AstraZeneca Pharmaceutical industry Case Study Assignment Help

AstraZeneca Pharmaceutical industry Case Study Assignment Help

Table of Contents

  1. Summary
  2. Introduction
  3. Competitive Factors of Pharmaceutical Industry
  4. Process of Strategic Analysis

4.1.1. Pfizer\Pharmacia:

4.1.2. GlaxoSmithKline:

4.1.3. Merck Co.:

4.2. Porter’s Five Forces Analysis for Pharmaceutical Industry:

  1. Key Business Strategies
  2. Resources of AstraZeneca

6.1. Physical Resources:

6.2. Human Capital:

6.3. Financial Capital:

6.4. Intellectual Capital:

6.5. Social Capital:

  1. Capabilities of AstraZeneca
  2. Alignment of the Resources and Capabilities with the Business Strategies
  3. References
  4. Appendices

10.1 Appendix A

10.2. Appendix B

 

  1. Summary

This case study assignment help report conducts a strategic and competitive analysis of AstraZeneca, a firm operating in the Pharmaceutical industry of UK. This report discusses about the various participants and their competitive strategies to survive in the industry.

This report also provides a detail analysis of the AstraZeneca’s key strategies, resources and capabilities. In order to evaluate the industrial environment and competitive environment, a five forces analysis is also done in this report. According to the evaluation of competitive environment of Pharmaceutical industry, the competition is aggressive in the industry and firm should adopt innovative strategies to compete and to create sustainable competitive advantage.

  1. Introduction

AstraZeneca is one of biggest pharmaceutical and biologics Company in pharmaceutical industry. The company aims to make the lives of people better by providing them effective and affordable medicines. The company came into existence with the merger of Astra AB and Zeneca Group plc on 6 April 1999 (AstraZeneca: About Us, 2010). ( Now you avail marketing assignment help from our most experienced writers)

AstraZeneca provides new and innovative health care equipments applicable in different medical fields like gastrointestinal, cardiovascular ailments, infection, neurological and psychiatric, etc. The R&D Headquarter of the company is situated in Sodertalje, Sweden.

  1. Competitive Factors of Pharmaceutical Industry

Due to the significant development in new technologies and innovative R&D strategies, the structure of Pharmaceutical industry has changed. Presently the world pharmaceutical industry has become highly competitive and non-assembled (Kesic, 2009).

The pharmaceutical industry has witnessed a very tough and intense battle that exists among the prominent organizations. As the entry barriers are very high for the new entrants due to the requirement of huge capital investment, the nature of competition among the existing players is also very aggressive (House of Common Health Committees, 2005).

At the same time, many pharma companies are focusing their attention on the development of new drugs.  Development of new drugs require huge capital, lots of time, and expertise. Another competitive factor is the patent and copyright regulations. It is really very difficult to get patents and copyrights for the particular medicine (Rao & Ghauri, 2004). Threat of copy of products is also an issue in this industry (Wold-Olsen, 1998). In addition, the companies also have a threat of having adverse effects to the patients from their medicines that increases competitive pressure to invest big amount in R&D department.

Technological advancement, availability of wide range of medicines, introduction of new therapeutic fields, marketing and adverting strategies of companies, globalization, etc. are some important factors that increases competitiveness of global pharmaceutical industry (Kesic, 2006).

  1. Process of Strategic Analysis

In order to complete the strategic and competitive analysis of AstraZeneca Inc. a strategic analysis is conducted. This strategic analysis comprises the evaluation of the competitors and their strategies and porter’s five forces analysis to analyze the competitiveness of the Pharmaceutical industry.

4.1. Evaluation of the Leading Participants and their Strategies:

The top competitors of AstraZeneca and leading participants of the world pharmaceutical industry are as below –

4.1.1. Pfizer\Pharmacia:

In July 2000, when the merger between Warner-Lambert has taken place, Pfizer has become the top company of pharmaceutical industry. One of the biggest strengths of Pfizer is its broad product range and target market. The Company has a huge potential for its growth because of the presence of thirteen broad categories of leading products (Pfizer Inc.: About Us, 2010). The merger of Pfizer Inc. and Pharmacia Corporation was announced in April 2003 and the cost of this merger was calculated around $60 billion (2003: Pfizer and Pharmacia Merger, 2010). After this announcement, it has been evaluated the new entity would control approximately 11% pharmaceutical market all over the world and the revenue of the company would increase from$32 billion to $46 billion (Stamper, 2005). The merger was also approved by the European Commission. Commission and it has put a clause, in order to manage the anti-competitive charges, that the firm should divest it pharmaceutical operations in 9 countries. The business area of Pfizer is very large as the company deals in more than 150 countries of the world (Pfizer Inc.: About Us, 2010).

