Case study on Merck

Made by-
Charanjeet singh
Eshan chhagotra
Jitendra sawan
 Back ground:
Merck has been one of the top
pharmaceutical firm of the world.
The firm is about to loose some of its
top medicines like Vasotac and
Mevacor to generic knock-off
versions due to expiration of their
patents.
 Possible solutions:
The company can go in for mergers
like several other companies like
Rhone-poulenc and Hoecht have
done.
Stick to its core competency (i.e)
Creativity and Innovation
 New product process:
As seen in the case when it had a direct rivalry
with the similar drug named celebrexx made by
Monsato in camparision to its Vioxx(as both were
supposed to alleviate pain with minimum side
effects on stomach). The Merck company lost the
battle of early launch due to its late response
model for its improvement and development team.
As far as marketing is concerned, Merck is real fast
in it, as it develops cross functional teams and
starts marketing early in the development process
only.
 Through the new process development
Merck is able to stand out from the crowd
of pharma company as it is giving a
specialized and patented medicine which
a patient cannot get from any other
pharma company. Besides this, the
company manufactures certain highly
critical patented drugs.
This helps it to capture the untapped
market of such drugs.
 Vioxx case:
Vioxx case is actually a replica of the process
through which any drug is being manufactured.
It requires detailed analysis and a series of tests
like test tubes, lab mice test and then clinical trial.
So over all its quite a time consuming process.
As it is its core competency to innovate and to be
creative so Merck should focus on it, with the
only change in its process that is, to make the
response model of its improvement and
development more faster to respond.
 Risks with product
development:
Risk of product getting rejected in
the trials only.
Lots of money being at stake in the
R&D.
Other company might beat you in the
final market reach time for the
similar drug.
The medicine can become obsolete
with some other powerful medicine
being developed before ours.
 Major tribulations in the
pharmaceutical industry
Patent Expiration
Rapid decline in revenues
Ever increasing drug resistance of
the diseases
Porter: Five Strategic
Forces
Porter Model Applied
Barriers to Entry
Large economies-of-scale barriers in R&D
Significant marketing required at global
scale
High Risk inherent in the drug development
process
Increasing threat of new entries from
biotechnology companies
Bargaining Power of Suppliers
Mostly Commodities
Individual Scientists may have some
personal leverage
Porter Model Applied

Bargaining Power of Buyers

Buying Process is price sensitive
Large power of buyers plan sponsors
with an incentive to contain costs
Mail-order pharmacies obtain large
discounts on volume drugs
Large aggregated buyers hospital
suppliers, large distributors, government
institutions
Porter Model Applied

Threat of Substitutes
Generic drugs weakening branded drugs
More than half the patent life spent on
product development and approval
process
Technological development is making
imitation easier reverse engineering
Consumer aversion to chemical
substances erodes the appeal for
pharmaceutical drugs
Porter Model Applied
Intensity of Rivalry
Global Competition Concentrated Amongst
fifteen large companies
Most companies focus on certain types of
disease therapy
Competition amongst incumbents limited by
patent protection
Competition based on price and product
differentiation
Government intervention increases rivalry
Strategic alliances establish collaborative
agreements among industry players
Very profitable industry, but declining margins
Thank you