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•
Richard T. Clark, President &
CEO
History
Slogan
History
History
History
History
Organizational Hierarchy
Vaccine Segment
Mission Statement
Mission Statement
Goals/Objectives
• EMPLOYEE-RELATED GOALS:
• Implement or improve the Talent Management Process to identify
and promote talented employees.
• Increase the proportion of women in senior management positions
• Environmental goals
• Achieve an ISO 14001 Group certificate by the end of 2010.
• Increase waste recycling ratio (recycled waste: total waste) by20% to
at least 57% by 2010.
• COMMUNITY GOALS:
• Combat drug counterfeiting by supplying the compact
mobile laboratory GPHF-Minilab®.
•
PESTLE analysis
• POLITICAL:
• Political instability and a deteriorating law and order situation in the
country are other concerns. The drug manufacturers find it
extremely difficult to cope with the situation.
•
ECONOMIC:
• Almost 95% of raw materials used by the pharmaceutical industry of
Pakistan are imported from different parts of the world. The rapid
devaluation of the Pakistan Rupee against major currencies of the
world, (e.g. 60% against USD) has made the imported raw
materials much costlier.
• Social
• With its large population, growing economy and increasing health
awareness among the population, Pakistan should be regarded as a
significant emerging market for pharmaceutical firms
PESTLE ANALYSIS:
• TECHNOLOGICAL:
• Technologically this industry is facing some
problems like lake of electricity, repair of latest
equipments and research environments.
• LAW:
• In pharmaceutical industry the Intellectual
Property Protection is a major concern
regarding law.
PORTER’S 5 FORCES MODEL:
• Rivalry among Existing Firms:
• the rivalry among the existing firms is high and
these firms are one to one competing with each
other in every area.
• Threat of new entrants
• Huge investment, a large number of competitors, political
instability, government regulations, laws and a huge
amount for research and development are some of
many threats for a new entrant in pharmaceutical
industry so the threat of new entrants is low in this
industry
• Threat of substitutes:
• patents for the new medicine formulas that this medicine
will be produced only by a particular company having
the patent. So in the case of many medicines it is low
and as a whole It is moderate.
•
• Bargaining power of customers
• Bargaining power is low because customers are not very
aware of medicines and only use the particular
medicine prescribed by the doctors.
• Bargaining power of suppliers
• As in Pakistan about 95% of raw material for the
medicines is imported from countries such as china,
India, Germany, Japan, United Kingdom and
Netherlands. Many companies started producing it
locally so the bargaining power of supplier is low as
there a large number of suppliers available in the
market.
Strategy Formulation
Framework
Stage 1: The Input Stage
Internal Factor Evaluation Matrix
Internal Factor Evaluation
Matrix
Key Internal Factors Weight Rating Weighted
Score
Strengths
•Strong R & D. .20 4 .80
•Highly Experienced Top Management having a wealth .10 4 .40
Weaknesses
of knowledge. .
•Goodwill as CSR. .10 4 .40
•Dissatisfied employees & shareholders. .15 .15
•New Products are very successful. .10 3 .30
•Expensive medicines because of advertisement .15 13 .45
•Regular Innovation -1st Mover Advantage. .05 .15
expenses. 3
•Revenue is dropped by 50% in 2003. .10 .30
•Lack of Product Diversity. .05 3 .15
3
Total
1 . 00
3 . 10
External Factor Evaluation Matrix
External Factor Evaluation
Matrix
Key External Factors Weight Rating Weighted
Opportunities Score
•Increase in Aging Population . .20 3 .60
•Global expansion . .20 2 .40
•High Growth Rate Industry ( 8 . 4 % rate ).
•PhRMA
.05 3 .15
offered voluntary advertisement .
.10 2 .20
Threats
•Litigation & investigation Issues . .15 4 .60
•Competitors . .15 3 .45
•Changing Govt . regulation .
•Patent Expiry of medicines.
.10 3 .30
.05 3 .15
Total
1 . 00
2 . 85
Competitive Profile Matrix (CPM)
Competitive Profile Matrix
(CPM)
Merck Co. Pfizer Inc. J & J Inc.
•
• Merck proactively promote the
public interest by
encouraging :
– Community growth &
Development,
– Voluntarily eliminating
practices that harm.
