Laguna State Polytechnic University

Los Baños Campus

College of Business Management and Accountancy

Case No. 1: Allergan: Sustainability through Botox

Submitted by:
BSA 3 - A
Group 1
Bautista, Mikki
Dela Rosa, Joemelyn
Natividad, Katrine

Submitted to:
Mr. Romnick E. Pascual
Subject Teacher

Strategic Management
October 29, 2020
I. Point of View (P.O.V)
In this particular case, the analysts chose the point of view of Mr. David Pyott. David
Pyott is the CEO of Allergan company. He is the one who created different strategies to move
Allergan into position as a major player in the pharmaceutical industry.

II. Synopsis/Overview of the Case

The Allergan Pharmaceuticals is a small company that selling little-known eye and skin
drugs and over the counter contact lenses. The introduction of Botox wasn’t a big deal before
yet when some doctors discovered its other uses, which can erase a frown lines, effectively
treats migraine headaches, chronic neck and back pain, excessive sweating, and possibly
spastic disorders it creates a great opportunity to them. The Botox was approved by FDA last
April 2002 since then there are many consumers’ wants to inject them with it. The Allergan
Company wants to advertise the Botox cosmetics and generate more profit, so they want to
know what strategies they would proceed to attain their target market and their target growth.

III. Statement of the Problem (S.O.P)

The aim of this case analysis is to answer how can Allergan sustain profitability in
Botox?

Specifically, the study will answer the following questions:

1. In what medical industry can Allergan achieve its target growth?
2. What kind of strategies does Allergan can implement in promoting Botox?
IV. Areas for Consideration (Swot Analysis)

Table No. 1: The S.W.O.T. Analysis of Allergan

STRENGTH WEAKNESS OPPORTUNITIES THREATS

1. Botox started at 1. Side effects of 1. Minimal 1. Can’t control the

Allergan. Botox. competitor. Doctor’s action.
2. Consumers lack
2. Having an of knowledge where 2. Shifting of
2. More consumers.
exclusive formula. Botox injection Market Trends.
should perform.
s3. Effective 3. Botox is not 3. Increase in sales 3. Possibility of
Research and applicable to all due to repeated Government
Development. consumers. treatment of Botox. intervention.

This table shows the strength, weakness, opportunities and threats of the Allergan
Company on which development of Botox cosmetics that is in demand to the market that has
formula that is exclusive for them and of course their effective research and development
became their strengths. However, their weaknesses are the possible side effects that their
product will give to the consumers, lack of knowledge the consumers have regarding where
Botox injection should perform and the fact that this product is not open to all consumers. With
regards to the opportunities of the company, these might help them to grow and increase their
sales, having minimal competitors and more consumers that are loyal to them wherein they
continue patronizing their product. As for the threats of the Allergan company, it’s that they
didn’t have the control over the actions of the Doctors who buy their products, they also have
no control about the trend in the market that may cause to their consumers to be confused and
think if they will continue to buy their products and lastly is the possibility of government
intervention, wherein it is possible that if they will gain more sales, the taxes that they are going
to pay, increases.
V. Problem Flow Diagram

Allergan After discovering

discovered Botox, Allergan
Botox introduced it to the
Doctors even though it
was not yet registered
to FDA.
In April 2002, finally
FDA approved this
product of Allergan; the
Botox.

Management
Strategies in Since it is approved by
sustaining the FDA, Botox
Allergan’s became well-known
Botox cosmetics and in demand to the
in the market. market.

Figure No. 1 Problem Flow Diagram of Allergan

This figure shows how the Botox became popular and it also shows the problem that
Allergan will face which is how can Allergan sustain profitability in Botox.

VI. Alternative Solutions

1. Formulate strategies wherein they have a strong advertising about Botox, enhancing
their R&D and establish a relationship with the Doctors in the field of ophthalmology
and dermatology.
2. Established an exclusive clinic for the Botox Cosmetics consumers.
3. To sustain the Allergan company, they can merge with the other pharmaceuticals to
promote more the Botox cosmetics.
VII. Evaluation of Alternative Solutions

Table No. 2: Alternative Solution 1: Formulate strategies wherein they have a strong
advertising about Botox, enhancing their Research and development and establish a
relationship with the doctors in the field of ophthalmology and dermatology.

Advantages Disadvantages

(Pros) (Cons)

1. Promote Botox through TV and magazine 1. Expecting a higher cost of expense and
advertisement to make sure that 90% of long period of upgrading the Botox.
audience would see the ads at least ten times
a year.

2. Increasing the funds for Research and 2. Prone to fake Botox cosmetics due to
development. imitation of products.

3. With the skill of the professional doctors in 3. The strategies might be a failure because of
the field of ophthalmology and dermatology, the shifting of the market trends.
there will be an enhancement of product can
be more cost-effective than developing new
product.

(The table above discussed the advantages and disadvantages of the alternative solution no. 1)
Table No. 3: Alternative Solution 2: Establish an exclusive clinic for the Botox cosmetics
customers.

