Marketing Strategy: Merck, Sharp & Dohme (MSD) & PfizerMARKETING STRATEGY ASSIGNMENT:
MSD:
PFIZER
CHARMI POPATROLL NO. 03MARKETING STRATEGY ASSIGNMENT MBA PHARMA TECH VTH YEAR
We are Merck
Merck and Company Inc. was incorporated in New Jersey and trades on the New York Stock Exchange (NYSE: MRK). It is a research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of products used to improve consumer and animal health.We are a leading pharmaceutical, chemical and life science company with four strong and dynamic divisions: Merck Serono (Pharma segement), Consumer Health, Performance Materials and Merck Millipore.The company operates in three segments: the pharmaceutical, animal health and consumer healthcare segments.We have a clear focus on research and development as well as profitable, high-margin specialties for high growth markets.We are committed to living our social, economic and ecological responsibility toward people, toward our partners in the market and toward our shareholders.
We are committed to improving health and well-being around the world. From developing new therapies that treat and prevent disease to helping people in need, we are guided by a rich legacy and inspired by a shared vision.Our core values are driven by a desire to improve life, achieve scientific excellence, operate with the highest standards of integrity, expand access to our products and employ a diverse workforce that values collaboration.
Key figures of the Merck GroupHighlights 20121) Sales grow to exceed the 10 billion for the first time driven by solid organic growth rates of the three largest divisions as well as changes from foreign exchange rates2) Strong operational performance while substantially advancing with the transformation of the company3) Good profitability and strong working capital management lead to increased free cash flow4) Merck Serono generates solid top and bottom-line results while implementing major restructuring programs and efficiency initiatives across global administrative functions, R&D operations and country organizations5) Performance Materials delivers exceptional performance driven by liquid crystal materials, while the Pigments business remains sluggish6) Sales growth of Merck Millipore driven by all business units, predominantly through biotech manufacturing products in Process Solutions7) Net financial debt significantly lowered to below 2 billion8) Proposal to increase dividend by 13% to 1.70 demonstrates the current and future strength of the underlying business million 20122011Change in %
Total revenues11,172.910,276.48.7
Sales 10,740.8 9,905.9 8.4
Operating result (EBIT)963.6 1,132.1 14.9
Margin (% of sales) 9.0 11.4
EBITDA 2,360.2 2,730.9 13.6
Margin (% of sales) 22.0 27.6
EBITDA pre one-time items 2,964.9 2,723.8 8.9
Margin (% of sales) 27.6 27.5
EPS pre one-time items (in ) 7.61 6.79 12.1
Free cash flow 2,039.9 1,436.4 42.0
Merck 2012 Fit for 2018 : Our shared ideas connect us. They are changing our company.
Ideas that connect & Ideas that enable changeThe future is created in the minds and hearts of pioneering thinkers and dynamic entrepreneurs. With expertise, passion and innovative products, Merck provides valuable impetus to improve and enrich everyday life as well as the health and lives of people on both a small and large scale. Yet the future is also being created by the visionary ideas and clear goals of the pharmaceutical, chemical and life science leader of tomorrow.On the road to tomorrow we launched a change process called Fit for 2018. We are streamlining our organizational structure and at the same time aligning it specifically to current and future requirements. We are giving our strong divisions full business accountability. We are increasing our profitability and establishing clear guidelines with centrally steered corporate development targets. We are establishing a performance-oriented culture while promoting objective-driven thinking, engaged teamwork and efficient actions.
