Strategic Management

MGT - 8503

Strategic Evaluation & Analysis on Pharmaceutical

Industry: A Study on Rosche

Submitted To
Maj. Gen. Alauddin M A Wadud (Retd.), Bir Protik
Professor (Adjunct)
Faculty of Business Studies
Bangladesh University of Professionals

Submitted By
Group - 4

Name ID
Farjana Islam 2023032047
Md. Imdadul Huq 2023032055
Md Sumon Miah 2023032059
Tonmoy Kar 2023032065
Sadia Nowshin Oishy 2023032067
Shailee Jahan Ev18018043

Section: A
MBA Profesional (Batch-24)

November 06, 2021

Bangladesh University of Professionals

Mirpur Cantonment, Dhaka-1216
 Letter of Transmittal
Date: November 06, 2021

Maj. Gen. Alauddin M A Wadud (Retd.), Bir Protik

Professor (Adjunct)
Faculty of Business Studies (FBS)
Bangladesh University of Professionals

Subject: Submission of Paper of MGT- 8503: Strategic Management

Dear Sir,

It is our pleasure to submit the paper, which has been prepared as per the re-
quirement of the course: MGT- 8503: Strategic Management. We have strongly
followed your instruction and a standard structure. We got the opportunity to learn
about Strategic Evaluation practice done by Pharmaceuticals industries in general.
For our strategic Evaluation, we conduct a study on ”Roche Pharmaceutical”
Throughout the paper preparation period, we got to learn about the strategy taken
by the pharmaceutical industry. How they approach and take each approach to
make decisions for the organization. We also learn how different strategy can im-
pact the whole organization.
We will be highly obliged if you are kind enough to accept this paper and provide
your valuable judgment at your earliest convenience. It would be our immense plea-
sure if you find this assignment useful and informative.

Sincerely Yours

Name ID
Farjana Islam 2023032047
Md. Imdadul Huq 2023032055
Md Sumon Miah 2023032059
Tonmoy Kar 2023032065
Sadia Nowshin Oishy 2023032067
Shailee Jahan Ev18018043

i
 Acknowledgements
First and foremost, we would like to express our gratitude to the Almighty for en-
abling us to complete this report in due time.
We would like to express my sincere gratitude to our course instructor Maj. Gen.
Alauddin M A Wadud (Retd.), Bir Protik; Professor (Adjunct), Faculty of
Business Studies (FBS), Bangladesh University of Professionals for providing us
with detailed advice during the class on this assignment. He gave us suggestions to
make this paper as informative and constructive as possible.
Finally, we would like to thanks the Bangladesh University of Professionals for hav-
ing such a course requirement that helped us get a real-life understanding of our
subject matter and not binding us only in the pages of the books, but also allowing
us to learn about real-life situations. This will help us in the future steps of our
professional life. Also we would like to appreciate all the information we get from
Roche and other online resources.

i
Table of Contents

Table of Contents iii

List of Figures iv

List of Tables v

1 Introduction 2
1.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2.1 What we do . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2.2 How We Do It . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2.3 Corporate Strategy . . . . . . . . . . . . . . . . . . . . . . . . 6

2 Environmental Analysis 7
2.1 Porter’s Five Force Model . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1.1 Threat of New Entrants . . . . . . . . . . . . . . . . . . . . . 8
2.1.2 Bargaining Power of Suppliers . . . . . . . . . . . . . . . . . . 8
2.1.3 Bargaining Power of Buyers . . . . . . . . . . . . . . . . . . . 9
2.1.4 Threat of Substitutes . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.5 Rivalry Among Existing Competitors . . . . . . . . . . . . . . 10

3 SWOT Analysis 12
3.1 Strength . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Weakness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Limitations of SWOT analysis . . . . . . . . . . . . . . . . . . . . . . 16

4 Competitor Analysis 17
4.1 Innovation and R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Tackling Biosimilars’ Threat . . . . . . . . . . . . . . . . . . . . . . . 19

ii
Table of Contents Table of Contents

5 Key Indicator of Success 21

6 Achieved Success 23

7 Recommendation 25

8 Conclusion 27

9 References 28

iii
List of Figures

1.1 The founder of Roche, Fritz Hoffmann . . . . . . . . . . . . . . . . . 3

1.2 Roche’s Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2.1 Porter’s Five Force Model . . . . . . . . . . . . . . . . . . . . . . . . 7

