gene products to their affects on xenobiotics (Mini and Nobili, 2009). A drug that exhibits reduced efficacy does not always correlate with reduced levels of toxicity since remedial values and noxious side effects of a drug are often exerted via diverse biochemical pathways (Mini and Nobili, 2009). The study of pharmacogenomics, therefore, has vital therapeutic value because most disease states entail some sort of drug treatment (Kroemer and Meyer zu Schwabedissen, 2010). The study of genomics is now made it possible to predict safety, toxicity and efficacy of drugs and opt for a personalized treatment plan by targeting variant alleles (Dawood, 2009). The empirical notion of patients with a certain disease state reacting to drugs homogenously is flawed (Dawood, 2009). This conviction, however, does not account for genetic variation, which unfortunately leads to over 40% of patients either getting the incorrect drug or wrong dosage of the drug (Bordet, Gautier, Le Louet, Dupuis, and Caron, 2001). A Meta analysis study done in 1994, estimated that more than 2 million patients hospitalized in the US had fatalities related to adverse drug reactions (Lazarou, Pomeranz, and Corey, 1998). These results concluded that in 1994, the 106,000 fatalities associated with adverse drug effects ranked between fourth to sixth leading causes of death in the US(Lazarou et al., 1998). Regardless of strict and regulated standards for drug efficacy and prevention of toxicity, adverse drug reactions are prominent and a drug is never equivalently effective on a general population (Roses, 2000). Financially, neither the patients and/or the health insurance companies find it feasible to pay for drugs that are either ineffective or cause adverse effects (Roses, 2000). If a patient has blunted ability to metabolize a drug that is administered to them in normal doses this could easily lead to mortality due to toxic levels of the exogenous substance left in the system (Hood, 2003). Patients react to drugs in a heterogeneous manner compared to the notion of homogenous efficacy, which is particularly imminent in chemotherapeutic drugs (Dawood, 2009). Most chemotherapeutic drugs have narrow therapeutic index and any variability in metabolism of this drug can lead to adverse drug reaction (Dawood, 2009). The approach employed currently often leads to therapeutic failure and waste of time leading to expensive health care costs and valuable time (Hood, 2003). Therapeutic failure related to drug metabolism in diseases such as cancer, psychiatric disorders, and hypertension can be severely detrimental if the drugs do not take effect due to the presence of variantions in enzymes leading to high and low metabolizers (Hood, 2003). Although, genetic variability alon e does not account for all the adverse effects of drugs seen in a patient, pinpointing the altered gene can be beneficial in tailoring a more precise therapy that involves less adverse effects (Hood, 2003). Therefore, understanding the complex interaction of individuals with their environment and underlying genetic variation will allow for a gradual shift from one drug fits all perception to an embodiment of individualized medicine (Dawood, 2009). B. Individualized Medicine Individualized medicine encompasses many attributes such as clinical, genetic, and environmental factors all intertwined in a complex meshwork affecting a disease state (Ginsburg and Willard, 2009). Thorough understanding of these various attributes can aid in development of personalized treatment plans and medication types/dosages leading to an effective patient care, reduction in drug toxicity and increase in drug efficacy (Ginsburg and Willard, 2009). The ultimate goal of the drug is to have the most efficacious and least toxic effect on the patient (Dawood, 2009). However, clinical variables such as drug-drug interaction and metabolism of drug and drug transport show pronounced differences accounting for toxicity (Dawood, 2009). The statistics reveal that a certain drug is known to produce therapeutic effect only in 30% of the patients, whereas 30% of the patient show little or no advantageous effect to the drug, 10% are shown to have only deleterious effects (Maitland-van der Zee, de Boer, and Leufkens, 2000). For example if a patient is on an antidepressant, which usually take two weeks to take effect, predicting drug response for patients with a variant allele is advantageous in regards to predicting efficacy (Kirchheiner and Seeringer, 2007). Predicting drug response poses just as many challenges as do the study of inherited diseases related to genes (McCarthy and Hilfiker, 2000). The variant gene products involved in drug me tabolism are related to regulation at the level of gene expression, post translational modification and drug-drug interaction, all of which affects individual responses to xenobiotics (McCarthy and Hilfiker, 2000).Typically, drug doses are determined by body surface area and for certain group of individuals the systemic exposure is presumed to be homogenous if the surface area is similar The surface area is mainly determined based on height and weight (Dawood, 2009). The variation however stems not necessarily from differences in physical factors but rather from discrepancy in drug metabolism and drug clearance (Galpin and Evans, 1993). Although, systemic monitoring for drugs with low therapeutics indicies has been employed, it still is not efficient enough to prevent therapeutic failure (Nebert and Vesell, 2004). II. Genetic Polymorphism A. Introduction Genetic polymorphism is the variation in allele that is present at a locus and occurs in more than 1% of the population (Phillips, Veenstra, Oren, Lee, and Sadee, 2001). The allele is considered a mutation when it occurs in less than 1% of the population (Mini and Nobili, 2009). The human genome is 3 billion base pair long and the variation in one nucleotide sequence in the DNA occurs in every 100-300 bases (Hood, 2003). Single nucleotide polymorphism (SNP) is the most extensively studied genetic polymorphism, which accounts for most of the variation in drug metabolism (Schmith et al., 2003). The human genome has over 1.4 million single nucleotide polymorphisms 60, 000-100,000 is associated with drug effects ((Dawood, 2009)(Schmith et al., 2003). These SNP can gives rise to polygenic gene variants that can alter the pharmacokinetic and the pharmacodynamic portfolio of a drug leading to innate deviation in metabolism (W. E. Evans and McLeod, 2003). The gene loci that encodes for prote ins involved in drug metabolism are inherently shown to have about 47-61% polymorphism, which in turn correlates to the immense differences in substrate breakdown (Nebert, 1999). Genes that have SNPs in the coding region usually change the amino acid sequence of the protein whereas the SNP in the regulatory region are known to control the concentration of the proteins (McCarthy and Hilfiker, 2000). An exogenous substance relays its effect by interacting either on the cell membrane, cytoplasm or in the plasma (Mini and Nobili, 2009). However, a substance that is known to be efficacious in most individuals can cause detrimental effects in some if they are homozygous for the variant alleles as seen in Fig 3. This variation can affect any of the compartment of interaction a drug asserts its effects (Mini and Nobili, 2009). These alterations can manifest into phenotypes that can cause adverse effects by enhancing or inhibiting normal physiological activity (Mini and Nobili, 2009). The hu man genome project has simplified the identification of roughly 100,000 SNPs in the human genome, which can be employed to acquire accurate information on individual drug responses (Schmith et al., 2003). A haplotype is regarded as a blueprint in which not one but many SNP occur on the same chromosome (Hood, 2003). Although a single SNP may cause altered response to drugs, it is more likely the combination of SNPs on a single chromosome that may play a role in drug metabolism leading to polygenic phenotype (Hood, 2003). In the near future, clinical trials might be required to incorporate genotyping for potential drugs. The cost of genotyping for clinical trials has been predicted to cost approximately 1 million dollars (McCarthy and Hilfiker, 2000). Even though the additional cost to the trial is of concern, the overall end results might provide valuable information on drug metabolism amongst different ethnic groups, which would be beneficial in the long run. Characterization of genes of enzymes involved in drug metabolism are shown to have considerable variations; about 3 to 10 variant alleles are considered to be of the common type and over 12 to 100 variant alleles that are uncommon and occur rarely (Nebert and Vesell, 2004). Initially, when the Human Genome Project was undertaken, there was little concern about the difference in sequencing of chromosome amongst different ethnic groups (Nebert, 1999). Most scientists at the time believed there would be no substantial discrepancy between chromosomes of an individual who is of an Asian descent compared to an individual of European descent (Nebert, 1999). Graham and Smith in the 1999 study showed that there is significant variation in drug metabolism amongst individuals of different ethnic backgrounds, which effects the pharmacokinetic variability of the enzyme that