Advantages Disadvantages

(Pros) (Cons)

1. To avoid imitation of the Botox 1. Time consuming in finding professional

cosmetics and the illegal procedures and to and that will be part of the clinic and the one
secure their formula from imitators. who will execute the procedure.

2. The customer would have an easy access 2. Higher cost in the training of doctors and
to the procedure of the Botox. building the exclusive clinics.

3. They can monitor the doctor’s action and 3. Limited exposure to the market.
to prevent from conflicts upon treatment.

(The table above explained the advantages and disadvantages of the alternative solution no. 2)

Table No. 4: Alternative Solution 3: To sustain the Allergan Company they can merge with
the other pharmaceuticals to promote more their Botox cosmetics

Advantages Disadvantages

(Pros) (Cons)

1. Higher Budget 1. They will share the formula of Botox

2. More information can collect in 2. Possible problem in decision making

improving Botox

3. Haring of Expenses 3. The credits and the profit will not be earned
solely by Allergan Company.

(The table above stated the advantages and disadvantages of the alternative solution no. 3)
VIII. Decision
The case analysts chose the Alternative solution no. 1, Formulate strategies wherein
they have a strong advertising about Botox, enhancing their Research and development and
establish a relationship with the doctors in the field of ophthalmology and dermatology, as
the best alternative solution for it’s the one can sustain the profitability of Allergan Company
and can able to reach their target growth.
IX. Implementation
Setting up the goal.

Knowing the target market in medical industry.

Formulation of strategies.

Conduct a meeting.

Present the proposed strategies.

NO Revise the
Did the management approve
the proposal? proposal.

YES
Consult financial department about budgeting.

Proceed in finding skilled professionals.

Enhancement of R&D

NO Change the
Is the product effective?
formulation.

YES
Proceed endorsing the product in the market.

Monitoring the condition of product in the market.

NO Proceeding to
Did the desired goal happen? alternative
solution no.2
YES

Allergan Company achieved high

profit and have sustainable strategy.
 Figure no. 2: The implementation of the best alternative solution
X. Contingency Plan

In case that the best alternative solution does not work, the analyst decided to use
alternative solution number 2 as the contingency. In consideration of the advantages and
disadvantages stated above. The alternative solution number is the second-best alternative to
meet the target goal of the Allergan Company.

XI. Management Concepts/Business Ethics/Strategic Management/Strategic Marketing

Management/Financial Management/Managerial Economics Manifested in the Case

Management Concepts

Allergan, Inc. is a global provider of specialty pharmaceutical products in three main

areas: eye care, neuromodulators, and skin care. Allergan (pronounced AL-ergan) is one of the
world leaders in ophthalmic pharmaceuticals, developing, manufacturing, and marketing
products used in the treatment of glaucoma, cataracts, dry eye, eye infections, and
conjunctivitis. The firm's largest single product, however, is the neuromodulator Botox, which
is responsible for about one-third of overall revenues. Botox is used both therapeutically to
treat various neuromuscular disorders, such as crossed eyes, uncontrolled blinking, and
sustained muscle spasms, and cosmetically to erase facial wrinkles. Allergan's skin care line
focuses on treatments for psoriasis and acne. Allergan markets its products in more than 100
countries around the world, with international sales accounting for about 30 percent of the total.
The firm maintains three research and development facilities located in Irvine, California; High
Wycombe, England; and Dublin, Ireland, and manufactures most of its products at its own
plants situated in Waco, Texas; Westport, Ireland; and São Paulo, Brazil.

Business Ethics

Code of Conduct of Allergan Company

Our Code of Conduct is an important resource that represents who we are as a company
as well as defines our commitment to maintaining high ethical standards. It is a critical
component of our compliance program and provides guidance to help each of us make the right
decisions every day. Consult it often, uphold our values and bring our Code to life in everything
you do at Allergan. We expect everyone to do what’s right and to protect our reputation. Our
Code of Conduct provides guidance and tools to help you navigate the situations you face every
day, but it doesn’t cover everything: no Code does. Use it to assist you in your decision making
and seek help if you ever need additional guidance. In addition to the Code, you are required
to be aware of and comply with global and local policies impacting your role. Because our
commitment to doing business with integrity is critical to our company’s success, we take any
violation of our Code and our policies seriously. We believe that there’s no right way to do a
wrong thing. Anyone who violates our Code, our policies or the law may be subject to
disciplinary action, in accordance with applicable law. Violations of the law can have
additional consequences, such as criminal prosecution, imprisonment and fines.

Business Law

Licensing, inspection, and quality control

The law should create mechanisms to ensure that relevant parties are licensed and
inspected so the community can have confidence in them. Doctors and nurses may be covered
by other laws, but the medicine law needs to ensure that the people who import, distribute, and
sell medicines are properly qualified, approved, registered, and inspected.

