Posted in Marketing & Strategy Articles, Total Reads: 13059
, Published on 29 June 2014
Pharmaceutical industry is an integral part of healthcare industry, manufacturing, development and research of medicine and various dosage form formulation are the main functions performed by the pharmaceutical industry. Patient safety and healthcare needs are fulfilled by this industry. Pharmaceutical market share is growing in India at fast growth rate and India is among top five leaders in pharmaceutical industries.
Lupin, Mankind, GlaxoSmithKline, Pfizer and Cipla are the leading pharmaceutical companies and possess competitive advantage in different aspects.
Cipla is a global pharmaceutical company whose goal is ensuring no patient shall be denied access to high quality & affordable medicine and support.
GlaxoSmithKline – one of the world's leading research-based pharmaceutical and healthcare companies – is committed to improving the quality of human life by enabling people to do more, feel better and live longer.
Mankind aspires to aid the community in leading a healthy life through two parallel objectives: formulating, developing & commercializing medicines and delivering affordable & accessible medication that satisfies urgent medical needs.
Lupin Pharmaceuticals, Inc. is dedicated to delivering high-quality, branded and generic medications trusted by healthcare professionals and patients across geographies.
Pfizer have a leading portfolio of products and medicines that support wellness and prevention, as well as treatment and cures for diseases across a broad range of therapeutic areas.
Image Courtesy: freedigitalphotos.net, zole4
Strategic analysis of these five companies include the internal analysis by value chain analysis, external analysis by Porter’s five forces model and situational analysis by SWOT analysis.
The profile of these pharmaceutical companies; Lupin, Mankind, GlaxoSmithKline, Pfizer and Cipla are listed in the following table
Table1.1 Profiles analysis
Anti-TB, Cephalosporin and Cardiovascular drugs, diabetes, anti-inflammatory and respiratory therapy.
Anti-infective, dermatology, gynecology, diabetes, oncology, cardiovascular disease and respiratory diseases. vaccines, for hepatitis A, hepatitis B, invasive disease caused by H, influenza, chickenpox, diphtheria, pertussis, tetanus, rotavirus, cervical cancer, streptococcus pneumonia and others.
Pain ,Genitourinary ,Allergy and Respiratory ,Neuroscience
Antibacterial, Stem Cells and Regenerative Medicine
Antibody Technologies , Allergy and Respiratory, Peptide Technologies, Tissue Repair
Pain ,Genitourinary ,Allergy and Respiratory , Molecular and Translational Medicine
Anti-infective, anti-malarial, oncology, osteoporosis, respiratory, urology, children health, diabetes, HIV AIDS
1.2. Comparison of vision and mission statement and competitive advantage:
Vision is a future statement which explains where the company wants to be whereas mission is the statement of what business they are or what service they provide. Vision and Mission provide a direction to a company and also direct the decision of company and helps in strategy formulation. Competitive advantages give a company an edge over its rivals and an ability to generate greater value for the firm and its shareholders. The more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage. Strategy of any company should be aligned with its vision and mission, so that they can achieve their goals and objective. Competitive advantage gives special strength to an organization to outperform over the rivals in the competitive market.
The following table depicting the Vision, mission and competitive advantage
Table1.2. Comparison of vision, mission and competitive advantage:
Lupin Pharmaceuticals, Inc. is committed to bringing innovative products for the healthcare professional to improve the health and well-being of individuals.
Lupin's mission is to become a transnational pharmaceutical company through the development and introduction of a wide portfolio of branded and generic products in key markets.
Cephalosporin and Anti TB drugs
"To be amongst the top three pharmaceutical companies of India by 2016-17"
"To support a healthy & active lifestyle through our broad portfolio of Pharma, OTC & FMCG products."
strong portfolio of businesses, geographies and products range
We want to become the indisputable leader in our industry - not simply in terms of size, but in how we use that size to achieve our mission and improve the quality of human life. Becoming the indisputable leader in our industry means conquering the challenges that face us as an industry, and as a global society.
our mission is to improve the quality of life by enabling people to do more, feel better and live longer. This mission drives us to make a real difference to the lives of millions of people with our commitment to effective healthcare solutions.
Strong R&D focus and exploring new markets
We will be recognized for meeting the diverse medical needs of patients in Emerging Markets around the world in an innovative, socially responsible and commercially viable manner.
We will develop bold and innovative partnerships provide medicines and services in an affordable manner become a leading biopharmaceutical company in Emerging Markets reach patients we have never reached before be recognized for having the best talent in healthcare.
Excellent research and development,
Strong Brand image
Making India self-reliant and self-sufficient in healthcare.
We are renowned for making affordable, world-class medicines that meet the needs of patients across therapies. We also offer services like consulting, commissioning, plant engineering, technical know-how transfer and support.
anti-infective and anti-asthmatic formulations
2.1. Internal analysis by Value chain model:
Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Focusing on the value-creating activities could give the company many advantages.
