...Conflict and Change Harvard Case Study Professor: Robert Lazer PhD Team: Zerrin Hejazi, Mark Klabonski, Elizabeth Lamb, Hari Thenneti Pandurangamoorthi, & Hareshkumar Surani The History of Merck U.S. sales office opened in and George Merck, Heinrich’s grandson, was appointed head of the U.S. branch Friedrich Jacob Merck opened Merck in Germany 1668 1827 Heinrich E Merck transformed the business and Merck began manufacturing 1887 Merck merged with Philadelphia pharmacy Sharp & Dohme 1891 The renamed company Merck & Co. opens for business 1953 2009 Merck merged with ScheringPlough Corporation and Organon BioSciences Pharmaceutical Industry • The average drug development time is over fifteen years with an average R&D expenditure of $800 million. • The FDA requires three phases of testing to assess safety and effectiveness. o Test results dictate what is displayed on the drug’s label and how the doctor will prescribe it. • Follow-up studies (Phase 5) can be performed to assess the drug after market release (Phase 4) and amend the drug label for improved sales. Pharmaceutical Success • 1981 to 2001, Merck experienced an upward trend on several industry metrics. • Their Return on Sales (ROS) for their Human Pharma line peaked at just over 40% in 2001 with an average of 24% . • The early 1990’s exhibited a downward trend just prior to Gilmartin assuming the role of CEO. Pharmaceutical Success ...
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...Abstract Merck & Company (Merck) is evaluating the possible acquisition of Medco Containment Services Incorporated (Medco). The Chief Operating Officer, Executive Vice President of Sales and Marketing, and the Chief Financial Officer have all stated their thoughts and concerns regarding this matter. It is my job to make the final recommendation to the Board of Trustees. Executive Summary Merck is a leading pharmaceutical manufacturer and Medco is a leading pharmacy benefits manager. Both companies have a strong hold on their piece of the market. In 1992, Merck had revenue of $9.7 billion while Medco recorded $2.2 in revenue.4 Benefits of the merger include: * Increased marketing potential through Medco’s accumulated data * Access into the Managed Care market * Decreased costs in sales and marketing efforts Risks include: * Merging of corporate cultures * Loss of R&D dollars due to subsidizing Medco * Regulatory and compliance threats. The stated price for the merger is $6.6 Billion. At the time of the merger, I would have recommended to the Board to proceed with the merger as benefits seem to out-weigh the risks. However, in looking back, due to the FTC findings stating the merger did create an unfair advantage to Merck, I would have to re-evaluate. Merck was unable to issue the intended Medco IPO which had a planned offer price of $20 to $22 per share. In 2003 announced its plan to spin off Medco to existing Merck shareholders...
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...MERCK MBA Healthcare Management Capstone (HCM650-1403B-01) Phase 1 Individual Project Student: Brenda Wilfred Instructor: Professor Ruth Lindegarde Colorado Technical University Online August 24, 2014 Repost Professor Timothy Tapp; Applied Managerial Healthcare Finance, Professor Kristaizell Darby: Management the Healthcare Organization (HCM612-1401B-01), Professor Jenson Hagen: ECON616-1402A-0 Applied Managerial Economics, and Professor Kristy Taylor: Systems in Healthcare (HCM632-1403A-01) Abstract Pharmaceutical comes from Greek word “Pharmakeia” with the modern translation as “Pharmacia”. Many people owe their lives to many lifesaving medicines, without which they might not have seen another day in their life. Pharmaceutical companies are responsible for discovering new drugs, marketing them and getting them licensed for their use as medications. All drugs so produced have to go through a strict process of patenting and testing and are subjected to all sorts of safety checks and a variety of laws and regulations. These pharmaceutical companies not only play a very important role in the medicine industry but also play a significant role in the revenue industry and the development of a nation. Here are top 10 pharmaceutical companies in world. The global economic crisis is impacting every area of business and forcing corporations to reevaluate how they conduct operations. In an effort to operate in the leanest most efficient manner, some corporations...
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...Merck 1. What products has Merck developed and introduced recently? On the Merck website they have developed a product pipeline. This is a very helpful tool for those who want to follow their progress. This pipeline allows for people to see what phase each developing medication is in. These phases include phase II, phase III, and under review. The pipeline also shows the medication category, therapeutic area, and whether or not the medication has advanced. According to the product pipeline medications that Merck have developed that are recently under review are Zerbaxa, Omarigliptin, Grazoprevir/Elbasvir, Bridion, and Keytruda. Two of these medications have been introduced and moved forward including Grazoprevir and Keytruda. Medications included on the phase III list include Verubecestat, Anacetrapib, Keytruda, Letermovir, Ertugliflozin, Omarigliptin, Zerbaxa, and Doravirine. Medications included on the product pipeline list for phase II include Relbactam, Keytruda, Vericiguat, and Grazoprevir. 2. What role does research play in Merck's success? How...
