...Strategic Management Case study C: GSK, a merger too far? Answer 1: 1. By using Five Force Framework, assess the threat of rivalry and threat of entry in the pharmaceutical industry: Threats of rivalry. When we talk about threats of rivalry we should mention not only the rivalry at the industry but also at the product market level. Industry level The pharmaceutical industry has become increasingly concentrated during last 20 years. Guided by absence of proper R&D facilities, gradual expiry of patents and other reasons, there has been a number of mergers and acquisitions in the industry within last 20 years. This trend is currently shaping the internal rivalry among companies. The major reasons for that are opportunistic financial operations and the creation of synergy. It is worth mentioning that some companies would prefer to merge than to experience hostile takeover. Product market level: The two-tier structure has to be taken into account: patented original brands vs. generics. Original compete mostly on non-price benefits, especially as long as they are patent protected, whereas generic drug are generally driven by price competition. The threats of entry. The threats of entry into the pharmaceutical industry are extremely high. Still, it is considered to be very attractive for the new comers. As an evidence for that, 21 pharmaceuticals are featured in the Fortune 500 companies in return on sales. The pharmaceutical industry has big barriers to prevent new comers from...
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...STRATEGY CASE PREPARATION GLAXO WELLCOME SMITHKLINE BEECHAM easeyourlife herealso External analysis industry & market Drug wholesalers independant retailers retail chains government agencies hospitals patients GSK is diversified in areas such as vaccines, generics, biologics, consumer health and nutrition. Pharmaceutical industry €665 bn value, world largest industry R&D champion Major employer Influential lobby 10-15 years to develop a drug €1,17 bn cost of research & development, €105.00bn spent on R&D in 2012 in industry 1 to 2 of 10,000 substances pass all stages and become marketable macro analysis steeplec Society Technology Economy Environment Politics Legislation Ethic Competition fast growing aging & wealthier population rising urbanisation increase in unhealthy lifestyles & obesity opportunities opened up by scientific advances strong growth in emerging markets / Heavy political focus on healthcare as core state responsibility intellectual property protection / 3D printed drugs cyborgs rise new diseases category increased patient awareness & interest in natural medicines growing acceptance of generics shrinking working population falling R&D productivity increasing R&D expenses debt crisis in Europe reduction in individual disposable income volatility in emerging markets weak prospects in mature market increased...
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...APPENDIX A - PORTERS 5 FORCES Barriers to Entry • Entering of the potential industrialists is easy, if they have the necessary finances, because the cost of obtaining the permit and start operations is very high. However, there is stiff competition among the companies, especially with the pharmaceuticals, which have not only expanded their scope of operations and distribution through mergers and acquisitions, but also have the necessary know how and long experience to combat any new entrant. • The lengthy and cumbersome registration process, spanning up to two years or more, whereby the new companies have to provide the Certificates of Free Sale, (which confirms the approval for the sale of products in US, Europe, Japan etc) ensure the sale of product in the parent company (incase of MNC) and live up to other irrational clauses in the registration form, inhibit the companies from entering. • The pharmaceutical industry is a very capital intensive industry. This requires large amount of investment, and since, we lag behind in the capital industry, and it has to be imported. Thus, limiting new entrants. • With no stress and emphasis on research and development in our country, it is most likely that the new entrants will produce a new form of the generic type, already being produced in abundance. Thus, the absence of any differential advantage over their competitors will further reduce their chances of survival in the industry. • The risk aversive nature of the industrialists...
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...situated in London. It was formed after the merger between Glaxo and SmithKline to form one company in December 2000. The company is a leading manufacturer of drugs and vaccines for major diseases such as HIV/AIDS, malaria and Tuberculosis. The main focus of the organization was public health; however, there were issues that arose which made it appear as if their focus was shifting to profit maximization for the benefit of their shareholders. Contradictory statements were made by CEO, J P Garnier which suggested that they are looking to make profits for their shareholders, which led to a questionable integrity. GlaxoSmithKline (GSK) has been putting in a lot of effort to improve the healthcare in Less Developed Countries (LDCs) and in Sub-Saharan Africa. Their substantial effort has shifted to investing in research and development (R&D) of diseases which is necessary in the developing nations since they heavily rely on external support due to the inadequate facilities and is not self-sufficient in regards to developing medicines for the diseases themselves. The less developed regions are the ones that are significantly impacted, hence GSK has taken the initiative to set preferential pricing arrangements to benefit these regions. GSK has also continued with its philanthropic deeds by continuing programs that cares for, supports and educate the locals about HIV/AIDS in 27 different countries. Another altruism act that is performed by GSK is the donation that it carries out. It...
