I. Introduction
TEVA is one of the top fifteen pharmaceutical companies in the world, especially being a leader in the generic sector and active pharmaceutical ingredients (API) suppliers. TEVA, headquartered in Israel, has over 46,000 employees in 60 countries (Ellis, 2012). This essay analyzes current business model of TEVA Pharmaceutical Industries Ltd, based on a selected model. Onwards, through a radical overhaul, it indicates the most fundamental challenge and the changing prospect that TEVA need to deal with from the past to the near future. Eventually, it explores the most considerable factor that would affect the business models in the entire pharmaceutical industry based on relevant industry analysis and empirical evidence.
II. Business model analysis
Business model illustrates the process of value creation and capture and defines how those value deliver to customers. Specifically, a business model articulates the logic and provides data and other evidence to explain how a firm actually operates. Additionally, it outlines the composition of revenue stream and cost structure to calculate the profits associated with the business enterprise delivering that value (Teece, 2010).
Chesbrough and Rosenbloom (2002) identify the business model to be a conceptual framework that mediates between technological development and economic value creation. Their business model definition is proposed, detailed and divided into 6 components defining the main function and purpose of a business model. (See Appendix 1) A firm’s success is based on the commercial benefits achievement with the technology innovation support through the implementation of an appropriate business model. In other words, technology development plays an essential role...
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... two largest markets in the U.S. and Europe. TEVA’s profits mainly stem from its blockbuster innovative drug: Copaxone. However, Copaxone is also the springhead that would bring huge uncertainty and challenge to TEVA. Hence, based on a series of evident analysis and facts interpretation, TEVA requires maintaining the pace with the swapping prospects in the industry. Next, Intellectual Property Rights play an essential role in the entire pharmaceutical industry, particularly in the generic sector. Admittedly, the transaction form and the collaboration type among corporations, such as merger& acquisition and partnership, have generous influence on the pharmaceuticals. In general, IPRs could support substantial price differential across different countries, which reflects variances in income. As well, IPRs would abet R&D innovation to exert much more efforts to a firm.
(7) Hall B. Patents and Patent Policy -. 2007. The 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the 'Secondary' of the Morse H. SETTLEMENT OF INTELLECTUAL PROPERTY DISPUTES IN THE PHARMACEUTICAL AND MEDICAL DEVICE INDUSTRIES: ANTITRUST RULES. Allison JR, Lemley MA, Moore KA, Trunkey RD. Valuable patents. Geol.
Lehman, Bruce. 2003. “The Pharmaceutical Industry and the Patent System”. International Intellectual Property Institute. Pages 1-14.
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.
Threat of new entrants is relatively high. Companies forming alliances are potential rivals. Even if earlier such company was not considered to be a threat, after merging with some research and development company or forming alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is however weakened by significant research and development costs necessary to successfully enter the business. Eli Lilly’s focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new entrants, but other products that form lesser part of company’s sales such as insulin and others are exposed to high threat of new entrants. The need of obtaining certificates and licenses also weakens the threat of new entrants. Discussed above leads to the conclusion that threat of new entrants is medium.
Spokane Industries has contracted Franklin Electronics for an 18 month product development contract. Franklin Electronics is new to using project management methodologies and has not been exposed to earned value management methodologies. Even though Franklin and Spokane have worked together in the past, they have mainly used fixed-price contracts with little to no stipulations. For this project, Spokane Industries is requiring Franklin Electronics to use formalized project management methodologies, earned value cost schedules, and schedules for reports and meetings. Since Franklin Electronics had no experience with earned value management, the cost accounting group was trained in the methodology in order to bid for the project.
