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Group Project for the module of Operations Strategy and Business Relationship Management

Student Name and I’D No. Stella Onarotena Kolawole - R00223652


Miten Kathiriya - R00224487
Halil Ozbahceci – R00225181

Department Marketing and International Business


Program of Study MA in Global Business Practice
First examiner: Maria Gilsenan & Alan O’Mahony
Assignment title Analysis of MSD Ireland
Date 28th of November 2022
Signature

1
Student Assessment Declaration

This is to certify that the work I am submitting is my own and has been done by me solely and
not in consultation with anyone else. Neither I nor anyone else has submitted this work for
assessment, at either Munster Technological University or elsewhere. I have read and understood
the policy and procedures concerning academic honesty, plagiarism, and infringement. Where
breaches of the declaration are detected, these will be reviewed under MTU’s regulations and
policies. Any breach of the examination rules is a serious issue and can incur penalties. I
acknowledge that the Academic Department reserves the right to request me to present for the
oral examination as part of the assessment regime for this module

Cork, 28th of November 2022 Stella Onarotena Kolawole


Cork, 28th of November 2022 Miten Kathiriya
Cork, 28th of November 2022 Halil Ozbahceci

Table of Content

Introduction.….………………………………………………………………………………….03
Company overview…...………………………………………………………………………….03
Section 1
a) ……………………………………………………………………………..……..…04 - 05
b) …………………………………………………………………………………………...06
c) ………………………………………………………………………………………06 - 07
d) ………………………………………………………………………………………07 - 08

Section 2
a) …...………………………………………………………………………………….08 - 10
b) ………………………………………………………………………………...…….10 - 11
c) ………………………………………………………………………………………11 - 12
d) ………………………………………………………………………………………12 - 13

Closing remarks……...…………………………………………………………………………..13
References...………………………………………………………………………………..16 – 17

Table of Figures

Figure 1…………………………………………………………………………………………04
Figure 2…………………………………………………………………………………………05
Figure 3…………………………………………………………………………………………05
Figure 4…………………………………………………………………………………………12
Figure 5…………………………………………………………………………………………14
Figure 6…………………………………………………………………………………………15

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Abbreviation
NDA - New Drug Application
BLA - Biologics License Application
FDA - Food and Drug Administration

Introduction
The following report has been prepared to evaluate the Internal and External relationships and
the Operations strategy of the American Multinational pharmaceutical company Merck & Co.
The company transacts business as Merck Sharp & Dohme (MSD) outside the United States and
Canada and compares their operations strategies with Irish best practices.

Company overview.
MSD, known as Merck in the United States and Canada, has operations in more than 140
countries. In Ireland, MSD currently employs over 2,800 people across six facilities in
Ballydine, Co. Tipperary, Brinny, Co. Cork, Carlow, Dunboyne, Co. Meath, and Dublin.
Understanding the Irish pharmaceutical business and the crucial role it plays in Ireland's overall
economy is essential if one is to comprehend MSD Ireland.

Their yearly turnover places them among Ireland's top twenty businesses, and MSD has so far
invested almost $4.1 billion in their Irish operations which encompass manufacturing,
commercial, and marketing facilities. MSD is a leader in healthcare, dedicated to helping the
world be well through a wide range of innovative health solutions. This includes the
development, production, and distribution of prescription medicines, vaccines, and biological
therapies as well as animal health products. MSD’s commitment to research and to increasing
access to healthcare across the world is demonstrated by clearly focused policies, far-reaching
programs, and life-enhancing partnerships.

To improve manufacturing excellence and R&D across all Irish facilities and the global
company networks, MSD Ireland works at the cutting edge of science and technology. Their
Irish locations, which have a significant presence in Ireland and produce about half of MSD's top
twenty products, contribute to saving and improving lives in more than 60 different nations.

The key relationships in MSD, Ireland, with both internal and external stakeholders.
The relationship between business companies seeking to achieve their goals is one of the
distinctive characteristics of modern markets. Relationships that are successful can lead to the
achievement of goals. The business climate is affected by the relationships that companies have
with external stakeholders, including customers and employees, as well as suppliers, partners,

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investors, trade associations, and government regulators. The importance of nurturing ongoing
relationships with stakeholders has been recognized by an increasing number of businesses.
Developing long-term, mutually beneficial exchange relationships is now more important than
short-term transactions. Below mentioned are the Internal Stakeholders (Figure 1) and External
Stakeholders (Figure 2) of MSD. The key relationship of MSDs with the stakeholders is
mentioned in (Figure no. 03).