4.1.2. GlaxoSmithKline:

GlaxoSmithKline was created due to the merger of GlaxoWellcome and SmithKline Beecham in 2000. It captures third position in the world pharmaceutical industry and 7% market shares of global pharmaceutical industry (GlaxoSmithKline: About Us, 2010). It has gained largest shares in many therapeutic fields that comprises over-the-counter as well as vaccines. Apart from the market of North America, GSK is more profitable in comparison to Pfizer (The History and Analysis of the Pharmaceutical Industry, 2003). In the European market, the annual sale of GSK was estimated around $6 billion, whereas Pfizer’s sales were only $3.8 billion. In the market of Africa, Asia and Australia, the market share of Pfizer and GSK are closed to each other (The History and Analysis of the Pharmaceutical Industry, 2003).

4.1.3. Merck Co.:

Merck is also one of the world’s largest companies. Market share of this company is low from Pfizer and GSK, but the aggressive marketing strategies used by the firm can beat the position of leading companies also (Merck Co.: About Us, 2010). In the last 5 years, the company has singed more than 50 deals to strengthen its power. It has executed the strategy of targeting physicians to influence treatment decisions that finally affect customers or the patients. Instead of focusing on competitor’s products, the firm concentrates on breakthrough drugs (The History and Analysis of the Pharmaceutical Industry, 2003). Although the product pipeline of the company is weak in comparison to its competitors but firm have enough resources to compete.

In addition to this management assignment help experts, some other participants in the pharmaceutical industry are Sanofi-Aventis, Novartis, Abbott Laboratories, Wyeth, Eli Lilly, etc. The ranking of the companies according to the revenue is shown in the Appendix B. 

4.2. Porter’s Five Forces Analysis for Pharmaceutical Industry:

Threat of New Entrants: In this industry, entering of new company is very difficult, because of patent regulations and limitations. High investment cost for R&D department is also a reason (House of Common Health Committees, 2005).

Bargaining Power of Customers: Bargaining power of customers is quite low because the medicine is always prescribed by the professionals and consumer cannot take their own decisions (Gassmann, Zedtwitz & Reepmeyer, 2004).

Threats from Substitutes: Due to the patent and copyright regulations, threats from substitute products are low. But if the patent of the products has expired then it is a medium level threat of substitute products (Kesic, 2009).

Bargaining Power of Suppliers: Power of supplier is also low due to the availability of many suppliers (The Global Pharmaceutical Industry: International Trade and Contemporary Trends, 2007).

Rivalry among Current Players: Although the competition is very tough, but the first mover can gain advantage to get patent for the new medicine (Agrawala, Calantoneb & Nasonb, 2001).

The industry is highly valuable and advantageous for the current players. It has numerous opportunities to earn good profits. Due to the high competition among the current players, the future potential of success in this industry is very high (figure in Appendix A).

  1. Key Business Strategies

According to the framework of porter’s generic business strategies, main strategies used by the business organizations are cost leadership strategy, differentiation strategy and focused strategy over the past five years (Johnson, Scholes & Whittington, 2008).

AstraZeneca’s business strategies are very innovative and altered continuously for the provision of good values to the stakeholders and shareholders of the company (AstraZeneca: About Us, 2010). It is the leading company, which has a wide range of medicines in almost all areas of healthcare. Following are the key business strategies of AstraZeneca that it implemented in last five years:

5.1. The company mainly focuses on six therapy areas, which are cancer, cardiovascular, gastrointestinal, infection, and neuroscience and respiratory & inflammation (AstraZeneca: About Us, 2010). According to the porter’s generic strategies, the company continuously concentrates on the product differentiation strategies. In this concerned, the firm has introduced a new drug Nexium (esomeprazole) to differentiate its product category (Dubey & Dubey, 2009). This drug supports to provide relief to heartburn symptoms. The firm pursued for this strategy to give a competition to other pharmaceutical players like Teva (Hirschler, 2010).

5.2. The product portfolio of AstraZeneca is very broad, which comprises the product with high potential such as Arimidex for cancer, Nexium for gastrointestinal disease, Symbiotic for asthma and chronic obstructive pulmonary disease and Crestor for cardiovascular, etc. (AstraZeneca: Annual Report of 2009). The company is also using the cost leadership strategy according to Porter’s framework. In the gastrointestinal (GI) drugs market, the firm defense itself as market leader (Syeda & Purkayastha, 2008). The acid related disorder market is dominated by the company through cost leadership strategy. The company was pursued this strategy to create high entry barriers for the new entrants and competitive advantage over the other players. This strategy enabled the company to attract a wide range of consumers (Dubey & Dubey, 2009).