4.1 Sales Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

7.1 Market Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

iv
List of Tables

4.1 Company Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

4.2 Recognition Based on Innovation . . . . . . . . . . . . . . . . . . . . 18

v
List of Tables List of Tables

Executive Summary
Headquartered in Basel, Switzerland, Roche is a leader in research-focused health-
care with combined strengths in pharmaceuticals and diagnostics. Roche is the
world’s largest biotech company with truly differentiated medicines in oncology,
virology, inflammation, metabolism, and CNS. Roche is also the world leader in
in-vitro diagnostics, tissue-based cancer diagnostics, and a pioneer in diabetes man-
agement. Roche’s personalized healthcare strategy aims at providing medicines and
diagnostic tools that enable tangible improvements in the health, quality of life, and
survival of patients.
In 2020 the Roche Group reported sales growth of 1% at constant exchange rates
(CER) and core operating profit growth of 4%. IFRS net income increased by 17%
due to the prior period including significant goodwill write-offs, while Core EPS
increased by 4%. The appreciation of the Swiss franc against almost all currencies
had an adverse impact on the results expressed in Swiss francs compared to constant
exchange rates of 6 percentage points on sales, 8 percentage points on core operat-
ing profit, and 9 percentage points on Core EPS. In the Pharmaceuticals Division,
sales were 2% lower due to biosimilar erosion, which was especially pronounced in
the US, and COVID-19 effects. The global uptake of new medicines continued to
be strong and partly compensated for these effects. In the Diagnostics Division,
sales of COVID-19-related tests totaled CHF 2.6 billion and drove the 14% increase
in divisional sales, which more than offset a decline in routine testing across the
portfolio.
This report briefly describes the strategic planning for Roche in the coming post-
pandemic era. Roche is arguing that its pipeline will help offset the competition it
expects from biosimilar drugs. Biosimilars are compounds that behave in a similar
fashion to established drugs. Unlike generic drugs, which are essentially identical to
branded drugs that are marketed after the branded drugs’ patent protection ends,
biosimilars can be marketed competitively against branded drugs while patent pro-
tection remains. Roche is also focusing on treatments for blood cancers, asthma,
hemophilia and age-related vision lost. Its drug Gazyva/Gazyvaro (obinutuzumab)
has been approved in more than 50 countries in combination with chlorambucil for
untreated chronic lymphocytic leukemia (CLL), and in October the FDA granted
priority review for Roche’s Biologic License Application (BLA) for Gazyva to treat
follicular lymphoma in patients who relapsed after or are refractory to a rituximab-
containing regimen.

1
Chapter 1

Introduction

In Basel in 1894, Fritz Hoffman and Max Carl Tranb, a Munich pharmacist, es-
tablished the limited partnership Hoffman Tranb Ci. to produce and distribute
medicinal goods. After two and a half years, it was registered as F. Hoffman – La
Roche, also known as ’Roche’ across the world.
Fritz Hoffman was born on October 24, 1868, in Basil, to Friedrich and Anna Eliza-
beth Hoffman – Marian. Both parents were descended from old Basil families. Since
the late 1700s, the Hoffmans had been renowned silk ribbon makers, and the Merian
had produced several notable merchants. Fritz Hoffmann was the third child in a
family of five. He had a happy apprenticeship with the private bank Piguet Co. in
London from 1886 to 1889, followed by another apprenticeship with the pharmacy
Bohny, Hollinger Cio.
In 1889, Bohney Hollinger Co. purchased 3190 square meters of business property
in Klien Basil, where they erected a modest laboratory to make medicinal extracts,
ointments, tablets, essential oils, linseed – oil varnish, and floor polish. To handle
the business, they employed Max Carl Tranb, an experienced pharmacist from Mu-
nich. Fritz Hoffman and his father had taken a particular interest in the Bohney,
Hollinger Cie while running his apprenticeship. Hoffman Merian invests 200,000
Swiss Francs as a silent partner in Bohney, Hollinger Cie in 1982 to secure his
son a place as an authorized officer of the firm. In 1894, Hoffman, Tranb, and Co.
were formed as a limited partnership to manufacture and trade medications and
chemicals. As a silent partner, Fritz Hoffman – Merian contributed 180,000 Swiss
Francs. Fritz Hoffman, a young guy, gave 70,000 Swiss Francs. Fritz Hoffman would
be in charge of finance and sales, while trading would be in charge of production.
Hoffman worked hard and employed well-known chemists and managers to help him
grow the firm.

2
1.1. Objectives Chapter 1. Introduction

Figure 1.1: The founder of Roche, Fritz Hoffmann

He married Adil La Roche, the eighteen-year-old sister of his friend Enanual La

Roche, towards the end of 1894. Hoffman and Tranb split up in the autumn of
1896. Tranb, who was suffering from heart problems, had struggled to come up
with fresh ideas and had been guilty of a few commercial blunders. Hoffman paid
compensation on top of the 50,000 Swiss francs he paid for the tranb portion. In
1896, the firm was renamed Fritz Hoffman – la Roche Co.

1.1 Objectives
The main objective of this report is to provide Strategic Evaluation and analysis on
Roche Pharmaceuticals. However, this report also has some specific objectives.

1. To fulfill the partial requirement of the course Strategic Management (MGT-

8503).

3
1.2. Strategy Chapter 1. Introduction

2. To analyze the industry and environmental analysis of Roche Pharmaceuticals.

3. To analyze how well Roche Pharmaceutical is doing against their competitors

and adopting accordingly.

4. to analyze whether the strategy is working for Roche or not.

1.2 Strategy
Transparent reporting, engaging with their stakeholders, and a focus on developing
new medicines and diagnostic solutions are core components of Roche’s Business
Strategy.
Roche’s business environment is undergoing tremendous change. They are facing
new challenges due to the complexity of care and increasing pressure on healthcare
budgets. At the same time, they see new opportunities arising from major advances
in life sciences and digitalization in healthcare.