Owners

Animal
Health Investors
Product
MSD's
Internal
Stakehold
ers
Board of
Employe
Directors
es

Manager
s

Figure1

4
American
Chamber of
Commece Cork
HSA (Health
& Safety Chamber of
Authority) Commerce

HPRA IBEC (Irish


(Health Business and
Products Employers
Regulatory MSD's Confederati
Authority) External on)
Stakeholders

Environment IDA Ireland


al (Industrial
Protection A Developmen
gency t Agency)

Irish
European
Pharmaceuti
Federation of
cal
Pharmaceutical
Healthcare
Industries
Association
(EFPIA)
(IPHA)

Figure 2

Stakeholders

External Internal

IBEC (Irish Business and


American Chamber of Cork Chamber of IDA (Industrial
Employers
Commerce Chamber Development Agency)
Confederation)

Figure 3

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Evaluate the strength of the relationships with reference to the characteristics described by
Donaldson and O’Toole, 2007.

According to Donaldson & O’Toole (2007), In order to measure the strength of a relationship,
belief and action components are assessed. Behavioural processes are measured by the belief
component, while economic contents are measured by the action component. As far as
stakeholder relations are concerned, MSD maintains excellent relationships with both
stakeholders internal as well as External. IBEC, IDA, Cork Chamber of Commerce, American
Chamber of commerce. With high action and high beliefs in relationships between MSD and the
Investors, the American Chamber of Commerce, Cork Chamber of Commerce, IBEC (Irish
Business and Employers Confederation), and IDA (Industrial Development Agency). For the
low action and belief in relation to MSDs, there were many stakeholders namely HSA,
Environmental Protection Agency, HPRA & the employees. So, for high belief and low action in
relation to MSD and Managers. For Low Belief and High Action in relation to MSD and
Owners, and the Investors.

Impact of the Covid-19 pandemic on the relationship of supplier and MSD Ireland

The procedure that governs how a business communicates with its suppliers is known as supplier
relationship management. This is a mirror reflection of customer relationship management, as
the name implies (CRM). A business must cultivate relationships with its supplier in the same
way that it must do so with its consumers. This is a win-win situation is one in which both
parties get something.

The COVID-19 pandemic lockdown caught many industries by surprise including


pharmaceutical companies. But the one sector that witnessed growth during this period is the
pharmaceutical industry.

Although the COVID-19 pandemic caused some disruption and volatility in MSD´s global
supply chain network, and the Company experiences some disruptions in availability and delays
in shipments of raw materials and packaging, one thing that the pandemic did not affect is the
supplier relationship with MSD.

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The company set up well-planned logistics with all suppliers which prevented the company from
experiencing any such problems during Covid-19. Analyze and view their top-tier products, they
had set up experienced professionals in Singapore, the United States, and Ireland. Teams that
specialized in maintaining good relationships with suppliers and logisticians. As a result, they
also introduced hybrid, remote working structures for the teams which enabled them to continue
producing and supplying their products as well as meet the requirements of suppliers for the
demand.

Additionally, they entered into an advance purchase and supply agreement with the governments
of several countries worldwide. To make their treatment option more accessible to more than
100 low- and middle-income nations, they struck voluntary license arrangements with several
reputable Indian generic manufacturers and the Medicines Patent Pool. They collaborated to
produce and provide the vaccinations used by Johnson & Johnson.

Development of the strategic relationship

Suitability between partnerships is important. There are ten ways to identify suitability and
achieve success as a partner. (Pwc,2009)

