AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions
AM-Pharma is a biotech company developing a medicine for patients with acute kidney injury. The case describes the company's journey from inception in 2001 to a large deal with Pfizer in 2015. The aim is to discuss the value creation of AM-Pharma through its strategic decisions over time. It highlights the patient journey, company challenges, market size potential, and how the management team was able to raise multiple financing rounds from venture capitalists. It further provides the readers with a unique insight in the key risks and operational challenges of a biotech company and the value of an experienced management team backed by strong investors. The drug development process is inherently risky, long and expensive and the probability of commercializing a new drug is very low. The company's CEO is the protagonist and the case is split in three parts to provide the readers with surprises and open strategic questions which are time related. The case is semi-chronologically and a patient story is intermingled to provide a different perspective on clinical trials, ethical dilemmas and the high unmet medical need for new therapies. The case ends with a valuation simulation, in which the readers can negotiate the AM-Pharma/Pfizer deal themselves. Learning objective: The aim of the case study is to evaluate the value creation of AM-Pharma strategic decisions over time. 1/ The strategy diamond and Porter's Five Forces will be applied as a tool for understanding the industry and the company's strategy. 2/ The key success factors are also assessed for this challenging setting of a biotech startup. 3/ Role of Serendipity and management vision in opening new doors. 4/ Different exit options are discussed, highlighting pros, cons and what actually happened. 5/ How clinical outcome, and exit timing highly impact the valuation. The case will trigger discussions on the strategic options listed, and engage the students into exit negotiations simulation.
Authors :: Jim Pulcrano, Tim Knotnerus, Marion Owczarczak-Fogli, Mohammed El Ansari
Swot Analysis of "AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions" written by Jim Pulcrano, Tim Knotnerus, Marion Owczarczak-Fogli, Mohammed El Ansari includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharma Biotech facing as an external strategic factors. Some of the topics covered in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study are - Strategic Management Strategies, International business, Mergers & acquisitions, Negotiations, Venture capital and Strategy & Execution.
Some of the macro environment factors that can be used to understand the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions casestudy better are - – increasing transportation and logistics costs, there is backlash against globalization, geopolitical disruptions, wage bills are increasing, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation,
increasing household debt because of falling income levels, increasing commodity prices, etc
Introduction to SWOT Analysis of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharma Biotech, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions can be done for the following purposes –
1. Strategic planning using facts provided in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions case study
2. Improving business portfolio management of Pharma Biotech
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 Pharma Biotech
Strengths AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharma Biotech in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study are -
Strong track record of project management
– Pharma Biotech is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Pharma Biotech
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pharma Biotech does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Training and development
– Pharma Biotech has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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.
Effective Research and Development (R&D)
– Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Cross disciplinary teams
– Horizontal connected teams at the Pharma Biotech 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.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Pharma Biotech digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pharma Biotech 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.
Innovation driven organization
– Pharma Biotech is one of the most innovative firm in sector. Manager in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Pharma Biotech is one of the leading recruiters in the industry. Managers in the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 Pharma Biotech 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.
Sustainable margins compare to other players in Strategy & Execution industry
– AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions firm has clearly differentiated products in the market place. This has enabled Pharma Biotech to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pharma Biotech to invest into research and development (R&D) and innovation.
Learning organization
- Pharma Biotech 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 Pharma Biotech is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Low bargaining power of suppliers
– Suppliers of Pharma Biotech in the sector have low bargaining power. AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pharma Biotech to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
Workers concerns about automation
– As automation is fast increasing in the segment, Pharma Biotech 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.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 Pharma Biotech has relatively successful track record of launching new products.
Need for greater diversity
– Pharma Biotech 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, in the dynamic environment Pharma Biotech has struggled to respond to the nimble upstart competition. Pharma Biotech has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Low market penetration in new markets
– Outside its home market of Pharma Biotech, firm in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, it seems that the employees of Pharma Biotech 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 to strategic competitive environment developments
– As AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions HBR case study mentions - Pharma Biotech 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.
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 Pharma Biotech supply chain. Even after few cautionary changes mentioned in the HBR case study - AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pharma Biotech vulnerable to further global disruptions in South East Asia.
No frontier risks strategy
– After analyzing the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, 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.
Capital Spending Reduction
– Even during the low interest decade, Pharma Biotech 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.
Increasing silos among functional specialists
– The organizational structure of Pharma Biotech is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pharma Biotech needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pharma Biotech to focus more on services rather than just following the product oriented approach.
Opportunities AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions | 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
Developing new processes and practices
– Pharma Biotech 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.
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. Pharma Biotech can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Pharma Biotech 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.
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 Pharma Biotech in the consumer business. Now Pharma Biotech can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pharma Biotech is facing challenges because of the dominance of functional experts in the organization. AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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.
Using analytics as competitive advantage
– Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pharma Biotech to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Pharma Biotech 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pharma Biotech 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pharma Biotech 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, AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pharma Biotech 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.
Loyalty marketing
– Pharma Biotech has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Better consumer reach
– The expansion of the 5G network will help Pharma Biotech to increase its market reach. Pharma Biotech 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 Pharma Biotech 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 Pharma Biotech to hire the very best people irrespective of their geographical location.
Threats AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Pharma Biotech in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Consumer confidence and its impact on Pharma Biotech 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.
Shortening product life cycle
– it is one of the major threat that Pharma Biotech is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Pharma Biotech 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. Pharma Biotech can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pharma Biotech business can come under increasing regulations regarding data privacy, data security, etc.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pharma Biotech 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
– Pharma Biotech 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pharma Biotech 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions .
Increasing wage structure of Pharma Biotech
– 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 Pharma Biotech.
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. Pharma Biotech can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Pharma Biotech 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pharma Biotech with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Weighted SWOT Analysis of AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 AM-Pharma: Creating Value (C) Handout 2: AM-Pharma Team Instructions 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 Pharma Biotech needs to make to build a sustainable competitive advantage.