Figure 1.2: Roche’s Strategy

4
1.2. Strategy Chapter 1. Introduction

1.2.1 What we do
Roche focuses on their vision of fitting treatments to patients: providing the right
therapy for the right patient to ensure the best response at the right time for the
right value. Their approach combines their rich expertise in pharmaceuticals and
diagnostics with expanded data science capabilities to drive more effective and effi-
cient research and to enable better therapeutic decisions for patients.
Working in partnership with third parties, they offer integrated solutions with im-
proved medical, health, and economic benefits. They work with many different
stakeholders in the healthcare ecosystem to broaden access to their offerings for
people who need them and, ultimately, to provide a seamless patient journey. They
will continue to concentrate their energies on prescription medicines and in vitro
diagnostics, rather than diversify into other sectors like generics, biosimilar, or over-
the-counter medicines. Their pursuit of excellence in science and distinctiveness
rests on four key elements: an exceptionally broad and deep understanding of dis-
ease biology; the seamless integration of our capabilities in pharmaceuticals and
diagnostics; a diversity of approaches to maximize innovation; and a long-term ori-
entation.
Their delivery is to create value for all their stakeholders: being a partner of choice;
bringing significant medical benefit for patients, doctors, and payers; offering a great
place to work for employees; delivering a sustainable positive contribution to society;
and earning competitive returns for their investors.

1.2.2 How We Do It
Ultimately, delivering on Roche’s commitments takes people with integrity, courage,
and a passion for making a difference for patients. Their people are proud to say:
They are Roche.
Roche’s leadership inspires outcomes that matter by embracing diversity and inclu-
sion. Different backgrounds, perspectives, and experiences, across the entire organi-
zation, foster innovative solutions for the benefit of patients. Their ways of working
enable agile and networked responses to the ever-increasing pace of change by bal-
ancing the needs for stability, speed, and flexibility.
Roche’s set-up is designed for innovation. Their autonomous research and develop-
ment centers and alliances with more than 200 external partners foster a diversity
of scientific approaches and agility. Their global geographical scale and reach enable
them to attract talent in the leading global science clusters and to quickly bring

5
1.2. Strategy Chapter 1. Introduction

their solutions to people who need them.

1.2.3 Corporate Strategy

Pharmaceutical firms are operating in a very tough market, with more regulation,
payer cost constraints, and the fear of falling returns growth rate. Roche’s response
to external challenges is simple: focus on innovation, true medical differentiation,
and patient benefits, while increasingly leveraging synergies between its two core
businesses (pharma and diagnostics) to thrive new tailored solutions in personal-
ized healthcare while providing value to all stakeholders. The leverage between the
Pharmaceutical and Diagnostic industries is, in reality, Roche’s primary competitive
advantage. Having the two businesses under one roof gives Roche a unique position
in the industry, allowing it to share know-hows and skills at the very early stages
of RD, a circumstance in which any independent company would have to overcome
several barriers to enjoy the same benefit.
Roche’s major strategic drivers for its pharma business, through which it seeks to
flourish in this competitive climate, are based on three fundamental pillars that de-
fine Roche’s growth strategy.

• Focus on innovation, redefining the standard of care

• Expand into emerging markets, improving patients’ access to medicines.

• Protect patients with high standards by ensuring governments set adequate

guidelines for the development of biosimilars.

6
Chapter 2

Environmental Analysis

2.1 Porter’s Five Force Model

Michael E. Porter proposed a model in a 1979 essay in the Harvard Business Review.
This model, known as Porter’s Five Forces Model, is a strategic management tool
that aids in determining an industry’s competitive environment. Each of the five
factors listed in the model, as well as their respective strengths, aid strategic plan-
ners in understanding the intrinsic profit potential of a business. The strengths of
these factors vary from industry to industry, implying that each industry is unique
in terms of profitability and appeal. Even though an industry’s structure is solid, it
might alter over time.

Figure 2.1: Porter’s Five Force Model

7
2.1. Porter’s Five Force Model Chapter 2. Environmental Analysis

The Porter’s Five Forces model may be used to assess the attractiveness of
the sector in which Roche participates in terms of intrinsic profit potential. The
model-analyzed data may be utilized by Roche’s strategic planners to make strategic
decisions.
The following are Porter’s five forces:

2.1.1 Threat of New Entrants

• In the industry in which Roche works, economies of scale are difficult to at-
tain. This makes it easier for manufacturers with big capacities to have a cost
advantage. It also raises the cost of production for new entrants. As a result,
new entrants’ threats become a lesser power.

• Product differentiation is strong throughout the sector, with enterprises selling

distinct items rather than standardized ones. Customers are also looking for
unique things. There is a great emphasis on advertising as well as customer
service. Because of all of these characteristics, the danger of new entrants is a
minimal force in this market.

• The capital requirements in the sector are substantial, making it difficult for
new entrants to establish enterprises since large expenditures must be made.
Capital expenditure is also expensive due to the high expenditures of research
and development. All of these issues contribute to the prospect of new entrants
being a weaker force in this market.

• Access to distribution networks is simple for new entrants, who may quickly
set up their distribution routes and enter the market. With only a few retail
locations carrying the product type, any new entrant may easily get their
goods on the shelves. All of these variables combine to make the threat of new
entrants a powerful force in this business.

• Before a firm can begin selling, government laws in the industry demand severe
licensing and legal standards to be met. This makes it difficult for new entrants
to enter the business, resulting in a minimal threat from new entrants.