The partnership is important in itself but should be seen in the context of other partnerships and
other strategic activities.
Cultural fit is often as important as financial fit and is often overlooked. Be sensitive to cultural
differences – whether between organizations, industries, or countries. The “softer issues” are
often the most difficult to tackle, but the most lucrative when you get them right.
Identify the most difficult relationship or aspect of the partnership structure and prioritize efforts
in that direction. Don’t just stay in your comfort zone.
Anticipate and evaluate your partner’s value proposition - get inside their head. It will help avoid
surprises and enable a solution that works for both parties.
All businesses react to performance metrics, so it’s important that both parties agree on both
“what” to measure but also “how” to measure it.
Analysis and evaluation make you more confident, agile, and sensitive to differences in culture
and approach, avoiding misunderstandings. Remember, however, not to enter into an
analysis/paralysis mode, as momentum is critical.
Framing the proposition in a positive, constructive manner makes a huge difference – ‘take-it-or-
leave-it’ deals may appeal, but risk alienation and relationship breakdowns.
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Always raise questions or issues that have come from the analysis and preparation you have
conducted – the path untrodden may have been paved with gold, or at least been an easier
journey for all parties.
Establish review and dispute steps in the negotiation and implementation process early on – it
avoids the potential for litigation and opens up new possibilities for challenge and improvement.
Communicating benefits along the way helps to keep up momentum and increase sponsorship
within the parent companies – it also keeps spirits up when times get tough.

Relationship Development Stages


There are four relationship development stages. These are Early, Norms, Expansion, and Long-
term. In Early contact, expectations are established, and possibly sign formal documents e.g., if
developing a joint product. Understanding each other’s norms (attitudes and behaviours) enables
deeper trust and commitment e.g., taking steps to give more business to the new partner or
making initial changes in design to customize the service for the new partner. Expansion of
relationship with deepening involvement, perhaps taking actions to support the other firm’s
products or geographical area. A long-term relationship becomes a strategic asset but needs to
keep changing and maintaining it. Dissolution is always a possibility.

There are some differences between transactions and strategic relationships. Transaction means
standard specification, low value, and available freely in the market. However strategic
relationship means customized specifications, range of value, and cost likely to accrue from
relationships. On the other hand, there are 4 types of relationships. Close, Discrete, Coercive or
Hierarchical and recurrent. In Close relationships partners cooperate for mutual advantage, and
beliefs and actions are high. In Discrete relationships little or no commitment, transaction to
transaction driven. The hierarchical relationship is driven by the dominant company. The
recurrent relationship is a close relationship operating well but with little potential for growth.
If the relationship between MSD and new contract manufacturers remains a
transactional/discrete relationship it remains just a business. That means minimum belief and
action. The new partner produces MSD products according to their business agreement. In
discrete relationships assets contribution (Human, capital, physical), communication and trust
are low. There are no cooperation and flexibility. The time horizon is only transactional. The
information sharing is limited. The norms are contract based. (Donaldson and O’Toole, 2011).

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Despite being posed to conquer the pharmaceutical industry MSD Ireland is still threatened by
the following contemporary global issues which could impact future strategic operational plans
for MSD Ireland

Political instability.
According to (Sidamor et al., political stability 2016) is a qualitative condition of public
development expressed as public policy, achieved by controlling and balancing the stakeholders
of society to achieve specific goals, ideals, and objectives. It is also a reflection of good
governance, defined as the act of overseeing the performance of state institutions. However, Ake
(1975) defined political stability as a member of society who constrains behavioural patterns to
those constrained by political role expectations.

Uncertainty in the global economic and geopolitical situation could lead to a slowdown in the
global economy, causing pharmaceutical wholesalers and retailers, hospitals, government
agencies, and controlled healthcare providers to sell their products or Any decrease in demand
for those products could adversely affect our earnings and materially and adversely affect this
business, cash flows, results of operations, financial condition, and prospects. In addition,
instability, disruption, or destruction in any significant geographic area, regardless of cause,
including war, terrorism, riots, or civil unrest, could alter the business and political position of
the Company. Natural or man-made disasters such as famine, floods, fires, earthquakes, storms,
and diseases. In February 2022, in particular, the armed conflict between Russia and Ukraine
escalated. It is impossible to predict the broader consequences of this conflict, including
sanctions, embargoes, regional destabilization, geopolitical shifts, and adverse effects on
macroeconomic conditions, and financial markets.

Climate change
The company believes climate change may adversely affect the business and the results of
operations, cash flows, and prospects. Companies are exposed to physical risks (such as extreme
weather conditions and rising sea levels), risks associated with the transition to a low-carbon
economy (such as additional legal and regulatory requirements, technological change, market,
and reputational risks), and social risks. and at human risk. Impacts related to climate change,
such as population movements and damage to health and well-being. These risks are either acute
(short-term) or chronic (long-term).