are involved in drug metabolism (Graham and Peterson, 1999)(Maitland-van der Zee et al., 2000). Recent study on Asian, White s and Blacks showed that different ethnic populations differ in the frequency of alleles of a gene and this variant can result in altered drug responses (Limdi et al., 2010). The functional consequence on drug metabolism of the variant allele depends on the extension of mutation and frequency of occurrence in an individual subgroup (Maitland-van der Zee et al., 2000). To establish an accurate overall picture of variant alleles in different ethnic subgroups, an extensive SNP genotyping is needed, with an average group size of 1000 individuals in each subgroup (Nebert, 1999). The information derived from this can then be utilized for an extensive genotype-phenotype linkage study (Nebert, 1999). Figure 3 Polymorphism affecting the concentration of a drug leading to toxic doses and low efficacy in individuals who are homozygous for the variant gene. Reprinted from Pharmacogenetics: implementing personalized medicine By Enrico Mini; Stefania Nobili, Clinical Cases in Mineral and Bone Metabolism 2009; 6(1): 17-24 B. Adverse Drug Reaction Drug-drug interactions are common when numerous drugs are ingested simultaneously (Wolf et al., 2000). These drug-drug interactions can induce or inhibit enzymes in the common pathway of metabolism causing adverse effects (Oesch, 2009). An individual who has reduced ability to metabolize a substrate can easily accumulate the drug if an alternative route is not accessible (Oesch, 2009). The pharmacokinetic differences in individuals can cause poor metabolizers to have increased amounts of systemic exposure to the drug and fast metabolizers having less than normal amounts resulting in therapeutic failure or even toxicity. (Bailey, Bondar, and Furness, 1998). Comprehending this inherited genetic variability in drug metabolism can herald a new era in individualized therapy (Dawood, 2009)(Oesch, 2009)(Wolf et al., 2000). Study of pharmacogenomics allows for ways to reduce adverse drug reactions by identifying the nature of the drug, reaction to the drug and metabolic targets of the drug ( Phillips et al., 2001). All of the above can be utilized to create an extensive biomarker, which can then be employed by physicians to make appropriate dosing changes for individuals with variant alleles (Ginsburg, Konstance, Allsbrook, and Schulman, 2005). Alternatively, if reducing the dose is not a viable option, physicians can alter the treatment to include drugs that can by pass the deficient biochemical pathway (Ginsburg et al., 2005; Phillips et al., 2001). In order to utilize genotyping as a beneficial tool, physicians need to quantify variant drug responses to the specific gene unambiguously (Nebert, 1999). It is imperative that the candidate locus that is affected by the drug is identified and positive tests are employed for the variant alleles (Holmes et al., 2009). The Genetic polymorphism plays a major role in drug efficacy and also in adverse drug reactions (Dawood, 2009). Pharmacogenomic studies are hard to conduct because the variation in drug metabolism is only known after the administration of the exogenous substance, as compared to inherited diseases which have clear family linkage (McCarthy and Hilfiker, 2000). It is highly unlikely that an entire family would be prescribed a certain drug at the same time so the variation in the allele is only known under clinical trials (McCarthy and Hilfiker, 2000). SNP profiling can be beneficial if it can predict the drug response in patients and the demographics of people affected (McCarthy and Hilfiker, 2000). For example, a study by Drazen in 1999 showed that variation in ALOX5 was correlated 100% of the time with patients being non-receptive to an antiasthmatic drug (Drazen et. al, 1999). However, the prevalence of the non-variant gene in ALOX5 occurs in only 6-10 % of the patients; therefore, for a drug to be efficacious, the percent frequency of variant allele needs to be determined (Drazen et. al, 1999;McCarthy and Hilfiker, 2000). The major questions to be addressed then is how prevalent is the variant gene? How often are patients in a certain demographic group prescribed a drug that can cause adverse effects (Maitland-van der Zee et al., 2000)? A potential drug is marketed and distributed worldwide, however, most of the clinical trials are never encompass a broad range of population and most polymorphisms go undetected (McCarthy and Hilfiker, 2000). The clinical trials mainly consist of the Caucasian population in America and Europe, but a wider range of population is needed to pinpoint major variation amongst different ethnic groups (McCarthy and Hilfiker, 2000). Consequently, polymorphisms that are relevant in certain populations need to be studied and the target must be to address variant genes that are prevalent in drug metabolism (Maitland-van der Zee et al., 2000). Currently, there is little to no information on most of the drugs that are already in the market regarding genetic variability in drug metabolism (Maitland-van der Zee et al., 2000). In the future, potential drugs should include such population based studies in their clinical trials so fewer drugs would conform to one drug fits all motto (Maitland-van der Z ee et al., 2000). Polymorphism profiling can have major implication in drug safety because a drug that poses adverse effects on a large subgroup could be restricted from being launched into the market (Ginsburg et al., 2005). Genotyping can permit physicians to detect different polymorphism in individuals and allow them to create drug regimens that are not only efficacious but pose least toxic effects (Oesch, 2009). Preferential genotyping by clinicians for variant alleles could drastically reduce drug related adverse effects and in turn will be economically feasible and productive in the long run (March, 2000; Nebert and Vesell, 2004). Patient selection could be drastically improved by employment of genotyping. C. When is Genotyping Appropriate? Most drug targets are not key candidates for genotyping (Kirchheiner and Seeringer, 2007). The blood sample is collected from the patient after a day or two of administration of the drug. Therefore, drugs that require an immediate attention to dose adjustment or drugs that have a high therapeutic index may not be feasible for genotyping (Kirchheiner and Seeringer, 2007). In addition drugs that are metabolized via more than one overlying biochemical pathway pose extreme difficulties in pinpointing the variant allele and do not benefit from genotyping. However there are enzymes that have variant alleles such as the Cytochrome P450 enzymes which metabolize drugs such as warfarin, morphine, tamoxifen etc. and this polymorphism can lead to altered response to a drug (Kirchheiner and Seeringer, 2007). Adjusting the dose based on plasma level concentration of the drug is not always adequate for these patients (Dawood, 2009). Genotyping in these cases can lead to increased efficacy by identi fication of polymorphism, which can reduce the costly and time-consuming dose adjustment period. For example, CYP2D6 is a major enzyme involved in the breakdown of antidepressants. The therapeutic effects of antidepressants are only seen after a few weeks of treatment (Kirchheiner and Seeringer, 2007). Therefore, if a patient is a poor metabolizer they will accumulate the drug vs. a person who is an ultra rapid metabolizer, who will show no therapeutic value. In the case of antidepressants, genotyping for the CYP2D6 polymorphism may be beneficial prior to the start of therapy. Innovative technologies have made genotyping prevalent and we have come a long way since the advent of pharmacogenetic in the early 19th century. Pharmacogenetic disciplines if employed in pharmaceutical industry can aid in development of drugs that cater to the individual; this will allow for prospective drugs to be well suited for fewer people in comparison to drugs that assert mediocre efficacy in a vast group of individual. Food and Drug administration in 2004 permitted the employment of Chip technology known as AmpliChip by Rosche for identification of variant genes in the Cytochrome P450 pathway (http://www.roche-diagnostics.us/press_room/2005/011105.htm); (Ginsburg et al., 2005) Companies like Genelex Corporation of Seattle, Washington and Gentris are now enabling pharmaceutical companies and patients respectively to utilize Cytochrome P450 genotype profiling for CYP 2D6, CYP 2C9 and CYP2C19 enzymes (Hood, 2003). The marriage of genetics and medicine is going to become promine nt in the years to come and by the year 2020 pharmacogenomics will become a vital tool utilized to market drugs. The information derived from these test will allow patients to be on customized designer drugs(Collins and McKusick, 2001), allow physicians to set appropriate prescription amount for initial dosing and establish monitoring system for individuals with variant alleles (Tweardy and Belmont, 2009). III Cytochrome P450 Enzyme A. Background Variant alleles that lead to functional changes of gene product can have therapeutic consequences. These alleles can either have heightened responses to certain drugs causing toxicity or show none to very low compliance (Wolf et al., 2000). Polymorphism of over 20 enzymes involved in drug metabolism has been