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Transcript of Merck Presentation
Increase MERCK market share in the emerging markets to 30 % by 2020
Be the leader worldwide
Employee Relations Review
Fit for 2018
Capture new markets through objective- driven actions
Bring customers closer through performance and customer orientation
Strengthen profitability and focus on strategic brands
Creating an efficient supply by working with other companies
Being committed to help people all over the world
Focusing on centers of growth in China (approximately 4000 new jobs)
Internal realignment : laying off employees
Global leadership organisation
Shared performance culture
Developed in 1985 to review and evaluate personnel policies and practices at Merck
More than 50 recommendations
Identifies having a diverse workforce as an advantage
Hanae El Idrissi Lalami
Zineb El Koudia
Mission & Vision
Thank you for your attention!
1891 : Merck & Co. is established
1897: Merck & Co. opens pharmacy in Manhattan, N.Y.
1899: First Merck Manual is published
1912: Merck & Co. establishes its first foreign subsidiary
1925: George W. Merck becomes president of Merck & Co.
1942: Merck begins producing penicillin "G“
1953: Merck merges with Sharp & Dohme
1968: Merck & Co., Inc. acquires Calgon Corporation
1980: Merck develops one of the first ever company-wide diversity training programs
1987: Merck is named America's most admired and most innovative company
1989: Johnson & Johnson Merck Consumer Pharmaceuticals Co. is established
1993: Merck & Co., Inc. acquires Medco Containment Services, Inc.
2009: Merck named a top company for executive women
2011: Kenneth C. Frazier becomes president and CEO of Merck & Co., Inc.
2013: Recognition for Merck's Commitment to Diversity
The pharmaceutical industry was worth $962 billion in 2012, and it is expected to exceed $1 trillion by 2014.
The 10 largest drugs companies control over one-third of this market.
Companies currently spend one-third of all sales revenue on marketing their products - roughly twice what they spend on research and development
Patent expirations and currency swings were the big stories for Top Pharmaceutical companies revenues in 2012.
Merck is ranked 4th in top 10 Pharmaceutical companies in 2012, according to Forbes.
“We strive to be a leading-edge healthcare company devoted to providing the most innovative and best solutions to improve health and save lives, helping the world feel and be well.”
“To make a difference in the lives of people globally through our innovative medicines, vaccines, biologic therapies, consumer care and animal health products. We aspire to be the best healthcare company in the world and are dedicated to providing leading innovations and solutions for tomorrow.”
“To discover, develop and provide innovative products and services that save and improve lives around the world.”
Our mission is to provide a genuine and enduring value to customers and shareholders for generations to come. We aim at taking leadership role in the pharmaceutical industry worldwide as well as building partnerships with a wide range of stakeholders to advance R&D, enable access to medicines and vaccines through out Access to Health guiding principles, and help improve quality of life across the globe. With the highest standards of ethics and integrity, we promise to protect the environment and support the communities in which we work and live. We are committed to delivering long-term returns to make a real difference in people’s life.
CEO : KENNETH C. FRAZIER
Number of employees : 86,000
Number of countries : More than 140
Market Capitalization : 136,746.27 (M USD)
Raking in terms of sales : 4th
Strategy 1 :
:Expand in Brazil
Brazilian Pharmaceutical Retail Market in R$
Why Brazil ?
MERCK does not have a strong presence globally.
MERCK has set itself an ambitious target to grow by 25% by 2013 in the emerging markets, or EMs, from 18% now.
Big pharmaceutical players in the industry are aggressively realigning their strategies and resources around emerging markets.
Demand for pharmaceutical products grows approximately 10% per year.
More and more of Brazil’s 191 million people are getting access to health services and medicines.
Health expenditure, total (% of GDP) in Brazil was 8.90 as of 2011
The pharmaceutical industry in Brazil has increased its production by 50% within 5 years.
The government is investing more and more in the healthcare sector and pharmaceutical industry
According to a March 2012 Deutsche Bank market research report1, the Latin American pharma market is worth more than $60 billion per year, which is equivalent to 7% of global pharma sales.
IMS Health4 forecasts Brazil’s pharma sales to climb to sixth globally by 2015.
