Pharmaceutical industry analysis and merck's strategic assessement

Résumé du document

The pharmaceutical industry is characterized by a harsh competition between large companies, biotech start-ups and generics, long and risky R&D processes, increasing government regulations and strong purchaser pressures. Merck & Co Inc. is one of the biggest players in this industry, due to its competitive advantages. Indeed, Merck benefits from its continuous efforts in the R&D field: its R&D spending increased by 75% between 2005 and 2009. Second, the company's use of its human resources is a key success factor in an industry where scientific researchers are paramount and brain drain as well as poaching a plague for the pharmaceuticals leaders. That's the reason why Merck insists on offering strong incentives to attract and keep scientists, and develops scholarships granting along with partnerships with colleges and research centers. Finally, Merck presents a powerful customer-oriented philosophy, which fosters its brand equity, and which has been very much used these times, especially after the Vioxx scandal.

Extraits

[...] Merck has also set up an industrial base in Singapore in order to expand into Asia. difficulty to find substitutes - Leader on the market: Merck & Co. is one of the 4 leaders on the vaccine market. Merck bets on the first vaccine against uterus cancer (Gardasil®) and on Januvia®, to treat the type II of diabetes. Merck's business segments: - Prescription - Vaccine - Animal Health joint venture (Merial) - Consumer Health joint venture (J&J-Merck) Appendix BCG matrix applied to Merck portfolio III. Threats and opportunities: key challenges for the future A. [...]

[...] That's the reason why Merck must consider them in its strategy in order to delay their introduction on the market. The measures Merck should consider for that purpose include trying to obtain systematical patents, controlling costs, investing in marketing, and strengthening brand identity. B. The erosion of the blockbuster model The blockbuster drugs (those with sales over billion per year) on which the big pharmaceutical companies used to rely in the past years are expected to be fewer and fewer in the future. [...]

[...] Consequently, despite its leader position in the industry, Merck had to realize various strategic moves during the last five years to remain in the game. Indeed, despite its tradition of not getting involved in mergers and acquisitions processes, it acquired various biotech companies in order to gain technological advance and reinforce its position on the biotechnology segment. In addition, by acquiring Schering Plough later this year, Merck seems to have put an end to its strategy of internal growth: it is clear that it now resorts to acquisition with a view to becoming a stronger and global healthcare leader. [...]

[...] Threats and opportunities: key challenges for the future 8 A. The growing competition from new players 8 B. The erosion of the blockbuster model 8 C. The increasing pressure from public opinion and the government 9 D. Large emerging markets and unmet medical needs 9 Appendix Appendix Appendix Appendix Executive summary The pharmaceutical industry is characterized by a harsh competition between large companies, biotech start-ups and generics, long and risky R&D processes, increasing government regulations and strong purchaser pressures. Merck & Co, Inc. [...]

[...] Moreover, the media tend to target more the big pharmaceutical companies, which are often blamed for the huge profits they make and their lack of goodwill concerning social issues. An example of this pressure may be the fact that Merck and its competitors are put under great pressure to lower their prices so that poor countries can afford the HIV drugs. Finally, Merck, as well as the other big pharmaceutical companies, is increasingly submitted to political pressures, since government regulations may be expected to become stronger and stronger in the future. [...]