Communication Process of NOVARTIS

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CHAPTER 01 - INTRODUCTION

1.1 INTRODUCTION

Bangladesh pharmaceutical industry is mainly dominated by domestic manufacturers. Of the

total pharmaceutical market of Bangladesh, the local companies are enjoying a market share

reaching around 80%, while the MNCs are having a market share of 20%. Out of the top ten

pharmaceutical companies in Bangladesh, eight are local pharmaceutical companies, while

only two are MNCs. There are several sectors on which Bangladesh can be proud of and

undoubtedly the pharmaceutical sector is one of these sectors, rather it is the sector, which is

the second-largest contributor to the government exchequer.

Novartis International AG is a multinational pharmaceutical company based in Basel,

Switzerland, ranking number one in revenues, which accounted over $53 billion in 2008, and

number three in sales, which accounted 36.172 billon in 2008. Novartis is one of the largest

healthcare companies in the world and a leading giant among pharmaceutical companies.

Novartis produces medications for many diseases, cancer and cardiovascular medications that

make up the bulk of sales. These medications include blockbuster drugs Gleevec and Diovan,

which will benefit people who are more susceptible to cancer or cardiovascular problems. In

addition to their current drugs, Novartis has one of the strongest pipelines in the

pharmaceutical industry, with over 50 new products set to premier in the next several years.

In 1973 the Ciba Geigy (Bangladesh) was registered as a joint stock company (Novartis

Bangladesh website). It then launched researched pharmaceutical products in the Bangladeshi

market. In 1986 Ciba Geigy introduced its first generic product in the Bangladeshi market,

Servipham. The company began to export its products from Bangladesh in 1995. In 1997,

Ciba Geigy and Sandoz merged to form Novartis (Bangladesh) Limited and introduced its

first OTC product. In 2000, Novartis (Bangladesh) Limited became the first pharmaceutical

company in Bangladesh to be awarded the EU GMP certification.

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1.2 SCOPE & OBJECTIVES OF THE STUDY

My broad objective is to know the multinational companies internal and external

communication process in both home and host country. What is the marketing policy that

they apply for success in the host country? How a multinational company adapt in the host

country culture.

The scope of this term research paper is to present the text contents from different source

rather than fully textual basis. The company‘s website, company profile by employees are

found to complete this term research paper. The scope of arranging the term research paper is

condensed that the scope is only limited to secondary source of cyber information.

1.3 METHODOLOGY OF THE STUDY

As I mentioned earlier, that the prime source for the term research paper content is the

secondary source called internet. It is really not easy to find the ultimate information from

internet. The searching criteria must be different. There are various types of PDF and

document files which contain only the text I have typed in the search box but the rest of the

file is totally useless for the term research paper. The search for Power Point Slides also helps

to understand the main points and probable information which I need to present on the term

research paper. The PowerPoint also helps to get the graphs and statistics in an easy way.

1.4 LIMITATION OF THE STUDY

There are few limitations of this report for which the findings of the study may not represent

the complete scenario of the positioning activities. The limitations are summarized below:

The Marketing and Finance Departments are core units of the Pharma division of

Novartis. So most of the information is confidential and is not communicable

publicly.

Most of the tasks of this unit involve negotiating with the third parties (Clients)

which require being an employee of Novartis Pharmaceuticals. So, as an Internee, I

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could not participate in those activities directly, I just had the basic concepts from

interviewing.Novartis (Bangladesh) Limited has three core divisions working in

Bangladesh i.e.

Pharmaceuticals (branded and patented products), Sandoz (generic products) and

Consumer Health. As the Internship was performed in the Pharmaceutical division,

the strategies of the other two divisions were not included in this report.

In the following parts of this report, various aspects of Novartis (Bangladesh) Limited are

illustrated and the full work flow of the Marketing department is described.

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CHAPTER 02 - DISCUSSION : AN OVERVIEW OF NOVARTIS

2.1 AN OVERVIEW NOVARTIS GLOBAL

Novartis International AG is a multinational pharmaceutical company based in Basel,

Switzerland, ranking number one in revenues, which accounted over $53 billion in 2008, and

number three in sales, which accounted 36.172 billon in 2008. Novartis is one of the largest

healthcare companies in the world and a leading giant among pharmaceutical companies.

Novartis produces medications for many diseases, cancer and cardiovascular medications that

make up the bulk of sales. These medications include blockbuster drugs Gleevec and Diovan,

which will benefit people who are more susceptible to cancer or cardiovascular problems. In

addition to their current drugs, Novartis has one of the strongest pipelines in the

pharmaceutical industry, with over 50 new products set to premier in the next several years.

Novartis is different from any other major pharmaceutical company in that it also has a strong

presence in the generic market. Sandoz - one of its divisions - brought in 18% of the

company's total sales in 2008. With $7.6 billion in annual sales, Sandoz is the largest generic

manufacturer under a major pharmaceutical company. This investment in the generic market

allows Novartis to be somewhat insulated from patent expiration. At the same time, however,

the investment in generics may complicate Novartis's stance towards patent issues since it has

large stakes on both sides of the issue.

2.1.1 HISTORY OF NOVARTIS

Novartis was created in 1996 from the merger of Ciba-Geigy and Sandoz Laboratories, both

Swiss companies with long histories. At the time it was said to be the largest corporate

merger in history. Ciba-Geigy was formed in 1970 by the merger of J. R. Geigy Ltd (founded

in Basel in 1758) and Ciba (founded in Basel in 1859). Combining the histories of the merger

partners, the company‘s effective history spans 250 years.

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Ciba-Geigy

Johann Rudolf Geigy-Gemuseus began trading in 1758 in materials, chemicals, dyes

and drugs of all kinds in Basel, Switzerland. Johann Rudolf Geigy-Merian and Johann

Muller-Pack acquired a site in Basel in 1857, where they built a dyewood mill and a

dye extraction plant. Two years later, they began the production of synthetic fuchsine.

In 1901, they formed the public limited company Geigy and the name of the company

was changed to J. R. Geigy Ltd in 1914.