It is already the largest pharma market in Latin America (accounting for more than a third of regional pharma sales), and ranks seventh globally
Brazil is expected to be a particularly strong contributor to several of Merck’s main categories, including antihistamines (13% of global growth), paediatric cough, cold and allergy remedies (11%) and laxatives (56%).
Increase MERCK market share in Brazil and Latin America by 10% by 2020
Increase MERCK market share in the emerging markets to 30 % by 2020
Improve its ranking to the top leader
Future Cash Flows: $9.3 billion
Costs: $3billion start+annual advertising expenses
NPV: Superior to $3 billion
Decrease in sales globally
Double digit growth in the organic consumer care market (10% worldwide estimated for 2012-2018).
Organic market is expected to reach $13.2 billion by 2013.
North America accounted for 34.8 % of global demand in 2011.
The Brazilian market for Naturals has grown to to a 20% annually since 2005.
Asia remains the largest market for Natural Personal Care with China and Japan representing 64% of the region.
Asia is ranked 2nd in growth after Brazil.
Penetrate the organic personal care market
Position among the leaders in the industry (Yves Rocher;Estee Lauders;Natura and O boticario in Brazil…)
Increase market share in the Consumer Care market
Profit from a diversified portfolio
Future Cash flows: $5 billion
Costs: $500M start+ Annual advertising expenses
NPV: Superior to $3 billion
Strategy 2 :
: Develop a strong personal care division with an emphasis on the organic products
Why organic products?
Offer a wide range of comsumer care products including skin care, hair care, cosmetics, oral care,…
Create a new SBU dedicated to organic products.
Focus the efforts on domestic market and key emerging markets (
Brazil and China
Costs: Invest $500 M annually
Breakdown of costs
R&D: $150 M
Advertising: $250 M (Internet, TV, Wholesalers and Retailers,…)
Supply costs(Production and distribution): $150 M
High generics competition and decrease in sales
of many star products
Reach top 2 rank in the global Pharmaceutical industry.
Boost annual revenues by more than 15%.
Having a strong generics division that accounts for more than 15% of total revenues by 2025
Maintain a good brand equity: Use another brand name for the generics division.
Ease penetration in emerging markets.
Future Cash flows: $ 13.9 billion
Costs: $3 billion start + Annual advertising expenses
NPV: Superior to $ 6 billion
Strategy 3 :
Launch a generics division
Outsource our production facilities in China to minimize production cost and optimize profit margins.
Advertize our products by emphasizing on our expertise as a world leader.
Lobbying in emerging markets to impose
our new brands.
Total costs : $ 3 billion
Land: $600 M.
Building: $500 M.
Equipment and machines: $400 M.
Marketing expenses: $1.5 billion at first and then it will be adjusted in response to changes.
High growth in the generics market.
Ease of entering this market ( almost no R&D expenses needed).
Increased bargaining power of customers
Increased demand for cheap drugs
Reduce risks associated to patent expirations.
Compensate losses from expired patents products.
Porter's Five- Forces
Grand Strategy Matrix
Strategy Selection Table
Forecasted Income Statement
http://www.lesechos.fr/entreprises-secteurs/grande-consommation/actu/reuters-00559832-merck-co-penalise-par-le-januvia-et-la-sante-animale-623032.php http://www.currentpartnering.com/insight/top-50-pharma/ http://www.lesaffaires.com/secteurs-d-activite/biotechnologies-et-pharmaceutique/merck-souffre-de-lexpiration-de-ses-brevets/562971#.Un9uj_nEPTB
Passport MERCK & CO INC IN CONSUMER HEALTH (WORLD) July 2013
http://issuu.com/focusreports/docs/phex_brazil_2012 http://export.gov/brazil/static/7.%20DRUGS%20AND%20PHARMACEUTICALS_Latest_eg_br_054744.pdf http://www.businesswire.com
http://blogs.nature.com/tradesecrets/2012/05/29/encouraging-pharma-in-brazil http://www.marketresearch.com/Business-Monitor-International-v304/Brazil-Pharmaceuticals-Healthcare-Q1-7308689/ http://www.slideshare.net/julianelewis/brazil-pharmaceutical-market-indicators-20032013 http://issuu.com/focusreports/docs/phex_brazil_2012Encouraging Pharma in Brazil : Trade Secrets