Although monopolies appear damaging at times, there are arguments that they are an advantage to society. Monopolies in the pharmaceutical industry drive companies to pursue research and development (R&D) efforts to gain new patents. According to a 1992 study, among the 24 US. Industry groups, pharmaceuticals dedicated 16.6% of their amounts to basic research, while all other industries averaged at 5.3% (Sherer 1307). This fact validates the incentive pharmaceutical companies have to get a patent and acquire more power. Pfizer encourages R&D because of the incentives and a want to obtain patents to receive more profit. Pfizer has to promote itself to be successful, creating a good brand image that consumers will trust. If the company can advertise successfully, more consumers will purc...
10. Collis, David, and Troy Smith. "Strategy in the Twenty-First Century Pharmaceutical Industry:Merck&Co. and Pfizer Inc." Harvard Business School, 2007: 8-12.
Zott, C., Amit, R. And Massa, L. (2011) ‘The Business Model: Recent Developments and Future Research’, Journal of Management, vol.37, no.4 pp.1019-42 [Online]. Available at http://jom.sagepub.com/content/37/4/1019 [Accessed 24th November 2013]
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.
Janssen is a division of Johnson and Johnsons that primarily focus on diseases that can help develop new strategies in improving prevention as well as developing vaccines and its accessibility to the world. The pharmaceutical company of J&J invests large amounts of money in research and development of its products. The competitive environment of Johnson and Johnson is very high for pharmaceutical companies due to which that many companies are releasing drug products and other devices. However, this company does not face any potential competitors due to which that it is a large company that provides a wide range of opportunities such as finances, and experiences. This leads to advantages compared to other competitors due to whom the pharmaceutical companies creates a barrier because of the high cost in research and development in medicine. In addition, Johnson and Johnson have to make sure that it has many suppliers for different categories for their products especially in medicine if one supplier causes shortages. Although suppliers do not bargain for the price values of its products, it still influences the price in the market in different countries. In addition, finding
PROBLEM STATEMENT Teva Pharmaceuticals, the first multinational pharmaceutical company in Israel, has become a successful global giant in the industry of generic drugs. After experiencing a long period of success and growth in the generic drug industry against some big western pharmaceuticals, the company had acquired many well known pharmaceutical companies and had achieved its goal of $1 billion. theory seemed to be in trouble in building a new strategy and vision to compete with the rapidly growing generic industry. They confronted two big issues as key hurdles in their way.
Leonard Prescott, vice president and general manager of Weaver-Yamazaki Pharmaceutical of Japan, believed that John Higgins, his executive assistant, was losing effectiveness in representing the U.S. parent company because of an extraordinary identification with the Japanese culture.
When an individual decides to venture out on their own and become an entrepreneur they are taking a huge risk, one of the tools that can make the difference between being successful or failing is the Business Model Canvas (BMC). Osterwalder invented the BMC because he believed that a company’s first business plan always failed the minute it reached the customers, leaving the owners discouraged and deflated and feeling that they had wasted time, energy and money; so he wanted to create a more flexible business plan that owners can edit and make the changes needed to reach the customers needs "One Tool Startups Need to Brainstorm, Test and Win | First Round Review," n.d.). The canvas consists of nine elements or building blocks that create a visual template spelling out the business’s value proposition, infrastructure, customers and the finances (White, 2012). Breaking down the key elements that are vital to taking customers needs, wants or problems into a fruitful company
When the buzzword of business model was very active and reactive during the internet boom, many individuals did not understand the concept of the proper business model for the proper business (Magretta, 2002). When not utilizing the right type of model for the organization, the model will be misused and distorted (Magretta, 2002). Understanding the traditional organization and learning organization, will allow an organization to determine which time of organization they desire the most.
In addition to this, pharmaceutical companies can also regulate the price of the drug as they will be the only company selling that drug. However, these aspects of patents can adversely affect the generics industry. The generics industry cannot make or sell drugs that are patented but once a patent licence expires, both the generics industry and the WHO see increased benefits as drugs become more widely available around the world (i.e. developing countries) at a lower price. Here we will discuss the pros and cons of patents from the point of view of the pharmaceutical industry, the generics industry and the WHO. As we said above, patents grant exclusive rights to an invention or a process of making and invention.