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...of technological developments and other strategic issues facing the industry. The latter sections of the report focuses on the industry’s leading firm, Pfizer\Pharmacia. Page 1 Pharmaceuticals Industry Analysis The Pharmaceutical Industry 1. Origins and Evolution 1 The modern pharmaceutical industry is a highly competitive non-assembled global industry. Its origins can be traced back to the nascent chemical industry of the late nineteenth century in the Upper Rhine Valley near Basel, Switzerland when dyestuffs were found to have antiseptic properties. A host of modern pharmaceutical companies all started out as Rhine-based family dyestuff and chemical companies e.g. Hoffman-La Roche, Sandoz, Ciba-Geigy (the product of a merger between Ciba and Geigy), Novartis etc. Most are still going strong today . Over time many of these chemical companies moved into the production of pharmaceuticals and other synthetic chemicals and they gradually evolved into global players. The introduction and success of penicillin in the early forties and the relative success of other innovative...
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...GlaxoSmithKline company profile Francis Weyzig Amsterdam, October 2004 Summary Business description GlaxoSmithKline (GSK) is one of the world’s largest research-based pharmaceutical corporations that discovers, develops, manufactures and markets branded human health products. Headquarters: UK, with additional operational headquarters in the USA Global presence: about 160 countries Primary markets: USA, France, Germany, UK, Italy and Japan Employees: approximately 103,000 GSK key figures for 2003 (in £ million) Sales 21,441 Materials and production costs 4,188 Marketing and administration 7,563 R&D expenditures 2,770 Operating income 6,920 Net profit 4,765 GSK has two main business divisions, pharmaceuticals and consumer healthcare. This profile deals with the pharmaceuticals division, which generates 85% of GSK’s sales. The five largest selling GSK products are Seretide/Advair for asthma and Chronic Obstructive Pulmonary Disease (COPD); Paxil/Seroxat and Wellbutrin, both antidepression drugs; Avandia/Avadamet for type 2 diabetes; and the antibiotic Augmentin. Each of these drugs generated above £800 million of sales in 2003. GSK produces a broad range of products of special importance to developing countries, including: Anti-malaria drugs Zentel (albendazole), for de-worming and the prevention of lymphatic filariasis Pentosam, against leishmaniasis Anti-retrovirals (ARVs) for the treatment of HIV/AIDS Tuberculosis drugs Vaccines for developing countries Corporate...
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...Instructor’s Manual CASE TEACHING NOTES The Global Pharmaceutical Industry Sarah Holland (Manchester Business School) and Bernardo Bátiz-Lazo (London South Bank University) 1. Introduction The case describes how the prescription pharmaceutical industry has changed since its modern beginnings in the early 1950s. The various forces affecting the competitive environment of the industry are discussed in terms of origins, immediate past and immediate future (2004 onwards). As a result, the note provides insights into the evolution of barriers to enter and exit the industry for prescription pharmaceuticals, while aiming to help students to recognise how to set boundaries for an industry. This is a detailed industry note on the “ethical” pharmaceutical industry which provides an opportunity to analyse key success factors of major players. The note centres on a descriptive overview of the predominant issues in the three major Triad market areas: the US, Europe and Japan (although major issues in emerging markets are also mentioned). The note covers the overall industry environment with in-depth discussion of the driving forces in the industry such as globalisation (in particular global regulatory issues, changing world demographics and worldwide pricing disparities); development of new technology; the importance of time to market; and amalgamations. The case also examines issues around corporate social responsibility. 2. Position of the Case The pharmaceutical industry...
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...1.EXECUTIVE SUMMARY Executive summary: While studying the HR procedures it was conspicuous that the recruitment and selection procedures are of greater importance for any organization. As GlaxosmithKline Pharmaceuticals Ltd. is an esteemed organization in Nashik the response to recruitment advertisement was huge. During my training period I was a part of recruitment and selection procedure. My primary task was to screen the resumes of the applicants and thus to select the candidates for the interview sessions. The selection procedures included written tests and interviews. After every stage the selected candidates are moved to the next level while the rejected candidates are again called for the feedback. The objective with which the study was conducted are as follows, To understand: 1. The functioning of Recruitment and Selection. 2. To have exposure to recruitment process 3. Whether the recruitment process and selection process are satisfactory or not. The major findings about the recruitment and selection procedures are as follows, * The overall satisfaction level is high. * Job profile communication, evaluation of experience is the factors where Glaxosmithkline is scoring well. * The recruitment is mainly done through print media. * The selection procedures are having three phases. * The executives want the procedure to be future oriented. Following were the suggestions given for the improvement in the procedures. ...