In 1859 Alexander Clavel took up the production of fuchsine in his factory for silk-

dyeing works in Basel. In 1864, a new site for the production of synthetic dyes was

constructed, and in 1873, Clavel sold his dye factory to the new company

Bindschedler & Busch. In 1884 Bindschedler & Busch is transformed into a joint-

stock company with the name ―Gesellschaft für Chemische Industrie Basel‖

(Company for Chemical Industry Basel). The abbreviation Ciba was adopted as the

company‘s name in 1945.

In 1925 J. R. Geigy Ltd. began producing textile auxiliaries an activity which Ciba

took up in 1928.

In 1939, Geigy chemist Paul Hermann Müller discovered that DDT was effective

against malaria-bearing insects. He received the Nobel Prize in Medicine for this

work in 1948.

Ciba and Geigy merged in 1971 to form Ciba Geigy Ltd., and this company merged

with Sandoz in 1996 to form Novartis.

Sandoz

The Chemiefirma Kern & Sandoz (―Kern & Sandoz Chemistry Firm‖) was founded in

1886 by Dr. Alfred Kern and Edouard Sandoz. The first dyes manufactured there

were alizarine blue and auramine. After Kern‘s death, the partnership became the

corporation Chemische Fabrik vormals Sandoz in 1895. The company began

producing the fever-reducing drug antipyrin in the same year. Further pharmaceutical

research began in 1917.

Between the World Wars, Gynergen (1921) and Calcium-Sandoz (1929) were brought

to market. Sandoz also produced chemicals for textiles, paper, and leather, beginning

in 1929. In 1939, they began producing agricultural chemicals.

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The psychedelic effects of lysergic acid diethylamide (LSD) were discovered at the

Sandoz laboratories in 1943 by Albert Hofmann. Sandoz began clinical trials, and

marketed the substance, from 1947 through the mid 1960s, under the name Delysid as

a psychiatric drug, thought useful for treating a wide variety of mental ailments, from

alcoholism to sexual deviancy. Sandoz suggested in its literature that psychiatrists

take LSD themselves, to gain a better subjective understanding of the schizophrenic

experience, and many did exactly that. Research on LSD peaked in the 1950s and

early 1960s. Sandoz withdrew the drug from the market in the mid 1960s.

Sandoz opened its first foreign offices in 1964.

In 1967, Sandoz merged with Wander AG (known for Ovomaltine and Isostar).

Sandoz acquired the companies Delmark, Wasabröd (a Swedish manufacturer of crisp

bread), and Gerber Products Company.

On 1 November 1986, a fire broke out in a production plant storage room, which led

to a large amount of pesticide being released into the upper RhineRiver. This

exposure killed many fish and aquatic lives..

In 1995, Sandoz spun off its speciality chemicals business to form Clariant.

Subsequently, in 1997, Clariant merged with the speciality chemicals business that

was spun off from Hoechst AG in Germany.

Novartis

On March 7, 1996, the news shook the business world. It has been formally announced that,

Sandoz and Ciba, two proud Swiss based companies with almost three hundred years of

tradition, agreed to integrate to become one. The creation of Novartis was at that time one of

the largest corporate merger in the history. Ciba-Geigy Ltd. and Sandoz both have a colorful

and rich history spanning more than hundred years. Preceding the merger, there were months

of top-secret negotiations and meetings of the minds on a bold strategic move.

With the approval of the EU and US Federal Trade Commission, Novartis finally came into

existence on December 20, 1996, clearing all the regulatory hurdles of the merger.

Headquartered in Basel, Switzerland, Novartis innovates for the benefits of its customers. It

operates through 360 affiliates in 140 countries and offers its products through its

Pharmaceuticals, Generics, consumer Health, CIBA Vision, Animal Health and Business

Development & Licensing Unit.

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2.1.2 MAJOR FUNCTIONS OF NOVARTIS LIMITED

At present, Novartis is one of the top 5 global pharmaceutical companies in the world. The

complementary healthcare businesses of Novartis address the changing needs of patients and

societies worldwide. With innovative pharmaceuticals at the core, Novartis is also a global

leader in generics, vaccines and consumer health products.

Businesses:

Pharmaceuticals: The Pharmaceuticals Division of Novartis is recognized worldwide for the

innovative medicines provided to patients, physicians and healthcare organizations. This

business develops and markets patent-protected prescription drugs for important health needs.

The products are concentrated in major therapeutic areas:

1. Cardiovascular and Metabolism

2. Oncology and Hematology

3. Neuroscience and Ophthalmics (NSO)

4. Respiratory

5. Immunology and Infectious Diseases (IID)

The current product portfolio includes more than 45 key marketed products, many of which

are leaders in their respective therapeutic areas. The product development pipeline involves

about 155 projects in various stages of clinical development – including potential new

products as well as potential new indications or formulations for existing products.

Vaccines and Diagnostics: The Novartis Vaccines and Diagnostics Division provides more

than 20 products to fight vaccine-preventable viral and bacterial diseases, and makes

sophisticated equipment to test blood donations for infections. Novartis formed this division

when it acquired Chiron Corporation in 2006.The division consists of two businesses:

º Novartis Vaccines and Chiron

º The blood testing business.

Sandoz: Novartis is the only pharmaceutical company with a global leadership position in

both patented prescription and generic pharmaceuticals. Sandoz plays a critical role in the

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Novartis strategy of offering a range of treatment options to patients, physicians and

healthcare providers worldwide. This broad portfolio helps to make affordable, high-quality

medicines available to patients around the world and stabilize healthcare systems.

There are two main elements to the Sandoz business strategy:

1. Global reach and reputation: In addition to its unique position within Novartis, Sandoz

benefits from a strong global presence and powerful brand recognition worldwide.

2. Unique expertise: Sandoz differentiates itself through its ability to develop and produce

difficult-to-make medicines. Sandoz is the pioneer of biosimilars — follow-on versions of

biopharmaceuticals following patent expiry — with the first two marketed products (human

growth hormone Omnitrope and anemia medicine Binocrit). A third product, oncology

medicine Zarzio, was approved in 2009.

Consumer Health: The Consumer Health Division creates, develops and manufactures a

wide range of products designed to restore, maintain or improve the health and well-being of

the customers.

The division focuses on three business units:

1. Over-the-Counter: Novartis Consumer Health, Inc. is a world leader in consumer

healthcare, providing self-medication products for the treatment and prevention of common

illness and conditions, and the enhancement of overall health and well-being.