Infrastructure of pharmaceutical industry has to comply with the standards set by different competitive authorities such as FDA, WHO, NDA, INDA etc. so infrastructures of pharmaceutical industry are almost similar. GlaxoSmithKline, Lupin and Pfizer have specialized research and development center which is approved by these regulatory bodies. Lupin’s manufacturing and supplying APIs and formulations approved by leading pharmaceutical regulatory authorities like the US FDA, World Health Organization, MHRA (UK), TGA (Australia), MHLW (Japan), ANVISA (Brazil) and MCC (South Africa) which serves as the competitive advantage for the Lupin.
Human resource department is one of the important sources for competitive advantage. GlaxoSmithKline and Pfizer both have more than 100000 lakh employees each which form the great work force and employed over the world. Cipla, Lupin and Mankind have relatively small workforce of 26000, 12710 and 10000 respectively. These five companies have different unique system; Lupin, Mankind, GlaxoSmithKline, Pfizer and Cipla has employee benefit, work life balance, learning development, talent acquisition and HR generalist scheme respectively.
Research and development of new molecules or existing drug is the integral function of pharmaceutical industries. Continuous improvement of quality and effectiveness of drug gives competitive advantage to the company over its rivals. GlaxoSmithKline invest huge amount of money in its R & D projects, its researches are focused on bioelectric tackling, epigenetic turn on and turn offs and antibiotic resistance whereas Cipla, Mankind, Pfizer and Lupin focuses on API development, new molecule, stem cells antibiotic technology, and advance drug delivery system respectively.
Operation of these companies are almost similar, how efficiently and effectively operate certain functions determine the success or failure of any company. All these companies have basic operation function as manufacturing, supplying, quality control and delivering of drug and formulation.
Sales and marketing is the ultimate objective of any manufacturing industry. Lupin has the robust distribution network, Mankind have aggressive selling strategy with its 80% employee as the medicinal representative, GlaxoSmithKline has commercial team for this purpose, market access is the main strategy of Pfizer and strategic tie ups with global MNCs are the strategy of Cipla.
A service provided by these five companies is of significant importance to customers, stake holders and employees. Lupin provides patient education, GlaxoSmithKline has consumer healthcare center, Mankind provide home healthcare and Pfizer involves in stakeholder benefit plan and Cipla in employee benefit services.
Table2.1. Value chain analysis: comparison
VALUE CHAIN COMPONENTS
biotechnology R&D center
R& D department
consumer healthcare center
R& D unit
R& D unit
HUMAN RESOURCE MANAGEMENT
Recruitment , training,
Recruitment , training,
Work life balance
Learning and Development
Learning and Development
Learning and Development
RESEARCH AND DEVELOPMENT
Advanced Drug Delivery Systems (ADDS) Research,
Novel Drug Discovery and Development (NDDD),
Mankind Research Centre Innovation in technology, new molecule
Tackling, the threats of antibiotic resistance,and
Epigenetic-turn-ons and turn-offs
Antibacterial, Stem Cells and Regenerative Medicine
Molecular and Translational Medicine , Antibody Technologies , Peptide Technologies, Tissue Repair
Lupin's global manufacturing operations are spread across India and Japan.
manufacturing and supplying APIs and formulations.
its business operation in India namely Discovery, Future, Special, Vet, & Lifestar.
Starting its operation in Srilanka, Vietnam, Philippines, Nepal & Rwanda
Operation include manufacture, formulate, fill, pack, control, release and deliver over 1.4 billion doses.
Operational Sustainability Team help for this purpose
Business Operations strive to set the standard for quality, safety and value in the discovery, development and manufacture of medicines
sophisticated manufacturing plants
SALES AND MARKETING
Large Dynamic Sales Force,
Robust Distribution Network
aggressive marketing policy , customer engagement model
commercial teams are responsible for understanding our patients, consumers and customers.
Sales (outside US)
Strategic tie up for sales and marketing with global MNCs
Home health care,
Toll free number
GlaxoSmithKline consumer healthcare India
Direct Stock Purchase and Dividend Reinvestment Plan,
Direct Deposit of Pfizer Dividends
Employee self service
2.2. External analysis by Porter’s five forces model:
Michael Porter's Five Forces of Competitive Position model provides a simple framework for assessing and analyzing the competitive strength and position of a corporation or business organization. These five forces are new entrants, bargaining power of suppliers, bargaining power of buyers, threats of substitute and competitive rivalry.
Threats of new entrants are generally less because of huge capital cost and established brand image of existing companies these five companies have established its strong brand image so for all these have less threats of new entrants however Mankind has medium threats because it also operates in FMCG sector.
Suppliers bargaining power is low for all the companies because of availability of more suppliers in the market and also these companies are huge volume producers which reduce the bargaining power of suppliers.
Buyers bargaining power is low for all the five companies because they have patent for specific medicines so buyers cannot change the pricing of drugs.