5.3. The company has innovative scientific and commercial capabilities. The firm is continuously working to achieve integrity and ethical standard for the benefits of the society (Research responsibility of AstraZeneca, 2010). The company also concentrates on focused strategy and expansion of market. According to this strategy, the company focuses on the notion of branded generic that allows the firm to target small and midsized market to maximize growth and maintain variations in the product range (AstraZeneca Outlines Branded Generics Strategy at Emerging Markets Event, 2010).

In addition, the company has also implemented some HR and marketing strategies to manage its successful performance such as –

5.4. For every working day, the company spends around $16 million on its R&D department for the innovations of new medicine to fulfill the requirement of patients (Va, 2002).

5.5. The company is following the concept of workforce diversity. Approximately, 51% of employees belong from Europe, whereas 27% from America and rest are from Asia, Australia and Africa (Ericson, 2009).

  1. Resources of AstraZeneca

In order to cope with the competitive environment of pharmaceutical industry, the firms should have some resources and capabilities to achieve long term success and growth. Resources of AstraZeneca are as followed:

6.1. Physical Resources:

Physical resources can be defined as the buildings, equipments, machineries, etc. AstraZeneca is very rich in physical resources.  Company has different small molecule facilities in different countries such as Alderley Park, Macclesfield and Charnwood in UK, Lund, MoIndal and Sodertalje in Sweden and Waltham, Massachusetts and Wilmington, Delaware in the USA (AstraZeneca: About Us, 2010). In addition, some other sites are situated in Canada and France also.

The Company also has a facility in Osaka, Japan for the clinical development. In Maryland, California and Cambridge, the firm has major sites of biologics and vaccines (Ericson, 2009). In addition, company has expanded its R&D facilities in Asia Pacific also. The company has also started a center of innovation in China in 2007. Another research facility of AstraZeneca is presented in Bangalore, India. This facility supports the firm to increase its operations in Indian market. These are the threshold resources of the firm that helps to achieve the objective of low cost strategy. It is because; the increase in physical resources declines the cost of production and helps to achieve the cost leadership.

6.2. Human Capital:

Human resource is concerned with the experience, skill, temporary workers, training and quality of work life, the HR administration and remuneration benefits (Butler, 2002). AstraZeneca has many powerful R&D teams that work in eight countries. Each R&D team have around 11, 600 people. All the employees of the company are highly qualified and talented to survive in the competitive environment of pharmaceutical industry as teams are quite better than the competitors (AstraZeneca: Annual Report of 2009). Around 62000 employees work with the company all over the world (AstraZeneca: About Us, 2010).

6.3. Financial Capital:

In teenue of the firm is approximately $32,804 million (Condensed Consolidated Statement of Comprehensive Income Statement of AstraZeneca, 2010). According to the sales and revenues, it captrms of financial resources, the company is very strong. At the end of fiscal year 2009, annual revures seventh position in the global pharmaceutical industry (Fortune: Global 500).

6.4. Intellectual Capital:

Intellectual capital resources comprise goodwill and corporate image of the firm. AstraZeneca is one of the biggest pharmaceutical firms with a strong corporate image and goodwill (Rao & Ghauri, 2004). Company has achieved many awards such as regarding employment rewards, innovative and broad product range for the patients, quality for research and development department, community support, etc. (AstraZeneca: Awards & achievements, 2010).

6.5. Social Capital:

The social capital can be described as the relations with the suppliers and buyers. Company is also rich in this resource. In order to maintain good relationship with the suppliers, company has implemented a process of procurement, which has four steps: assessment, communicate, contract, and management (Eriksson, 2008).

  1. Capabilities of AstraZeneca

Capability is defined as the ability to incorporate the resources of the firm effectively.  This capability is derived from intricate interactions among the firm’s brand equity as well as tangible and intangible resources.

7.1. The history of AstraZeneca effectively demonstrates the long term success and strengths of company in R&D and innovations. The R&D department has the capabilities to enhance the market for the firm in both biologics and vaccines (AstraZeneca: Leading biologics and vaccines capabilities, 2010).

7.2. The company has the capabilities to develop high extent of relations in the global as well as local market. The executive leadership team of AstraZeneca take into account all the favorable opportunities available in the market with the inclusion of its operational accuracy, speed and collaboration (Kesic, 2009).

7.4. The cross functional R&D teams of the company is also capable to integrate their skills and abilities to ensure the development of effective medicine for the rare diseases and healthcare problems (Ericson, 2009).