2. Animal Health: Novartis Animal Health focused on the well-being of companion animals

and on the health and productivity of farm animals.

3. CIBA Vision: CIBA Vision is a global leader in the research, development and

manufacturing of contact lenses and lens care products.

2.1.3 BUSINESS PROFILE

Novartis sustained momentum during 2008 from continuing operations. Net sales rise 9% to

USD 41.5 billion on accelerating growth in Pharmaceuticals along with important

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contributions from Vaccines and Diagnostics and Consumer Health. Operating income

advances 32% to USD 9.0 billion. Net income up 25% to USD 8.2 billion, impacted by a

higher 2008 tax rate and start of financing costs for 25% Alcon stake. Basic EPS rises 28% to

USD 3.59 from USD 2.81 in 2007. Dividend of CHF 2.00 per share proposed for 2008, a

25% increase from 2007 and representing a payout of 53% of net income from continuing

operations. Novartis expects record results again in 2009 in an increasingly challenging

environment.

Novartis is one of the leading pharmaceutical companies around the world. The main

competitors of Novartis are GlaxoSmithKline, Sanofi Aventis, Pfizer, Johnson & Johnson etc

Novartis had the 3rd

highest sales in the year 2008 with a sales of $ 36,172 million. Pfizer had

the highest sales with USD $43,363 million followed by GlaxoSmithKline withUSD $36,506

million. Sales.

Novartis‘s mission is to care and cure.They want to discover, develop and successfully

market innovative products to prevent and cure diseases, to ease suffering and to enhance the

quality of life.They also want to provide a shareholder return that reflects outstanding

performance and to adequately reward those who invest their money, their time and their

ideas in our company.

2.1.4 BUSINESS STRATEGY

A global leader in healthcare, Novartis is uniquely positioned to take advantage of the fast-

changing industry environment and to fulfill its mission of caring and curing. As we enter our

next growth phase, we are accelerating the execution of our strategy of leading through

science-based innovation to deliver positive health outcomes for patients and payers. Our

strategic priorities are to extend our lead in innovation, accelerate growth and drive

productivity across our diversified portfolio in order to generate profits and increase

shareholder return. Committed to high performance with integrity, we are engaged in an open

and cooperative dialogue with all of our stakeholders.

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Extending lead in innovation: Science-based innovation is at the heart of Novartis. We

follow a distinct research and clinical approach to build an industry-leading pipeline of

differentiated medicines and treatments with the goal of delivering real-world benefits to

patients and healthcare providers.

Accelerating growth: Novartis is pursuing long-term growth by maximizing product

launches and leveraging its robust portfolio. We are expanding in established and emerging

markets and adapting our commercial model to the rapidly changing healthcare environment.

Driving productivity: Novartis is driving productivity by simplifying its processes,

accelerating cross-divisional collaboration, and improving global procurement and supply

chain management. We are using rigorous resource allocation to improve cash management

and profitability.

Our four strategic enablers allow us to pursue high performance with integrity.

Commitment to people: We strive to attract and retain the best talent in the industry, nurture

team diversity and cultivate high engagement.

Quality beyond compliance: We are dedicated to producing high-quality pharmaceutical

and medical therapies that exceed industry standards to protect patient safety and build trust

with our stakeholders.

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Ethical business practices: Through global adherence to our Code of Conduct, we

consistently strive for the highest ethical standards around the world.

Corporate responsibility: We are committed to enhancing access to medicines and

healthcare services for underserved populations through innovative patient support programs

and Social Ventures.

2.1.5 MARKETING STRATEGY

Extending lead in innovation: Science-based innovation is at the heart of Novartis. We

follow a distinct research and clinical approach to build an industry-leading pipeline of

differentiated medicines and treatments with the goal of delivering real-world benefits to

patients and healthcare providers.

Accelerating growth: Novartis is pursuing long-term growth by maximizing product

launches and leveraging its robust portfolio. We are expanding in established and emerging

markets and adapting our commercial model to the rapidly changing healthcare environment.

Driving productivity: Novartis is driving productivity by simplifying its processes,

accelerating cross-divisional collaboration, and improving global procurement and supply

chain management. We are using rigorous resource allocation to improve cash management

and profitability.

Our four strategic enablers allow us to pursue high performance with integrity.

Commitment to people: We strive to attract and retain the best talent in the industry, nurture

team diversity and cultivate high engagement.

Quality beyond compliance: We are dedicated to producing high-quality pharmaceutical

and medical therapies that exceed industry standards to protect patient safety and build trust

with our stakeholders.

Ethical business practices: Through global adherence to our Code of Conduct, we

consistently strive for the highest ethical standards around the world.

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Corporate responsibility: We are committed to enhancing access to medicines and

healthcare services for underserved populations through innovative patient support programs

and Social Ventures.

Promoting our products gives us an ethical responsibility to provide accurate information

about our products to healthcare professionals, patients and consumers. These fundamental

principles guide our marketing practices and interactions with healthcare professionals and

customers:

Promotional practices must accurately reflect the benefits and risks of a medicine.

They must be ethical and be in good taste.

Any information we provide must consider the needs of customer. It must be based on

product information as approved by local authorities.

Sponsorships of medical or scientific events must be clearly disclosed, and the event‘s

purpose must be sharing relevant medical or scientific information.

Hospitality must be appropriate, modest, consistent with local practices and secondary

to the main purpose of any meeting.

Gifts may be given only when local standards permit it. Gifts must be inexpensive

compared to local standards, relevant to the practice of medicine and may only be

given infrequently.

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We prohibit any personal incentives to prescribe products.

Samples may only be provided to help healthcare professionals become familiar with

a product. This must adhere to all local requirements.

All interactions and activities must comply with applicable local laws and regulations.

Our global standards represent the company‘s minimum standards, and each Novartis

division has specific standards. For example, the Novartis Pharma Principles and Practices

for Professionals (NP4) governs how associates in our largest division conduct business and

interact with customers, including promoting medicines to healthcare professionals. All

Novartis divisions have similar policies, and the Novartis Group Audit team works to ensure

compliance.