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...would be a valuable asset. The insight it can give Merck and the access to the market to increase share and give insight to Merck’s drug treatments will be invaluable. MARKETING & SALES CONSIDERATIONS Currently Merck has to send out its own reps to doctors where Medco does the same to doctors and companies. This will eliminate that area for Merck and result in a $1 billion annual savings in redundant marketing costs by a reduction of Merck’s sales force by using the marketing strategies of Medco’s database and ideology of marketing to plan managers as opposed to doctors. OPERATERATIONAL CONSIDERATIONS Medco’s database that allows Merck to identify prescriptions that can be switched from competitors to their brand will help increase market share while weakening competition. Merck pharmacists will be able to suggest these switches to the patient’s doctor. FINANCIAL CONSIDERATIONS Medco has about 33 million customers in the United States and manages 95 million prescriptions a year for government, unions, insurance firms and companies. Revenues for Medco were $2.2 billion. OTHER FACTORS (REGULATORY ISSUES – HUMAN RESOURCES ISSUES – SYNERGY ISSUES) Synergy between Merck and Medco could be achieved by IT integration, non-duplication of efforts and using Medco’s approach of working with plan managers instead of doctors to reduce costs of marketing. Company Backgrounds Merck & Co., Inc. (NYSE: MRK), dba Merck Sharp & Dohme, MSD outside the...
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...Executive Summary Merck & Co., Inc. is one of the largest pharmaceutical firms in the world. The company is known for its discovery, development, production, and marketing of products and services that are geared towards the maintenance and restoration of health. The company’s business focuses on two areas: human and animal health products and Services and Specialty Chemical products. Medco Containment Services, Inc. is one of the largest pharmacy benefits manager (PBM). The company was mainly responsible for the management of drug benefits for more than 65 million Americans whose prescriptions were filled at retail drug stores or the company’s mail order business. Merck’s acquisition of Medco was one of the largest health care industry mergers, as well as one the largest U.S. corporate unions in the early 1990’s (Olmos, 1993). In addition the merger provided Merck with access to Medco’s technology and information. With the merger they acquired more than 1,000 pharmacists who decided or advised physicians on how prescriptions should be filled (Tanouye, 1993). This merger allowed Merck to increase its pharmaceutical sales through the use of patient information from Medco’s database. The merger was expected to solidify Merck’s presence in the pharmaceutical industry by giving it direct access to the healthcare providers that had influence over the type and price of prescription drugs (Olmos, 1993). Merck acquired all of the outstanding shares of Merck for approximately...
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...HOJNACKI_M5A1 April 08, 2012 DIVERSITY AUDIT Company Highlights Merck and Company, Inc., a pharmaceutical leader, has a clear vision which is to make a difference in the lives of people globally through their innovative medicines, vaccines, biologic therapies, consumer health and animal products. The company’s core strength is the skill, integrity and creativity of its people. Merck employees, while remarkably diverse in background, training and life experiences, are all motivated by innovation and their mission of providing products that save and improves lives around the world. Under the leadership of Kenneth C. Frazier, who serves a threefold role: Chairman of the Board, President and Chief Executive Officer, Merck and Company reflects its corporate values and guides in day-to-day decision making. Merck recognizes that the world is changing and they have to keep up with the changing demands. The company’s vision is “a commercially sustainable business that both increase the accessibility of products globally and helps build local capacity for quality, healthcare services for those who need them most. Background Merck and Company is an innovative, global healthcare leader that is committed to improving health and well-being around the world. Merck and Company is a very unique leader in its diversity outlook. The company, sort of like IBM, encourages diversity through their employees by: ...
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...MERCK AND RIVER BLINDNESS 1. Think about the definition of stakeholders — any parties with a stake in the organization’s actions or performance. Who are the stakeholders in this situation? How many can you list? On what basis would you rank them in importance? People suffering from the disease or those who potentially may be infected – would directly benefit from the cure Merck employees at all levels – profitability and the economic health of the company affects current employees Merck shareholders – inability to profit from the drug might have a negative effect on shareholder’s value, but taking the stand on “doing the right thing” might have a favorable effect on company’s reputation and increase the value of the stock Various healthcare organizations – Merck is one of the leaders in the industry whose actions or inactions may affect the state of the industry as a whole One way to rank stakeholders in importance is by their level of benefit from the drug putting people suffering from the disease in the first place as they would benefit the most from the invent of the cure. Then, employees and shareholders would share the second place, provided that the company would most likely not be able to recover funds invested in the long and expensive process of developing the drug which in turn would affect company’s profitability. Finally, various healthcare organizations would rank third; the effect on them would depend on the level of their involvement in the process...
