Case Study Description of Pharmaceutical Switching
In an unprecedented move in mid-1998, Blue Cross of California, a unit of WellPoint Health Networks, Inc., filed a Citizen Petition with the FDA to switch Claritin, manufactured by Schering-Plough, and two other second-generation antihistamines from prescription-only to over-the-counter (OTC) status. Prescription pharmaceuticals like Claritin were covered by insurance programs, whereas OTC drugs were not. In the late 1990s, U.S. spending on prescription pharmaceuticals had increased significantly, in part as a result of direct-to-consumer advertising of prescription drugs, and posed a substantial burden on insurance companies. Blue Cross argued that the switch would make the drugs more widely available to consumers and would benefit consumers because the second-generation antihistamines were non sedating, unlike the 100 antihistamines sold on the OTC market. Manufacturers opposed the switch because it would put the second-generation antihistamines under considerable price pressure and would disrupt their product planning. Moreover, a switch initiated by an insurance company could lead to future petitions for switches of other prescription drugs. Just under three years later, on May 11, 2001, an FDA advisory committee voted overwhelmingly that the three second-generation antihistamines could safely be marketed over the counter. Although the vote was not binding, the FDA usually acted in accord with the judgements of its advisory committees. The pharmaceutical companies strongly objected to the committee's vote and faced the challenge of developing a strategy for dealing with the threat.
Swot Analysis of "Pharmaceutical Switching" written by David P. Baron includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Antihistamines Prescription facing as an external strategic factors. Some of the topics covered in Pharmaceutical Switching case study are - Strategic Management Strategies, Marketing, Personnel policies, Product development and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Pharmaceutical Switching casestudy better are - – there is backlash against globalization, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, geopolitical disruptions, increasing commodity prices,
increasing transportation and logistics costs, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Pharmaceutical Switching
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pharmaceutical Switching case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Antihistamines Prescription, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Antihistamines Prescription operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Pharmaceutical Switching can be done for the following purposes –
1. Strategic planning using facts provided in Pharmaceutical Switching case study
2. Improving business portfolio management of Antihistamines Prescription
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Antihistamines Prescription
Strengths Pharmaceutical Switching | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Antihistamines Prescription in Pharmaceutical Switching Harvard Business Review case study are -
Superior customer experience
– The customer experience strategy of Antihistamines Prescription in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Antihistamines Prescription is one of the leading recruiters in the industry. Managers in the Pharmaceutical Switching are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Antihistamines Prescription has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pharmaceutical Switching Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– Pharmaceutical Switching firm has clearly differentiated products in the market place. This has enabled Antihistamines Prescription to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Antihistamines Prescription to invest into research and development (R&D) and innovation.
Diverse revenue streams
– Antihistamines Prescription is present in almost all the verticals within the industry. This has provided firm in Pharmaceutical Switching case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Antihistamines Prescription is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David P. Baron can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Antihistamines Prescription has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Antihistamines Prescription to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Antihistamines Prescription has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Pharmaceutical Switching - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the Pharmaceutical Switching Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Antihistamines Prescription has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Innovation driven organization
– Antihistamines Prescription is one of the most innovative firm in sector. Manager in Pharmaceutical Switching Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Antihistamines Prescription is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Antihistamines Prescription is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Pharmaceutical Switching Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Pharmaceutical Switching | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pharmaceutical Switching are -
High operating costs
– Compare to the competitors, firm in the HBR case study Pharmaceutical Switching has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Antihistamines Prescription 's lucrative customers.
Slow to strategic competitive environment developments
– As Pharmaceutical Switching HBR case study mentions - Antihistamines Prescription takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pharmaceutical Switching, in the dynamic environment Antihistamines Prescription has struggled to respond to the nimble upstart competition. Antihistamines Prescription has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Increasing silos among functional specialists
– The organizational structure of Antihistamines Prescription is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Antihistamines Prescription needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Antihistamines Prescription to focus more on services rather than just following the product oriented approach.
High cash cycle compare to competitors
Antihistamines Prescription has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Pharmaceutical Switching that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Pharmaceutical Switching can leverage the sales team experience to cultivate customer relationships as Antihistamines Prescription is planning to shift buying processes online.
Skills based hiring
– The stress on hiring functional specialists at Antihistamines Prescription has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Pharmaceutical Switching, is just above the industry average. Antihistamines Prescription needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Workers concerns about automation
– As automation is fast increasing in the segment, Antihistamines Prescription needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Low market penetration in new markets
– Outside its home market of Antihistamines Prescription, firm in the HBR case study Pharmaceutical Switching needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Antihistamines Prescription has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Pharmaceutical Switching should strive to include more intangible value offerings along with its core products and services.
Opportunities Pharmaceutical Switching | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Pharmaceutical Switching are -
Better consumer reach
– The expansion of the 5G network will help Antihistamines Prescription to increase its market reach. Antihistamines Prescription will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Antihistamines Prescription is facing challenges because of the dominance of functional experts in the organization. Pharmaceutical Switching case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Leveraging digital technologies
– Antihistamines Prescription can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Loyalty marketing
– Antihistamines Prescription has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Antihistamines Prescription can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Antihistamines Prescription can use these opportunities to build new business models that can help the communities that Antihistamines Prescription operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Antihistamines Prescription can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Pharmaceutical Switching, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Antihistamines Prescription can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Manufacturing automation
– Antihistamines Prescription can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Antihistamines Prescription can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Antihistamines Prescription can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Antihistamines Prescription to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Antihistamines Prescription in the consumer business. Now Antihistamines Prescription can target international markets with far fewer capital restrictions requirements than the existing system.
Threats Pharmaceutical Switching External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pharmaceutical Switching are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Antihistamines Prescription needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Antihistamines Prescription in the Sales & Marketing sector and impact the bottomline of the organization.
Stagnating economy with rate increase
– Antihistamines Prescription can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Antihistamines Prescription will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Increasing wage structure of Antihistamines Prescription
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Antihistamines Prescription.
Technology acceleration in Forth Industrial Revolution
– Antihistamines Prescription has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Antihistamines Prescription needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Antihistamines Prescription demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Antihistamines Prescription can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Pharmaceutical Switching .
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Antihistamines Prescription in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Antihistamines Prescription can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Antihistamines Prescription business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Antihistamines Prescription high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Pharmaceutical Switching Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Pharmaceutical Switching needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Pharmaceutical Switching is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Pharmaceutical Switching is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Pharmaceutical Switching is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Antihistamines Prescription needs to make to build a sustainable competitive advantage.
