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Advantages and disadvantages of mergers and acquisitions
Advantages and disadvantages of mergers and acquisitions
Advantages and disadvantages of mergers and acquisitions
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External Environment Analysis Economy Merck & Co. has to be aware of the economy as with any industry. Within the recession, more and more were looking towards generic substitutes. This can at times not be a problem with patents. However, once a patent is up, a competitor who develops generic versions of Merck’s products becomes a low-cost competitor. However, during the recession from 2008 – 2009, Merck didn’t see any drop in sales. Actually, they were able to keep a continual increase in sales and net income. Socio-Culture Merck has not had to worry about much socio-culture shifts. As long as people need prescription drugs, they will have a consumer. There has been a slight shift in some who are wanting more natural remedies. However, …show more content…
They are missing out on opportunities that exist externally. It is time for the mindset of the company to evolve and understand that not all great ideas will be developed internally. In order to jump back to being the leading pharmaceutical company, they will have to open their doors to external pharmaceutical innovation. Stakeholder Identification A decision on whether or not an open innovation strategy is implement effects several stakeholders. First of all, it effects the stakeholders who are shareholders. Shareholders could be missing out on increased profits because the culture and organization of the company has become stubborn. Researchers who work at Merck are also stakeholders who are affected by this decision. They could possible lose jobs if Merck does employ an open innovation strategy and finds it more successful than its current innovation strategy. However, it could also develop more for them to work with and create more success. Varying ideas may be brought which works well with current ideas set in motion my Merck researchers. With the help of external ideas, they may be able to improve or create new …show more content…
It will allow more opportunities for the Merck & Co. to innovate from. Not all great ideas are being generated within Merck and this strategy will allow us access to those other great ideas. Open innovation will help Merck jump back in the lead of developing the larger number of new pharmaceutical drugs. They have already dipped their toe in with the “reverse-merger” with Schering-Plough which was great way to introduce the idea to the organization and culture within Merck. This course of action is the most ethical because it allows the company to maintain its core strategy of differentiation. It will also help continue the reputation of being innovative by supplying more ideas to work with within the R&D department. It will create more possible drug choices for consumers and profits for the company to enjoy, especially shareholders. An external idea could help produce the next Nobel Prize for the R&D
In the recent years the drug industry underwent a significant transformation. Many of the big companies generate high revenues, which allow them to expand. Some of them expand on their own others through mergers and the buying of smaller companies.
Doctor Tristram Engelhardt, an American philosopher, argues that the importance of these profits is to acquire resources and to productively make new discoveries. These profits will secure recourses for these companies and that with the extra money, these pharmaceutical companies can be more innovative. With these profits, more effort will be put in to decreasing morbidity and mortality risks. According to Engelhardt, if these companies decrease profits, the amount of resources and energies available to be innovative will also decrease, leading to more risks. However, Stan Frinkelstein and Peter Temin states that we can eliminate the link between drug prices and drug discovery by developing the Drug Development Corporation, that will solve this problem, as mention in the last
...ll help the company in selling generic drugs and provide affordable medications to its customer base.
In 2007, pharmaceutical company Mylan acquired Merck and their multibillion dollar generics business under CEO Robert Coury. Coury immediately appointed one of his top executives, Heather Bresch, to integrate the new products into the company’s pipeline. Bresch became Mylan’s COO later that year and decided to focus primarily on the Epipen, a spring-loaded syringe device created to deliver an exact dose of epinephrine, a severe allergy life-saving drug which immediately reverses life-threatening reactions to bee stings, peanuts, and other allergens.
Main Issue In 2000, Rich Kender, Vice President of Financial Evaluation and Analysis at Merck & Company was discussing the opportunity of investing in licensing, manufacturing and marketing of Davanrik, a drug originally developed to treat depression by LAB Pharmaceuticals. LAB proposed to sell the rights of all the future profits made from the successful launch of Davanrik at the cost of an initial fee, royalty payments and additional payments as the drug completed each stage of the approval process. Merck & Company's organizational goal is to constantly refresh its drug development portfolio and reach as many customers as possible during the patented period. So there was not only the potential of financial gain or quantitative aspect of the offer, but also the qualitative value which will be added by getting better positioning in the risky pharmaceutical industry.
