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INTRODUCTION
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1.1
INTRODUCTION
Strategies exist at several levels in any organization - ranging from the overall
business (or group of businesses) through to individuals working in it.
Corporate Strategy - is concerned with the overall purpose and scope of the business
to meet stakeholder expectations. This is a crucial level since it is heavily influenced
by investors in the business and acts to guide strategic decision-making throughout the
business. Corporate strategy is often stated explicitly in a "mission statement".
Functional Strategy - is concerned with how each part of the business is organized to
deliver the corporate and business-unit level strategic direction. Operational strategy
therefore focuses on issues of resources, processes, people etc.
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1.2
1.3
The prime source for the term paper content is the annual report of the respective
companies. Then I search the internet to find more contents related to this topic. I also
took the help of our two authorized book for the course which are Strategic
Management: An Integrated Approach by Charles W. L. Hill & Gareth R. Jones and
Strategic Management: Concept & Cases by Arther A. Thompson Jr. & A.J
Strickland.
1.4
One of the main limitations of this term paper is that the only source available for
collecting data is the annual report of the respective companies and their websites.
There was not enough time available for fixing a meeting with the company
representatives.
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CHAPTER 02
AN ANALYSIS OF
PHARMACEUTICAL
INDUSTRIES
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2.1
PHARMACEUTICAL INDUSTRY
Pharmaceutical industry is the industry which develops, produces, and markets drugs
or pharmaceuticals licensed for use as medications. Pharmaceutical companies are
allowed to deal in generic or brand medications and medical devices. They are subject
to a variety of laws and regulations regarding the patenting, testing and ensuring
safety and efficacy and marketing of drugs. The pharmaceutical industry is
responsible for the development, production and marketing of medications. Thus, its
immense importance as a global sector is evident. The total level of pharmaceutical
revenue worldwide had reached nearly one trillion U.S. dollars. North America is
responsible for the largest portion, generating more than 40 percent of these revenues.
This is mostly due to the leading role of the U.S. pharmaceutical industry. But as in
many other industries, the Chinese pharmaceutical sector shows the highest growth
rates worldwide.
Pharmaceutical Industry has grown in Bangladesh in the last two decades at a
considerable rate. The sector consistently creates job opportunities for qualified
people. In Bangladesh Pharmaceutical sector is one of the most developed hi tech
sector which is contributing in the country's economy. The professional knowledge,
thoughts and innovative ideas of the pharmacists working in this sector are the key
factors for these developments. Due to recent development of this sector we are
exporting medicines to global market including European market. This sector is also
providing 95% of the total medicine requirement of the local market. Leading
Pharmaceutical Companies are expanding their business with the aim to expand
export market.
For preparing this term paper I have chosen GlaxoSmithKline & Novartis from
the foreign market while Incepta Pharmaceuticals Limited and The ACME
Laboratories Limited from the local market. I have tried to analyze their different
strategies followed by them and finally tried to compare among the strategies followed
by those companies.
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2.2
GlaxoSmithKline
2.2.1
GSK lays down its strategies with the intention of being the Indisputable leader in the
pharmaceutical sector. Indisputable in the sense of quality of the product, price,
selling and distribution network, more precisely in every sphere of its activities.
GSK have been creating a more balanced business and product portfolio, capable of
delivering sustainable sales growth. This is centered on our three business areas of
Pharmaceuticals, Vaccines and Consumer Healthcare.
GSK have changed their R&D organization so that it is better able to sustain a
pipeline of products that offer valuable improvements in treatment for patients and
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Being a responsible business is central to their strategy, and how we deliver success is
just as important as what we achieve. Ensuring our values are embedded in our culture
and decision-making helps they better meet the expectations of society.
2.2.2
The company has two main divisions, pharmaceuticals and consumer healthcare. The
pharmaceuticals division is the largest part of GSKs businesses and can be divided
into prescription drugs and vaccines. This report deals with the pharmaceuticals
division only. The headquarters of GSK are located in the UK, with additional
operational headquarters in the USA. The company operates in some 160 national
markets, the major ones being the USA, Japan, France, Germany, the UK and Italy.
GSK conducts R&D at more than 20 sites and employs 15,000 employees in R&D.
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The company has a leading position in genetics and in new drug discovery
technologies. The manufacture and supply system of GSK operates as a single global
network.