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Adverse effects of climate change include an increase in the frequency and severity of natural
disasters and extreme weather events such as hurricanes, tornadoes, wildfires (exacerbated by
droughts), floods, and extreme weather events. Extreme weather and rising sea levels pose
physical risks to our assets and those of our suppliers. Such risks include losses incurred as a
result of physical damage to facilities, loss or spoilage of inventory and business interruption
caused by such natural disasters and extreme weather events. Other potential physical impacts
due to climate change include reduced access to high-quality water in certain regions and the
loss of biodiversity, which could impact future product development. These risks could disrupt
the Company's operations and its supply chain, which may result in increased costs.

Also, New legal or regulatory requirements may be enacted to prevent, mitigate, or adapt to the
implications of a changing climate and its environmental effects. These regulations, which may
differ across jurisdictions, could result in the Company being subject to new or expanded carbon
pricing or taxes, increased compliance costs, restrictions on greenhouse gas emissions,
investment in new technologies, increased carbon disclosure and transparency, upgrade of
facilities to meet new building codes, and the redesign of utility systems, which could increase
the Company's operating costs, including the cost of electricity and energy used by the company.
The company's supply chain is likely to face similar transition risks, with increased costs likely
to be passed on to the company.

Fluctuations in currency exchange rates and interest rates


MSD operates in multiple jurisdictions and substantially all sales are denominated in the local
jurisdiction's currency. In addition, they have and will continue to have business development
transactions, borrowings, or other financial transactions that may expose them to currency and
interest rate risk. Because they cannot reliably anticipate and mitigate such adverse fluctuations,
changes in foreign exchange rates, interest rates, and inflation may adversely affect their
business, cash flows, results of operations, financial condition, and prospects.

From time to time, they enter into hedging agreements to mitigate the adverse effects of these
market fluctuations. Hedging instruments such as currency options, forwards, and interest rate
swaps can limit exposure to currency and interest rate fluctuations but attempts to mitigate these
risks are costly and not always successful. Certain of their interest rate derivatives and
investments are based on the London Interbank Offered Rate (LIBOR), and certain of Merck's
debt bears interest at floating rates, primarily based on LIBOR.

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Although the Company has begun adopting alternative interest rate benchmarks as an alternative
to LIBOR, the Company cannot predict the outcome and timing of additional or unanticipated
developments to arise in the future.

According to (Godin, B. (2008). Having ideas, implementing them, developing new approaches,
and improving existing ones is part of human history Ideas and concepts have influenced and
been affected by change. Language reflects the social understanding of the world. Bringing
together ideas and processes to develop solutions to problems is called innovation Skinner, M.,
and Hanlon, N. (2015).

The pharmaceutical industry has evolved by implementing ideas that come together to produce
new solutions to problems or improvements to existing systems, processes, products, or
attempted solutions. This expansion continues and the industry is expected to grow to $ 1.5
trillion by 2023 MSD team should take advantage of this and embrace the innovation for their
future growth and the following are ways they tap into this evolution.

Industry 4.0

This phenomenon is the latest move towards intelligent automation technology. In this new era,
the integration of modern manufacturing technologies and new information technologies will
play a key role in economic competitiveness (Zawadzki and Zywicki 2016). This review
examines future technological trends in the pharmaceutical industry. In the pharmaceutical
industry, Industry 4.0 is being used as a tool for process control. But more than that, you can use
the generated data to better understand your processes. This opens an insight into previously
inaccessible processes.

This allows a wide variety of quantitative and qualitative data to be used, by Fully understanding
processes and workflows from industrial processes, and human-generated, sensor-driven data.
Everything from traditional statistical tools to AI-driven solutions can be used to generate
complete process models for diagnostics, real-time process control, process development, and
process scaling.

Remote access to data retroactively and during live processes allows easy transfer of knowledge
between sites. The benefits of eliminating human variability and ensuring consistency are
immense. The days of lost process information are over. Automatic document creation captures
all process coordination. In 2016, the FDA published a blog post stating that it is encouraging
pharmaceutical manufacturers to move from batch to continuous manufacturing because of the
many benefits. That encouragement is also at a particular time today as we enter the era of
(personalized) precision medicine, where “drugs with unique properties must be manufactured
more quickly and delivered to patients who need them.” (FDA, 2016).