UCB was founded 1920s and their first blockbuster drug was Zyrtec; since then have focused on the anti-inflammatory drugs.1 Sanofi is also in the same field of drugs as UCB. Recently, UCB and Sanofi entered a strategic partnerships aimed at finding treatments for immune-mediated diseases such arthritis and gastroenterology.1 The terms of the agreement is that there is a 50:50 split on costs and profits.1 Also UCB entitled to initial upfront, preclinical and clinical development milestone payments from Sanofi that could exceed the amount of 100 million euros.1 The arrangements of the partnership are not publicized. The purpose of the partnership is to gain new products for their product development pipeline, which keeps both companies to continue being attractive in the market. There is an advantages for both companies to use their competitive assets, resources, and network and understanding of their sales, but is the partnership a smart decision for UCB and if not is there a better option.
Another recommendation for Boston Scientific is to pursue a differentiation strategy instead of a cost-based leadership strategy. The oligopolistic nature of the industry and opportunities for innovation create an ideal situation for differentiation. This strategy is also dependent upon Boston Scientific acquiring and maintaining a plethora of patents. By using these patents, Boston Scientific would be able to create a distinct, innovative product that consumers would be willing to pay a higher amount for. Consumers would be less price-sensitive if Boston Scientific’s products were unrivaled and unique. Additionally, creating a technologically superior device could lead to a sustainable competitive advantage for Boston Scientific. Due to the
It is as a result of acquiring distinct competitive advantages that CEMEX was able ...
If drug costs were to drop 40-45%, the amount of a drug to move from animal testing to human clinics would decrease by 50-60% (Abbott and Vernon). With such high risk and low reward, pharmaceutical companies will likely stop or slow research on new technologies and compounds. In 1969 Canada imposed regulations on drug prices (Weidenbaum). After the regulations were imposed, there was a decline in new drugs being created (Weidenbaum). This change in the pharmaceutical industry would likely have a major effect on the medical industry as a whole.
Pfizer is the largest American pharmaceutical company and one of the largest pharmaceutical companies in the world. It competes with Merck and Glaxo, and markets such well-known medications as Celebrex and Viagra. However, the pharmaceutical industry as a whole has undergone changes in recent years with significant consolidation taking place and with increased scrutiny regarding the ways in which drugs are developed, tested and marketed. In addition, recent controversies have erupted regarding Merck's drug Vioxx, and Pfizer has been the target of unwanted publicity regarding its painkiller Celebrex. This research considers the strategic position of Pfizer, including its strengths and weaknesses as well as the opportunities and threats that it faces, its strategic priorities and the acquisition strategy that it might follow.
However, RLK’s competitors are downsizing and outsourcing R&D and exploiting on the cost advantages. If RLK decides to invest more money into R&D and should the new product stall on launch, they face the danger of becoming bankrupt.
... global marketplace, it is also essential that Johnson & Johnson focuses on the critical drivers of their future growth: to create value through innovation, to extend their global reach, with local focus, to execute with excellence in everything it does and to inspire leadership with purpose among the people who carry on the Johnson & Johnson legacy.
I think it is wise for the board of executives to take an active role in coming up with a system to evaluate their products. This evaluation system is considered a function strategy. In our text, it tells us that functional strategies consist of production procedures, advertising, product research, product development, personnel, economic, and support. (Coulter, K. 2013, p. 7) Due to the fact that Clorox has a wide range of products that are very diverse, it is important for them to evaluate them based on the current market. This strategy has allowed the company to evaluate the value of the products before resulting in a price increase or decrease. Clorox made a competitive strategy when they decided to go green. This was during the period when the company was going through leadership shift and the CEO thought
Other companies cannot replicate the drug and therefore they are forced to either wait until the patent expires or they must find an alternative drug that carries out the same purpose.... ... middle of paper ... ... It is clear to see that there are many pros and cons to patents in the pharmaceutical industry.
Open innovation opens the doors for a vast array of ideas and suggestions that can help an organization succeed in being innovative. This will allow the organization to hold a competitive advantage when compared to their competition. Organizations who understand the importance of managing technological innovation will have an easier time succeeding than those organizations who feel they are safe and put innovation on the back burner. Managing technological innovation is essential in this day and age, where technology is advancing at a faster than