CIBA-GEIGY MERGER WITH

SANDOZ
Corporate Strategy Case 17.2

Erlangga Eka N.
Henryawan Aditya Pradipto
Hizbullah Hadikusumandari
I Gede Nandya
13/360609/PEK/19107

13/360604/PEK/19102
13/360607/PEK/19105
13/360608/PEK/19106

Merger History Timeline

Merger History Ciba-Geigy

Merger History Sandoz

Merger History

Worlds 9th-

largest drugmaker in 1996

Had 2,3%
international
market share
Held 45% shares
of Novartis

Worlds 14th-

Worlds 2th-

largest drugmaker after

Glaxo Wellcome
Had 4,4%
international
market share
Focus on

largest drugmaker in 1996

Had 2,1%
international
market share
Held 55% shares
of Novartis

Merger Strategic Reasons

Create More
Powerful
Bargaining
Power

What were the individual strengths

and weaknesses of Sandoz and CibaGeigy?

High research

Brand name

capabilities and
modern marketing
system
High economic of
scale and scope of
economic on
manufacturing
facility.
Strong position on
agriculture and
petrochemical

harmed due to the

legal case of CIBAs
Clioquinol in Japan
Discovery of
unethical way on
chemical Galecron
testing

What were the individual strengths

and weaknesses of Sandoz and CibaGeigy?

Best known for its

nutrition product
such as Gerber
baby foods,
Ovaltine, and Wasa
crispbreads
High research
investment in
genetic field
Strong performance
in emerging
markets

Though had

invested heavily in
gene research, but
newly developed
products were still
years away
Responsible for a
notorious chemical
disaster in Rhine
River

How would the merger help

each company?
Merger give more

possibility to innovate
in research and
development, such as
biotechnology.

More efficient marketing

and broader distribution

products.

How would the merger help

each company?
Leaner organizational

structure make
organizational efficiency and
find competent employees

Merger make

Financial
strength

How would the merger help

each company?
Combine product

lines and make

more sales

Lower cost of

financing,
increased liquidity

What was the expected

future strategic focus of
Novartis, and why?
Focused

diversification

Innovative
pharmaceuticals
Differentiated generics
Preventing
infectious
disease
Eye care
Self-care products

What was the expected

future strategic focus of
Novartis, and why?
Getting drugs to patients faster

Broad use of computer modeling and

simulation
Economics of innovation

What was the expected

future strategic focus of
Novartis, and why?
Extending lead in

innovation

Science-based innovation is at the heart

of Novartis. Follow a distinct research
and clinical approach to build an
industry-leading
pipeline
of
differentiated medicines and treatments
with the goal of delivering real-world
benefits to patients
and healthcare
Accelerating
growth
providers.
pursuing long-term growth by maximizing
product launches and leveraging its
robust portfolio. Expanding in established
and emerging markets and adapting our
commercial model to the rapidly changing
healthcare environment.

What was the expected

future strategic focus of
Novartis, and why?
Driving productivity
Novartis is driving productivity by
simplifying its processes, accelerating
cross-divisional
collaboration,
and
improving global procurement and
supply chain management. We are
using rigorous resource allocation to
improve
cash
management
and
profitability.

Thank You!