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...A “Calibrated Approach”: Pharmaceutical FDI and the Evolution of Indian Patent Law Web version: August 2007 Authors: Katherine Connor Linton and Nicholas Corrado1 Abstract India has charted its own intellectual property (IP) path over the last 35 years, attempting to foster the growth of a domestic pharmaceutical industry and access to medicine while, more recently, also addressing the requirements of the international IP regime. Multinational companies (MNCs) have responded to India’s movement towards compliance with the W TO intellectual property agreement, TRIPS, by increasing the quantity and quality of foreign direct investment (FDI) in the areas of pharmaceutical research and development (R&D) and manufacturing. By contrast, MNCs have adopted a more cautious attitude toward the patenting and commercialization of new pharmaceutical products in India, waiting to see how Indian courts and patent offices interpret the new laws, and awaiting the enactment of longdebated data protection legislation. The ultimate success of the Indian “calibrated approach” to fostering the domestic industry and access to medicine while also addressing international IP requirements remains to be seen. 1 Katherine Connor Linton (katherine.linton@usitc.gov) is the International Trade Analyst for Intellectual Property and Nicholas Corrado was a law student intern in the Office of Industries of the U.S. International Trade Commission (USITC). The views expressed are those of Ms. Linton and...
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...Table of contents: INTRODUCTION TO THE PROJECT 2 FINANCIAL RATIO ANALYSIS: 2 Purposes and considerations of ratio analysis 2 PHARMACEUTICAL INDUSTRY IN PAKISTAN 3 FEROZSONS LABORATORIES LIMITED 4 LIQUIDITY ANALYSIS RATIOS 4 Current Ratio: 4 Quick Ratio 5 Working Capital: 6 Absolute Liquid Ratio: 8 SOLVENCY RATIOS (Capital Structure Analysis Ratios) 9 Debt Ratio 9 Debt to Equity Ratio 9 Interest Coverage Ratio 10 Equity Ratio 12 Assets to Equity Ratios 13 PROFITABILITY ANALYSIS RATIOS: 14 GENERAL PROFITABILITY: 14 Gross profit ratio/ margin: 15 Operating Expense Ratio: 16 Operating Profit Margin: 17 Net Profit Ratio: 18 OVERALL PROFITABILITY: 19 Earnings per Share (EPS): 19 Return on Equity (ROE): 20 Return on Assets (ROA): 21 Return on Capital Employed: 22 ACTIVITY ANALYSIS RATIOS 23 Operating Cycle 27 Assets Turnover Ratio 30 Working Capital Turnover Ratio 31 CAPITAL MARKET ANALYSIS RATIOS 32 Price earnings ratio(PE): 32 Dividend Yield Ratio 34 Market to Book Ratio 35 Dividend Payout Ratio 36 STATIC ANALYSIS: 37 REFERENCES: 44 INTRODUCTION TO THE PROJECT The project covers the trend analysis of Ferozsons, a pharmaceutical company in Pakistan, and the static analysis of the same with its major rival, Glaxo Smith Kline Pakistan Limited FINANCIAL RATIO ANALYSIS: The financial statements are essential but they are only the starting point for successful financial management. Financial Ratio...
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...International Series in Quantitative Marketing Min Ding Jehoshua Eliashberg Stefan Stremersch Editors Innovation and Marketing in the Pharmaceutical Industry Emerging Practices, Research, and Policies Chapter 3 Portfolio Management in New Drug Development Min Ding, Songting Dong, Jehoshua Eliashberg, and Arun Gopalakrishnan Abstract The pharmaceutical industry leads all industries in terms of R&D spend. Portfolio management in new drug development is extremely challenging due to long drug development cycles and high probabilities of failure. In 2010, a pharmaceutical company like GlaxoSmithKline (GSK) spent over USD 6 billion in R&D expenditure and managed a total of 147 R&D projects across 13 therapeutic areas in different stages of development. There are a lot of challenges in deciding on how to allocate resources to these projects in order to achieve the maximum returns. For example, how to evaluate the value and risk of each project, how to choose new projects for both short-term cash flow and long-term development, how to decide which projects to prioritize and which projects to remove from the portfolio, how to design drug development unit and incentive schemes to maximize the likelihood of success, and so forth. This chapter reviews both practice and the state-of-the-art research and summarizes the latest insights from both industry and academia. For a manager, it provides a guide to the tools they need in portfolio management in the new drug development...