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...Merck: Business Analysis Tamikiia Brown MGT521 July 11, 2011 Sharon Palmitier Merck: Business Analysis Merck is a flourishing research-driven pharmaceutical company, which discovers, develops, manufacturers, and promotes an extensive variety of human and animal health products. Although Merck is one of the biggest pharmaceutical companies of the world, they still come across problems today while striving to sustain a lead against its competition. Merck has achieved success with its lengthy history of breakthrough drugs and the development of three significant pharmaceutical products: antibiotics, vitamins, and hormones. Merck’s success relies heavily on its management and how they modify the business model in place to that of the ever-changing economy. Influence of Economic Trends The global pharmaceutical market is likely to undergo a wide variety of changes with new competition arising in India, China, Malaysia, South Korea, and Indonesia. This new competition has a growing economy and has made a difference between the product cost and disposable income of consumers. According to NASDAQ (2011),“ Global pharmaceutical market sales are expected to grow at a 4-7% through the year 2013 largely being driven by the growing access to health care in emerging economic regions” (para. 2-5). Short-term growth within this area is stimulated by the United States market, as it continues to be the largest pharmaceutical market in the world. A focal point on research and...
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...Merck’s Business Environment MNGT/521 University of Phoenix November 7, 2011 Kevin Wilhelmsen Merck’s Business Environment There are many factors a business, such as Merck, must have in order to be successful, for example strong financial statements, leading technology, and globalization. With the help of income statements, balance sheets, and cash flow statements, a financial analysis can be applied in a wide variety of situations to give business managers the information they need to make critical decisions (Financial Analysis, 2010). They also provide information in regards to the financial health of a company. Pharmaceutical companies are using technology to conduct clinical trials, which has proven to be beneficial to research, development, and the introduction of new products. Globalization is also important for Merck when it comes to product distribution. Outsourcing was been adopted by Merck in order to produce equal quality vaccines and medications at a cheaper cost. Review of Finances Analyzing a company’s income statement, balance sheet, and cash flow is a prime way in determining their success. A comparison can be made between the competition in the industry and a leader can be established. An analysis can also show which company is spending more on research and development and in turn, producing better products. After review of the income statements, Merck’s worldwide sales were $12 billion...
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...Case Study: Merck and the Vioxx Recall Kelvin Gabel Benedictine University Case Study: Merck and the Vioxx Recall According to Lawrence and Weber (2014), former Merck CEO George W. Merck implied a corporate vision of social responsibility for Merck & Co., Inc. (Merck) when he stated in 1950 that medicine was for the people and that loyalty to that concept would lead to greater profits. On the surface, it appears Merck has historically lived its declared mission of putting people first. This is demonstrated by the company forfeiting patent and profits from the antibiotic streptomycin and the drug Mectizan (Lawrence, 2014). Merck was well rewarded for its people first philosophy. Though it was ranked fifth in asset and market value, it ranked first in profits. Additionally the company had a stellar reputation of being perceived as the most ethical and socially responsible of the major drug companies (Lawrence, 2014). Today Merck Pharmaceutical’s mission statement is “to discover, develop and provide innovative products and services that save and improve lives around the world (Merck, 2015).” Reading Merck’s current mission statement lacks both the compassion of placing people first and the implied social responsibility of Mr. Merck’s statement in 1950. To be contextually correct historically in forming a view of Merck and the Vioxx recall issue, I sought to find a corporate mission statement from the period of the recall which was in 2006. According to Culp...
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...Course Project: Merck Pharmaceutical Sydney Momoh Tanika Thomas PM587 Prof. Susan Orr June 9th, 2012 Table of Contents 1.0 Introduction of Merck Company………………………………………………………..…..3 2.0 Organization Strategic Plan………………………………………..…………………………3 • Sustainability of loyal customers and employees • Change to meet customers demand • Growth will strengthen the company through acquisitions ……………………….4 3.0 Strategic Capacity Plan………………………………………………………………………4 4.0 Portfolio Management Process……………………………………………………………...5 • Capital Structure of Merck Group…………………………………………………6 5.0 Portfolio Selection Criteria …………………………………………………………………7 • Serono • Millipore • Integrated Chemicals 6.0 Program Management Plan ………………………………………………………………...8 7.0 Plan to Identify and Resolve Conflict ……………………………………………………..10 8.0 Change Management Plan …………………………………………………………………11 9.0 Resource Utilization Plan ………………………………………………………………….11 10.0 Reference Page …………………………………………………………………………….12 Introduction: We found pharmaceutical companies to be better fit for our project. This industry touches each person on this planet in one form or another and the work they are conducting in search of making every ones live healthier and live longer than our fore fathers. When we stacked up all pharmaceutical companies, we found Merck Corporation to meet all of the criteria that we were looking for in a pharmaceutical industry. Merck have conducted many projects concurrently during drug developments...