2.1.6 PESTEL ANALYSIS

The following PEST analysis shows how political-legal, economic, socio-cultural and

technological forces affect Novartis in terms of business and development of the company

and what are some of the Novartis approaches to tackle these forces:

Political: With exhaustive need for new development of medicines to meet all the

medical requirements, Novartis requires political and legal support in order to venture into

this pharmaceutical and biomedical industry. Besides, Novartis being a MNC, it needs to

accordingly abide to the legislations of different countries. This would greatly influence the

development of Novartis when it‘s one of the emerging global healthcare leaders.There is a

factual article that claims that Novartis has achieved certain degree of stability in the political

involvement in most of the countries by being part of public affairs operations in Basel,

Switzerland; Brussels, Belgium; and Washington D.C., in the US under Novartis Global

Public Affairs department.

Economic: The global economic crisis would greatly impact the trust of the society

towards Novartis. The people believes that the above mentioned crisis might lead the

business and its entrepreneurs to be involved in misleading factors such as scandals,

bankruptcies and unethical practices.Nonetheless, Novartis had been engaged in Novartis

Foundation for Sustainable Development (NFSD) with associative alliances with ethicist,

economist and business people to show how they are tackling the current economic crisis.

With above said involvement, they are ensuring consumer needs, truthful business practices,

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use of natural resources without destroying the ecological balance are met ethically. On the

other hand, globalisation which is always been emphasized nowadays would influence

Novartis business unconstructively if there is no adaptation is made as advancements are

being declared.

Socio-Cultural: In those days, consumers were not aware of proper ethical guidelines

in order to get the right pharmaceutical products which only caused problems and resulting in

higher expenditures of resolution in the end. Though, nowadays consumers prioritize the

quality of the product in terms of overcoming the current health concerning issues with less

expenditures and proper prescriptions. This change in consumers perspective has also

manipulated as in enhanced the quality of products being developed by Novartis International

AG.In which Novartis had undertaken a lot of measures in order to ensure good medicines

are developed with high quality values and at the same time ensuring that they are affordable

to the society. They continue to venture into this journey by promoting their products

extensively.

Technological: As for Novartis which has an extensive involvement in research and

development, innovation in technology would affect the business and development to the

highest degree. Understanding this, Novartis has always been ensuring that the

instrumentations as well as pipelines of theirs are brought up to date from time to time with

the maximum efficiency to enhance the productivity of the company.

Environment: In order for a company to successfully enter the pharmaceutical

industry, Research and Development and also patent for their products is very vital. Due to

the scattered distribution of buyers throughout the world for Novartis, there isn‘t much

bargaining leverage for them. On the other hand, as the products of Novartis is all protected

by patents, there isn‘t much of a choice for the buyers to ponder upon which would not

influence the pricing of the products. There are numerous suppliers that have registered in the

portal of Novartis which aims to do business with Novartis. This actually initiates a sense of

competitiveness within them due to the very fact that Novartis can switch from their suppliers

without incurring a very high cost. Therefore, it is not easy for the supplier to drive up their

prices.

Legal: Novartis has also been actively deploying ethical and legal tools for their

research and development in pharmaceutical sectors with active involvements of people who

are members of certain trade union who contributes to achieve common goal together in

developing new medicines.

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2.1.7 SWOT ANALYSIS

SWOT stands for strengths, weaknesses, opportunities, and threats associated with a business

and it is an effective strategic analytical tool used to assess businesses. The following table

illustrates GlaxoSmithKline SWOT Analysis:

Strengths

Has a global reach in over 140 countries

Core businesses in pharmaceuticals, vaccines, consumer health, generics and animal

health

Novartis Biotechnology leadership camp organized by it is a unique step

Mergers and acquisitions have it a strong brand

First company-wide health and well-being initiative at Novartis

Employee strength of over 120,000.

Weaknesses

Controversies regarding their advertising of certain products affected brand image.

Case regarding Indian patent laws also created a problem for the brand

Opportunities

Broad-based medical innovation, in technologies and businesses across the spectrum

of health care

Venture into health needs in under-developed and poor countries

Leverage its core business expertise and resources to create sustainable solutions in

countries around the world.

Threats

Increasing obsolesce of technology.

Competition from peers

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2.1.8 CULTURE AND BEHAVIOR

At Novartis, our performance-oriented culture and responsible approach are the foundations

of our success. We recognize that our business depends on the creativity, dedication and

performance of our associates. We encourage associates to focus on achievement through

collaboration and innovation.

A global healthcare leader, Novartis has one of the most exciting product pipelines in the

industry today. A pipeline of innovative medicines brought to life by diverse, talented,

performance driven people. All of which makes us one of the most rewarding employers in

our field.

Novartis is committed to equality of opportunity, fairness, work and lifestyle, mutual respect

and dignity at work for all associates. Novartis values differences including disability, sexual

orientation, race, ethnicity, age, thinking styles, gender and religion.

Inclusion establishes and reinforces behavioral standards that foster a collaborative culture

and work environment, which will enable individuals and groups to contribute to their fullest

potential.

Diversity and Inclusion adds value for our company, our patients, our customers, our

associates, our shareholders, our suppliers and the communities in which we live and work.

2.1.9 COMMUNICATION

Novartis highly adheres to the concept of innovation within their business operations. Not

only is innovation specifically addressed in the mission statement13 in terms of the

discovery, development and successful marketing of innovative products, it is touted as “The

essence of our mission” (Novartis, 2012: 1). Furthermore, innovation is stated as the greatest

job satisfaction for Novartis employees in terms of working efficiently and innovatively in

order to improve the quality of life for patients (Novartis, 2013). In Novartis‘ 2012 annual

report, the term ‗innovation‘ is mentioned no less than 54 times, signifying a citation on

every 1 out of 5 pages. Furthermore, Novartis‘ official website commits a significant amount

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of information on the subject in terms of operations and values as a prioritized element of

their external communications.

While the various communication platforms, in theory, are deemed extremely beneficial in

the form of mechanisms to facilitate innovation communication, the functionality of these

vary to a great extent, thereby undermining the underlying intent. Moreover, the

configuration of these platforms serves to exclude certain levels of the organization, which

could be highly detrimental to future innovation generation as well as employee loyalty and

commitment. Furthermore, there seems to be a significant incongruity present in the sense

that innovation communication platforms are provided, yet discouraged by Novartis leaders.