Pharmaceuticals themselves require a special form of inspection. An inspector visiting

a pharmacy or warehouse may have reason to suspect that medicines are not of sufficient
quality or in good condition: they may be damp, dirty, or disintegrating. More often, samples
need to be obtained for testing in the quality-control laboratory, an essential part of the
inspection system.

Countries that have pharmaceutical manufacturing operations should enforce good

manufacturing practices GMP, which is a system to ensure that products are consistently
produced and controlled according to quality standards. GMP overs all aspects of the
production from the starting materials, premises, equipment, and quality testing to the training
and personal hygiene of staff. WHO has established detailed guidelines for good manufacturing
practice and many countries have formulated their requirements base on WHO GMP.
Licensing Pharmaceutical Products

In the United States, all food, drugs, cosmetics, and medical devices, for both humans
and animals, are regulated under the authority of the Food and Drug Administration (FDA).
The Food and Drug Administration and all of its regulations were created by the government
in response to the pressing need to address the safety of the public with respect to its foods and
medicinal. The purpose of this review is to describe and explain the nature and extent of these
regulations as they apply to drugs in the United States. This review discusses the FDA’s
regulatory oversight and that of other agencies, the drug approval and development process,
the mechanisms used to regulate manufacturing and marketing, as well as various violation and
enforcement schema.

The primary responsibility for the regulation and oversight of pharmaceuticals and the
pharmaceutical industry lies with United States Food and Drug Administration (FDA). The
FDA was created in 1931 and is one of several branches within the US Department of Health
and Human Services (HHS). The FDA’s counterparts within HHS include agencies such as the
Centers for Disease Control and Prevention (CDC), National Institutes of Health (NIH), and
Healthcare Financing Administration (HCFA).

The FDA is organized into a number of offices and centers headed by a commissioner
who is appointed by the president with consent of the senate. It is a scientifically based law
enforcement agency whose mission is to safeguard the public health and ensure honesty and
fairness between health-regulated industries (i.e., pharmaceutical, device, biological, and the
consumer). It licenses and inspects manufacturing facilities; tests products; evaluates claims
and prescription drug advertising; monitors research; and creates regulations, guidelines,
standards, and policies. It does all of this through its Office of Operations, which contains
component offices and centers such as the Center for Drug Evaluation and Research (CDER),
the Center for Biologics Evaluation and Research (CBER), the Center for Devices and
Radiological Health (CDRH), the Center for Food Safety and Applied Nutrition (CFSAN), the
Center for Veterinary Medicine (CVM), the Office of Orphan Products Development, the
Office of Biotechnology, the Office of Regulatory Affairs, and the National Center for
Toxicological Research. Each of these entities has a defined role, although sometimes their
authorities overlap.
Strategic Management

Allegan can sustain its profitability by starting to adapt and innovate strategies through
formulating upgraded Botox, maximizing doctors and professionals and widening its market.

A Different R&D Path that Defines the Company’s Position

The ecosystem delivering biopharmaceutical innovation has shifted. Where global

pharma companies had previously discovered, developed and delivered new products from
their own labs, the driving source of innovation today is coming from smaller biotechnology
and pharma companies, as well as academia.

Given this shift in innovation origination, Allergan has sought to follow a different
R&D path than other companies. Allergan embrace Open Science Model. A large percentage
of our pipeline is sourced by partnering with biotech companies, academia and other
pharmaceutical companies globally. Through this Open Science model, we drive strong R&D
productivity by delivering innovative therapies that create long-term shared value for Allergan,
for customers and for patients.

Strategic Marketing Management

Advertising and promotion

Although many countries have rules to ensure that advertising is not misleading, these
rules are generally not sufficient to cover pharmaceuticals. With consumer products, a certain
degree of exaggeration is often tolerated as the normal practice of the marketplace. But for
medicines that have the capacity to kill or cure, and with claims that people cannot easily verify,
it is important that advertising to health professionals and to consumers be objective and
reliable; misleading and extravagant pharmaceutical advertising claims may pose significant
risks to the public.

For these reasons, most laws on pharmaceuticals now include a clause empowering
regulation on advertising. In many countries, it is illegal to advertise to consumers medicines
intended to be prescribed by health professionals. However, direct promotion of
pharmaceutical products through the Internet is practically impossible to control; therefore, the
national regulatory agency should educate consumers on identifying reliable sources of
information, preferably in collaboration with national consumer and professional
organizations. All advertising and labeling must be consistent with the information verified
when the pharmaceutical product wax registered or approved for marketing with modifications
required by the regulatory authority on the basis of post marketing experience.

Useful guides to the principles that should underlie honest pharmaceutical promotion
have been issued by WHO and separately by manufacturer (WHO 1988,1999b).

References:

https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-
labor/businesses-and-occupations/allergan-
inc#:~:text=Allergan%2C%20Inc.%20is%20a%20global%20provider%20of%20eye%20care
%20and,%2C%20acne%2C%20and%20various%20cancers.

https://allergan-web-us-prod.azurewebsites.net/research-and-development/open-science