.4Ps: Product (As per Indian Pharmaceutical Industry)In Pharma sector MSD operates in diverse segments. Diabetes, Derma, Gynaec., Hormones are the major contributors. Merck sells its products to drug wholesalers, retailers, hospitals, government agencies, and managed care providers. The companys products address drug therapies to treat atherosclerosis (Zocor), hypertension / heart failure (Cozaar, Hyzaar, and Vasotec), anti-inflammatory / analgesics (Vioxx, Arcoxia), osteoporosis (Fosamax), asthma / allergy (Singulair), pediatric vaccines, anti-bacterial / anti-fungal, and HIV. Portfolio of Options:
TOP BRANDS SUPERGROUP Values MAT (in Crs.) MS (as per 2013) in %
JUN'10 JUN'11 JUN'12 JUN'13
Grand total of MSD IPI 394.2 443.5 539.8 629.2
JANUMET Anti Diabetic 27.8 43.2 76.2 109.8 17.5%
JANUVIA Anti Diabetic 40.4 50.0 66.5 80.2 12.7%
QUADRIDERM-RF Derma 57.6 67.1 73.4 74.9 11.9%
DECA DURABOLIN Hormones 45.1 47.3 57.0 67.2 10.7%
DIPSALIC-F Derma 17.2 20.0 22.5 23.6 3.7%
NATUROLAX Gastro Intestinal 15.0 17.2 17.5 23.4 3.7%
NOVELON Gynaec. 12.4 13.4 17.2 21.2 3.4%
FEMILON Gynaec. 11.5 12.4 16.0 19.4 3.1%
ELOCON Derma 11.1 13.4 15.1 16.0 2.5%
ZIENAM Anti-infectives 8.7 9.7 9.1 12.4 2.0%
4Ps: PriceDifferent pricing strategies are adopted by Merck for different countries/regions:1. Differential Pricing is adopted by Merck for Emerging Markets (EM) like India, China, Russia, Brazil, South Korea, Mexico & Turkey.Eg. Januvia was sold at fraction of cost in India compared to US2. Value based Pricing is adopted to improve profitability in developed countries. Eg. U.S.3. Franchisee Pricing:4. Reimbursement strategy of assigned product portfolio5. Medicare - Merck medical benefits: It is a insurance co payment system organized by Merck to support the customers and help them increase the access to unaffordable medicines.
.4Ps: Promotion1. Co-promotion: To increase the promotion of the products & to increase the reach of the product co-promotion is done by Merck. Eg. Merck announced the tie up with Avanir Pharma to promote Mercks Januvia in U.S. (12th Aug 2013)2. Patient assistance program: To assist patient with long term diseases.Eg. SPARSH Patient assistance program in India for Januvia & Janumet3. Product website for every new product introduced in the market4. Direct to consumer advertising ie. TV commercialsEg. TV commercial for shingles vaccine Zostavax aimed at raising awareness among the patients. They did not mention the name of the drug but encouraged older adults to ask doctors about shingles.5. Newly published Book: The Merck Manual Go-To Home Guide for SymptomsThis book provides information on when to seek medical attention, when it may suffice for consumers to address their ailments at home. It also discusses the possible causes of common symptoms..4Ps: PlaceHeadquartered in Whitehouse Station, New Jersey, United States.Present in more than 60 countries. Present in Emerging Markets.
5 Cs: Customer, Company, Competition, Collaborators, Context
1st C: CustomerPatients, Stakeholders, Retailers, Specialist, General Physician & Consulting Physician
2nd C: CompanySWOT ANALYSIS MSD (Global level): Strengths1. A well- known trusted name in Pharmaceutical industry. Its Brand Image and Awareness2. A large department of R & D which conducts research regarding different health products & new ways of treating disease (At 1,511 million, R&D spending remained roughly at last years level (2011: 1,514 million). At 14.1%, the ratio of R&D expenses to total sales fell around one percentage point compared to 2011)3. Global market capture gives strong edge to the company4. Strong market capture & industry hold. Highest Profit Margin in the industry 5. High volume of product approval by FDA6. Diversified Product Portfolio7. Knowledge of benefits of risks offered8. Sophisticated Online Search Tool (mercksource.com)9. Transparency10. Expansion to developing countries (Access)Weaknesses1. The company has various controversies the biggest being VIOXX Product Liability ($4.85 billion) to be paid to the family members of people who got injured or died because of this drug causing risk of heart attack & strokes2. Liquidity of company is low & expenditure on R & D is high. Highest R&D with historically increasing expenses3. High salary of skilled pharmaceutical representatives4. Weak core portfolio (Overly dependent on joint venture) (Approximately 65% of Mercks 2008 revenue is attributable to alliance products and patents)5. Aggressive marketing open to scrutiny by government agenciesOpportunities1. Product diversification. Diversification into biologics, diabetes & infectious market segments2. Increasing elderly population worldwide3. Strategic Acquisitions eg. Schering plough4. Focus on R&D for chronic diseases vs. acute disease5. Penetration of vaccines and biologics for emerging international markets (Gardasil)6. Educate staff to promote loyalty through relationships from distribution channelsThreats1. Government regulations & actions may increase the threat of fines & loss of credibility which also have being happening in the past2. Risk of expensive class action law suits3. Loss of patent protection4. Tightening of FDA Regulatory Oversight5. Increased global competition6. May pose serious threats from companies like GSK who also making efforts to go global & capture markets.