Rivalry of competitors are very high especially in generic sector of medicine where a pharmaceutical company can use cost reducing technique for achieving competitive advantage in the market.
Threats of product substitute are high for the generic medicines because of cost related advantage of one company over the others. There is no threats or less threats for the patented medicines.
Following tables comparisons the five forces for these pharmaceutical companies:
Table2.2. external analysis by Porter’s five forces model
Threat of New entrants
Suppliers bargaining power
Buyers bargaining power
Rivalry from competitors
Threat of product substitute
2.3. Situational Analysis:
A situational analysis often is called the foundation of a marketing plan. A situational analysis includes a thorough examination of internal and external factors affecting a business. It creates an overview of the organization that will lead to a better understanding of the factors that will influence its future.
A SWOT analysis is used to determine the strength, weakness, opportunity and threats which can be useful for various decision making and problem solving approaches as well as strategy making in the company at all level from marketing strategy to operation strategy.
Strengths are the source of competitive advantage of the companies and it varies with company to company, Lupin has large market share in Japan US and its world leader in anti TB drugs and cephalosporin which are its biggest strength. Mankind’s drugs are highly prescribed by the physician and have excellent advertising strategy, GlaxoSmithKline has excellent R& D center, Pfizer has strong brand image and expanding market share by mergers and acquisition, and Cipla have its strength on anti-infective and anti-asthmatic formulation.
Weaknesses are the areas where a company should look at to improve the organization and convert it to its strength over a time. High dependence on global market is the biggest weakness of Lupin because its main market is Japan and US, Mankind has less regular sells and GlaxoSmithKline has patent expiry as its weakness, for Pfizer and Cipla tough competition in the market is the main weakness. These weaknesses should be sort out by the companies and try to overcome those weaknesses.
Opportunity is something that a company tries to grab to get the profit and take important decision to expansion of product or business. Emerging technology and prevalence of TB in developing countries is the good opportunity for Lupin, related diversification and modernization of retail is good opportunity for Mankind as it also involve in FMCG sector. Merger and acquisition and research of new drug, strategic partnership with other companies, and Alzheimer’s disease are the opportunities for GlaxoSmithKline, Pfizer and Cipla respectively.
Threats for the pharmaceutical companies are generally failure of the drug, soaring cost of research and development of the drug especially in clinical trials. Lupin finds rigid opposition and huge cost of discovering new drug as the threats of the company. Completion from the unbranded drug, risk of failure of new drug, economic slowdown and fluctuation in the currency exchange rate is threats for Mankind, GlaxoSmithKline, Pfizer and Cipla respectively.
These are explained in brief in the table below:
Table2.3 Situation analysis
1.Worldwide leader in Cephalosporin and Anti TB drugs 2. In the US and Japanese market it is the largest generic player
2. strong distribution network
3. unique ads
1. world’s largest investor in R&D
2.Strong R&D focus and exploring new markets
1.Excellent research and development
2. Mergers and acquisitions
3. Strong brand name
1.positive brand image 2. Fixed-Dose combination
3.anti-infective and anti-asthmatic formulations
1.High dependence on global formulation business
2.Forecasting done on technological level is less
3.It operates in low growth segments
1.very niche category of market
2. less regular sell
1.issue of safety of drugs
2. Patent expiry
2.Negative brand image (healthcare fraud)
1. Negative campaigns by AHF
2. Tough competition
1. Emerging technological trends in drug delivery
2. Increasingprevalence of TB
2. Growth in modern retail
1. Increasing awareness
2. mergers and acquisitions
1.Strategic agreements with pharmaceutical companies
2. mergers and acquisitions
1. Alzheimer’s disease medication.
2.Increased investment in the budding markets.
2. Soaring cost of discovering novel products
1. Promotion and advertising a little difficult 2. Competition from unbranded and local products.
1.Risk of unsuccessful new Products
1.unsuccessful new Products
1. Constant price rises 2. Rupee depreciation
3. Fluctuations in currency exchange rates
From the above table all the strength, weaknesses, opportunities and threats can be analyzed and used in the strategy formulation of the above five companies of pharmaceutical industry. This information can also be used in decision making of any important situation.
After strategic analysis of five companies namely Lupin, Mankind, GlaxoSmithKline, Pfizer, and Cipla it can be straight way concluded that their strategies are aligned with their vision and mission; Lupin heading towards it vision by continuous innovation and healthcare improvement with having competitive advantage of anti TB drug and cephalosporin, Mankind by its strong portfolio of businesses, geographies and products range looking forward to achieve its vision, GlaxoSmithKline investing huge money in R&D and exploring new market to become indisputable leader of industry, Pfizer by its wide range of medicines and brand image its fulfilling its promise to deliver innovative product, and Cipla is providing varied range of medicines to make the customers self-reliant and self-sufficient. These comparative strategic analyses of these five companies provide the concise analysis of those companies.
This article has been authored by Chandra Kumar from National Institute of Technology Karnataka
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