characterized and most of these involve the Cytochrome P450 enzymes (CYP) (Wolf et al., 2000). Cytochrome P450 enzymes are involved in metabolism of over 60% of drugs currently in the market today (Hood, 2003). Polymorphisms in the CYP enzymes are known to alter the pharmacokinetic aspects of exogenous substances affecting mainly the biotransformation of the substance (Kirchheiner and Seeringer, 2007). Polymorphism of the Cytochrome P450 enzyme was first discovered in relation to debrisoquine, a hypertension-correcting drug (March, 2000). Bob Smith, of Imperial College in London ingested debrisoquine and experienced severe hypotension after administration. In addition, his blood levels showed 20 fold decreased levels of drug metabolite compared to his colleagues (March, 2000; Nebert 1997). In 1988, Gonzalez and his group characterized and showed that the gene product that was causing the altered response to debrisoquine as CYP2D6; it was also found to be a liver microsomal enzyme. The cloning of this microsomal enzyme was the first look at genetic polymorphism at the molecular level (Gonzalez et al., 1988; Mini and Nobili, 2009). The study by Gonzales et al. and his group paved way for further studies geared to identify genetic polymorphism in a population that linked variant genes to alteration in drug metabolism and drug response (Mini and Nobili, 2009). Cytochrome P450s are mainly found in endoplasmic reticulum and in the mitochondria of a cell, and are copious in the liver (Porter and Coon, 1991). The CYP enzymes consist of about 49 genes that function primarily in drug metabolism (Maitland-van der Zee et al., 2000; Porter and Coon, 1991). In humans the CYP enzymes are major constituents in metabolism of fatty acids, prostoglandins, steroids and xenobiotics (Graham and Peterson, 1999). Daily diet intake of mammals consists of many natural products such as terpenes, steroids, and alkoloids and the CYP enzymes are major catalysts in the biotransformation and breakdown of these exogenous substances (Guengerich, 1991). Cytochrome P450 enzymes comprise of a super family of gene that encompass proteins predominantly involved in metabolizing of xenobiotics as well as endogenous substrates such as steroids, fatty acids, prostaglandins and arachidonate metabolites as shown in Table 1, therefore genetic polymorphism in the CYP enzymes can lead to many health related risks such as hypertension and cancer (Graham and Peterson, 1999; Jiang et al., 2005; Mayer et al., 2005). CYP enzymes are monooxygenases that catalyze non-specific oxidations of many substrates (Guengerich, 1991), (Porter and Coon, 1991). The synthetic exogenous substrates of t he cytochrome enzymes range to approximately 200,000 entities, which can all have complex interplay amongst each other in inducing or inhibiting the various isoforms of the CYP enzymes (Porter and Coon, 1991). These enzymes however are capable of catalyzing novel substrates as well and therefore one cannot cap an upper limit on the number of possible potential substrates (Porter and Coon, 1991). Therefore, the evolutionary advantage in the immensity of the CYP isoform is a crucial survival tool for our cultivating environment as well as our dynamically changing physiological system. Table 1. Exogenous and endogenous substrates of Cytochrome P450 enzymes The substrate for the CYP enzymes are just as diverse for endogenous substance as they are for exogenous substances. The CYP enzymes are prominent catalytic enzymes involved in biotransformation of various substances. Reprinted from Miniereview: Cytochrome P450 By Todd D. Porter and Minor J. Coon, The Journal of Biological Chemistry, 1991; 266(21): 13649-13472 The rates of catalyzation of the CYP enzymes are relatively slow and this can provide further explanation into their pivotal role in drug disposition (Guengerich, 1991). In addition, most of the CYP enzymes are involved in rate-limiting steps of drug metabolism and this is a key determinant of the in vivo kinetics of the drug (Pelkonen, 2002). CYP enzymes are key players in the systemic exposure of a drug and the time period a drug can assert its action (Brockmoller, Kirchheiner, Meisel, and Roots, 2000). The CYP enzymes are involved in either forming the active metabolite of the drug from a prodrug or in metabolizing the drug into inactive by-products,both of which can influence the functional temporal aspect of a drug (Brockmoller et al., 2000). Metabolites created by the CYP enzymes can also be toxic; exerting their own mutagenic and allergenic effects (Brockmoller et al., 2000). The FDA requires pharmaceutical companies to identify on the product brochure one of twenty CYP enzyme s that are involved in the biotransformation of the drug (Brockmoller et al., 2000). Interactions of different drugs concerning CYP enzymes are good predictor of drug-drug interaction, therefore marketed drugs are required to indicate the CYP enzyme involved in biotransformation of the drug on the product information (Andersson, 1991)(Brockmoller et al., 2000). However, this information does not include the polymorphism prominent within these CYP enzymes. The need for such information is crucial since these enzymes are notorious for genetic polymorphism (Brockmoller et al., 2000). Functional variations in the CYP enzymes are known to show a gradient in efficacy and variation in the quantity of the substrate present in the subject (Maitland-van der Zee et al., 2000; Wolf et al., 2000). Allelic variants causing poor, fast and ultrarapid metabolizing enzymes have been identified in most of the CYP enzymes. Most of the CYP enzymes in the liver show some degree of polymorphism (Anzenbach erova et al., 2000). B. Cytochrome Gene Family Evolution CYP enzymes are ubiquitous as they are found in every domain of living organism from Bacteria, Archaea and Eukarya and known to have originated from an ancestral gene approximately three and half billion years ago. The modern cytochrome probably originated with the Prokaryotes 1.5 billion years before the prevalence of atmospheric oxygen (Graham and Peterson, 1999; Nebert and Gonzalez, 1987; Werck-Reichhart and Feyereisen, 2000). In early eukaryotes, these enzymes not only maintained membrane veracity but also were primarily involved in the biosynthesis of endogenous hydrophobic substances such as fatty acids, cholesterol (Nebert and Gonzalez, 1987). The CYP mutilgene family diverged again 900 hundred million years later giving rise to enzymes predominantly involved in biosynthesis of steroids (Nebert and Gonzalez, 1987). This expansion lead to the another divergence of the two most important mammalian CYP families implicit in drug and carcinogen metabolizing enzymes currently known as CYP1 and CYP2 gene family (Nebert and Gonzalez, 1987). Finally, 400 million years ago dramatic expansion ensued primarily in CYP2, CYP3 and CYP4 families (Nebert and Gonzalez, 1987). This current expansion correlates to the time frame when aquatic animals merged onto the terrestrial land and were exposed to many hydrocarbon-based combustion material in the environment along with toxic plant products in their diet (Gonzalez and Nebert, 1990; D. R. Nelson and Strobel, 1987) The generation of this multigene family is due to the multiple mechanistic changes over time that reflect the complexity and diversity of the CYP enzymes. Most of the changes are related to lack of intron conservation (Werck-Reichhart and Feyereisen, 2000), exon shuffling (Doolittle, 1985; Patthy, 1985), expression of redundant genes (Anderson et al., 1981; Barrell, Air, and Hutchison, 1976), alternative splicing, frame shit mutations and RNA editing (Andreadis, Gallego, and Nadal-Ginard, 1987; Atkins, Weiss, Genetic Polymorphism Governing the CYP2D6 Cytrochrome Genetic Polymorphism Governing the CYP2D6 Cytrochrome Genetic Polymorphism Governing the CYP2D6 Cytrochrome P450 Enzyme Subfamily in Drug Metabolism I. Abstract The decoding of the human genome has opened up an immense opportunity for further research in designing treatment plans that can be more personalized. The composition of a persons genome varies amongst individuals and also within populations. Individual responses to drug are inherited. The clinical implication of inter-individual variations is implicit in Cytochrome P450 enzymes that are prominent in drug metabolism. Polymorphism of over 20 enzymes involved in drug metabolism has been characterized and most of these involve the Cytochrome P450 enzymes. The Cytochrome P450 enzymes have been subjected to numerous evolutionary pressures over time, consequently producing various isoforms. The frequency of variant alleles can alter the pharmacokinetic parameters of the drug, especially of a drug with a narrow therapeutic index. These alleles can either have heightened responses to certain drugs causing toxicity or show very low compliance leading to therapeutic failure. Specifically, CYP2 D6 is known to vary tremendously amongst different ethnic groups. Polymorphism of drug metabolizing enzymes such as CYP2D6 can severely affect the clinical outcome in regards to drug response. CYP2D6 gene is shown to have 74 variant alleles, when expressed in homozygous or heterozygous manners give rise to four distinct phenotypes. In this new era of genomic advancements, there is much hope to decipher variations pertaining to drug metabolism and gear