The pharmaceutical industry is characterized by a harsh competition between large companies, biotech start-ups and generics, long and risky R&D processes, increasing government regulations and strong purchaser pressures. Merck & Co Inc. is one of the biggest players in this industry, due to its competitive advantages. Indeed, Merck benefits from its continuous efforts in the R&D field: its R&D spending increased by 75% between 2005 and 2009. Second, the company's use of its human resources is a key success factor in an industry where scientific researchers are paramount and brain drain as well as poaching a plague for the pharmaceuticals leaders. That's the reason why Merck insists on offering strong incentives to attract and keep scientists, and develops scholarships granting along with partnerships with colleges and research centers. Finally, Merck presents a powerful customer-oriented philosophy, which fosters its brand equity, and which has been very much used these times, especially after the Vioxx scandal.
[...] strategy Biotech especially need to attract funding biotech (complex) biotech's has Technological enabled Merck to get advance gives technological greater chance of advantages success for R&D Equipment strategic location production (India and China capabilities attract investments) Research sites based Rationalization / in developed multiplication of countries plant & equipment Researchers and employees doctors sometimes Highly acknowledged act like divas doctors and research centers Partnerships with colleges, scholarships High incentives to keep and attract brains specialists distribution products: targeted Partnerships with relationship hospitals, doctors' marketing associations, and Doctors for primary drugstores for DTC care products: importance of the number of sales reps companies' images High brand Brand loyalty awareness, efficient important especially for DTC for OTC and DTC Capabilities Industr Comments Merck's Comments y grade grade Management define global companies strategy: Sold non strategic Which M&A ? assets Outsourcing R&D ? Information required to Good internal System coordinate the communication tools. different units of research. [...]
[...] As a consequence, Merck has to consider the different options in order to control these companies (joint-ventures, alliances, acquisitions) as they represent a key challenge for the future - and we may notice that Merck has already acquired some of them (see Appendix 1). The generics competition also constitutes a growing threat for Merck, as they accounted for 19% of the US prescription drugs in in 2000 and as much as 57% in 2005. Their introduction was helped by the Waxman- Hatch Act, passed in 1984, which made the approval process for generic drugs faster. The generics cost advantage is obvious for consumers, so their increase is very likely to continue. [...]
[...] Diversity is the keyword of Merck's human resources policy. But it is not a matter of quota or a simple “diversity program” fostered by the government: for Merck, diversity is a core value, a real part of the firm's business practices and training strategy. To attract future researchers, Merck supports medical and science education by taking part in funds and by offering scholarships and internships for biomedical students. Sales and Marketing: customer-oriented philosophy As mentioned before, after the Vioxx scandal, Merck had to restore its image. [...]
[...] Consequently, despite its leader position in the industry, Merck had to realize various strategic moves during the last five years to remain in the game. Indeed, despite its tradition of not getting involved in mergers and acquisitions processes, it acquired various biotech companies in order to gain technological advance and reinforce its position on the biotechnology segment. In addition, by acquiring Schering Plough later this year, Merck seems to have put an end to its strategy of internal growth: it is clear that it now resorts to acquisition with a view to becoming a stronger and global healthcare leader. [...]
[...] In comparison with the whole pharmaceutical industry, Merck invested in 2006 of the total R&D investment. Merck made a lot of efforts these last years and its percentage of R&D increased of 71% between 2005 and 2009. Moreover, due to the merger with Schering Plough, the part of R&D and resources available will increase significantly. D. Production Merck's repartition of the production is the following: prescription, vaccine, animal health (joint venture with Merial), consumer health (joint venture with J&J). Before the merger, people involved in production represented 12,000 workers. [...]
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