2.1.2 Bargaining Power of Suppliers

• In the industry in which Roche works, there are often more providers than
buyers. This means that suppliers have less pricing control, making suppliers’
bargaining leverage a weak force.

8
2.1. Porter’s Five Force Model Chapter 2. Environmental Analysis

• These vendors’ products are fairly standardized, less differentiated, and have
minimal switching costs. This makes switching suppliers easier for buyers like
Roche. As a result, suppliers’ bargaining strength is weakened.

• Suppliers are not competing with other items in this business. This signifies
that there are no alternative substitutes for the product than the ones provided
by the vendors. As a result, suppliers’ negotiating power becomes a more
powerful force in the industry.

• The suppliers do not pose a real threat to Roche’s future incorporation into
the sector. As a result, suppliers’ negotiating strength becomes a weaker force
in the sector.

• Roche’s suppliers rely heavily on the industry in which it works. This means
that the profitability of the sector is inextricably linked to those of the sup-
pliers. As a result, these vendors must offer competitive prices. As a result,
suppliers’ negotiating strength becomes a weaker force in the sector.

2.1.3 Bargaining Power of Buyers

• In the industry in which Roche works, the number of suppliers far outnumbers
the number of enterprises manufacturing the products. This implies that pur-
chasers have few enterprises to select from and, as a result, no pricing control.
Buyers’ negotiating power becomes a weaker influence in the sector as a result.

• Product differentiation is high within the sector, which indicates that pur-
chasers cannot discover alternative organizations providing a certain product.
Because switching is difficult, purchasers’ negotiating power inside the sector
is weakened.

• The purchasers in the sector have a modest income. This means that there is
a lot of pressure to buy at cheap prices, which makes purchasers more price
sensitive. Buyers’ purchasing power becomes a weaker force in the business as
a result.

• Customers place a premium on product quality, and these buyers make reg-
ular purchases. This means that industry purchasers are less price sensitive.
Buyers’ negotiating power becomes a weaker influence in the sector as a result.

• Buyers face no major risk if they integrate backward. As a result, the negoti-
ating power of purchasers becomes a weaker force in the business.

9
2.1. Porter’s Five Force Model Chapter 2. Environmental Analysis

2.1.4 Threat of Substitutes

• There are few replacements for the items manufactured in the industry in which
Roche works. The few accessible replacements are likewise manufactured by
low-profit enterprises. This implies that there is no cap on the maximum profit
that enterprises in the industry in which Roche operates can make. All of these
reasons contribute to the threat of alternative products being a weaker force
in the business.

• The few accessible replacements are of great quality but much more costly.
Firms manufacturing within the industry in which Roche operates sell at a
cheaper price than alternatives while maintaining appropriate quality. As a
result, purchasers are less inclined to move to other items. As a result, the
danger of alternative products is low inside the sector.

2.1.5 Rivalry Among Existing Competitors

• In the industry in which Roche works, there are extremely few rivals. The
majority of these are also rather enormous. This means that companies in the
business will not make movements that go unreported. As a result, rivalry
among existing enterprises becomes a weaker force in the sector.

• Only a few rivals have a substantial market share. This suggests that they
will engage in competitive measures to obtain market leadership. As a re-
sult, rivalry among existing enterprises becomes a more powerful force in the
industry.

• Roche’s industry is rising year after year and is anticipated to do so for the
foreseeable future. Positive industry growth suggests that rivals are less likely
to engage in competitive actions since they are not competing for market share.
As a result, rivalry among existing enterprises becomes a weaker force in the
sector.

• The fixed expenses in the industry in which Roche works are significant. As
a result, the enterprises in the industry are forced to operate at full capacity.
This also means that when demand falls, these businesses will have to lower
their pricing. As a result, rivalry among existing enterprises becomes a more
powerful force in the industry.

• The items manufactured in the industry in which Roche operates are particu-
larly distinct. As a result, rival enterprises find it difficult to gain each other’s

10
2.1. Porter’s Five Force Model Chapter 2. Environmental Analysis

clients because each of their items is unique. As a result, rivalry among existing
enterprises becomes a weaker force in the sector.

• The manufacture of items within the sector necessitates a significant expansion

in capacity. As a result, the sector is vulnerable to interruptions in the supply-
demand balance, which frequently leads to overproduction. Overproduction
necessitates price reductions by businesses to ensure that their items sell. As
a result, rivalry among existing enterprises becomes a more powerful force in
the industry.

• The industry’s exit barriers are particularly high due to the significant invest-
ment required in capital and assets to operate. Because of government laws
and prohibitions, the exit barriers are very substantial. As a result, enterprises
inside the sector are hesitant to quit, and they continue to produce even at
poor earnings. As a result, rivalry among existing enterprises becomes a more
powerful force in the industry. existing enterprises becomes a more powerful
force in the industry.

• Firms in the industry have varied strategies, which implies they are distinct
from one another in terms of approach. As a result, they run into one another
in terms of strategy. As a result, competition among established enterprises is
a powerful force in the sector.

Strategic planners will be able to comprehend how different aspects under each of
the five forces affect the profitability of the industry by using the information in
Roche’s five forces analysis. A stronger force results in poorer profitability, whereas
a weaker force results in higher profitability. Based on this, a profit judgment for
the industry may be produced and utilized in strategic planning.