7.5. The company has capabilities to organized clinical programs and trainings to concentrate on the development of potential medicines. By using its financial as well as human resources the company has enhanced its clinical research capabilities (AstraZeneca Enhances Clinical Research Capabilities in China with First Clinical Pharmacology Unit, 2007).

  1. Alignment of the Resources and Capabilities with the Business Strategies

The resources and capabilities of the firm develop core competencies for it. These competencies help the management to align the business strategies with the firm’s resources. Company has aliened its resources and capabilities to its business strategies at the high level. In order to implement the product differentiation strategy, firm has enough financial and HR resources. The R&D team of the firm has also potential to research the new era for the development of biologics and vaccines (Ericson, 2009).

In addition, the focus strategy of the firm is also aligned with its resources and capabilities. The company is able to utilize the technological advancements and facilities to match the level of clinical needs and regulations of the external environment such as political and social (AstraZeneca: Leading biologics and vaccines capabilities, 2010).

In addition to this Case Study Writing, the company and its expert team are also committed to deliver regularly new and effective medicines for the long and healthy life of patients. Due to the enough resources and capabilities, it has been established its presence in more than 100 countries including UK and USA successfully (AstraZeneca: Annual Report of 2009). The company is also focusing on the cost leadership strategy due to the enough financial resources.

  1. References

Agrawala, M., Calantoneb, R. & Nasonb, R.W., 2001, Competitiveness in the Global Pharmaceutical Industry: The Role of Innovation, Journal of Research in Pharmaceutical Economics, Vol. 9, No. 1, pp. 5 – 32.

AstraZeneca: Annual Report of 2009, 2010, viewed 17 September, 2010 <http://www.astrazeneca-annualreports.com/2009/>

AstraZeneca: About Us, 2010, History, viewed 17 September, 2010 <http://www.astrazeneca.com/about-us/history/>

AstraZeneca: Awards & achievements, 2010, viewed 18 September, 2010 <http://www.astrazeneca-us.com/careers/?itemId=6591245>

AstraZeneca: About Us, 2010, Research and Projects, viewed 17 September, 2010 <http://www.astrazeneca.com/research/focus-on-disease/>

AstraZeneca: About Us, 2010, Strategy and Vision, viewed 17 September, 2010 <http://www.astrazeneca.com/responsibility/strategy-vision/>

AstraZeneca: About Us, 2010, What we Do, viewed 17 September, 2010 <http://www.astrazeneca.com/about-us/>

AstraZeneca Enhances Clinical Research Capabilities in China with First Clinical Pharmacology Unit, 2007, September 4, viewed 21 September, 2010 <http://www.astrazeneca.com/media/latest-press-releases/2007/5344?itemId=3891536>

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Butler, G., 2002, September 4, ‘Strategic trends facing the pharmaceutical industry and their implications for marketing skills development’, International Journal of Medical Marketing, Vol. 3, No. 1, pp. 65-68

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Ericson, M., 2009, November 26, ‘Management of Restructuring: AstraZeneca’, HR Sweden Operations, viewed 18 September, 2010 < http://arenas.itcilo.org/countries/sweden/case-studies/astra-zeneca-ab-mats-ericson>

Eriksson, P.E., 2008, Achieving Suitable Coopetition in Buyer-Supplier Relationships: The Case of AstraZeneca, Journal of Business-to-Business Marketing, Vol. 15, No. 4, pp. 425-454.

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 List of Participants in Global Pharmaceutical Company and their Ranking according to the Revenue

 

 

REVENUES PROFITS
Rank Company Global 500 rank $ millions % change from 2007 $ millions % change from 2007
1 Johnson & Johnson 103 63,747 4.3 12,949 22.4
2 Pfizer 152 48,296 -0.3 8,104 -0.5
3 GlaxoSmithKline 168 44,654 -1.7 8,439 -19.1
4 Roche Group 171 44,268 9.8 8,288 1.9
5 Sanofi-Aventis 181 42,179 5.5 5,637 -21.8
6 Novartis 183 41,459 4.2 8,195 -31.4
7 AstraZeneca 268 31,601 6.9 6,101 9.0
8 Abbott Laboratories 294 29,528 13.9 4,881 35.3
9 Merck 378 23,850 -1.4 7,808 138.4
10 Wyeth 401 22,834 1.9 4,418 -4.3
11 Bristol-Myers Squibb 435 21,366 7.0 5,247 142.4
12 Eli Lilly 455 20,378 9.4 -2,072 -170.2

From the July 20, 2009 issue (Fortune: Global 500, 2009)

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