2.2.3
This
specific
corporate
strategy
finds
its
echo
within
about
effective
combination
of
quality
and
price
for
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2.3
NOVARTIS PHARMACEUTICALS
2.3.1
2.3.2
Novartis pharmaceuticals business strategy is a unique one. They are always ready to
fulfill the customer demands and they are able to please the customer group with
sensible prices. With these they try to achieve the distinctive competencies.
Novartis has been trying a very different strategy. Instead of targeting giant
populations, it targets rare diseases with a small, very similar population. That lets
scientists figure out the molecular pathway by which the disease works and how to
interrupt it.
Market Penetration: Novartis will grow markets by penetrating markets in which
similar products already exist, but their goal is to gain competitors customers and
their market share. They will also try to convince the current non-users of our
products to buy our products by using smart advertising and loyalty programs.
Market Coverage: The market coverage is differentiated in their case because they
offer different products for different target groups. However, all of thei products will
be available simultaneously in all of the selling points: Pharmacies, Supermarkets and
Hospital drugstores.
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2.3.3
Novartis itself created from merging two companies. Novartis strategy is based on
focused diversification. Their uniquely broad business portfolio focuses on sciencebased healthcare sectors that are growing, reward innovation and enhance the lives of
patients. Innovation is fundamental to our business. In 2012, we invested $9.1 billion
(USD) across our divisions in R&D and we plan to sustain our high level of
investment.
Novartis is consistently rated as having one of the industrys most respected
pharmaceutical development pipelines with 141 projects in pharmaceutical clinical
development.
The Swiss giant Novartis aims to transform itself from a pharmaceutical company to
become a broader-based health care company over the next five to ten years. To do
this it has been strengthening its core competence of science-based innovation while
focusing on five high-growth segments of healthcare: Pharmaceuticals, eye care,
generics, consumer health and vaccines and diagnostics.
2.4
2.4.1
Incepta Limited is committed about maintaining salaries and benefits that are fair to
all employees and competitive in the local market place. The management monitors
changes in the economy and salary market to ensure that the overall compensation
package is sufficient to attract, recruit and retain high quality staff within the financial
capabilities of Incepta Limited.
Incepta has taken the following strategy for reduce the production cost. These are:
Sourcing better quality of raw material at the lower cost
Take initiative to enhancing productivity
Take initiative to minimize production process losses
Take initiative to minimize wastage of finished product
Incepta has taken the following strategy to reduce the distribution cost. These are
Develop smart distribution system
Give training to distribution assistant to be more efficient.
Update sales territory periodically.
Use of fuel efficient vehicle to reduce the distribution cost.
Take initiative to reduce the inventory cost.
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2.4.2
Incepta practice the following strategy to support the other department for smooth
operation. These are
Implement new technology instead of legacy system
Take initiative cost reduction program to reduce the IT cost
Incepta practice the following strategy to increase the sales in terms of taka and
product quantity. These are
Take initiative to develop loyal customer
Product diversification to enhance product basket.
Give training to enhance selling and communication skill
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2.4.3
Incepta has its own large distribution network having 20 depots all over the country.
They make the products available in every single drug store of the country. The depots
are located in Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, Barisal, Comilla,
Noakhali, Mymensingh, Magura, Bogra, Narayangonj, Rangpur, Dinajpur, Tangail,
Jessor, Moulovibazar, Cox's Bazar and Feni.
2.5
2.5.1
The functional departments take the responsibility to implement and achieve their
objectives.
functional department knows the areas to be developed and achieve the company
objectives. The company has diversified business and is responsible for formulating
and implementing the strategy for each business. Coordination and consistency among
the various functional and process strategies are helping the company to achieve its
objectives.
Pursuing ways to realize economies of scale:
Moves to achieve continuous reduction of total cycle time in production
process. Square is implementing flexible manufacturing systems and doing
batch processing to minimize costs.
Finding ways to enrich human capital and develop fully efficient and
productive workforce by necessary training and good recruitment process
Continuous involvement in introducing newer molecules to market and new
distribution systems to meet the needs of the future.
Moves to empower all Square employees in a participative, cooperative and
creative workplace. Any new idea of product marketing and sales is instantly
rewarded.