One of the most promising initiatives in terms of innovation communication is the LEAD

program, which grants a communication bypass from lower levels of the organization directly

to ENC members. However, this program is laden with difficulties as a result of poor

communication skills, lacking self-awareness of self-efficacy, and questionable innovative

content on the part of participants, which severely affects the innovative outcomes and

underlying intent of the program.

Internal-Operational Communication: Novartis has an internal communication

system which holds the employee communicates each other on the platform of GSK.

There are so many platforms to communicate like as:

CEO engages a plat form from all over the world of 250 top people from different

sections of the company to help the strategic change in different sectors of the

company.

A CEO advisory board which helps the CEO from their ideas from across the world is

also established.

The online version of magazine is published on the 100% recycled paper.

An online access on Novartis TV to download the views and progress inside the

company.

Novartis has also an internal business communication system via intranet through that

the messages, meeting across worldwide be conducted.

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External-Operational Communication: The exponential increase in

communication platforms and medias in the marketplace today has provided private and

public businesses the opportunity to not only communicate directlyto their stakeholders, but

also receive feedback from these stakeholders instantaneously.

Regardless of what social media platform is accessed, Novartis has a presence, including

Facebook, Instagram, Twitter, Pinterest, and LinkedIn. In order to add a two-way,

symmetrical communications function to Novartis‘ external communications, these various

social media platforms are used, where external audiences are able to comment and provide

feedback directly. The degree to which this interactivity is feasible depends entirely on users

propensity to seek out the company online and connect with them.

This indicates that despite Novartis‘ significant efforts to reach external audiences through

contemporary medias, the actual audience is quite inconsequential relative to Novartis‘

geographical reach, size, and amount of patients using their products. This unproportionate

ratio may be affected by the nature of these medias, namely that users select and control the

information they deem relevant and interesting, thus representing the dominant party in the

external communications relationship. Such a dynamic is considered relatively new. In more

traditional medias, such as TV, newspapers, etc., the sender determines the content,

placement, and timing of the messages and as such, the audience relinquishes control of the

messages and information that they are exposed to.

2.2 AN OVERVIEW NOVARTIS BANGLADESH LTD.

In 1973 the Ciba Geigy (Bangladesh) was registered as a joint stock company (Novartis

Bangladesh website). It then launched researched pharmaceutical products in the Bangladeshi

market. In 1986 Ciba Geigy introduced its first generic product in the Bangladeshi market,

Servipham. The company began to export its products from Bangladesh in 1995. In 1997,

Ciba Geigy and Sandoz merged to form Novartis (Bangladesh) Limited and introduced its

first OTC product. In 2000, Novartis (Bangladesh) Limited became the first pharmaceutical

company in Bangladesh to be awarded the EU GMP certification.

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Novartis Bangladesh awarded the National Export Trophy for the years 2002-2003 and 2003-

2004 from Bangladesh government‘s Export Promotion Bureau (Novartis Bangladesh

website). Novartis Bangladesh is one of the top pharmaceutical exporters of Bangladesh that

exported US$15 million medicines in 2007, which is 44 percent of the total pharmaceutical

exports from Bangladesh (Daily Star report, 2008). Though its export value is quite

impressive, Its generic division Sandoz‘s performance in Bangladesh‘s local market is not as

good as Novartis‘s patented products. Sandoz positioned 15 in top 20 pharmaceutical

companies in Bangladesh.

2.2.1 BANGLADESH’S PHARMACEUTICAL MARKET

According to the UKTI (April, 2010) the total size of the pharmaceutical market of

Bangladesh was estimated to be US$700 million in 2007. It also reports that the industry

produced medication worth $715 million in 2007 with the market growing over 12% annually

over the last half a decade and firms primarily focus primary on branded generic final

formulations by using mostly imported APIs. According to the World Bank report (2008)

about 80% of the drugs sold in Bangladesh are generics and 20% are patented drugs. It also

reports that domestically Bangladeshi firms generate 82% of the market in pharmaceuticals

and locally based multinational companies account for 13%, and the final 5% is imported.

There are 240 registered pharmaceutical companies in Bangladesh where 164 of these

actively involved in the manufacture or marketing of pharmaceutical products (Hussain et al.,

2008).

The top 30 to 40 companies dominate almost the entire market, where the top 10 hold 70% of

domestic market share and the two companies Beximco and Square capture over 25% of the

market (World Bank report, 2008). The pharmaceutical market of Bangladesh is dominated

by a few large companies. This kind of market structure is defined as oligopoly (Gillespe,

2010, p. 302; Griffiths & Wall, 2008, p. 226; Salvatore, 2007, p. 340; Besanko et al, 2010, p.

221). The decisions of one company influence, and are influenced by, the decisions of other

companies. For example, when the pharmaceutical market leader Square got the UK MHRA

approval, the second largest company Beximco immediately started the process desperately

to secure it (UKTI, 2010).

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2.2.2 BUSINESS PROFILE

Novartis is the only company with leading positions in each of these key areas:

Pharmaceuticals: innovative patent-protected medicines

Alcon: global leader in eye care with surgical, ophthalmology and consumer products

Sandoz: affordable, high-quality generic medicines and biosimilars

Consumer Health: self-medication products and treatments for animals

Vaccines and Diagnostics: vaccines and diagnostic tools to protect against life-

threatening diseases

Novartis manufactures such drugs as clozapine (Clozaril), diclofenac (Voltaren),

carbamazepine (Tegretol), valsartan (Diovan) and imatinib mesylate (Gleevec/Glivec).

Additional agents include cyclosporin (Neoral/Sandimmun), letrozole (Femara),

methylphenidate (Ritalin), terbinafine (Lamisil), and others.

Since Novartis was created in 1996 – when only 45% of net sales came from healthcare – the

company has shifted focus to fast-growing areas of healthcare. Their strategy is to provide

healthcare solutions that address the evolving needs of patients and societies worldwide.

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2.2.3 BUSINESS STRATEGY

a. Functional level strategies: Novartis Bangladesh Ltd follows different functional level

strategies to gain competitive advantages and sustain it in the long run in the matured

industries. They increase their efficiency through exploiting economies of scale and learning

effects.

b. Business-Level Strategies: Novartis strategic managers adopt different business level

strategies to use the company‘s resources and distinctive competencies to gain competitive

advantage over its rivals. These are:

They follow cost-leadership strategy as they have intermittent over capacity and the

ability to gain economies of scale. This way they can produce cost effective products

and yet be profitable.