the focus towards individualized medicine. Patient selection can be drastically improved by the employment of genotyping. Innovative technologies have made genotyping prevalent and we have come a long way since the advent of pharmacogenetic in the early 19th century. Sir William Osler (1849-1919) documented that variability is the law of life, and as no two faces are the same, no two bodies are alike, and no two individuals react alike, and behave alike under the abnormal conditions we know as disease. II. Personalized Medicine and Pharmacogenomics A. Pharmacogenomics The human genome project has it made possible for researchers to comprehend the complexity of biological pathways involved in disease states and focus on variations amongst individuals in regards to drug regimens (Ginsburg and Willard, 2009). The pharmacokinetic aspect of the bodys way of dealing with the drug such as adsorption, distribution, metabolism and elimination of the substrate factors into the variability of individual drug response (Kroemer and Meyer zu Schwabedissen, 2010). The pharmacogenetic variation in absorption and elimination are quite rare compared to the variation seen in drug elimination (Nebert, 1999). According to Nebert et al. (2004) Clinical pharmacology is any particular response seen after a drug is administered. However, this phenotypical drug response is rather ambiguous and has various biological and environmental influences as illustrated in Fig.1, which can lead to a gradient in drug efficacy and toxicity (D. R. Nelson et al., 2004). The phenomenon of genetic variability causing different reactions to drugs has been recognized for awhile as seen in Fig 2 but only recently has the idea become prevalent (March, 2000). In 1902, Sir Archibold Garrard regarded enzymes as vital endogenous biochemical substances required for detoxification in alkaptonuria (Hood, 2003). Sir Archibold Garrard later exemplified the enzyme deficit leading to adverse drug reactions as in born errors of metabolism (Hood, 2003). An inherited difference in tasting ability of phenylthiocarbamide was first discovered by a chemist, Arthur Fox in 1931. Arthur Foxs finding in 1931 on genetic variability was considered a breakthrough finding in the field of pharmacogenetic (Hood, 2003). During World War II, the antimalarial drug such as primaquine showed differing results in Caucasian soldiers compared to the African American soldiers; African American soldiers showed greater occurrences of hemolytic anemia when administered drug (March, 2000). Metabolism as a conce pt became prevalent in mid 19th century when scientists began to decipher the excretory metabolites of consumed substances (Nebert and Vesell, 2004). Pharmacogenomics, the term coined in 1995, focuses on a persons genetic composition, gene and respective gene products, and illustrates how this variability affects drug metabolism (Nebert and Vesell, 2004)(Maria Almira Correia, 2009). The two major aspects of pharmacogenomics are a) To recognize the genes that are affected in a disease state; and b) To focus on the variant alleles that alter our response to the drugs (Wolf, Smith, and Smith, 2000). Figure 1 Factors influencing individual drug response. Reprinted from Pharmacology, pharmacogenetics, and pharmacoepidemiology: three Ps of individualized therapy By S. Dawood , 2009, Cancer Investigation, 27, 809-815 Figure 2 Favism is implicit in certain population that consume fava beans A Greek philosopher Pythagoras first noted this phenomenon that was later found to be associated with acute hemolytic anemia in people who consume the legumes. These people have deficiency in glucose-6-phospahte dehydrogenase and can show altered response to antimalarial drug Reprinted from Pharmacogenomics: the promise of personalized medicine by Hood Emily, 2003, Environ Health Perspect.; Aug;111(11):A581-9. Pharmacogenomics encompasses the whole human genome, DNA, RNA and the associated gene products involved in the study of drug metabolism, drug transport, target proteins (receptor, ion channels, enzymes) and links these gene products to their affects on xenobiotics (Mini and Nobili, 2009). A drug that exhibits reduced efficacy does not always correlate with reduced levels of toxicity since remedial values and noxious side effects of a drug are often exerted via diverse biochemical pathways (Mini and Nobili, 2009). The study of pharmacogenomics, therefore, has vital therapeutic value because most disease states entail some sort of drug treatment (Kroemer and Meyer zu Schwabedissen, 2010). The study of genomics is now made it possible to predict safety, toxicity and efficacy of drugs and opt for a personalized treatment plan by targeting variant alleles (Dawood, 2009). The empirical notion of patients with a certain disease state reacting to drugs homogenously is flawed (Dawood, 2009). This conviction, however, does not account for genetic variation, which unfortunately leads to over 40% of patients either getting the incorrect drug or wrong dosage of the drug (Bordet, Gautier, Le Louet, Dupuis, and Caron, 2001). A Meta analysis study done in 1994, estimated that more than 2 million patients hospitalized in the US had fatalities related to adverse drug reactions (Lazarou, Pomeranz, and Corey, 1998). These results concluded that in 1994, the 106,000 fatalities associated with adverse drug effects ranked between fourth to sixth leading causes of death in the US(Lazarou et al., 1998). Regardless of strict and regulated standards for drug efficacy and prevention of toxicity, adverse drug reactions are prominent and a drug is never equivalently effective on a general population (Roses, 2000). Financially, neither the patients and/or the health insurance companies find it feasible to pay for drugs that are either ineffective or cause adverse effects (Roses, 2000). If a patient has blunted ability to metabolize a drug that is administered to them in normal doses this could easily lead to mortality due to toxic levels of the exogenous substance left in the system (Hood, 2003). Patients react to drugs in a heterogeneous manner compared to the notion of homogenous efficacy, which is particularly imminent in chemotherapeutic drugs (Dawood, 2009). Most chemotherapeutic drugs have narrow therapeutic index and any variability in metabolism of this drug can lead to adverse drug reaction (Dawood, 2009). The approach employed currently often leads to therapeutic failure and waste of time leading to expensive health care costs and valuable time (Hood, 2003). Therapeutic failure related to drug metabolism in diseases such as cancer, psychiatric disorders, and hypertension can be severely detrimental if the drugs do not take effect due to the presence of variantions in enzymes leading to high and low metabolizers (Hood, 2003). Although, genetic variability alon e does not account for all the adverse effects of drugs seen in a patient, pinpointing the altered gene can be beneficial in tailoring a more precise therapy that involves less adverse effects (Hood, 2003). Therefore, understanding the complex interaction of individuals with their environment and underlying genetic variation will allow for a gradual shift from one drug fits all perception to an embodiment of individualized medicine (Dawood, 2009). B. Individualized Medicine Individualized medicine encompasses many attributes such as clinical, genetic, and environmental factors all intertwined in a complex meshwork affecting a disease state (Ginsburg and Willard, 2009). Thorough understanding of these various attributes can aid in development of personalized treatment plans and medication types/dosages leading to an effective patient care, reduction in drug toxicity and increase in drug efficacy (Ginsburg and Willard, 2009). The ultimate goal of the drug is to have the most efficacious and least toxic effect on the patient (Dawood, 2009). However, clinical variables such as drug-drug interaction and metabolism of drug and drug transport show pronounced differences accounting for toxicity (Dawood, 2009). The statistics reveal that a certain drug is known to produce therapeutic effect only in 30% of the patients, whereas 30% of the patient show little or no advantageous effect to the drug, 10% are shown to have only deleterious effects (Maitland-van der Zee, de Boer, and Leufkens, 2000). For example if a patient is on an antidepressant, which usually take two weeks to take effect, predicting drug response for patients with a variant allele is advantageous in regards to predicting efficacy (Kirchheiner and Seeringer, 2007). Predicting drug response poses just as many challenges as do the study of inherited diseases related to genes (McCarthy and Hilfiker, 2000). The variant gene products involved in drug me tabolism are related to regulation at the level of gene expression, post translational modification and drug-drug interaction, all of which affects individual responses to xenobiotics (McCarthy and Hilfiker, 2000).Typically, drug doses are determined by body surface area and for certain group of individuals the systemic exposure is presumed to be homogenous if the surface area is similar The surface area is mainly determined based on height and weight (Dawood, 2009). The variation however stems not necessarily from differences in physical factors but rather from discrepancy in drug metabolism and drug