Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

Case Study SWOT Analysis Solution

Case Study Description of Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement

In 2004, pharmaceutical powerhouse Merck acknowledged potentially harmful side effects and withdrew one of its best selling drugs, Vioxx, an arthritis and pain relief drug, from the market. Withdrawing an FDA approved drug from the U.S. market due to newly-discovered side effects was not so uncommon. What was unusual, however, was that Merck's withdrawal was a voluntary decision by the company after Vioxx had been taken by an estimated 80 million patients during four plus years on the market. While Merck's decision was initially hailed as an example of Merck's well known dedication to ethical business practices, some in the medical community instead accused Merck of intentionally keeping Vioxx on the market even though it was too dangerous. Critics claimed that Merck had put profits ahead of patients and Merck soon faced close to 30,000 product liability lawsuits. This case package consists of a written case, supporting written materials, and an accompanying case video which takes place in the courtroom of a trial against Merck. Tom Cona and John McDarby sued Merck after experiencing heart attacks that they attributed to Vioxx. Using trial footage supplied by Courtroom View Network, this case explores the kinds of wrongful conduct alleged and how companies like Merck defend themselves against such claims. The witnesses testifying in this trial include the patients and their families who are suing, Merck's CEO and senior management, the physicians who prescribed the drug, and those who were called to give expert testimony in support of and against Merck's drug development, regulatory, and marketing activities.Disk 1: Introduction to the trial & Opening statements Disk 2: Testimony in Plaintiffs' Case Disk 3: Testimony in Merck's Defense Disk 4: Closing Statements, Judge Instructions, Verdicts Disk 5: Review copy of case study, supplementary materials and slides from video presentation This material is designed to be used in a one-day seminar or equivalent, with students having read the written case study and watched Disk 1 prior to class. This case is particularly well suited for business, medical, and law students. The written materials and video are sold as a package and are designed to be used together. Academic faculty may request a teaching note. Please contact cases_requests@gsb.stanford.edu for permissions to use the written case each time it is taught.

Authors :: Margaret L. Eaton

Topics :: Strategy & Execution

Tags :: Ethics, Health, Product development, Regulation, SWOT Analysis, SWOT Matrix, TOWS, Weighted SWOT Analysis

Swot Analysis of "Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement" written by Margaret L. Eaton includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merck Merck's facing as an external strategic factors. Some of the topics covered in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement case study are - Strategic Management Strategies, Ethics, Health, Product development, Regulation and Strategy & Execution.

Some of the macro environment factors that can be used to understand the Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement casestudy better are - – supply chains are disrupted by pandemic , increasing commodity prices, digital marketing is dominated by two big players Facebook and Google, geopolitical disruptions, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, increasing household debt because of falling income levels, there is increasing trade war between United States & China, increasing energy prices, etc

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Introduction to SWOT Analysis of Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement

SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merck Merck's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merck Merck's 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.

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SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix

SWOT analysis of Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement can be done for the following purposes –
1. Strategic planning using facts provided in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement case study
2. Improving business portfolio management of Merck Merck's
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 Merck Merck's

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Strengths Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The strengths of Merck Merck's in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement Harvard Business Review case study are -

Effective Research and Development (R&D)

– Merck Merck's 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement - 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

– Merck Merck's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merck Merck's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.

Operational resilience

– The operational resilience strategy in the Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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.

Training and development

– Merck Merck's has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.

Sustainable margins compare to other players in Strategy & Execution industry

– Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement firm has clearly differentiated products in the market place. This has enabled Merck Merck's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Merck Merck's to invest into research and development (R&D) and innovation.

Superior customer experience

– The customer experience strategy of Merck Merck's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.

Low bargaining power of suppliers

– Suppliers of Merck Merck's in the sector have low bargaining power. Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merck Merck's to manage not only supply disruptions but also source products at highly competitive prices.

Innovation driven organization

– Merck Merck's is one of the most innovative firm in sector. Manager in Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.

Cross disciplinary teams

– Horizontal connected teams at the Merck Merck's 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.