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...| Merck-Medco | Analysis of an Acquisition | | | | | Merck-Medco Acquisition Analysis Executive Summary: Recommendation It is recommended that Merck tender a cash bid of $6.6 Billion dollars to acquire Medco Containment Services Inc. Marketing & Sales Considerations Medco currently maintains relationships with employers, plan sponsors, and managed care organizations and services over 33 Million individuals. The information collected on physician prescription practices, and patient records and refill tendencies will allow Merck to target their sales and marketing efforts to more effectively reach target markets. In addition, the data collected will be used to identify competitor drug deficiencies and pricing. Operational Considerations A combined Merck/Medco company would result in the control of the entire drug manufacturing and selling process. Merck would have the ability to manufacture drugs specific to each patients needs with collected information being used to research and develop new drugs for sale. Due to the vertical nature of this acquisition Merck will continue to be run independently of Medco so that each division can focus on executing on their strengths within the industry. Overlapping operations, such as marketing and sales, will be consolidated at an estimated after acquisition savings of $1 Billion. Financial Considerations As mentioned, it is recommended that the tendered bid be comprised of all cash. While this will...
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...C Marginalized APC Inc. Top 10 BioPharma Companies: Key Annual Financial Metrics APC $ (mil) Net Sales Cost of Products Sold $19,152 $5,098 26.6% % Genentech $ (mil) $36,017 $9,797 27.2% % Amgen $ (mil) $14,642 $4,070 27.8% 72.2% 18.1% 8.3% % Novo Nordisk $ (mil) $9,566 $2,506 $7,060 $1,636 $890 26.2% 73.8% 17.1% 9.3% % Merck Serono $ (mil) $7,454 $2,020 $5,434 $1,327 $581 27.1% 72.9% 17.8% 7.8% % Baxter BioScience $ (mil) $5,573 $1,494 $4,079 $1,031 $568 27% 73.2% 18.5% 10.2% % Biogen Idec $ (mil) $4,247 $1,249 $2,998 $824 $446 29.4% 70.6% 19.4% 10.5% % Genzyme $ (mil) $3,562 $1,104 $2,458 $705 $349 31.0% 69.0% 19.8% 9.8% % CSL Ltd.* $ (mil) $3,211 $967 $2,244 $581 $350 30.1% 69.9% 18.1% 10.9% % Allergan $ (mil) $1,310 $385 $925 $258 $152 29.4% 28.2% 27.0% 70.6% 71.8% 73.0% 19.7% 18.5% 17.8% 11.6% 9.8% 9.0% % Top 10 Top 5 % % Gross Margin $14,054 73.4% $26,220 Marketing, Selling and Administrative $3,508 18.3% $6,447 Advertising and Product Promotions $2,209 11.5% $2,917 Total SG&A Research and Development Operating Margin Total Expenses $5,717 29.9% $3,464 18.1% $4,873 72.8% $10,572 17.9% 8.1% $2,650 $1,215 $9,364 26.0% $6,591 18.3% 28.5% $3,865 26.4% $2,606 $4,100 17.8% 28.0% $2,525 26.4% $1,856 $2,678 19.4% 28.0% $1,908 25.6% $1,312 $2,214 17.6% 29.7% $1,599 28.7% $1,003 $1,477 18.0% 26.5% $1,270 29.9% $756 $973 17.8% 22.9% $1,054 29.6% $616 $787 17.3% 22.1% $931 29.0% $706 $607 22.0% 18.9% $410 31.3% 28.3% 26.9% $288 $227 22.0% 18.8% 18...
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...day goal of launching the marketing blitz. Situation Analysis Issue and Opportunity Identification The current organizational structure does not support the new strategy. The current sales staff lacks the skill set to excel in the future company focus. “High-performing firms display a greater commitment to training and skill development than their lower-performing counterparts. This practice, a core HRM activity, is related to other ideas about the need for continuous improvement and development over time. Thus, firms must take care to select people with the ability and willingness to learn and develop, and they must establish reward practices that encourage employees to participate in training activities.” (Dreher & Dougherty, 2001, ch.1, p.13-14). Organizational behavior should be monitored and controlled as much as possible. Identifying job candidates who possess not only the ability to be top performers but also the motivation to work hard and the desire to stay at a company represents another difficult challenge. Both the motivation to perform and the motivation to stay are determined by a complex interaction between the outcomes associated with each type of...
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