clearance (Galpin and Evans, 1993). Although, systemic monitoring for drugs with low therapeutics indicies has been employed, it still is not efficient enough to prevent therapeutic failure (Nebert and Vesell, 2004). II. Genetic Polymorphism A. Introduction Genetic polymorphism is the variation in allele that is present at a locus and occurs in more than 1% of the population (Phillips, Veenstra, Oren, Lee, and Sadee, 2001). The allele is considered a mutation when it occurs in less than 1% of the population (Mini and Nobili, 2009). The human genome is 3 billion base pair long and the variation in one nucleotide sequence in the DNA occurs in every 100-300 bases (Hood, 2003). Single nucleotide polymorphism (SNP) is the most extensively studied genetic polymorphism, which accounts for most of the variation in drug metabolism (Schmith et al., 2003). The human genome has over 1.4 million single nucleotide polymorphisms 60, 000-100,000 is associated with drug effects ((Dawood, 2009)(Schmith et al., 2003). These SNP can gives rise to polygenic gene variants that can alter the pharmacokinetic and the pharmacodynamic portfolio of a drug leading to innate deviation in metabolism (W. E. Evans and McLeod, 2003). The gene loci that encodes for prote ins involved in drug metabolism are inherently shown to have about 47-61% polymorphism, which in turn correlates to the immense differences in substrate breakdown (Nebert, 1999). Genes that have SNPs in the coding region usually change the amino acid sequence of the protein whereas the SNP in the regulatory region are known to control the concentration of the proteins (McCarthy and Hilfiker, 2000). An exogenous substance relays its effect by interacting either on the cell membrane, cytoplasm or in the plasma (Mini and Nobili, 2009). However, a substance that is known to be efficacious in most individuals can cause detrimental effects in some if they are homozygous for the variant alleles as seen in Fig 3. This variation can affect any of the compartment of interaction a drug asserts its effects (Mini and Nobili, 2009). These alterations can manifest into phenotypes that can cause adverse effects by enhancing or inhibiting normal physiological activity (Mini and Nobili, 2009). The hu man genome project has simplified the identification of roughly 100,000 SNPs in the human genome, which can be employed to acquire accurate information on individual drug responses (Schmith et al., 2003). A haplotype is regarded as a blueprint in which not one but many SNP occur on the same chromosome (Hood, 2003). Although a single SNP may cause altered response to drugs, it is more likely the combination of SNPs on a single chromosome that may play a role in drug metabolism leading to polygenic phenotype (Hood, 2003). In the near future, clinical trials might be required to incorporate genotyping for potential drugs. The cost of genotyping for clinical trials has been predicted to cost approximately 1 million dollars (McCarthy and Hilfiker, 2000). Even though the additional cost to the trial is of concern, the overall end results might provide valuable information on drug metabolism amongst different ethnic groups, which would be beneficial in the long run. Characterization of genes of enzymes involved in drug metabolism are shown to have considerable variations; about 3 to 10 variant alleles are considered to be of the common type and over 12 to 100 variant alleles that are uncommon and occur rarely (Nebert and Vesell, 2004). Initially, when the Human Genome Project was undertaken, there was little concern about the difference in sequencing of chromosome amongst different ethnic groups (Nebert, 1999). Most scientists at the time believed there would be no substantial discrepancy between chromosomes of an individual who is of an Asian descent compared to an individual of European descent (Nebert, 1999). Graham and Smith in the 1999 study showed that there is significant variation in drug metabolism amongst individuals of different ethnic backgrounds, which effects the pharmacokinetic variability of the enzyme that are involved in drug metabolism (Graham and Peterson, 1999)(Maitland-van der Zee et al., 2000). Recent study on Asian, White s and Blacks showed that different ethnic populations differ in the frequency of alleles of a gene and this variant can result in altered drug responses (Limdi et al., 2010). The functional consequence on drug metabolism of the variant allele depends on the extension of mutation and frequency of occurrence in an individual subgroup (Maitland-van der Zee et al., 2000). To establish an accurate overall picture of variant alleles in different ethnic subgroups, an extensive SNP genotyping is needed, with an average group size of 1000 individuals in each subgroup (Nebert, 1999). The information derived from this can then be utilized for an extensive genotype-phenotype linkage study (Nebert, 1999). Figure 3 Polymorphism affecting the concentration of a drug leading to toxic doses and low efficacy in individuals who are homozygous for the variant gene. Reprinted from Pharmacogenetics: implementing personalized medicine By Enrico Mini; Stefania Nobili, Clinical Cases in Mineral and Bone Metabolism 2009; 6(1): 17-24 B. Adverse Drug Reaction Drug-drug interactions are common when numerous drugs are ingested simultaneously (Wolf et al., 2000). These drug-drug interactions can induce or inhibit enzymes in the common pathway of metabolism causing adverse effects (Oesch, 2009). An individual who has reduced ability to metabolize a substrate can easily accumulate the drug if an alternative route is not accessible (Oesch, 2009). The pharmacokinetic differences in individuals can cause poor metabolizers to have increased amounts of systemic exposure to the drug and fast metabolizers having less than normal amounts resulting in therapeutic failure or even toxicity. (Bailey, Bondar, and Furness, 1998). Comprehending this inherited genetic variability in drug metabolism can herald a new era in individualized therapy (Dawood, 2009)(Oesch, 2009)(Wolf et al., 2000). Study of pharmacogenomics allows for ways to reduce adverse drug reactions by identifying the nature of the drug, reaction to the drug and metabolic targets of the drug ( Phillips et al., 2001). All of the above can be utilized to create an extensive biomarker, which can then be employed by physicians to make appropriate dosing changes for individuals with variant alleles (Ginsburg, Konstance, Allsbrook, and Schulman, 2005). Alternatively, if reducing the dose is not a viable option, physicians can alter the treatment to include drugs that can by pass the deficient biochemical pathway (Ginsburg et al., 2005; Phillips et al., 2001). In order to utilize genotyping as a beneficial tool, physicians need to quantify variant drug responses to the specific gene unambiguously (Nebert, 1999). It is imperative that the candidate locus that is affected by the drug is identified and positive tests are employed for the variant alleles (Holmes et al., 2009). The Genetic polymorphism plays a major role in drug efficacy and also in adverse drug reactions (Dawood, 2009). Pharmacogenomic studies are hard to conduct because the variation in drug metabolism is only known after the administration of the exogenous substance, as compared to inherited diseases which have clear family linkage (McCarthy and Hilfiker, 2000). It is highly unlikely that an entire family would be prescribed a certain drug at the same time so the variation in the allele is only known under clinical trials (McCarthy and Hilfiker, 2000). SNP profiling can be beneficial if it can predict the drug response in patients and the demographics of people affected (McCarthy and Hilfiker, 2000). For example, a study by Drazen in 1999 showed that variation in ALOX5 was correlated 100% of the time with patients being non-receptive to an antiasthmatic drug (Drazen et. al, 1999). However, the prevalence of the non-variant gene in ALOX5 occurs in only 6-10 % of the patients; therefore, for a drug to be efficacious, the percent frequency of variant allele needs to be determined (Drazen et. al, 1999;McCarthy and Hilfiker, 2000). The major questions to be addressed then is how prevalent is the variant gene? How often are patients in a certain demographic group prescribed a drug that can cause adverse effects (Maitland-van der Zee et al., 2000)? A potential drug is marketed and distributed worldwide, however, most of the clinical trials are never encompass a broad range of population and most polymorphisms go undetected (McCarthy and Hilfiker, 2000). The clinical trials mainly consist of the Caucasian population in America and Europe, but a wider range of population is needed to pinpoint major variation amongst different ethnic groups (McCarthy and Hilfiker, 2000). Consequently, polymorphisms that are relevant in certain populations need to be studied and the target must be to address variant genes that are prevalent in drug metabolism (Maitland-van der Zee et al., 2000). Currently, there is little to no information on most of the drugs that are already in the market regarding genetic variability in drug metabolism (Maitland-van der Zee et al., 2000). In the future, potential drugs should include such population based studies in their clinical trials so fewer drugs would conform to one drug fits all motto (Maitland-van der Z ee et