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2.5.2
2.5.3
The ACME laboratories have an unique strategy to maintain the corporate works.
These are:
Making the moves to establish positions in different businesses and achieve
related or unrelated diversification.
Pursuing ways to capture valuable cross-business strategic fits and turn them
into competitive advantage.
To take the initiative and act accordingly to boost overall performance of the
company.
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CHAPTER 03
COMPARISON
&
CONCLUSION
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3.1
COMPARISION
Strategic planning involves making decisions and taking actions that help organization
to achieve goals. Strategic management involves setting the overall goals, values and
direction of the organization. Ideally, planning and management align to move an
organization forward. Comparing and contrasting an organizations strategic plan with
a management strategy can improve resourcefulness and efficiency that leads to
successfully achieving organizational goals.
Here I have already analyzed the different strategies taken by the selected company
which lies in the pharmaceuticals industry. Now I am going to compare among them
in a systematic manner:
On the other hand Novartis has introduced science based innovation to deliver positive
health outcomes for patients and payers. Their strategic priorities are to extend their
lead in innovation, accelerate growth and drive productivity across our diversified
portfolio in order to generate profits and increase shareholder return. Committed to
high performance with integrity, we are engaged in an open and cooperative dialogue
with all of our stakeholders.
Incepta Limited is committed about maintaining salaries and benefits that are fair to
all employees and competitive in the local market place. Incepta has taken some
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unique strategy for reduce the production cost. Incepta has taken some strategy to
reduce the distribution cost.
The ACME laboratories limited have functional departments to take the responsibility
to implement and achieve their objectives.
strategy for the business. The functional department knows the areas to be developed
and achieve the company objectives. The company has diversified business and is
responsible for formulating and implementing the strategy for each business.
Coordination and consistency among the various functional and process strategies are
helping the company to achieve its objectives.
On the other hand Novartis are always ready to fulfill the customer demands and they
are able to please the customer group with sensible prices. With these they try to
achieve the distinctive competencies. Instead of targeting giant populations, it targets
rare diseases with a small, very similar population.
Incepta follows the integrated cost leadership/differentiation strategy. Because
Incepta makes the various types of strategy for its each and every department. Incepta
practice some unique strategy to support the other department for smooth operation.
The ACME laboratories operating strategy of the company is to implement the
actions effectively & efficiently. Moves to implement JIT inventory management
system. This will reduce s fixed overhead cost. Finding more sources of quality raw
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materials inputs.
and inventory stocking strategy to a limited extent to meet any unanticipated demand.
Instituting proper warehouse staffing strategy by proving proper training and support
system so that any order can be fulfilled accurately within shortest period of time.
Novartis itself created from merging two companies. Novartis strategy is based on
focused diversification. Their uniquely broad business portfolio focuses on sciencebased healthcare sectors that are growing, reward innovation and enhance the lives of
patients. Innovation is fundamental to our business.
Incepta has its own large distribution network having 20 depots all over the country.
They make the products available in every single drug store of the country. Sales team
comprising highly professional science graduate and post-graduate people are
involved in the timely and smooth promotion of our products for the benefits of our
doctors, people as well as the whole nation.
In ACME, making the moves to establish positions in different businesses and achieve
related or unrelated diversification. Pursuing ways to capture valuable cross-business
strategic fits and turn them into competitive advantage. Venture new business to
utilize resources and reduce risk. Establishing investment priorities and steering
corporate resources into the most attractive business units.
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3.2
CONCLUSION
Apart from their own business, in our daily life pharmaceutical companies have a
huge effect. In any kind of diseases we need medicines, and these are companies
which supply those medicines.
All the four companies form the pharmaceutical industry that I have chosen are very
top class companies and they are the market leaders in considering the others. It is not
easy to compare among the strategies that those companies have undertaken as all the
four are successful in their own field.
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REFERENCES
www.gsk.com
http://www.novartis.com/
http://www.inceptapharma.com/
http://acmeglobal.com/acme_laboratories.htm
Annual Report Of GlaxoSmithKline
Annual Report Of Novartis
Annual Report Of ACME Laboratories
Annual Report Of Incepta Pharmaceuticals
Strategic Management : An Integrated Approach by Gareth R. jones & Charles
W. L. Hill
Strategic Management : Concept & Cases by Thompson
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