They also target different market segments with different products to have broad

product line. By product proliferation they reduce the threat of entry and expand the

range of products they make to fill a wide variety of niches.

c. Strategy in the Global Environment: Novartis Bangladesh Ltd. is registered under

GlaxoSmithKline plc. As a part of a global company it follows some generalized strategies

and principals of GlaxoSmithKline. However, they also modify different strategies based on

the national conditions. The different strategies that they follow in the global environment are

stated below:

They import the raw materials from the places where it is less costly, thus achieve

location economy.

GSK follows a multi domestic strategy where the companies extensively customize

both their product offering and marketing strategy to different national conditions.

d. Corporate strategy: Novartis carries out the following corporate level strategies:

They have a diversified business. Novartis has reflected the changing market

dynamics there and to prepare for the launch of multiple new products. Novartis are

restructuring to improve efficiency and focus resources to growth opportunities in

what continues to be a challenging market environment.

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Novartis have changed the traditional R&D so that it is better able to sustain a

pipeline of products that offer valuable improvements in treatment for patients and

healthcare providers.

As business continues to change shape, Novartis is transforming so that it can reduce

complexity and become more efficient.

2.2.4 MARKETING STRATEGY

Two main elements empower the Novartis business strategy:

Global reach and reputation: In addition to its unique position within Novartis,

Sandoz benefits from a strong global presence and powerful brand recognition

worldwide.

Unique expertise: Sandoz distinguishes itself primarily through its ability to develop,

produce and commercialize differentiated medicines. Sandoz is the pioneer and

global leader of biosimilars — follow-on versions of biopharmaceuticals following

patent expiry — with the first three approved and marketed products in the EU

(human growth hormone Omnitrope, anemia medicine Binocrit, and oncology

medicine Zarzio).

Marketing is the process by which companies create value for customers and build strong

customer relationships in order to capture value from customer inreturn (Kotler, 2005).

Marketing is the backbone of all industries. Though pharmaceuticals produce life saving

drugs, they also need marketing. But their marketing is to some extent different from other

industries. Some major characteristics of marketing sector are given below:

Their distributional channel includes invoice system, own distribution channel.

Medical representatives are the key persons in marketing.

For promotion, the groups such as doctors, surgeons are targeted.

Major promotional strategies include printed promotional materials, physical sample,

and clinical materials.

Special incentives are given to the doctors. For example, the doctors are given honeymoon

packages, the cost of which is borne by the pharmaceuticals. The field level executives are

playing the imperative role for marketing division. Basically, they have taken the

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responsibility to market the products of their companies. So, the success of a pharmaceutical

industry intensively depends on the efficiency and effectiveness of the medical

representatives. If an organization wants efficient employees in this section, he should to

satisfy these representative. The researcher conducted a small survey over the field level

executives, who are playing the prime role for marketing of the products of pharmaceutical

companies. Here, the study finds that, only 32% employees are in satisfactory and extremely

satisfactory level. So, how it is possible to expect, the executives will devote maximum effort

for marketing their products. Most of the interviewees think that the sector should increase

the benefits to the marketing executives with relevant effort.

2.2.5 PESTEL ANALYSIS

PESTEL analysis provides a framework to examine the external environment of a company

(Gillespie, 2010, p. 13; Morrison, 2006, p. 30). PESTEL stands for political, economic,

social, technological, environmental and legal factors. PESTEL analysis helps a company to

categorize the relevant issues in its environment, so that it can assess its relative importance

and develop an appropriate strategy (Sloman & Hinde, 2007). The following sections

provides an overview of the currently affecting the Novartis in Bangladesh.

Political factors: Experienced international businesses engage in political risk

assessment, a systematic analysis of the political risks they face in foreign countries and any

changes in the political environment that may adversely affect the value of a company‘s

business activities. Politically Bangladesh is now a stable country after decades of instability

and coups.

Support of Government: Bangladesh government regards the pharmaceutical industry as

one of the key sector for foreign investment in the country (BOI, 2010a). With strong

government support Bangladesh is developing a robust manufacturing and technically

experienced industrial base for this sector. Bangladesh was placed 15th

globally for the

protection which it affords investors in the World Bank‘s (2009) ―Doing Business‖ survey.

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Issues: General strikes by opposite political parties those caused huge loss to the businesses

and industries were a regular part of political life in Bangladesh. The situation has improved a

lot in past few years despite of very few occasions (BBC, June 2010). Companies are still

facing some corruption and bureaucracy issues when to do business in Bangladesh. For

example, according to the World Bank report (2009) it requires 7 procedures and takes 44

days to start a business there. Despite some bureaucratic problems in overall the current

political environment of Bangladesh is business-friendly for Novartis.

Economic factors: When a company wants to do business in another country, it

should have good knowledge on growth rate, inflation, unemployment, wages, income,

stability, poverty and the like of that country.

GDP Growth: The economy of Bangladesh has grown 5-6% per year since 1996 despite

many internal problems like political instability, poor infrastructure, corruption, and

insufficient power supplies and its growth was resilient during the 2008-09 global financial

crisis and recession.

Inflation: Inflation rate is a measure of the increase in the cost of living that influence on

many parts of the economic confidence, and the stability.

Unemployment:Daniels et al (2009) argues that unemployment depress economic growth,

create social pressures, and provoke political uncertainly. The unemployment rate in

Bangladesh was 2.5 percent.

Debt: The larger the total debt becomes, the more uncertain a country‘s economy becomes.

The internal public debt that was measured by the percentage of Bangladesh‘s GDP was

lower than in India, Pakistan or UK in 2009.

Labour Force and Cost: For the pharmaceutical industry, the cost of labour is one of the

key elements of total production costs. Companies always search the world for the best deal

with the difference between low-cost and high-cost countries.

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Socio-cultural factors: A company should identify key cultural differences in the

country where it is doing or intended to do business and then it must need to alter its

customary practices to succeed there.

Religion: According to the World Factbook (2010), 89.5% of the population in Bangladesh is

Muslim. The religious belief and practices have influence and impact on

national/international business that is seen in a culture‘s values and attributes toward

entrepreneurship, consumption and social organisation. Many Muslim workers require extra

time break for daily prayer. Muslims are forbidden from the consumption of pork and

alcohol. The pharmaceutical companies need to consider these religious factors to do the

business in Bangladesh.