11
Chapter 3

SWOT Analysis

SWOT analysis is a strategic planning method that Roche management may use
to do a situational study of the company. It is a valuable tool for identifying the
current Strengths (S), Weaknesses (W), Opportunities (O), and Threats (T) that
Roche is experiencing in its current business environment.
The Roche Group is a market leader in its field. Roche maintains its market dom-
inance by thoroughly examining and revising the SWOT analysis. SWOT analysis
is a highly interactive process that necessitates excellent coordination across several
corporate departments such as marketing, finance, operations, management infor-
mation systems, and strategic planning.

3.1 Strength
Roche has various assets that help it to prosper in the market as one of the leading
businesses in its field. These advantages not only assist it to maintain its market
share in existing areas but also to enter new ones. According to a thorough study
conducted by Fern Fort University, some of Roche’s strengths are as follows:

• Automation of activities improved the consistency of quality in Roche goods

and enabled the corporation to scale up and scale down in response to market
demand.

• Excellent Performance in New Markets - Roche has developed competence in

entering and succeeding in new markets. The growth has assisted the orga-
nization in creating new revenue streams and diversifying the economic cycle
risk in the markets in which it operates.

12
3.2. Weakness Chapter 3. SWOT Analysis

• Trustworthy suppliers — The firm has a large base of reliable raw material
suppliers, allowing it to overcome any supply chain bottlenecks.

• Strong distribution network — Over the years, Roche has established a de-
pendable distribution network that allows it to reach the majority of its po-
tential market.

• Successful training and learning programs have resulted in a highly competent

workforce. Roche invests heavily in employee training and development, re-
sulting in a team that is not just highly competent but also driven to achieve
more.

• High level of customer satisfaction - thanks to its specialized customer rela-

tionship management department, the firm has been able to achieve a high
level of customer happiness among current customers as well as strong brand
equity among future consumers.

• Strong Returns on Capital Expenditure - Roche is generally successful at

project execution and has earned good returns on capital expenditure by de-
veloping new income sources.

• Product innovation requires a proven track record of developing new goods.

3.2 Weakness
Roche’s weaknesses are the areas where it can improve. Strategy is about mak-
ing choices, and weaknesses are places where a firm may use SWOT analysis to
strengthen its competitive advantage and strategic posture.

• Integration of enterprises with distinct work cultures has not been very effec-
tive. As previously stated, while Roche is adept at combining small businesses,
it has failed to integrate organizations with different work cultures.

• High staff attrition - Compared to other firms in the sector, Roche has a
higher turnover rate and must spend much more on employee training and
development.

• The profitability ratio and Net Contribution % of Roche are below the industry
average.

13
3.3. Opportunities Chapter 3. SWOT Analysis

• There are gaps in the company’s product line. This lack of options may allow
a new rival to get a foothold in the market.

• In comparison to its competitors, it is not particularly adept at estimating

product demand, resulting in a greater proportion of missed chances. One of
the reasons Roche’s day’s inventory is so high in comparison to its competi-
tors is because the company isn’t particularly effective at estimating demand,
therefore it keeps more inventory both in-house and in the channel.

• Limited success outside core business - Despite being one of the premier com-
panies in its field, Roche has had difficulties in expanding into other product
areas with its current culture.

• Days inventory is high in comparison to rivals, requiring the firm to obtain

additional funds to spend in the channel. This may influence Roche’s long-
term growth.

3.3 Opportunities
• Customers acquired through the web channel – The corporation has invested a
significant amount of money in the internet platform during the last few years.
This investment has provided Roche with a new sales channel. In the next
years, the corporation can capitalize on this potential by better understanding
its customers and meeting their demands using big data analytics.

• The market development will result in a dilution of rivals’ advantages, allowing

Roche to strengthen its competitiveness in comparison to its competitors.

• After years of recession and weak development in the business, the economic
rebound and increase in consumer spending represent a chance for Roche to
gain new customers and boost its market share.

• The fundamental capabilities of an organization might lead to success in the

field of related other items. A comparable example would be GE healthcare
research, which aided in the development of improved oil drilling machines.

• Reduced transportation costs as a result of decreased shipping rates can also

reduce the cost of Roche’s products, creating a chance for the firm to either
increase its profitability or pass on the savings to consumers to win market
share.

14
3.4. Threats Chapter 3. SWOT Analysis

• The new taxation policy will have a substantial influence on how businesses
operate and will provide new opportunities for established companies such as
Roche to boost their profitability.

• New environmental policies - The new opportunities will level the playing field
for all industrial participants. It is a fantastic chance for Roche to capitalize
on its edge in new technologies and achieve market share in a new product
category.

• The government’s green initiative also provides an opportunity for state and
federal government contractors to purchase Roche goods.

3.4 Threats
• The growing isolationism in the American economy may prompt a similar
reaction from other governments, severely harming worldwide commerce.

• No consistent supply of novel items — The firm has produced various products
over the years, but they are frequently in response to the development of other
companies. Second, the supply of new items is irregular, resulting in high and
low swings in sales numbers over time.

• Changing customer purchasing habits through internet channels may pose a

challenge to the current physical infrastructure-driven supply chain architec-
ture.

• Rising raw material costs may jeopardize Roche’s profitability.

• Rising salary levels particularly moves such as $15 per hour, and rising costs
in China can put considerable strain on Roche’s profitability.