3rd C:CompetitionIn its drug manufacturer industry, Mercks major competitors are Johnson & Johnson, Pfizer, Novartis, GlaxoSmithKline as well as other smaller companies.4th C: Collaborators1) JOINT VENTURE WITH INDIAS SUN PHARMA: To launch Januvia & Janumet in India.2) MSD entered collaboration with PFIZER 3) Merck licensing strategy results in high-value alliances: 65% of Mercks 2008 revenue is attributable to alliance products and patents eg. GARDASIL, ROTATEQ, FOSAMAX, COZAAR / HYZAAR, NEXIUM etc.5th C: Context: PEST ANALYSISIndian Political & Economic EnvironmentConsumer Price Index (CPI):
Chart - CPI inflation India 2012 (yearly basis) - The average inflation of India in 2012:9.30 Wholesale price inflation pressure are on ebb, but retail inflation remains high.
Number of policy initiatives by UPA government to arrest the downward slide of economy
Slow economic growth & subdued Industrial activity India is a 3rd largest economy in PPP terms & lowest per capita GDP in the world. Slower recovery of domestic demand and weak export activity. Industrial activity expected to remain subdued & growth in service & exports was expected to stay sluggish due to Depressed global condition. Steering Group to accelerate Infrastructure investment GDP grew at 4.9% in FY13 CAGR over past decade still stands at 7.68% Currency depreciated by >10% (expected INR 58 & 63 against USD $)
STPSEGMENTATION:With an enduring focus on innovation and sound science, we work to deliver vaccines, medications, and consumer and animal health products that can help millions around the world.Products: Pharmaceutical products, vaccines, prescription products, consumer products, animal health & chemicalsTARGETING: Large business owners & operatorsDeveloped & Emerging Pharmaceutical nations like India, China, Brazil, Russia etc.
POSITIONING:Mission Statement, Values, Strategy"Our aspiration is to make great things happen."The first sentence of ourMission Statementalso applies to ourvaluesand shapes theway the company is managed. In order for the Mission Statement to be reliably implemented, we have created globally consistent tools and control systems. This enables us to actively shape ourcorporate cultureand measure ourselves even better against our own principles.Thecorporate strategyis targeted to success, but equally respects the interests ofemployees, customers, providers of capital, and society.Our values and strategy give our employees clearorientationfor their daily work.A global research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures
PFIZERPfizer, Inc.is an Americanmultinationalpharmaceuticalcorporation headquartered inNew York City,and with its research headquarters inGroton, Connecticut, United States. It is one of theworld's largest pharmaceutical companies by revenues.A Pioneering Spirit on the Frontiers of Medicine: History of Pfizer
.4Ps: Product (As per Indian Pharmaceutical Industry)Pfizer develops and produces medicines and vaccines for a wide range of conditions including in the areas of immunology and inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain. Pfizer's products include Lipitor (atorvastatin, used to lower LDL blood cholesterol); Lyrica (pregabalin, for neuropathic pain/fibromyalgia); Diflucan (fluconazole, an oral antifungal medication); Zithromax (azithromycin, an antibiotic); Viagra (sildenafil, forerectile dysfunction); and Celebrex/Celebra (celecoxib, an anti-inflammatory drug).
Diversified global health care portfolio: human, animal biologic, small molecule medicines and vaccines Six Pfizer brands feature among the Top 100 pharmaceutical brands in India. Few ofPfizer brands - Lipitor, Viagra, Corex and Becosules etc Marketing Powerhouse in the Pharmaceutical Sector PfizerIndiaisrecognisedforitsmarketingstrength.Pfizerwasawardedtheprestigious Express Pharmaceutical Pulse 2002 award for overall excellence in the Indian pharmaceutical industryTOP 10 BRANDSVALUE as per in crs. (2013)
COREX278.1
BECOSULES159.9
DOLONEX97.2
MINIPRESS-XL92.1
GELUSIL-MPS91.6
FOLVITE77.5
MUCAINE68.2
MAGNEX59.8
WYSOLONE58.5
OVRAL-L51.7
Pfizer is committed to applying science and global resources to improve health and well-being at every stage of life. They strive to provide access to safe, effective and affordable medicines and related health care services to the people who need them.