Technological factors: Technological environment is another important dimension of

a country and the foundation of its resource base. Three key technological factors are

discussed in following sections.

Research and Development: Foreign direct investment has brought about the globalization

of production, but this has not led to the globalization of technological innovation in

Bangladesh. Large companies have tendency to concentrate their R&D activities in their

home countries, but progressively specialized R&D is being decentralized to overseas

locations, to benefit from different areas of excellence in different localities.

Environmental factors: Couple of key environmental factors discussed in following

sections those significant for Novartis operation in Bangladesh.

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Climate Change: Bangladesh is now widely recognized to be one of the countries which are

most vulnerable to climate change as a result of global warming. It is a low-lying region that

risks submerging some of its parts beneath the sea. Natural hazards that come from increased

rainfall, rising sea levels, and tropical cyclones are expected to increase as climate change,

each seriously affecting agriculture, water & food security, human health and shelter.

Legal factors: Every company in every country must comply with local legal system

and regulations regarding operations. The legal environment has a great impact on doing

business in any country. According to the World Bank reports Bangladesh is ranked 119 out

of 183 economies on ease of doing business whereas India ranked 133 .

2.2.6 SWOT ANALYSIS

Strengths:

1.Has a global reach in over 140 countries

2. Core businesses in pharmaceuticals, vaccines, consumer health, generics and animal

health.

3. Novartis Biotechnology leadership camp organized by it is a unique step

4. Mergers and acquisitions have it a strong brand

5. First company- wide health and well-being initiative at Novartis

Weaknesses:

1. Controversies regarding their advertising of certain products affected brand image

2. Case regarding Indian patent laws also created a problem for thebrand

Opportunities:

1. Broad-based medical innovation, in technologies and businesses across the spectrum of

health care.

2. Venture into health needs in under-developed and poor countries

4. Leverage its core business expertise and resources to create sustainable solutions in

countries around the world.

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Threats:

1. Increasing obsolesce of technology

2. Competition from peers

2.2.7 CULTURE AND BEHAVIOR

Bangladesh, as well as the US and UK, is a masculine culture, so it fits Hofstede‘s profile

when it comes to behavior and promotion of respect in the workplace, as it is a feminine trait

to be tender and nurturing, not a masculine one. As for Hall‘s insider/outsider-dimension, low

context cultures do not distinguish closely between insiders and outsiders, and therefore

people of all backgrounds and levels have the possibility of being respected in the same way.

According to Greet Hofstede, Bangladesh scores high on power distance, it‘s about 80, which

means that people accept a hierarchical order in which everybody has a place and which

needs no further justification. Hierarchy in an organization is seen as reflecting inherent

inequalities, centralization is popular, subordinates expect to be told what to do and the ideal

boss is a benevolent autocrat.

In case of individualism, Bangladesh scores about 20 which are considered a collectivistic

society.

Bangladesh scores 55 on masculinity and can be considered a masculine society. In

masculine countries people “live in order to work”, managers are expected to be influential

and assertive, the emphasis is on equity, competition and performance and conflicts are

resolved by fighting them out.

Bangladesh scores 60 on uncertainty avoidance and thus has a high preference for avoiding

uncertainty.

In long term orientation, Bangladesh scores 40, in this dimension which reflects it a short

term orientation culture.

Societies with a short-term orientation generally show great respect for traditions, a relatively

small propensity to save, strong social pressure to “keep up with the Joneses”, impatience

for achieving quick results, and a strong concern with establishing the Truth.

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In Bangladesh, Novartis has adopted a four step approach towards the initiation of cultural

change. This change process has been slightly modified from the force field analysis

proposed by (Lewin 1951) to fit the change situation of Novartis. The steps that were

undertaken by the company can be summarized in the form of following diagram:

These four steps cover the following four points:

1. Make sure that the R&D department and people understand the pressure of change

– why do we need to change?

2. Develop and share a clear vision about where the organization and department is

headed – where are we going?

3. Put in place the individual, departmental and organizational capabilities for change

– what do we need to make the change?

4. Have a plan of action that outlines what has to be done to get it all started – what do

we have to do tomorrow when we come to work?

One of the main reason for the successful adaptation in Bangladesh of Novartis because

Novartis BD believes in recruitment from the Bangladesh. A large number of employee has

been recruited from the local market. More over Novartis BD has a huge participation in

different national social work.

The communication styles of Bangladeshi people are indirect or implicit. They usually take

longtime to know each other; they love to use rich and contextualized words. If someone take

short time or direct approach in introduction, they considered as rude. Personal space is not a

huge factor in Bangladeshi culture, they tend to stand or close (2-3 feet) when taking. Touch

of same gender is common in Bangladesh usually in female. All of the friends and family

members take along conversation period in meeting each other or taking via network; this

approach happened because Bangladeshi believes in collectivism approach.

2.2.8 COMMUNICATION

Communication is a very important thing for a company like Novartis BD. The headquarter

of the company situated in Dhanmondi, Dhaka whereas all the other eleven Distribution

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Centers Nationwide situated throughout the Country. So to communicate with each other they

need some advance technology and easy communication process.

Internal-Operational Communication: Internal-Operational Communication are

those which is used in conducting work within a business. That is the communication among

the business employee‘s that is done to create, implement and track the success of the

business‘s operating plan. Now-a-days technology plays a very important role in internal-

operational communication.

There are so many platforms to communicate like as:

Board of Directors holds periodic meetings to resolve issue of policies and strategies,

recording minutes/decisions for implementation by the Executive Management.

The Managing Director heads the Executive Management, the Chief Executive

Officer (CEO) who has been delegated necessary and adequate authority by the Board

of Directors. The Executive Management operates through further delegations of

authority at every echelon of the line management.

There are five major departments and each departments and each departments of

Novartis BD operates in different aspects but they are interrelated as well as

complement to each other.

HR department of Novartis BD administrate smooth workflow in the organization and

manages the demands of the labors in the factory.

Because of the advancement of the technology now-a-days any kind of

communication can be made through land phone or cellular phone.

For any kind of brief information employees can use electronic mail or even fax.

Employees can use their own web portal for many important things.