• Because the firm operates in several countries, it is vulnerable to currency

changes, particularly given the turbulent political atmosphere in several mar-
kets throughout the world.

• Liability rules vary by country, and Roche may be subject to a variety of

liability claims if regulations in those markets change.

• Growing local distributor strength poses a challenge in some areas since com-
petition pays larger margins to local distributors.

15
3.5. Limitations of SWOT analysis Chapter 3. SWOT Analysis

3.5 Limitations of SWOT analysis

• Certain organizational qualities or elements might be both a strength and a
weakness at the same time. This is one of the most significant limitations of
SWOT analysis. For example, altering environmental rules may be both a
danger and an opportunity in that it allows the firm to compete on a level
playing field or gain an edge over competitors if it can produce goods faster
than the competition.

• SWOT analysis does not reveal how to gain a competitive advantage, hence it
cannot be used as a means to a goal.

• The matrix is only a starting point for a debate about how recommended
tactics may be executed. It offered an evaluation window but not a strategy
for execution based on Roche’s strategic competitiveness.

• SWOT analysis is a static evaluation - an examination of the status quo with

minimal potential alterations. The dynamics of a competitive environment
may not be revealed in a single matrix when conditions, capabilities, threats,
and tactics vary.

• SWOT analysis may cause a company to overemphasize a single internal or

external aspect when developing plans. There are interrelationships between
the primary internal and external aspects that SWOT does not uncover and
that may be significant in strategy development.

16
Chapter 4

Competitor Analysis

Roche is the world’s largest biotech firm, offering products that are really unique
in cancer, immunology, infectious diseases, ophthalmology, and neurology. Roche is
also a global leader in in vitro diagnostics and tissue-based cancer diagnostics, as
well as a pioneer in diabetes care. Roche’s top-selling drug in FY 2020 was Avastin,
which is used to treat advanced colorectal, breast, lung, kidney, cervical and ovarian
cancer, relapsed glioblastoma, and liver cancer. Other top-selling medicines in FY
2020 include: neuroscience drug Ocrevus, which brought in $4.7 billion in revenue;
and oncology drug Perjeta, which generated $4.3 billion. Even though they are the
leading industry, there are several pharmaceutical industries who are catching upto
them very quickly. Some of them includes Pfizer, Novartis, AstraZeneca, Sanofi,
Jhonson & Jhonson, Bayers and many more. However, if we want to make a more
specific comparison then it will be Novartis, who are the prime competitor of Roche.
Novartis is also a Switzerland Based pharmaceutical industry like Roche.

Name Roche Novartis

Innovation Index rank 1 3
Invention Index Rank 10 4
Employees 100000 104000
Revenue $61.63 Billion $51.9 Billion
Basel, Basel,
Headquarter
Switzerland Switzerland
Table 4.1: Company Overview

17
4.1. Innovation and R&D Chapter 4. Competitor Analysis

Rank Company #
1 Roche 16
2 Novartis 12
3 BMS 10
4 Merck 9
5 Pfizer 7
Table 4.2: Recognition Based on Innovation

4.1 Innovation and R&D

R&D productivity is undoubtedly a critical subject for the industry’s long-term
performance, and it is also central to Roche’s strategy, which is totally based on
innovation. As previously said, R&D returns in the pharma business have been
dropping over the last decade, and studies indicate that the industry as a whole is
in a critical zone, earning about 8-10% on average, making it difficult for companies
to even earn back their cost of capital. However, what is most significant for an
investor is not the industry average, but the R&D productivity of the various firms.
When analyzing Roche’s position over a ten-year period based on its average yearly
R&D spending and the output of its investments in the form of NMEs, a fourfold
difference in productivity may be detected between Roche and its counterparts. In
other words, the top performing firms earn four times the return on investment in
R&D as the worst performing ones. This R&D productivity dilemma reveals one
essential fact: segregation will persist since only real innovation will be rewarded.
Firms with marginally differentiated goods that do not deliver their cost of capital
will not be paid by payers and will eventually exit, producing a market disruption
with generics companies on the one hand and real medical innovation companies on
the other.

18
4.2. Tackling Biosimilars’ Threat Chapter 4. Competitor Analysis

Figure 4.1: Sales Overview

When profit margins and the degree of diversity are considered, it is evident
that the more concentrated a business is, the better margins it may make in the
pharmaceutical sector. This insight so conveys the recognition of how Roche, ac-
cording to its strategy, looks to be well positioned among its peers, producing a
strong return as a percentage of its sales due to its low level of marketing, general,
and administrative expenditures.

