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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Case Study SWOT Analysis Solution
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 - – increasing household debt because of falling income levels, customer relationship management is fast transforming because of increasing concerns over data privacy, digital marketing is dominated by two big players Facebook and Google, technology disruption, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, increasing government debt because of Covid-19 spendings,
supply chains are disrupted by pandemic , there is backlash against globalization, 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 -
Ability to recruit top talent
– Prilosec Astrazeneca is one of the leading recruiters in the industry. Managers in the AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
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.
Diverse revenue streams
– Prilosec Astrazeneca is present in almost all the verticals within the industry. This has provided firm in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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.
Operational resilience
– The operational resilience strategy in the AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug 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.
Innovation driven organization
– Prilosec Astrazeneca is one of the most innovative firm in sector. Manager in AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Low bargaining power of suppliers
– Suppliers of Prilosec Astrazeneca in the sector have low bargaining power. AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Prilosec Astrazeneca to manage not only supply disruptions but also source products at highly competitive prices.
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.
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.
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.
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.
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.
Highly skilled collaborators
– Prilosec Astrazeneca 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 -
High bargaining power of channel partners
– Because of the regulatory requirements, James G. Conley, Robert C. Wolcott, Eric Wong suggests that, Prilosec Astrazeneca 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.
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 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.
Products dominated business model
– Even though Prilosec Astrazeneca 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 - AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Prilosec Astrazeneca products
– To increase the profitability and margins on the products, Prilosec Astrazeneca needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, is just above the industry average. Prilosec Astrazeneca 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.
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 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.
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.
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.
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 -
Developing new processes and practices
– Prilosec Astrazeneca can develop new processes and procedures in Strategy & Execution 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 Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Prilosec Astrazeneca 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. Prilosec Astrazeneca 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.
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.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Prilosec Astrazeneca to increase its market reach. Prilosec Astrazeneca 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.
Using analytics as competitive advantage
– Prilosec Astrazeneca 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Prilosec Astrazeneca to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
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.
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 Prilosec Astrazeneca in the consumer business. Now Prilosec Astrazeneca can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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 -
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 .
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. Prilosec Astrazeneca 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.
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.
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.
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.
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.
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.
Environmental challenges
– Prilosec Astrazeneca needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Prilosec Astrazeneca can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Prilosec Astrazeneca can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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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