• Nearly $ 26 million spent:
– Tsunami in in southeast
asia, 26th Dec. 2004.
– Earthquake in Pakistan
8th oct 2005.
•
http://www.duke.edu/web/soc142/team2/images/merck2.jpg
SWOT Matrix
SWOT Matrix
•Joint Ventures With Pfizer & J & J. (O3) competitors for Joint ventures .( S2 , S4 , Through Joint Ventures With J & J .
•High Growth Rate Industry (8.4% Rate). O3 ) ( O3 , w3 ).
•Through Innovation , Merck Can Get More
(O4)
Market Share . ( S3 , O4 ).
Threats------t ST Strategies ---- s WT Strengths ----- s
•New CEO Should Handle Litigation •Merck Can Make Short & Long - term
•Litigation & Investigation Issues .
( T1 ) Issues With His Experience . ( S1 , T1 ). Agreements With Its Competitors To
•Strong R & D Can Be Used To Compete Make Its Employees & Shares Satisfied .
•Competitors . ( T2 )
I II III
EFE Total W . Score
IV V VI
4.0
2.0
VII VIII XI
1.0
3.0
BCG Matrix
BCG Matrix
Serono
Wintogeno
BCG matrix(Pakistan)
Erbitux Diabion
Flexagel saizen
Nasvin
Zetia
The Grand Strategy Matrix
The Grand Strategy Matrix
Rapid Market
Growth
III IV
Competitive
Position
Slow Market
Growth
Stage 3: The Decision Stage
The Decision Stage
Quantitative Strategic Planning
Matrix (QSPM)
QSPM of Merck Co.
Joint Ventures withRestructuring
J&J. for
reducing costs.
Threats
•Litigation & investigation Issues. .15 - -
•Competitors. .15 3 .45 1 .15
•Changing Govt. regulation. .10 2 .20 1 .10
•Patent Expiry of medicines. .05 1 .05 3 .15
Strengths
•Strong R & D. .20 4 .80 3 .60
•Highly Experienced Top Management having a wealth of knowledge. .10 3 .30 3 .30
•Regular Innovation -1st Mover Advantage. .05 3 .15 3 .15
•New Products are very successful. .05 4 .20 3 .15
•Goodwill as a CSR. .15 1 .15 1 .15
Weaknesses
•Dissatisfied employees & shareholders. .15 1 .15 1 .15
•Expensive medicines because of advertisement expenses. .15 1 .15 4 .60
•Revenue is dropped by 50% in 2003. .10 2 .20 1 .10
•Lack of Product Diversity. .05 2 .10 2 .10
• Merck having a corporate culture that creates trust and makes innovation possible, a strong
customer focus, responsible handling of natural resources, and social commitment have always
been the keys to Merck’s success.
• In April 2007, the Executive Board enacted the Merck Social Charter. This is binding on the entire
Merck Group. It reinforces our claim to treat all employees fairly and in compliance with local
laws and regulations. In the following areas, we have committed ourselves to certain standards
that apply to all our sites worldwide:
• • Wages and salaries
• • Working hours
• • Freedom of association
• • Non-discrimination and equal opportunity
• • No child labor
• • No forced labor
• • Prevention of abuse and harassment
• • Prevention of bribery and corruption
• Our success is based on courage, achievement, responsibility, respect, integrity, and transparency.
These values determine our actions in our daily dealing with customers and business partners
as well as in our teamwork and our collaboration with each other." By believing in Courage,
achievement, responsibility, respect, integrity, and transparency
STRATEGIES UNDERTAKEN AT THE
• Corporate level
• Each year, typically in the summer, senior top management set aside a
specific period to develop, discuss and refine the Company’s long-
range operating plan and overall corporate strategy. In the fall, the
Board typically reviews the Company’s overall annual performance
and considers the following year’s operating budget and capital
plan.
• BUSINESS UNIT LEVEL
• To keep in touch with employee perspectives about our culture, Merck
conducts an annual Culture Assessment that measures Merck’s
progress toward becoming a high-performance organization
• FUNCTIONAL LEVEL
• Merck implemented a global flexible work arrangement policy and
launched tools to increase access to such arrangements worldwide.