4.2 Tackling Biosimilars’ Threat

Biosimilars, as previously said, will be the key issues Roche will confront in the
next years. Biosimilars are defined by the FDA as ”a biological product that is
highly similar to a US licensed reference biological product, notwithstanding minor
differences in inactive components, and for which there are no clinically meaningful
differences in terms of the product’s safety, purity, and potency.” The introduction
of biosimilars in both established and new markets is a critical tool for encouraging
competition, particularly given the high costs associated with existing branded phar-
maceuticals, which can cut expenses while improving access to treatments. Indeed,
biologics are among the most expensive treatments on the market, and biosimi-
lars are significantly less expensive than their patented counterparts, representing

19
4.2. Tackling Biosimilars’ Threat Chapter 4. Competitor Analysis

a lower-cost alternative that is not only appealing but also necessary in economies
where expensive treatments are not financially feasible.
Aside from the potential for a lower cost alternative, another motivator for the entry
of biosimilars into the market is the opportunity to increase healthcare access while
driving competition and thereby contributing to the overall financial sustainability
of the healthcare system. Nonetheless, despite the numerous benefits, there are a
number of regulatory issues about the evidence of interchangeability and automatic
substitution between the originator medication and the biosimilar.
Biosimilars are a ”hot subject” in the pharmaceutical sector right now: their en-
try into the EU market may be considered as both a danger and an opportunity,
and it may (and has already prompted) changes in many companies’ strategic ap-
proaches. Obviously, no one knows which approach, implemented by the leading
players, will be revealed to be the winning plan as of today. Nonetheless, it may
be worthwhile to highlight some of the probable strategic responses to biosimilars
that pharma firms might take, as well as what path Roche has taken in accordance
with its company strategy and long-term objectives.// So far, Roche’s position on
biosimilars has been quite clear, as stated in the media release reviewed in ”Roche
is committed to meeting high ethical standards in all of its endeavors, as well as
to sustain and defend the trust of doctors who prescribe and patients who rely on
the quality, safety, and efficacy of our products.” While Roche respects its rivals’
legitimate endeavors, including biosimilar producers, we expect our competitors to
comply with applicable laws and regulations.”

20
Chapter 5

Key Indicator of Success

In the administration and transformation of a hospital or laboratory, performance

indicators are critical. It is critical to have the correct key performance indicator
(KPI) information at your fingertips, whether you are offering insights to managers
for team development and quality assurance, or executives for strategic investment
planning. Working with Roche Healthcare Consulting to modernize your clinical
diagnostic infrastructure, organization, and procedures can help to guarantee that
KPI reporting remains clear and straightforward and that strategic decision-making
is guided by the most accurate, up-to-date data.
Roche Healthcare Consulting uniquely approaches KPIs, mapping them onto the
client’s transformation plan across five dimensions: people, financial performance,
quality, growth, and time. This strategy enables consultants to analyze market
circumstances and other external deciding variables when assessing whether a cer-
tain firm should expand, protect its position, or seek alternative routes of change.
Customized KPIs may include everything from turnaround time to noise pollution
levels, from customer happiness to employee retention rates.
We ensure a balance for clients between essential business viewpoints, how the com-
pany perceives itself and how others see it, its business demands now and how
these may evolve by embedding KPIs around people, financial performance, quality,
growth, and time into every project. As a result, our consultants assist their clients
in focusing on the measures they need to take in collaboration to produce perfor-
mance breakthroughs. People, financial performance, quality, growth, and time are
unifying aspects that can also aid in the integration of several projects with diver-
gent goals that may be happening concurrently. This comprehensive method breaks
down organizational divisions by translating strategy into measurable targets and
provides managers and employees with a clear grasp of how organizational transfor-
mation goals interact with their day-to-day work.

21
 Chapter 5. Key Indicator of Success

Our scientific method to evaluate success and visualize transformation progress is

based on the notion that managers must be as forensic with KPI data as scien-
tists are with clinical data. Without a solid foundation of trustworthy facts, how
can laboratory managers and consultants hope to jointly identify organizational and
strategic problems and suggest timely, suitable solutions?
Bench-marking is an essential part of the KPI process since it compares the labo-
ratory’s performance to that of its rivals. A ’benchmark’ is the best-in-class perfor-
mance that can be achieved for a specific business process, and benchmark analysis
provides consultants with answers to critical questions such as which organization
performs better in their client’s field, what makes them better, and what actions
are required to match this performance. With the data provided by bench-marking,
consultants can create performance indices that allow for the identification of in-
ternal objectives and industry norms. They may then define internal performance
targets and track progress toward strategic goals as a result of this. Roche Health-
care Consulting, being a global provider of diagnostic consultant services, has a
unique understanding of diagnostic laboratory performance across the world.
This enables consultants to provide consistent advice to healthcare organizations
on how their performance and progress toward goals related to the reality of peers
confronting identical issues. We rely on data generated from over 1,000 separate
laboratories in APAC alone as part of its yearly KPI-related bench-marking pro-
cess.
In applying KPIs to their customers’ improvement projects, Roche Healthcare Con-
sulting takes a somewhat different approach than other consultants. Rather than
imposing a strict framework of KPIs on our customers, our consultants customize
KPIs to the individual demands of each project and map them across the funda-
mental functions of people, financial performance, quality, growth, and timeliness.

22
Chapter 6

Achieved Success

• Pharmacist Carl Schaerges, the first head of research, together with chemist
Emil C. Barell demonstrated the presence of iodine in thyroid extracts. This
results in Roche’s first patent and scientific publications. The launch of Aiodin
marks the earliest in a series of thyroid preparations by Roche.

• Roche produces a non-prescription cough syrup containing its active ingre-

dient, Thiokol. The orange-flavored syrup is an almost immediate success.
Launched under the trademark Sirolin in 1898, the syrup remains on the mar-
ket for over 60 years.