Novartis BD encourage open network communication usually. In this communication

network employees can frequently communicate their views and perception without so much

formal network.

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External-Operational Communication: External-operational communication is

work-related communication with people outside the business such as personal selling,

telephoning, advertising and writing message. For meeting up with the necessary information

to the market Novartis BD has medical promotion officer. Their main duties are as follows :

Meet and approach customers actively and energetically.

Get the job done with professional standard.

Seek, share and adopt successful practices in the team.

Meet commitment and deliver results on time and travel extensively.

Novartis BD as a buyer of the raw materials, manufactured goods and services around the

world has a better relationship according to the human rights commission. Novartis BD aims

to have a good relationship with the local communities. Novartis BD wants to minimize the

influence on the local communities and aim to prosperity of the area.

On the other hand the informal network, consisting largely of personal communications, is

highly complex and ever changing.

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CHAPTER 03 – EVALUATION & CONCLUSION

3.1 EVALUATION

A few strengths of Novartis (Bangladesh) Limited has been given below-

High Quality products: Novartis provides high quality products. And the quality of

medicine that we get here from Novartis is identical with any other countries all over

the world. So Novartis ensures quality product.

Innovative and unique product lines: As it has been said earlier that Novartis

Pharma is specialized in patent products, so the products invented here is innovative

and unique. And most of these products cannot be found by manufactured from other

companies.

Highly skilled management: As I have worked with the management and other

employees of Novartis for three months, it can be ensured by me that Novartis is well

known for recruiting highly skilled management, whom are responsible for the

success of this company.

Quality raw materials imported from foreign sources: Most of the raw materials

that are used for making medicines are imported from abroad. That‘s why the quality

of the raw materials are ensured.

High quality customer service: Novartis has a separate division of customer care

service. This team always updates the current conditions of the customers and tries to

provide them maximum service based on their medicines.

Sole manufacturing plant with GMP standard & European Certification:

As it has been said earlier that, Novartis has a plant in tongi. And this plant has been built

under the observation of experts to ensure that it falls under the GMP standard and European

certification.

Other than these characteristics, Novartis is also-

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Leading pharmaceutical exporter of the country

Effective marketing strategies

It is a large multinational company globally

A proven track record in defect-free manufacture

Highly Efficient employees

Effective State-of-the-art plant and equipments.

Available Cash on hand

Global Company reputation

A positive work climate and organization culture

Novartis is the number 1 ethical pharmaceutical company worldwide.

Novartis is in 4th position among all the industries globally.

Serving additional customer group in the existing geographical market.

Expanding into new geographic markets.

Scope to improve in export oriented products.

Expanding the company‘s product line to meet a broader range of customer needs

Transferring sector‘s skill or technological know-how to a new business or a new

product.

Scope to communicate the global reputation of Novartis

Although being a multinational company, Novartis has some drawbacks such as-

Very expensive Raw Materials: Most of the raw materials Novartis uses to produce

medicine are imported from abroad. And due to that the cost to purchase raw material gets

very high, and ultimately the impact falls on the price of the product.

High price of products: As the cost of raw material is high, naturally the products

price also gets higher. And due to higher price, consumers do not want to the medicines of

Novartis.

Lack of proper awareness in the market: Awareness is a significant issue for any

product to run well in the market. There is no doubt that the products of Novartis are quality

full, but still Square and Beximco has a significant place on the mind of the customers. For

this reason people find the products of Square and Beximco familiar rather than Novartis.

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Narrow product lines than the competitors: Another problem of Novartis is, its

product line is narrow than other companies. As it has been said earlier that, in Pharma

division only patent products are made, which‘s price is higher, and at the same time variety

is less. So other company gets the advantage.

Lack of manpower: For any company, workers are the ultimate source of power.

And in this field also, other companies have the advantage. Basically, the term manpower

refers to the field forces who works with the product and directly keeps contact with the

customers and doctors. The number of field force in Novartis is less than other companies, so

it faces number of problems.

Strong local competition: It has been said earlier that the local competition is very

strong in market. And whenever the market is tight, all the companies has to work very

carefully so that no loopholes are left over.

3.2 Conclusion

In this report Novartis current operations in Bangladesh are analyzed. PESTEL analysis used

to examine few significant factors of external environment and discussed how they influence

the Novartis. At the end of the report couple of recommendations is provided for Novartis‘s

current and future strategies and operations in Bangladesh.

The findings that I have analyzed on weakness part were basically high price of raw

materials, high price of products, comparatively weak marketing channel etc. If Novartis

(Bangladesh) Limited can overcome these issues, future prospects will be higher.

In conclusion it can be said that, definitely Novartis (Bangladesh) Limited is one of the best

pharmaceuticals all over the world, just a blend of reasonable price and quality product will

take it to the extremes.

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REFERENCES

BOI (2010a) Market Overview, (Board of Investment Bangladesh),

http://www.boi.gov.bd/key-sectors/life-sciences/market-overview (Accessed: 12 July 2010)

BOI (2010b) Key Benefits and Advantages, (Board of Investment Bangladesh),

http://www.boi.gov.bd/key-sectors/life-sciences/key-benefits-a-advantages (Accessed: 12

July 2010)

Czinkota, M., Ronkainen, I., Moffett, M., Marinova, S. & Marinov, M. (2009) International

Business, European Edition. John Wiley & Sons, Ltd.

Daniels, J. D., Radebaugh, L. H. & Sullivan, D. P. (2009) International Business:

Environments and Operation, 12th ed. Pearson Prentice Hall.

http://www.novartis.com/

http://www.novartis.com/careers/

http://en.wikipedia.org/wiki/Novartis

http://www.nibr.com/

http://www.novartisvaccines.com/

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APPENDICES

Appendix A

Pharmacy - Pharmacy is the science and technique of preparing as well as dispensing drugs

and medicines. It is a health profession that links health sciences with chemical sciences and

aims to ensure the safe and effective use of pharmaceutical drugs.

Appendix B

Communication - Communication (from Latin commūnicāre, meaning "to share" [1]

) is the

activity of conveying information through the exchange of ideas, feelings, intentions,

attitudes, expectations, perceptions or commands, as by speech, gestures, writings, behavior

and possibly by other means such as electromagnetic, chemical or physical phenomena. It is

the meaningful exchange of information between two or more participants (machines,

organisms or their parts).