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Reformulation of Drugs
Drug Lifecycle Management (LCM) encompasses a range of strategies implemented by biotech
and pharmaceutical companies to unlock the hidden value, maximize sales and extend the life of
drugs. Drug reformulation is one of the most commonly used line expansion strategies that
extend the therapeutic utility of a drug and provide market exclusivity in several ways.
Reformulation allows pharmaceutical companies to meet specific marketing needs, strengthen
brands, reposition medicines in entirely new target groups or new therapeutic areas, and
effectively target patients with specific clinical needs. can be treated as A company's motivation
to rebrand itself depending on where in the drug's lifecycle the restructuring takes place.
(Venneti, K.C., Nalavade, R., Jha, S.S., Akshay, S., Jaokar, T.M., Gattu, U., & Shangary, S.K.
(2020)).

Global pharmaceutical companies with big brands often see formulation changes as a strategy to
improve the lifecycle management of patented products and delay the entry of generics as long
as possible. For small molecules, reformulation allows developers to improve the performance
and patient-centricity of existing drugs. It can be done to create versions of existing drugs that
are more convenient and easier for patients to use, improve quality of life, and promote
adherence to promote treatment success.

Macromolecular reconstitution can improve solubility, improve absorption, or improve


formulation stability. In both cases, reconstitution saves significant time and money compared to
discovering and developing entirely new chemistries. New chemical entity.

MSD Ireland's new product development process


The company uses innovative technology platforms to develop processes for the formulation of
solid-dosage pharmaceutical product candidates used in late-stage clinical trials. The formulation
manufacturing facility will also enable the plant to manufacture initial launch quantities of newly
approved products, the flowchart below shows the processes of their new product development

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Figure 4

Effectiveness in MSD

a. Speed
In pharmaceutical companies’ the production process speed is low because it takes a
very long time to develop drugs. There are five steps to produce drugs. These are
discovery and development, preclinical research, clinical research, FDA review, and
FDA post-market safety monitoring. (FDA,2018) Especially the preclinical, and clinical
research phases are too long. However, if MSD wants to produce a generic drug, it takes
less than develop a product because generic drugs are copies of the innovator or brand-
name prescription drugs and make up about 90% of prescriptions filled in the USA.
(FDA,2022)

b. Quality-
Drug quality is important at MSD. MSD’s motto is safety first. MSD has to provide the
GMP and FDA regulations. GMP refers to the Good Manufacturing Practice regulations
promulgated by the US Food and Drug Administration under the authority of the Federal
Food, Drug, and Cosmetic Act These regulations, which have the force of law, require
that manufacturers, processors, and packagers of drugs, medical devices, some food, and
blood take proactive steps to ensure that their products are safe, pure, and effective.

c. Availability/Dependability
GMP regulations require a quality approach to manufacturing, enabling companies to
minimize or eliminate instances of contamination, mix-ups, and errors. This protects the
consumer from purchasing a product that is not effective or even dangerous. Failure of
firms to comply with GMP regulations can result in profoundly serious consequences
including recall, seizure, fines, and jail time. (ispe.org, 2022)
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d. Flexibility
MSD flexibility is low because they produce drugs and they have to provide all
regulations of GMP, FDA or, Ireland regulations.

e. Cost
Developing new drugs or producing generic drugs might be expensive because
companies spend millions of dollars on research and development. However, companies
are trying to find a solution to reduce costs. MSD has multiple manufacturing locations in
Ireland. One of the reasons why they chose Ireland is the tax regulations in Ireland.

The approach taken to Operations Strategy and Business Relationship Management by


MSD, Ireland, to best practices in the pharmaceutical industry.

The approach taken by MSD Ireland to operations strategy and business Relationships Ireland's
best practice in the pharmaceutical industries cannot be overemphasized. Through Their
partnership, investment, and endless invention, which seek to overcome barriers to providing a
healthier future for the masses.

Operating responsibly is at the heart of MSD's ability to deliver sustainable impact – driving
long-term value for the company and society at large. Also, access to health Employees'
Environment Ethics & Access to innovative medicines and vaccines are valued. Using world-
class research and science to save and improve lives.
They make long-term investments in research & development and target diseases where they can
make the greatest difference, researching infectious diseases and developing vaccines they are
committed to addressing the global public health burden of infectious diseases by working with
partners who share the same commitment.

Overall, the following table shows the approaches taken by MSD for the best practices in the
pharmaceutical industry.

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