Several new developments were threatening the success of Big Pharma. The patents on well-known blockbusters were reaching expiry, and generic manufacturers were eagerly waiting to produce lower-priced copies. Throughout the world, governments were taking a more active role in determining the prices at which drugs could be sold. The expansion of government insurance programs was adding to the complexity of the marketing challenges. Another change involved a shift towards direct-to-customer advertising, including the proliferation of information on the Internet, in addition to the traditional process of sales visits to family doctors. Research funding had doubled since 1991, but the number of new drugs emerging each year had fallen by half. The research and development process was also changing dramatically. Whereas blockbuster drugs had been developed as general treatments for common conditions, it was becoming increasingly apparent that not all patients reacted in the same ways to these drugs, and some - although a very small percentage - suffered serious side effects. This reality was expected to lead to the creation of a much larger number of niche drugs, each one targeted at a narrower group of patients. Related to this development was the growth of biopharma in which new biotech companies were creating drugs that could attack specific cells. Some analysts felt that Big Pharma was in a peculiar predicament in that profits were still very large, and this served as a barrier to necessary changes in strategy.
Authors :: David W. Conklin, Murray J. Bryant, Danielle Cadieux
Swot Analysis of "Future of "Big Pharma?"" written by David W. Conklin, Murray J. Bryant, Danielle Cadieux includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Drugs Pharma facing as an external strategic factors. Some of the topics covered in Future of "Big Pharma?" case study are - Strategic Management Strategies, and Global Business.
Some of the macro environment factors that can be used to understand the Future of "Big Pharma?" casestudy better are - – there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing commodity prices, supply chains are disrupted by pandemic , cloud computing is disrupting traditional business models, technology disruption,
increasing household debt because of falling income levels, wage bills are increasing, etc
Introduction to SWOT Analysis of Future of "Big Pharma?"
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Future of "Big Pharma?" case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Drugs Pharma, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Drugs Pharma 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 Future of "Big Pharma?" can be done for the following purposes –
1. Strategic planning using facts provided in Future of "Big Pharma?" case study
2. Improving business portfolio management of Drugs Pharma
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Drugs Pharma
Strengths Future of "Big Pharma?" | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Drugs Pharma in Future of "Big Pharma?" Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Drugs Pharma 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.
High switching costs
– The high switching costs that Drugs Pharma 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.
Ability to recruit top talent
– Drugs Pharma is one of the leading recruiters in the industry. Managers in the Future of "Big Pharma?" are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Analytics focus
– Drugs Pharma 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 David W. Conklin, Murray J. Bryant, Danielle Cadieux 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.
Successful track record of launching new products
– Drugs Pharma has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Drugs Pharma 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.
Low bargaining power of suppliers
– Suppliers of Drugs Pharma in the sector have low bargaining power. Future of "Big Pharma?" has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Drugs Pharma to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Drugs Pharma 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
– Drugs Pharma 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 Future of "Big Pharma?" HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Drugs Pharma digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Drugs Pharma 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.
Ability to lead change in Global Business field
– Drugs Pharma 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 Drugs Pharma in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Operational resilience
– The operational resilience strategy in the Future of "Big Pharma?" 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.
Sustainable margins compare to other players in Global Business industry
– Future of "Big Pharma?" firm has clearly differentiated products in the market place. This has enabled Drugs Pharma to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Drugs Pharma to invest into research and development (R&D) and innovation.
Weaknesses Future of "Big Pharma?" | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Future of "Big Pharma?" are -
Products dominated business model
– Even though Drugs Pharma 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 - Future of "Big Pharma?" should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Drugs Pharma 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.
Increasing silos among functional specialists
– The organizational structure of Drugs Pharma is dominated by functional specialists. It is not different from other players in the Global Business segment. Drugs Pharma needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Drugs Pharma to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Drugs Pharma, firm in the HBR case study Future of "Big Pharma?" needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Drugs Pharma 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. Drugs Pharma 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Drugs Pharma 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 Future of "Big Pharma?" 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 Drugs Pharma has relatively successful track record of launching new products.
No frontier risks strategy
– After analyzing the HBR case study Future of "Big Pharma?", it seems that company is thinking about the frontier risks that can impact Global Business 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.
High operating costs
– Compare to the competitors, firm in the HBR case study Future of "Big Pharma?" 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 Drugs Pharma 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, David W. Conklin, Murray J. Bryant, Danielle Cadieux suggests that, Drugs Pharma 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 cash cycle compare to competitors
Drugs Pharma 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.
Opportunities Future of "Big Pharma?" | 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 Future of "Big Pharma?" are -
Redefining models of collaboration and team work
– As explained in the weaknesses section, Drugs Pharma is facing challenges because of the dominance of functional experts in the organization. Future of "Big Pharma?" 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.
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. Drugs Pharma can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Building a culture of innovation
– managers at Drugs Pharma 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 Global Business segment.
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 Drugs Pharma in the consumer business. Now Drugs Pharma can target international markets with far fewer capital restrictions requirements than the existing system.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Drugs Pharma 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 Drugs Pharma to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Drugs Pharma to increase its market reach. Drugs Pharma 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
– Drugs Pharma 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 Future of "Big Pharma?" - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Drugs Pharma to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Low interest rates
– Even though inflation is raising its head in most developed economies, Drugs Pharma 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Drugs Pharma can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Drugs Pharma 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.
Learning at scale
– Online learning technologies has now opened space for Drugs Pharma 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Drugs Pharma can use these opportunities to build new business models that can help the communities that Drugs Pharma operates in. Secondly it can use opportunities from government spending in Global Business sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Drugs Pharma 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, Future of "Big Pharma?", to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Future of "Big Pharma?" External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Future of "Big Pharma?" are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Drugs Pharma 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 Future of "Big Pharma?" .
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 Drugs Pharma business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Drugs Pharma 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 Drugs Pharma is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Drugs Pharma 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. Drugs Pharma can take advantage of this fund but it will also bring new competitors in the Global Business industry.
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 Drugs Pharma in the Global Business sector and impact the bottomline of the organization.
Regulatory challenges
– Drugs Pharma 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 Global Business industry regulations.
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. Drugs Pharma needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Drugs Pharma with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Drugs Pharma 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.
Increasing wage structure of Drugs Pharma
– 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 Drugs Pharma.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Future of "Big Pharma?", Drugs Pharma may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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 Drugs Pharma.
Weighted SWOT Analysis of Future of "Big Pharma?" 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 Future of "Big Pharma?" 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 Future of "Big Pharma?" 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 Future of "Big Pharma?" 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 Future of "Big Pharma?" 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 Drugs Pharma needs to make to build a sustainable competitive advantage.