PRICE:Pricing Strategy Is Based on Local Market and Competitive Dynamics 55% average price differential between US and emerging markets 60% price reduction to make available at $1 per dose in developing countries
5 CS:1st C: CustomerPatients, Stakeholders, Retailers, Specialist, General Physician & Consulting Physician
2nd C: CompanySWOT ANALYSIS PFIZER:Strengths1. Industry leaders. One of the largest pharmaceutical companies in the world and spread over more than 50 countries. Strong brand name and recall globally2. Excellent research and development (R&D) creating innovative and breakthrough products. R&D innovation with a broad therapeutic coverage3. Mergers and acquisitions with big pharma brands increasing brand reputation4. Has over 100,000 employees as a part of the organization5. Strong sales and marketing infrastructure. Marketing strength in major geographical and therapeutic areas6. Revived blockbuster credentials in recent years - Lyrica, Sutent and Chantix/ChampixWeaknesses1. Tough competition from other major pharma brands means limited scope for market share growth2. Negative brand image due to involvement in largest healthcare fraud of marketing its drug illegally. Law Suit Infringements3. Low Investment into R&D compared to competitionOpportunities1. Strategic agreements with other pharmaceutical companies andorganizationstoboostits research.2. Increasing awareness about healthcare needs & Increasing demand for quality healthcare solutions3. Global penetration through mergers and acquisitions4. Restructuring strategy designed to cut costs and create a leaner company5. Acquisitions and in-licensing/co- development opportunities6. Biologic market expansion7. Emergence of integrated global markets and globalisation for new products8. Co-marketing agreements with companies wishing to capitalize on Pfizer's marketingThreats1. Considerable exposure to generic competition, focal point of which is Lipitor, due to lose patent exclusivity in 20112. Further large scale M&A activity could further decline Pfizer's profitability3. Increased competition for core products like Viagra as its high cost encourages use of cheaper alternative treatments& An increase in the number of safety issues surrounding Viagra4. Competition from products similar to Pfizer's in R&D that reach the market close to or before Pfizer's products5. The new economic potential of emergent China, India and competition in diverse regional markets.6. Economic downturn influencing consumers' purchasing power7. Negative publicity. Losing the quality of their drugs and being sued by more consumers.8. Regulatory environment is becoming more & more stringent
3rd C:CompetitionIn its drug manufacturer industry, Pfizer major competitors are Johnson & Johnson, Merck, Novartis, GlaxoSmithKline as well as other smaller companies.4th C: Collaborators1. Developing Viable Business Models to Serve the Underserved2. Providing Important Medicines Through Institutional Buyers (For example, Pfizer has long-standing business partnerships with both the U.S. Agency for International3. Development and the United Nations Population Fund to make our injectable contraceptive, Depo-Provera, available to women all across the globe, from sub- Saharan Africa to Southeast Asia to Latin America.4. We are working to expand our relationship with such institutional buyers to make a broad portfolio of our medicines accessible to as many low income patients (as possible)
STP
SEGMENTATION:Heart disease, Obesity, psychiatric disorders, cognitive enhancers, oncology & animal health segment, dysfunction. TARGETING:Large business owners & operatorsPOSITIONING:Pfizer SloganA slogan is a short, memorable catch phrase, tagline or motto used to to identify a product or company in advertisements. The advertising slogan, or business slogan most associated with Pfizer, is:"Pfizer Quality."Pfizer Mission Statement:"We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live."Pfizer Vision:At Pfizer, we're inspired by a single goal: your health. That's why we're dedicated to developing new, safe medicines to prevent and treat the world's most serious diseases. And why we are making them available to the people who need them most. We believe that from progress comes hope and the promise of a healthier world
SVKMs NMIMS SPP SPTMPage 5
