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Merck Case Study

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Mallory James

on 24 April 2013

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Transcript of Merck Case Study

Mallory James: History/Core Competencies/Strategy/Competitive Advantage
Dane Jennings: SWOT
Cora Ashley: Porter's 5 Forces
Syndie Taylor: Financial Analysis/Recommendations Merck: Open for Innovation? Strategic Map SWOT Analysis Porter's 5 Forces Threat of Substitutes:
High to Moderate
Generic drugs
Reverse engineering
Low switching costs
Herbal medicine, home remedies, no medicine Power of Buyers:
Few large buyers (insurance companies, hospitals)
Purchase large quantities
Control many access points Rivalry Among Existing Competitors:
Slow industry growth
Competitors are roughly of equal size
High exit barriers Threat of Entry:
High entry barriers
High capital requirements
Large economies of scale
High proprietary technology Power of Suppliers:
Mostly commodities
Low bargaining power
Low switching costs Merck & Co. History Founded by
Friedrich Merck 1668 Merck and Co.
was established "The Harvard
of Pharma" 1891 Vioxx recall 2004 Acquisitions
Sirna Therapeutics 2006 "Reverse-Merger"
Schering Plough 2008 1950's Financial Analysis Strengths:
Investment in R&D
Incorporated as an United States firm
Employees- respected scientists
Company atmosphere
Strong financial position Weaknesses:
Legal liabilities
Alliance with Sirna Therapeutics
Development time
Lack of innovation
Loss of control
Mergers destroy shareholder value Opportunities:
Expanding market
Licenses, spin offs, and joint ventures
PhRMA investment
Open innovation Threats:
Generic drugs
Shorter patent exclusivity
Price Pressures
Decreasing pharmaceutical market
FDA approval
Drug development costs
Open innovation Use the open innovation strategy
Continue to connect with the external environment through informal networking, conference attendance, publications, creative business arrangements with other scientific organizations
Encourage employees’ understanding and acceptance of innovations and changes
Consider alliances long-term
Promote partnership with Schering Recommendations: 2011 WORLDWIDE SALES 2011 R&D EXPENSE CORPORATE GIVING
$48.0 BILLION $8.5 BILLION $1.3 BILLION 2011 Revenues in billions:
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