al., 2000). Polymorphism profiling can have major implication in drug safety because a drug that poses adverse effects on a large subgroup could be restricted from being launched into the market (Ginsburg et al., 2005). Genotyping can permit physicians to detect different polymorphism in individuals and allow them to create drug regimens that are not only efficacious but pose least toxic effects (Oesch, 2009). Preferential genotyping by clinicians for variant alleles could drastically reduce drug related adverse effects and in turn will be economically feasible and productive in the long run (March, 2000; Nebert and Vesell, 2004). Patient selection could be drastically improved by employment of genotyping. C. When is Genotyping Appropriate? Most drug targets are not key candidates for genotyping (Kirchheiner and Seeringer, 2007). The blood sample is collected from the patient after a day or two of administration of the drug. Therefore, drugs that require an immediate attention to dose adjustment or drugs that have a high therapeutic index may not be feasible for genotyping (Kirchheiner and Seeringer, 2007). In addition drugs that are metabolized via more than one overlying biochemical pathway pose extreme difficulties in pinpointing the variant allele and do not benefit from genotyping. However there are enzymes that have variant alleles such as the Cytochrome P450 enzymes which metabolize drugs such as warfarin, morphine, tamoxifen etc. and this polymorphism can lead to altered response to a drug (Kirchheiner and Seeringer, 2007). Adjusting the dose based on plasma level concentration of the drug is not always adequate for these patients (Dawood, 2009). Genotyping in these cases can lead to increased efficacy by identi fication of polymorphism, which can reduce the costly and time-consuming dose adjustment period. For example, CYP2D6 is a major enzyme involved in the breakdown of antidepressants. The therapeutic effects of antidepressants are only seen after a few weeks of treatment (Kirchheiner and Seeringer, 2007). Therefore, if a patient is a poor metabolizer they will accumulate the drug vs. a person who is an ultra rapid metabolizer, who will show no therapeutic value. In the case of antidepressants, genotyping for the CYP2D6 polymorphism may be beneficial prior to the start of therapy. Innovative technologies have made genotyping prevalent and we have come a long way since the advent of pharmacogenetic in the early 19th century. Pharmacogenetic disciplines if employed in pharmaceutical industry can aid in development of drugs that cater to the individual; this will allow for prospective drugs to be well suited for fewer people in comparison to drugs that assert mediocre efficacy in a vast group of individual. Food and Drug administration in 2004 permitted the employment of Chip technology known as AmpliChip by Rosche for identification of variant genes in the Cytochrome P450 pathway (http://www.roche-diagnostics.us/press_room/2005/011105.htm); (Ginsburg et al., 2005) Companies like Genelex Corporation of Seattle, Washington and Gentris are now enabling pharmaceutical companies and patients respectively to utilize Cytochrome P450 genotype profiling for CYP 2D6, CYP 2C9 and CYP2C19 enzymes (Hood, 2003). The marriage of genetics and medicine is going to become promine nt in the years to come and by the year 2020 pharmacogenomics will become a vital tool utilized to market drugs. The information derived from these test will allow patients to be on customized designer drugs(Collins and McKusick, 2001), allow physicians to set appropriate prescription amount for initial dosing and establish monitoring system for individuals with variant alleles (Tweardy and Belmont, 2009). III Cytochrome P450 Enzyme A. Background Variant alleles that lead to functional changes of gene product can have therapeutic consequences. These alleles can either have heightened responses to certain drugs causing toxicity or show none to very low compliance (Wolf et al., 2000). Polymorphism of over 20 enzymes involved in drug metabolism has been characterized and most of these involve the Cytochrome P450 enzymes (CYP) (Wolf et al., 2000). Cytochrome P450 enzymes are involved in metabolism of over 60% of drugs currently in the market today (Hood, 2003). Polymorphisms in the CYP enzymes are known to alter the pharmacokinetic aspects of exogenous substances affecting mainly the biotransformation of the substance (Kirchheiner and Seeringer, 2007). Polymorphism of the Cytochrome P450 enzyme was first discovered in relation to debrisoquine, a hypertension-correcting drug (March, 2000). Bob Smith, of Imperial College in London ingested debrisoquine and experienced severe hypotension after administration. In addition, his blood levels showed 20 fold decreased levels of drug metabolite compared to his colleagues (March, 2000; Nebert 1997). In 1988, Gonzalez and his group characterized and showed that the gene product that was causing the altered response to debrisoquine as CYP2D6; it was also found to be a liver microsomal enzyme. The cloning of this microsomal enzyme was the first look at genetic polymorphism at the molecular level (Gonzalez et al., 1988; Mini and Nobili, 2009). The study by Gonzales et al. and his group paved way for further studies geared to identify genetic polymorphism in a population that linked variant genes to alteration in drug metabolism and drug response (Mini and Nobili, 2009). Cytochrome P450s are mainly found in endoplasmic reticulum and in the mitochondria of a cell, and are copious in the liver (Porter and Coon, 1991). The CYP enzymes consist of about 49 genes that function primarily in drug metabolism (Maitland-van der Zee et al., 2000; Porter and Coon, 1991). In humans the CYP enzymes are major constituents in metabolism of fatty acids, prostoglandins, steroids and xenobiotics (Graham and Peterson, 1999). Daily diet intake of mammals consists of many natural products such as terpenes, steroids, and alkoloids and the CYP enzymes are major catalysts in the biotransformation and breakdown of these exogenous substances (Guengerich, 1991). Cytochrome P450 enzymes comprise of a super family of gene that encompass proteins predominantly involved in metabolizing of xenobiotics as well as endogenous substrates such as steroids, fatty acids, prostaglandins and arachidonate metabolites as shown in Table 1, therefore genetic polymorphism in the CYP enzymes can lead to many health related risks such as hypertension and cancer (Graham and Peterson, 1999; Jiang et al., 2005; Mayer et al., 2005). CYP enzymes are monooxygenases that catalyze non-specific oxidations of many substrates (Guengerich, 1991), (Porter and Coon, 1991). The synthetic exogenous substrates of t he cytochrome enzymes range to approximately 200,000 entities, which can all have complex interplay amongst each other in inducing or inhibiting the various isoforms of the CYP enzymes (Porter and Coon, 1991). These enzymes however are capable of catalyzing novel substrates as well and therefore one cannot cap an upper limit on the number of possible potential substrates (Porter and Coon, 1991). Therefore, the evolutionary advantage in the immensity of the CYP isoform is a crucial survival tool for our cultivating environment as well as our dynamically changing physiological system. Table 1. Exogenous and endogenous substrates of Cytochrome P450 enzymes The substrate for the CYP enzymes are just as diverse for endogenous substance as they are for exogenous substances. The CYP enzymes are prominent catalytic enzymes involved in biotransformation of various substances. Reprinted from Miniereview: Cytochrome P450 By Todd D. Porter and Minor J. Coon, The Journal of Biological Chemistry, 1991; 266(21): 13649-13472 The rates of catalyzation of the CYP enzymes are relatively slow and this can provide further explanation into their pivotal role in drug disposition (Guengerich, 1991). In addition, most of the CYP enzymes are involved in rate-limiting steps of drug metabolism and this is a key determinant of the in vivo kinetics of the drug (Pelkonen, 2002). CYP enzymes are key players in the systemic exposure of a drug and the time period a drug can assert its action (Brockmoller, Kirchheiner, Meisel, and Roots, 2000). The CYP enzymes are involved in either forming the active metabolite of the drug from a prodrug or in metabolizing the drug into inactive by-products,both of which can influence the functional temporal aspect of a drug (Brockmoller et al., 2000). Metabolites created by the CYP enzymes can also be toxic; exerting their own mutagenic and allergenic effects (Brockmoller et al., 2000). The FDA requires pharmaceutical companies to identify on the product brochure one of twenty CYP enzyme s that are involved in the biotransformation of the drug (Brockmoller et al., 2000). Interactions of different drugs concerning CYP enzymes are good predictor of drug-drug interaction, therefore marketed drugs are required to indicate the CYP enzyme involved in biotransformation of the drug on the product information (Andersson, 1991)(Brockmoller et al., 2000). However, this information does not include the polymorphism prominent within these CYP enzymes. The need for such information is crucial since these enzymes are notorious for genetic polymorphism (Brockmoller et al., 2000). Functional variations in the CYP