AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Strategy / MBA Resources
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Case Study Description of AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug
Tom McKillop, CEO of AstraZeneca, faced the classic quandary of large pharmaceutical firms. Within the year, the firm's patent for Prilosec (active ingredient omeprazole) was expiring. Prilosec was a US$6.2 billion/year blockbuster that revolutionized the treatment of chronic gastro-esophageal reflux disorders (GERD). Severe cost-based competition from generic drug manufacturers was, however, inevitable. Patent expirations were nothing new for the US$15.8 billion in revenues drug firm. AstraZeneca had Nexium, an improvement on the original Prilosec molecule, in the pipeline. Ideally, it would like to move brand-loyal Prilosec customers to Nexium. Additionally, the company had the opportunity to introduce its own version of generic omeprazole, hence becoming the first mover in the generic segment, and/or introduce an over-the-counter (OTC) version of omeprazole. Tactically, AstraZeneca would like to use regulatory incentives and intellectual property rights to strengthen its competitive position. How could the company use its entire portfolio of intellectual properties-including patents and trademarks-to actively manage the priced-based competition and achieve a revenue growth strategy in the GERD market?
Authors :: James G. Conley, Robert C. Wolcott, Eric Wong
Swot Analysis of "AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug" written by James G. Conley, Robert C. Wolcott, Eric Wong includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Prilosec Astrazeneca facing as an external strategic factors. Some of the topics covered in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug case study are - Strategic Management Strategies, Intellectual property, International business, Strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug casestudy better are - – wage bills are increasing, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, technology disruption, there is backlash against globalization,
challanges to central banks by blockchain based private currencies, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Prilosec Astrazeneca, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Prilosec Astrazeneca 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug can be done for the following purposes –
1. Strategic planning using facts provided in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug case study
2. Improving business portfolio management of Prilosec Astrazeneca
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Prilosec Astrazeneca
Strengths AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Prilosec Astrazeneca in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug Harvard Business Review case study are -
High switching costs
– The high switching costs that Prilosec Astrazeneca 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.
Superior customer experience
– The customer experience strategy of Prilosec Astrazeneca in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to lead change in Strategy & Execution field
– Prilosec Astrazeneca 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 Prilosec Astrazeneca in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Prilosec Astrazeneca has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Prilosec Astrazeneca to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Prilosec Astrazeneca digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Prilosec Astrazeneca 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.
Sustainable margins compare to other players in Strategy & Execution industry
– AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug firm has clearly differentiated products in the market place. This has enabled Prilosec Astrazeneca to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Prilosec Astrazeneca to invest into research and development (R&D) and innovation.
Learning organization
- Prilosec Astrazeneca 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 Prilosec Astrazeneca is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Prilosec Astrazeneca 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 James G. Conley, Robert C. Wolcott, Eric Wong 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.
Training and development
– Prilosec Astrazeneca has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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.
Successful track record of launching new products
– Prilosec Astrazeneca has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Prilosec Astrazeneca 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.
Organizational Resilience of Prilosec Astrazeneca
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Prilosec Astrazeneca does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Prilosec Astrazeneca is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Weaknesses AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug are -
Aligning sales with marketing
– It come across in the case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug can leverage the sales team experience to cultivate customer relationships as Prilosec Astrazeneca is planning to shift buying processes online.
High cash cycle compare to competitors
Prilosec Astrazeneca 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.
Slow to strategic competitive environment developments
– As AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug HBR case study mentions - Prilosec Astrazeneca 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.
Increasing silos among functional specialists
– The organizational structure of Prilosec Astrazeneca is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Prilosec Astrazeneca needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Prilosec Astrazeneca to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Prilosec Astrazeneca has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow decision making process
– As mentioned earlier in the report, Prilosec Astrazeneca has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Prilosec Astrazeneca even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High operating costs
– Compare to the competitors, firm in the HBR case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 Prilosec Astrazeneca 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Prilosec Astrazeneca 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.
Low market penetration in new markets
– Outside its home market of Prilosec Astrazeneca, firm in the HBR case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, in the dynamic environment Prilosec Astrazeneca has struggled to respond to the nimble upstart competition. Prilosec Astrazeneca has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
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 Prilosec Astrazeneca supply chain. Even after few cautionary changes mentioned in the HBR case study - AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Prilosec Astrazeneca vulnerable to further global disruptions in South East Asia.
Opportunities AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug | 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Prilosec Astrazeneca in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Prilosec Astrazeneca is facing challenges because of the dominance of functional experts in the organization. AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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.
Learning at scale
– Online learning technologies has now opened space for Prilosec Astrazeneca 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.
Building a culture of innovation
– managers at Prilosec Astrazeneca 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 Strategy & Execution segment.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Prilosec Astrazeneca can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Prilosec Astrazeneca 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Prilosec Astrazeneca 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.
Manufacturing automation
– Prilosec Astrazeneca can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
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. Prilosec Astrazeneca can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Prilosec Astrazeneca 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 Prilosec Astrazeneca to hire the very best people irrespective of their geographical location.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Prilosec Astrazeneca 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, AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Prilosec Astrazeneca can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Prilosec Astrazeneca can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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.
Threats AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug are -
High dependence on third party suppliers
– Prilosec Astrazeneca 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.
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 Prilosec Astrazeneca in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Prilosec Astrazeneca
– 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 Prilosec Astrazeneca.
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.
Consumer confidence and its impact on Prilosec Astrazeneca 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.
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.
Stagnating economy with rate increase
– Prilosec Astrazeneca 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.
Technology acceleration in Forth Industrial Revolution
– Prilosec Astrazeneca has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Prilosec Astrazeneca needs to keep up with the evolution of technology in the Strategy & Execution 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Prilosec Astrazeneca with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, Prilosec Astrazeneca may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Prilosec Astrazeneca 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug .
Regulatory challenges
– Prilosec Astrazeneca 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 Strategy & Execution industry regulations.
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 Prilosec Astrazeneca.
Weighted SWOT Analysis of AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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 Prilosec Astrazeneca needs to make to build a sustainable competitive advantage.
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