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, central banks are concerned over increasing inflation, increasing transportation and logistics costs, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, technology disruption,
cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , 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 -
Organizational Resilience of Antihistamines Prescription
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Antihistamines Prescription does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Antihistamines Prescription has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Antihistamines Prescription has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
Highly skilled collaborators
– Antihistamines Prescription has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Pharmaceutical Switching HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Antihistamines Prescription digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Antihistamines Prescription has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Sales & Marketing field
– Antihistamines Prescription is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Antihistamines Prescription in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Cross disciplinary teams
– Horizontal connected teams at the Antihistamines Prescription are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
Low bargaining power of suppliers
– Suppliers of Antihistamines Prescription in the sector have low bargaining power. Pharmaceutical Switching has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Antihistamines Prescription to manage not only supply disruptions but also source products at highly competitive prices.
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.
Weaknesses Pharmaceutical Switching | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pharmaceutical Switching are -
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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Antihistamines Prescription supply chain. Even after few cautionary changes mentioned in the HBR case study - Pharmaceutical Switching, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Antihistamines Prescription vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Antihistamines Prescription has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
No frontier risks strategy
– After analyzing the HBR case study Pharmaceutical Switching, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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.
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.
Lack of clear differentiation of Antihistamines Prescription products
– To increase the profitability and margins on the products, Antihistamines Prescription needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
High bargaining power of channel partners
– Because of the regulatory requirements, David P. Baron suggests that, Antihistamines Prescription is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
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.
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.
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 -
Building a culture of innovation
– managers at Antihistamines Prescription can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Using analytics as competitive advantage
– Antihistamines Prescription has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Pharmaceutical Switching - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Antihistamines Prescription to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Antihistamines Prescription to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
Buying journey improvements
– Antihistamines Prescription can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pharmaceutical Switching suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Antihistamines Prescription to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Antihistamines Prescription to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Antihistamines Prescription in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Antihistamines Prescription can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Antihistamines Prescription can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
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.
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.
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.
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 -
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pharmaceutical Switching, Antihistamines Prescription may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Antihistamines Prescription.
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.
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.
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.
Regulatory challenges
– Antihistamines Prescription needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
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 .
Shortening product life cycle
– it is one of the major threat that Antihistamines Prescription is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
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.
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.