AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

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

Topics :: Strategy & Execution

Tags :: Intellectual property, International business, Strategy, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

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, increasing energy prices, increasing commodity prices, cloud computing is disrupting traditional business models, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic , 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 -

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.

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.

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.

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.

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.

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.

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.

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.

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.

Effective Research and Development (R&D)

– Prilosec Astrazeneca 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 AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.

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.

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.

---

---

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 -

Employees’ incomplete understanding of strategy

– From the instances in the HBR case study AstraZeneca, Prilosec, and Nexium: Strategic Challenges in the Launch of a Second-Generation Drug, it seems that the employees of Prilosec Astrazeneca don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.

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.

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.

Capital Spending Reduction

– Even during the low interest decade, Prilosec Astrazeneca 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.

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.

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.

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.

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.

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.

Workers concerns about automation

– As automation is fast increasing in the segment, Prilosec Astrazeneca 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.

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.

---

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 -

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Increase in government spending

– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Prilosec Astrazeneca can use these opportunities to build new business models that can help the communities that Prilosec Astrazeneca operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.

Leveraging digital technologies

– Prilosec Astrazeneca 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.

---

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 -

Shortening product life cycle

– it is one of the major threat that Prilosec Astrazeneca is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.

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.

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.

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. Prilosec Astrazeneca needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.

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.

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.

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 .

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.

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.

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.

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.

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.

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.

---

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.

--- ---