enzymes are known to show a gradient in efficacy and variation in the quantity of the substrate present in the subject (Maitland-van der Zee et al., 2000; Wolf et al., 2000). Allelic variants causing poor, fast and ultrarapid metabolizing enzymes have been identified in most of the CYP enzymes. Most of the CYP enzymes in the liver show some degree of polymorphism (Anzenbach erova et al., 2000). B. Cytochrome Gene Family Evolution CYP enzymes are ubiquitous as they are found in every domain of living organism from Bacteria, Archaea and Eukarya and known to have originated from an ancestral gene approximately three and half billion years ago. The modern cytochrome probably originated with the Prokaryotes 1.5 billion years before the prevalence of atmospheric oxygen (Graham and Peterson, 1999; Nebert and Gonzalez, 1987; Werck-Reichhart and Feyereisen, 2000). In early eukaryotes, these enzymes not only maintained membrane veracity but also were primarily involved in the biosynthesis of endogenous hydrophobic substances such as fatty acids, cholesterol (Nebert and Gonzalez, 1987). The CYP mutilgene family diverged again 900 hundred million years later giving rise to enzymes predominantly involved in biosynthesis of steroids (Nebert and Gonzalez, 1987). This expansion lead to the another divergence of the two most important mammalian CYP families implicit in drug and carcinogen metabolizing enzymes currently known as CYP1 and CYP2 gene family (Nebert and Gonzalez, 1987). Finally, 400 million years ago dramatic expansion ensued primarily in CYP2, CYP3 and CYP4 families (Nebert and Gonzalez, 1987). This current expansion correlates to the time frame when aquatic animals merged onto the terrestrial land and were exposed to many hydrocarbon-based combustion material in the environment along with toxic plant products in their diet (Gonzalez and Nebert, 1990; D. R. Nelson and Strobel, 1987) The generation of this multigene family is due to the multiple mechanistic changes over time that reflect the complexity and diversity of the CYP enzymes. Most of the changes are related to lack of intron conservation (Werck-Reichhart and Feyereisen, 2000), exon shuffling (Doolittle, 1985; Patthy, 1985), expression of redundant genes (Anderson et al., 1981; Barrell, Air, and Hutchison, 1976), alternative splicing, frame shit mutations and RNA editing (Andreadis, Gallego, and Nadal-Ginard, 1987; Atkins, Weiss,

Financial Performance Analysis of Amazon

Financial Performance Analysis of Amazon Executive Summary Amazon.com, Inc (Amazon) registered strong growth of 36% in 2008 mainly due to increased unit sales and expanded sales base in several categories. Meanwhile during the 3rd quarter of 2009, Amazon managed to report a steady growth despite the recession period. This report reviews and analyse Amazon financial performance as well as comparison with its competitors. All analysis and ratios are derived from data collected from respective companies annual reports and www.reuters.com. Brief Description of the Company Amazon is one of the leading online retailers in the world based in Seattle, Washington, United States of America. The company started its operation in 1995 and has regional involvement in the Asia Pacific, North America and Western Europe. Initially the core business of the company is selling online books however has diversified to products such as apparel, electronic and home improvement products. The company is involved in the internet retailing industry with 7.5% market share in 2008. The e-commerce industry has gone through major phases of growth and decline however, Amazon persevered and surprised everyone. Amazon achieved its first annual profit in 2003 and has continuously performed better each year. Amazons main competitors are the book retailer, Barnes and Nobles (BN) and third party retailing non-book related good, Ebay.com (Ebay). BN and Ebay are engaged in the similar industry as Amazon, which is online business and catalogue retailing of single and diversified product lines In terms of market capitalisation, Amazon has the highest at $59.57 billion and followed by Ebay and BN at $30.59 billion and $1.21 billion respectively. This indicates that Amazon has greater stability and low risk compared to the competitors. Financial Analysis Profitability The companys performance has improved wherein it has performed above the projections made throughout the four years period. Net sales have increased by 29.2% from $14,835 million in 2007 to $19,166 million in 2008 with net income of $476 million and $645 million respectively. The Cost of Sales (COS) has increased throughout the years partly contributed from the free shipping cost and has affected the net income figure. There was a drop in the net income in 2006 due to increase spending on technology and content and in income tax expenses. However, the said figure has increased thereafter. In terms of sales, Amazon has performed double from the competitors throughout the four-year period. Sales increased tremendously primarily due to low prices, vast selection of products and free shipping offers. However, in terms of Gross Profit Margin (GPM), Ebay operated at 74% has outperformed Amazon at 23% in 2008. The reason behind this is due to Amazons high expenditure on Cost of Sales (COS), which is about 70% of its sales value. The high COS was mainly contributed from the free shipping cost incurred. In comparison to Ebay, the company applies different business model from Amazon and have managed to minimise its expenditure on COS at about 20% of its sales value and therefore reflected to a high GPM. GPM proves that eBay is generating a very large percent of net income from each dollar of sales and this contributes greatly to the growing of eBays overall financial strength. Meanwhile, BN showed a better margin because of its smaller size and the retailer aspect. Amazon and BN have a stable Operating Profit Margin (OPM) of 4% compared to Ebay, which fluctuates within the same period. Its constant operating expenses of 20% from its sales value support the stable growth for Amazons OPM. Ebays fluctuation figures are resulted from high expenses incurred from selling, general and administrative. Based on the industry standard, Amazon and its competitors have performed ahead from the standard, which are 14.1% and 0.53% for GPM and OPM respectively. The low OPM standard can be ascribed to the effect of the recent financial crisis. As of the 3rd quarter of 2009, Amazons sales were $14,989 million with net income of $518 million. For the current year, it is projected a further increase of 21% and 19.5% in sales and COS respectively from 2008 primarily to the low prices, vast selection and free shipping offers. With the said sales projection, the net profit is projected at $743 million in 2009. The basis for the projection takes into consideration on the global economic downturn and changes in customer purchasing preferences. Based on the current quarter performance, the same trend was observed wherein Amazon is still having the highest net sales while Ebay still dominating the net income figure. BN was badly hit from the result of economic crisis. In comparison with the competitors, Amazons Return on Equity (ROE) was high in 2005 at 135% but drastically dropped throughout the years to 40% and 20% in 2007 and 2008 respectively. The main reason for the decrease was due to the yearly increase in the businesss equity. As at 2008, Amazons ROE is equivalent to the competitors and is expected to be in line with the competitors in the future. In comparison on the ROE and Return on Assets (ROA), Amazon has the highest growth among its competitors as it has a smaller capital base than Ebay and a higher profit level than BN. The high ROE is indicates that Amazon is continuing to grow. Meanwhile the ROA showed that Amazon is efficient in generating income from its assets compared to its competitors. The industry standard for the ROE and ROA are 3.8% and 1.6% respectively. The lower industry standard might be driven by the economic condition, which has a great impact to the performance and profitability of most companies. There was an increase of 1% for each year from 2006 to 2008 for the Return on Investment (ROI), whereas the Return on Capital Employed (ROCE) was at the highest in 2008 at 29%. These have indicated that Amazon is efficientat using its assets to generate earnings compared to the competitors. Liquidity and leverage analysis The companys current ratios are more or less similar to BN during the four-year period. The companys current ratio was between the ranges of 1.3 to 1.5 for the past four years. This indicates that Amazon is able to lay its hands on $1.30-$1.50 for every $1.00 they owe. In comparison between current and acid test ratio, acid test ratio is lower at average of 1.0 within the years. It will enable the company to cover its short-term liabilities adequately with its liquid assets. This is within some of the industry standards of 1:1, showing that the company will be able to cover its short-term liabilities adequately with its liquid assets. In comparison with the industry, Ebay performed better than Amazon for both the current ratio and acid test ratio. Amazon fell below the standard in the initial years but almost meeting the standard in 2008 at 1.5:1. Although not performing better than the industry