Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal
This case has been developed to facilitate a negotiation exercise related to the formation of partnership deals in the healthcare industry. It is based on actual information, but reflects a hypothetical situation involving two companies and a product that have all been disguised. The scenario described within the case involves Pharmac, a large pharmaceutical company, and Respire, a small medical start-up. Pharmac and Respire began negotiating a partnership to develop and eventually market an inhaled form of parathyroid hormone (PTH) to treat osteoporosis. If successful, this product would improve the available options for the treatment of osteoporosis. It was also expected to produce "blockbuster" sales since it would make PTH, an already extremely effective treatment option, more convenient and appealing to a large segment of untreated patients who were injection-averse (injection was the standard delivery mechanism for this drug). Development of the product was highly speculative and was expected to take six to seven years due to early stage development of the inhalable delivery system and the multi-year Phase III fracture trials required for approval. Pharmac had released the first man-made, injectable form of parathyroid hormone, called Strocal, in 2002. However, no one had yet developed a non-injectable version of PTH, despite efforts by Pharmac and other companies that spanned more than a decade. Respire's goal was to be the first company to solve this problem by developing an inhaled formulation and a device to deliver Strocal through the lungs in a safe, effective, and reproducible manner. Enough information is provided within the case to enable students to negotiate terms for royalties, milestones, exclusivity provisions, and an equity investment. At the end of OIT-81A, information known to Pharmac (but not to Respire) is provided. In OIT-81B, information known to Respire (but not to Pharmac) is given.
Authors :: Stefanos Zenios, Robert Chess, Sara Gaviser Leslie, Lyn Denend
Swot Analysis of "Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal" written by Stefanos Zenios, Robert Chess, Sara Gaviser Leslie, Lyn Denend includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pharmac Respire facing as an external strategic factors. Some of the topics covered in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal case study are - Strategic Management Strategies, Negotiations and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal casestudy better are - – there is backlash against globalization, wage bills are increasing, challanges to central banks by blockchain based private currencies, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, increasing transportation and logistics costs, banking and financial system is disrupted by Bitcoin and other crypto currencies,
geopolitical disruptions, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pharmac Respire, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pharmac Respire 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal can be done for the following purposes –
1. Strategic planning using facts provided in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal case study
2. Improving business portfolio management of Pharmac Respire
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pharmac Respire
Strengths Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pharmac Respire in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal Harvard Business Review case study are -
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Pharmac Respire digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pharmac Respire has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Highly skilled collaborators
– Pharmac Respire 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Strong track record of project management
– Pharmac Respire is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Successful track record of launching new products
– Pharmac Respire has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pharmac Respire 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.
Cross disciplinary teams
– Horizontal connected teams at the Pharmac Respire 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.
Learning organization
- Pharmac Respire 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 Pharmac Respire is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Pharmac Respire has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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.
Diverse revenue streams
– Pharmac Respire is present in almost all the verticals within the industry. This has provided firm in Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Effective Research and Development (R&D)
– Pharmac Respire 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to lead change in Leadership & Managing People field
– Pharmac Respire 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 Pharmac Respire in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Pharmac Respire has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pharmac Respire to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Pharmac Respire
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pharmac Respire does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal are -
Increasing silos among functional specialists
– The organizational structure of Pharmac Respire is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Pharmac Respire needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pharmac Respire to focus more on services rather than just following the product oriented approach.
Products dominated business model
– Even though Pharmac Respire 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 - Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Pharmac Respire products
– To increase the profitability and margins on the products, Pharmac Respire needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Pharmac Respire 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. Pharmac Respire 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.
High cash cycle compare to competitors
Pharmac Respire 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Pharmac Respire 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 bargaining power of channel partners
– Because of the regulatory requirements, Stefanos Zenios, Robert Chess, Sara Gaviser Leslie, Lyn Denend suggests that, Pharmac Respire is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Need for greater diversity
– Pharmac Respire has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Slow to strategic competitive environment developments
– As Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal HBR case study mentions - Pharmac Respire 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 star products
– The top 2 products and services of the firm as mentioned in the Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Pharmac Respire has relatively successful track record of launching new products.
Capital Spending Reduction
– Even during the low interest decade, Pharmac Respire 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.
Opportunities Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal | 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal are -
Loyalty marketing
– Pharmac Respire 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Pharmac Respire can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Pharmac Respire to increase its market reach. Pharmac Respire 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.
Creating value in data economy
– The success of analytics program of Pharmac Respire has opened avenues for new revenue streams for the organization in the industry. This can help Pharmac Respire to build a more holistic ecosystem as suggested in the Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal case study. Pharmac Respire can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pharmac Respire can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
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. Pharmac Respire can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pharmac Respire can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Pharmac Respire can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pharmac Respire in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Pharmac Respire 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 Leadership & Managing People segment.
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 Pharmac Respire 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pharmac Respire is facing challenges because of the dominance of functional experts in the organization. Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pharmac Respire 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, Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Pharmac Respire can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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.
Threats Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal are -
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 Pharmac Respire.
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 Pharmac Respire business can come under increasing regulations regarding data privacy, data security, etc.
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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal, Pharmac Respire may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
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 Pharmac Respire in the Leadership & Managing People sector and impact the bottomline of the organization.
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. Pharmac Respire needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Regulatory challenges
– Pharmac Respire 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 Leadership & Managing People industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pharmac Respire with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Pharmac Respire
– 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 Pharmac Respire.
Shortening product life cycle
– it is one of the major threat that Pharmac Respire is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Pharmac Respire 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. Pharmac Respire can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Pharmac Respire 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.
Technology acceleration in Forth Industrial Revolution
– Pharmac Respire has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Pharmac Respire needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Weighted SWOT Analysis of Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Negotiating Partnerships in the Healthcare Industry (A): The Pharmac and Respire Deal 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 Pharmac Respire needs to make to build a sustainable competitive advantage.
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