Organizational Resilience of Merck Merck's

– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merck Merck's 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

– Merck Merck's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Merck Merck's 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.

Strong track record of project management

– Merck Merck's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.

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Weaknesses Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The weaknesses of Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement are -

High bargaining power of channel partners

– Because of the regulatory requirements, Margaret L. Eaton suggests that, Merck Merck's 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.

High operating costs

– Compare to the competitors, firm in the HBR case study Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Merck Merck's 's lucrative customers.

Ability to respond to the competition

– As the decision making is very deliberative, highlighted in the case study Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement, in the dynamic environment Merck Merck's has struggled to respond to the nimble upstart competition. Merck Merck's 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 Merck Merck's supply chain. Even after few cautionary changes mentioned in the HBR case study - Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Merck Merck's vulnerable to further global disruptions in South East Asia.

Increasing silos among functional specialists

– The organizational structure of Merck Merck's is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Merck Merck's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Merck Merck's to focus more on services rather than just following the product oriented approach.

High dependence on star products

– The top 2 products and services of the firm as mentioned in the Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Merck Merck's has relatively successful track record of launching new products.

Slow to strategic competitive environment developments

– As Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement HBR case study mentions - Merck Merck's 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.

No frontier risks strategy

– After analyzing the HBR case study Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement, it seems that company is thinking about the frontier risks that can impact Strategy & Execution 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.

Compensation and incentives

– The revenue per employee as mentioned in the HBR case study Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement, is just above the industry average. Merck Merck's 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.

Capital Spending Reduction

– Even during the low interest decade, Merck Merck's 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.

Products dominated business model

– Even though Merck Merck's 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 - Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement should strive to include more intangible value offerings along with its core products and services.

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Opportunities Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement | 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement are -

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. Merck Merck's can explore opportunities that can attract volunteers and are consistent with its mission and vision.

Lowering marketing communication costs

– 5G expansion will open new opportunities for Merck Merck's 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.

Increase in government spending

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

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 Merck Merck's in the consumer business. Now Merck Merck's can target international markets with far fewer capital restrictions requirements than the existing system.

Using analytics as competitive advantage

– Merck Merck's 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Merck Merck's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.

Manufacturing automation

– Merck Merck's 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.

Leveraging digital technologies

– Merck Merck's 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.

Better consumer reach

– The expansion of the 5G network will help Merck Merck's to increase its market reach. Merck Merck's 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.

Remote work and new talent hiring opportunities

– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Merck Merck's 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 Merck Merck's to hire the very best people irrespective of their geographical location.

Learning at scale

– Online learning technologies has now opened space for Merck Merck's 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.

Reforming the budgeting process

- By establishing new metrics that will be used to evaluate both existing and potential projects Merck Merck's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.

Developing new processes and practices

– Merck Merck's 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.

Buying journey improvements

– Merck Merck's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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.

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Threats Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis

The threats mentioned in the HBR case study Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement are -

Environmental challenges

– Merck Merck's 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. Merck Merck's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.

Shortening product life cycle

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

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 Merck Merck's.

Increasing wage structure of Merck Merck's

– 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 Merck Merck's.

Consumer confidence and its impact on Merck Merck's 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.

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 Merck Merck's in the Strategy & Execution sector and impact the bottomline of the organization.

Technology acceleration in Forth Industrial Revolution

– Merck Merck's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Merck Merck's 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.

High dependence on third party suppliers

– Merck Merck's 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.

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. Merck Merck's 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.

Barriers of entry lowering

– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merck Merck's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.

Regulatory challenges

– Merck Merck's 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.

Increasing international competition and downward pressure on margins

– Apart from technology driven competitive advantage dilution, Merck Merck's 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement .

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.

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Weighted SWOT Analysis of Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Lessons from Pharmaceutical Product Litigation: Merck and the Vioxx Withdrawal, Cona & McDarby vs. Merck, Video Supplement 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 Merck Merck's needs to make to build a sustainable competitive advantage.

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