• Roche managed to overcome the crisis under the leadership of chairman Emil
C. Barell. The company experienced an unexpected upsurge spurred by its vi-
tamin production, which made the return to former prosperity possible. Roche
can expand once more and starts its strong commitment to the US-American
market with first investments in New York and Nutley.

• In the mid-1950s a new group of sedatives, known as tranquilizers, is intro-

duced into clinical use. Returning to a group of compounds he has worked
on previously, Leo Sternbach chances upon benzodiazepines. One of them, Ro
5-0690, later launches as Librium. Tranquilizers soon become one of Roche’s
most important product segments. This success, combined with a push to
streamline vitamin production, fuels a period of unprecedented growth.

• Roche introduces its first anti-cancer drug, Fluorouracil, in 1962. The drug
paves the way for Roche’s activities in the field of cancer chemotherapy.

• Valium Roche, a sedative and anxiolytic drug belonging to the benzodiazepine

family, was launched in 1963. Valium will prove a huge therapeutic success,
enabling Roche to build a worldwide reputation in psychotropic medications.

23
 Chapter 6. Achieved Success

• The anti-Parkinson drug Madopar wins the Prix Galien (1974), a prize created
in France to honor innovative and valuable advances in drug therapy. This is
the first of a series of prizes for Roche therapeutics that have become milestones
in drug therapy, as well as the first of 27 awards for other Roche products.

• Rocephin, an antibiotic of the cephalosporin class, is launched in 1982 in

Switzerland only four years after its discovery. By 1987 Rocephin outsells all
other Roche products. The Diagnostics Division releases the Cobas Bio/Mira
random access biochemistry analyzer. Roferon-A, Roche’s first genetically en-
gineered drug, enters the market.

24
Chapter 7

Recommendation

Roche is moving from this predominantly in-person static information, field force
driven approach to sales, to moving to often virtual digital channels, much more
customized content for different audiences. The specific recommendation will be the
following:

• Engagement from ”Mass field”

• Customer targeting from decided by sales representatives to supported by

advanced analytics.

• Focus on patients.

• Excellence in science

• Personalized Healthcare

• Access to healthcare

• Great workplace

• Sustainable value

• Patient populations are smaller and globally connected, e.g., communities for
rare diseases

• Further stakeholders besides clinicians are involved in decision making, e.g.,

patients, payers.

• Strengthening growth and innovation capability in a changing market environ-

ment.

25
 Chapter 7. Recommendation

• Financial implications of Operational Excellence

• Planned impact of Operational Excellence on jobs

• Continued focus on innovation

So, the strategic approach for a go-to-market model will be strictly data-driven.

Figure 7.1: Market Model

26
Chapter 8

Conclusion

The COVID-19 pandemic outbreak has posed an unprecedented challenge for health-
care systems across the globe.
The Roche Group has responded to this challenge with both its pharmaceuticals and
diagnostics businesses. In March 2020 the Diagnostics Division launched its Cobas
SARS-CoV-2 PCR test. This runs on the high-volume fully automated Cobas 6800
and Cobas 8800 systems based on PCR technology, which are installed in major
hospitals and laboratories around the world. Roche Diagnostics has also contin-
ued to complement its portfolio with point-of-care tests, such as the SARS-CoV-2
Rapid Antigen test. In the Pharmaceuticals Division, Actemra/RoActemra has been
adopted by many countries in their treatment guidelines to treat patients with se-
vere COVID-19 pneumonia, and in August 2020, the Roche Group announced that
it is partnering with Regeneron to develop, manufacture and distribute its investi-
gational neutralizing antibody combination.
The Roche Group’s business has so far proved to be largely resilient in this difficult
environment. The pandemic has nevertheless had a negative impact on the under-
lying business of both of the Roche Group’s divisions, with the various restrictions
leading to reduced hospitalizations and outpatient visits, which has impacted routine
diagnostics testing and has led to lower levels of prescriptions for many medicines,
notably those that require a medical professional to make infusions or injections.
At the same time, no major manufacturing supply chain issues have so far occurred
and the Group’s planned drug launches, filings, pivotal phase III trial readouts, and
pivotal trial starts are largely on track. Indeed, despite the pandemic, the Roche
Group’s research and development spending increased by 8%, and additionally, var-
ious in-licensing transactions and asset acquisitions led to additions to intangible
assets of CHF 3.9 billion in the Pharmaceuticals Division and CHF 0.4 billion in
the Diagnostics Division.

27
Chapter 9

References

1. https://www.roche.com/about/our-strategy.htm
2. https://www.roche.com/about/priorities.htm
3. https://ecampusontario.pressbooks.pub/bio16610w18/chapter/roche-strategies-
to-tackle-biosimilar-issue-2/
4. Strategic Product Portfolio Management: A Focus on the Bio-Pharmaceutical
Sector and Roche
5. https://www.roche.com/about/history.htm
6. https://www.roche.com/investors/sustainability-download-center/performance.htm
7. https://craft.co/roche/competitors
8. https://diagnostics.roche.com/global/en/news-listing/2019/Five-key-performance-
indicators-for-healthcare-organisations.html
9. https://www.roche.com/sustainability/suppliers/goalsp erf ormance.htm
10.StrategicAnalysisof T heW orldP harmaceuticalIndustry
11.https : //i − proclaim.my/journals/index.php/gdeb/article/view/188
12.https : //www.pharmtech.com/view/swot − analysis

28