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...Sir Richard Branson’s setbacks: from Virgin Cola to Virgin Brides The demise of the domestic carrier Little Red joins a string of the entrepreneur’s failures from makeup to bridalwear to alcohol • Virgin Atlantic axes Little Red * Share * * * inShare0 * Email * ------------------------------------------------- * ------------------------------------------------- Gwyn Topham, transport correspondent * ------------------------------------------------- The Guardian, Monday 6 October 2014 18.19 BST Sir Richard Branson hands out free cans of Virgin Cola in downtown Tokyo. Sales of the brand lost fizz against the might of Coca-Cola and Pepsi.Photograph: EPA Sir Richard Branson has made a fortune from a string of business ventures that bear his signature brand, including Virgin Trains and Virgin Media. But Little Red joins a series of failures that have seen Branson fail to break into lucrative markets including soft drinks and alcohol. Virgin Cola Launched in 1994, Virgin Cola was initially available only on Virgin planes and in Virgin cinemas before Branson sought wider distribution. “It tasted better than Coke. For one wonderful year we had the dream of Virgin Cola being the brand on everyone’s lips.” Instead, Branson claimed, “swat teams and bagfuls of money” sent from Coke’s Atlanta headquarters gobbled up his drink, whose market share peaked at 0.5% in the three years it was on sale in the US. In 2012, the UK producer went bust and no one else...
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...Krishna Burberry: Burberry moved manufacturing work overseas to China (offshoring). This involved the closure of their factory in Rhondda, causing 300 jobs to be lost in Rhondda. Consequently staff were crying when given the news and protests were held, causing the reputation and brand image to worsen in the short-term of Burberry as a result of making such an unethical move. This was a large concern as Burberry provided well-paid, quality employment, so the 300 job cuts in Rhondda meant a sad loss to the development of the economic infrastructure of Rhondda. Also in the short-term Burberry had to suffer larger cash outflows due to the redundancy payments. However the lower labour costs in China, although rising, allowed profits to rise. Also Burberry saw a 19% sales revenue rise, due to the rising customer disposable incomes in China, and as a result profits rose. Therefore in the short-term the move to China was not good as it meant large cash outflows due to the redundancy payments, and the job cuts in the UK made Burberry receive an unethical, negative brand image and reputation, reducing sales and profits. Although in the long-term Burberry is likely to benefit from greater sales and so more profits, particularly due to lower labour costs, but this depends on the rate at which labour costs are rising in China relative to that of the UK, and how high the shipping costs are of the goods from China to the UK. Dyson: Dyson's very innovative bladeless fan was the result...
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...Pharmaceutical industry The pharmaceutical industry develops, produces, and markets drugs licensed for use as medications.[1] Pharmaceutical companies are allowed to deal in generic and/or brand medications and medical devices. They are subject to a variety of laws and regulations regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs. Indian Pharmaceutical Industry The pharmaceutical industry in India is among the most highly organized sectors. This industry plays an important role in promoting and sustaining development in the field of global medicine. Due to the presence of low cost manufacturing facilities, educated and skilled manpower and cheap labor force among others, the industry is set to scale new heights in the fields of production, development, manufacturing and research. In 2008, the domestic pharma market in India was expected to be US$ 10.76 billion and this is likely to increase at a compound annual growth rate of 9.9 per cent until 2010 and subsequently at 9.5 per cent till the year 2015. | Industry Trends : * The pharma industry generally grows at about 1.5-1.6 times the Gross Domestic Product growth * Globally, India ranks third in terms of manufacturing pharma products by volume * The Indian pharmaceutical industry is expected to grow at a rate of 9.9 % till 2010 and after that 9.5 % till 2015 * In 2007-08, India exported drugs worth US$7.2 billion in to the US and Europe followed by Central and Eastern...
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...Q3 2010 www.businessmonitor.com siNGapore pharmaceuticals & healthcare report INCLUDES 10-YEAR FORECASTS TO 2019 issN 1748-216X published by Business monitor international ltd. SINGAPORE PHARMACEUTICALS & HEALTHCARE REPORT Q3 2010 INCLUDING 5-YEAR AND 10-YEAR INDUSTRY FORECASTS BY BMI Part of BMI’s Industry Report & Forecasts Series Published by: Business Monitor International Copy deadline: June 2010 Business Monitor International Mermaid House, 2 Puddle Dock, London, EC4V 3DS, UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2010 Business Monitor International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no...
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