average, Amazon has good and stable ratios, which indicates that the company is able to cover its current liabilities. Amazons gearing ratio was high in 2005 at 86% and subsequently reduces within the years to 13% in 2008. Due to the operational efficiency, increased sales and improved liquidity, Amazon was able to reduce its debt and currently the business is funded with internal generated funds. Meanwhile, Ebay has no borrowings and BN has an average of 30% for the gearing ratio. The high borrowing in 2005 has a huge impact on the debt-to-equity ratio, which was 6:0:1. However as the borrowings is paid, the debt equity ratio when down to 0.2:1 in 2008. This indicates that Amazon has 20 cent debt for every $1 equity the company have. As for BN, its debt/equity ratio was at average of 0.5:1 during the four years. Therefore, in comparison, Amazon is less risky than BN. As Ebay has no borrowing, the interest cover for the said company is high compared to Amazon and Ebay. In comparison with the debt-to-equity ratio set by the industry, Amazon has a very low ratio of 0.2 compared to 40.98. As mentioned earlier, the industry ratio is on the high side due to the economic condition. Investment analysis Amazons common shares outstanding plus shares underlying stock-based awards outstanding totalled 446 million on December 31, 2008, compared with 435 million a year ago. As of to date, the said shares amounted to 451 million. Based on Amazons Earning per Share (EPS) trend, it indicated that the markets willingness to pay for the companys earnings has increased. This indicates that the market foresees Amazons long-term prospects over and above its current position. As at 3rd quarter 2009, the EPS was $1.20 and to grow further based on the companys projection on higher earnings in 4th quarter. Analyst predicts that strong online holiday sales will boost the shares of retailers, including Amazon and has recommended that the said shares will outperform in the market (Reuters.com, 2009). In terms of market performance, Amazons share price fluctuates throughout the years and increased tremendously in 2007 at $92.64 due to the launch of its e-book reader, Kindle. However, during the economy downturn in 2008, the share price dropped to $51.28 due to low operating profit as Amazon begins its price reduction for the goods and services. In 2009, the share price gradually increased and after the 3rd quarter results, it continuously went up and as at 11 December 2009, the share price was $134.15. The current Price/Earning Ratio has increased to 80.70 times from 33.80 times in 2008. Analyst predicted that with a strong revenue growth Amazon would be able to gain significant market share from other competitors (Stahl, 2009). Due to the economic downturn, all companies are affected which was reflected in its performance. Similar to Amazon, Ebays and BNs share prices had an initial stable growth but in 2008 it dropped by about 50%. While others are still struggling to recover from the economic situation, Amazon has showed a growth in 2009 and the share price has currently increased by 168% compared to Ebay and BN at 70% and 62% respectively. Cash flow Analysis As at 3rd quarter 2009, the cash and cash equivalents was $2,514, which a reduction from the opening balances at the beginning of the year of $2,769. During the period, the cash used in financing activities was $229 million compared to $1,199 million in 2008 of which the cash outflows results from repurchases of common stock, repayments of long-term debt. Repayments on long-term debt and payments on capital lease obligations were $379 million for the 3rd quarter 2009 and $335 million in 2008. Meanwhile, free cash flowwas $446 million for the quarter. Throughout the years, Amazon has managed to have a positive cash flow from its operating activities. This indicates a good sign that the core operation of the company is generating income. In comparison of Amazons total liabilities to the cash flow generated from operations, the company has enough funds to cover level of investment and takes about 3.3 years to pay back all its financial commitments. With the current cash, cash equivalents, and marketable securities balances, the company is likely to be able to meet its anticipated operating cash needs for at least the next 12 months. In comparison between the cash flow from operating activities and net income, it indicated that Ebay has the higher ability compared to Amazon in managing its operating cash cycle through receivables, payables and inventory. The reason is that Ebay takes advantages of its payable days for as long as 361 days. Due to the similar business model, both companies have a negative cash cycle of which cash is generated from its payable and quick settlement payment from the customers. Management of Working Capital In terms of managing working capital, Amazon had maintained its positive cash flow being the highest at 2007 for an amount of $1,450. This indicates that the company is able to pay off its short-term liabilities and operating expenses accordingly. In comparison between the competitors, Ebay has the highest working capital of $4,023 million in 2007 while BN has the lowest at $841million in 2006. The high working capital for Ebay has enabled the company to be successful in its expansion programme and improve their operations. For the 3rd quarter ending 31st December, Amazons working capital is $1,832 million and is expected to increase further due to higher expectation of sales in the coming quarter. Working capital provides information on the companys underlying operational efficiency. In terms of efficiency, Amazon is efficient in using its assets in generating sales compared to its competitors, which are reflected in the asset turnover ratio. This indicates Amazons improved efficiency in inventory and asset management that is partly supported from the low pricing strategy and low profit margin. In comparison to the competitors, BN has the lowest account receivable days due to its retail business model, which is based on the cash transaction. Based on the account payable days, Ebay has taken advantage on the free source of finance for the business at 361 days compared to Amazon at 62 days. In respect of the inventory days, Amazon is able to turn the inventory quickly as low as 12 days compared to BN at 140 days. BN has high stock inventory days due to the reason of its retailing business model and product which requires some time to be sold. Due to the same business application, both Amazon and Ebay have a negative cash operating cycle, which indicates efficiency in cash management. In term of the industry standard, the three companies are performing above the indicative ratios, which are supported by the significant growth in the industry. Based on the industry standard, Amazon and the competitors are performing ahead from the standard. For the assets turnover ratio, Amazon was the highest at 2 times compared to 0.7 times industry standard. This indicates the companys efficiency at using its assets in generating sales. The reason Amazon performed better than the competitors is relatively derive from the pricing strategy wherein low profit margin company tends to have high asset turnover. Amazon Future Prospects Based on Amazons current performance, it is projected that the company will have a strong growth supported by the low pricing strategy and free shipping. Moreover, the latest acquisition of Zappos.com and improvised version of Kindle are expected to increase Amazon sales which leads to higher profitability. Due to the growth of Amazon, its annual earning is expected to grow over the next two to three years with sales reaching $2.38 million and $2.86 million respectively. Due to robust financial performance during the current economic condition, it has enhances investors confidence. Share prices are expected to increase with earnings of $2.57 and $2.38 per share in 2008 and 2009 respectively. In line with the said growth, Amazon will benefit in gaining additional market share despite tough competition from other online sites such as Ebay. References Amazon.com Annual Report 2008 Available from: http://amazon.com (accessed on 11th November 2009) Amazon.com 3rd Quarter 2009 Report Available from: http://amazon.com (accessed on 11th November 2009) Ebay.com Annual Report 2008 Available from: http://ebay.com (accessed on 11th December 2009) Barnes and Noble Annual Report 2008 Available from: barnesnobleinc.com ((accessed on 11th November 2009) BBC News (2008), Amazon Shares Fall Despite Growth. (Online) Available from: http://news.bbc.co.uk (accessed on 5th December 2009) George Stahl (2009), Amazon Shares Hit All Time High. The Wall Street Journal (0nline), Available from: http://online.wsj.com/article/SB125630854623203899.html (accessed on 4th December 2009) John Pacskowski (2009), Spare Change for Amazon Shares. The Wall Street Journal (Online), Available from: http://online.wsj.com/article/SB125630854623203899.html (accessed on 4th December 2009) Richard Waters and Jonathan Birchall (2009), Amazon Share Surge Recalls Tech Boom Days (Online) Available from:http://ft.com (accessed on 5th December 2009) Reuters.com (2009), Nasdaq rises with Online Retailers Dos Dips on Oil. (Online), http://ul.reuters.com (accessed on 3rd December 2009) www. reuters.com (accessed on 1st December 2009)