BCG Matrix Analysis for Roche Pharmaceuticals

Shiheng Liu

1) Cash Cows:
Cash cows have a low market growth but a high market share.
Products that fall into this category should be harvested. The cash
generated from this category should be used to invest in Question
Marks and Stars. As the market growth for these products is generally
low, Roche Pharmaceuticals should invest just enough to maintain the
products’ market share and avoid overinvesting in these products.
In my opinion, Roche should stop investing in Liquemin. Though
Liquemin is currently dominating the marketing, the market for
Liquemin is shrinking. So there is little point investing a product that’s
going out of date. So as long as the market exists, Liquemin will
continue to make profit for Roche Pharmaceuticals.
2) Stars:
Stars generate large amounts of cash because of their strong relative
market share, but also consume large amounts of cash because of their
high growth rate; therefore the cash in each direction approximately
nets out.
Roche Pharmaceuticals should definitely focus on developing star
products. If a star can maintain its large market share, it will become a
cash cow when the market growth rate declines.
3) Question Marks:
Question Marks are growing rapidly and thus consume large amounts
of cash, but because they have low market shares they do not generate
much cash. The result is a large net cash consumption. Products with
high market growth like Invirase, Aurorix and Neotigason have the
potential to gain market share and become stars, and eventually cash
cows. These products deserve investments. Roche Pharmaceuticals
should think twice before investing other question markets with lower
market growth.
4) Dogs:
Dogs have low market share and a low growth rate and thus neither
generate nor consume a large amount of cash. These products are the
weaknesses for Roche Pharmaceuticals. Out of all the 26 products, 6 fall
in that category. Most of these products (Apranax, Tilcotil, Atrium,
Dalmadorm and Rocephin) are cash traps because of the money tied up
in a business that has little potential. Such products are candidates for
divestiture. But products like Lexotan and Dormicum have relatively
higher market share, in my opinion these two products should be kept.