• Merck outlined steps in the Company’s ongoing efforts to reduce its
cost structure, increase efficiency and enhance competitiveness as
part of our overall strategy to regain an industry leadership
position
• As part of the 2008 restructuring program, Merck expected to
eliminate approximately 7,200 positions – 6,800 active employees
and 400 vacancies – across all areas of the Company worldwide by
the end of 2011.
•
MANAGEMENT STRATEGIES
• HRM
•Merck Serono, a division of Merck, Germany, announced that it has won
9.7% in the first quarter of 2008 - which was faster than that of the
overall pharmaceutical market.
• Decision Making
• Merck is constantly faced with tough decisions on which products to
invest in and how to allocate resources to functional areas. All
these decisions are made under mounting pressure from the
environment, with limited resources and staff, and with
substantial uncertainties over drug discovery and development
• TQM
• Merck believes that all world should have access to quality, affordable
health insurance coverage.
• Merck believes that action toward health system reform and coverage
for the uninsured should be built on the following broad
principles:
• Motivation and incentive techniques
Motivation & Incentives:
•
•
• PRICE:
• In high income countries Merck is having competitive prices.
• In middle income countries, Merck provides vaccines at significantly
reduced prices, while in the least developed countries of the world,
•Merck sells our two of our vaccines, GARDASIL and ROTATEQ, at
•
Products of Merck Co.
• VACCINES
– RotaTeq
– COMVAX
– M-M-R
Products of Merck Co. (Pak)
• Competitive analysis
• If we see in global market Merck has some major
competitors .e.g. GSK, Sanofi Pasture, Wyeth having
23%, 26% and 12% market share respectively. And
merckis having 16%(2009)
• The Merck/Schering-Plough tie-up would give the
group 5.6 per cent of the world's pharmaceuticals
market, pushing GSK into third place in the global
league, with a 5.4 per cent share, according to
Datamonitor/IMS Health.
tie-up would give the group 5.6 per cent of the world's pharmaceuticals market, pushing GSK into third place in the global league, with a 5.4per cent share, according
• MARKET SHARE:
•
REVENUES:
•
• LIQUIDITY
•
DEC 31st 2009 DEC 31st 2008 DEC31st 2007 DEC31st 2006
• R&D:
• Merck has always invested heavily in research and development. n
2005, it amounted to € 713 million, in 2006 to € 752 million.
Around 80% of our R&D spending is attributable to the
Pharmaceuticals business sector, which has an R&D budget of
approximately € 1 billion following the integration of Serono. Our
R&D activities focus on future trends and the needs of society. It is
also the key growth driver of business. Merck invested almost $5
billion annually on R&D in 2006, 2007 and 2008.
• Merck’s R&D model is designed to increase productivity and improve
the probability of success by prioritizing the resources of Merck
Research Laboratories.
• PROCUREMENT:
• Merck’s Global Procurement department introduced new Detailed
Supplier Ethical Assessment questionnaire for suppliers of new
products and services globally.
•
year
•
2008 2007 2006 2007
• procurement 100
Merck
employees who have 100 100 0
•
been trained in
supplier diversity (%)
•
• Achieve 100 percent completion of Merck’s pre-selection Detailed
Suppliers Ethical Assessment by potential suppliers of new
business globally by 2010.
• PRODUCTION:
• Merck is committed to seeking ways to reduce the cost of our
medicines and vaccines, and thus increase affords ability and
access.
• Merck’s supply strategy combines the best skills and talents of our
internal manufacturing organization with those of external
manufacturers who provides with specialized skills and/or
expertise and types of manufacturing services
• In recent years, we have concentrated our internal manufacturing
capabilities on core competencies and leveraged external
capabilities. This focus has, and will continue to, shift some
operations historically conducted internally to our external
suppliers. We currently project that external manufacturers will
eventually provide up to 35 percent of Merck’s manufacturing
volume.
•
CONTROL PROCEDURES
• MARKETING CONTROL:
•
• Evaluation of solutions:
• By making above solutions for Merck’s problems,
there will be a better image of the company in
eyes of employees, customers and stakeholder.
•
•
Recommendations
Recommendation
Recommendation