Merck: Business Analysis Merck is a flourishing research-driven pharmaceutical company, which discovers, develops, manufacturers, and promotes an extensive variety of human and animal health products. Although Merck is one of the biggest pharmaceutical companies of the world, they still come across problems today while striving to sustain a lead against its competition.
Merck has achieved success with its lengthy history of breakthrough drugs and the development of three significant pharmaceutical products: antibiotics, vitamins, and hormones. Merck’s success relies heavily on its management and how they modify the business model in place to that of the ever-changing economy.
Influence of Economic Trends The global pharmaceutical market is likely to undergo a wide variety of changes with new competition arising in India, China, Malaysia, South Korea, and Indonesia.
This new competition has a growing economy and has made a difference between the product cost and disposable income of consumers. According to NASDAQ (2011),“ Global pharmaceutical market sales are expected to grow at a 4-7% through the year 2013 largely being driven by the growing access to health care in emerging economic regions” (para.
2-5). Short-term growth within this area is stimulated by the United States market, as it continues to be the largest pharmaceutical market in the world.
A focal point on research and development in special drugs and generic drugs will remain a strong means to meet 2011 goals of earning $315 billion dollar in sales within the United States. Strategies Merck & Co. , Inc. has outlined its long-term strategic goals in how the company devises to develop and market medicines and vaccines worldwide.
Merck plans to enhance the value of its medicines and vaccines through lifecycle management and will put time into implementing internal and external growth opportunities such as regional business expansion.
The company also plans to obtain additional growth from budding markets. According to Drug Discovery & Development (2011), “In addition, the company is making significant investments in key emerging markets, including China and India, with the goal of attaining a leadership position in those markets over the long term” (para. 3-12). Furthermore, Merck is also moving o diversify its portfolio by creating a new division, Merck BioVentures, which leverages a unique platform for both follow-on and novel biologics (Drug Discovery & Development, 2011). Merck new division called Merck BioVentures (MBV) will use Merck’s privately owned glyco-engineering technology to become a chief provider of biologics, which symbolizes an important marketing opportunity because of the broad patent expiration of leading biologics scheduled to take place in 2017.
According to Drug Discovery & Development (2011), “Merck has also been involved in extensive diverse research and development efforts to include 47 active clinical programs across the company’s major research franchises: bone; respiratory; immunology and endocrine; cardiovascular; diabetes and obesity; infectious diseases; neuroscience; oncology and vaccines” (para. 3-12). The Drug Discovery & Development (2011) website, Merck is diversifying its scientific portfolio through internal and external research collaborations.
The company focuses on developing novel, best in class or follow-on treatments for patients in primary care, specialty care, and hospital settings. Additionally, Merck Research Laboratories is engaging in a collection of treatment protocols that consist of small molecules and vaccines. Merck continues to invest in introducing its medicines and vaccines around the world by engaging in suggestions for Gardasil and developing new fixed-dose combinations with Januvia as well as an extended release formulation of Janumet.
Merck will also have a global launching of new commercial models. This strategy uses new marketing technologies to accompany a new, more customer-centered method. It moves away from the customary frequency-based sales and marketing approach. This strategy also generates competence by preventing replication in principal functions and throughout sales organization. In Europe and Japan, where Merck is already implementing new models, the company is growing faster than the market and is ready for further growth.
Merck has also executed a distinctive strategy that entails starting a channel of communication with health care payers, usually insurers, before working on a new medical idea. “It is important because if you’re going to get your product approved in the future… you’ve got to understand what innovations are meaningful to your customer base, which includes payers” (Scheller, para. 5-16). Merck will also utilize a Chief Medical Officer, whose function is to be the voice of the patient or an advocate for patients.
Merck also uses a supply strategy that includes implementation of manufacturing procedures, a greater dependence on outside resources, and an explanation of its inside manufacturing system. This strategy intends to plan for the future how Merck will convey its products to the market. It puts forth Merck’s vision of being the most reliable and aggressive supplier of medicines and vaccines in the pharmaceutical industry. This new strategy is meant to improve their organizational focal point, competence, awareness to customer needs, and maintaining a competitive advantage for Merck.
As part of Merck’s global manufacturing strategy, they have been in existence in China since the 1980s through which a limited amount of formulation and products are prepared for the Chinese markets. Through their Global Procurement operations, they analyze organizations in countries all over the world to locate organizations that are best able to provide the active ingredients, packaging, and other services necessary for the manufacturing of their products (Van Arnum, 2008).
As far as outsourcing strategies, Merck outsources unimportant functions, which are those where outside manufacturers have greater expertise, and also have the capacity to distribute particular active ingredients or a product (Van Arnum, 2008). Merck has procedures in place that directly supervise the quality and supply of those products which are obtained from outside the company. Merck’s goal is to always locate the most proficient and successful way to deliver vaccines and medicines to patients with the quality standard that Merck is well known for.
To succeed with their strategies, Merck needs outside manufacturers who operate as partners and are ready to work collaboratively towards shared success, both in finding technological solutions to problems and in recognizing successful business processes that will generate a competitive advantage to others in the pharmaceutical industry. Tactics To help make certain that medical advances reach people who can benefit the most from them, Merck often gets involved with partnerships. One is a joint venture with the Wellcome Trust, which has a not-for-profit mission to develop innovative, affordable vaccines for people in developing countries” (Scheller, para. 5-16). One of Merck’s focuses is to make its medicines and vaccines readily available to patients on a globally, which is fundamental to Merck’s mission. In cases which people in developing nations can not afford medication and their country does have not have traditional health care systems in place, Merck partners with that country’s government.
For example, they have partnered with the Gates Foundation and other not-for-profit organizations to offer an all-inclusive approach to address HIV/AIDS in Botswana to employ education, support, prevention, and clinical care to include free treatment (Scheller). Another tactic used by Merck is the merging of previously researched and manufacturing functions into a Global Pharmaceutical Commercialization group. Merck has achieved the reduction by 12 months or longer of the amount of time required to take a product from proof of theory to market accessibility.
This new process has also tremendously decreased capital spending and has made it feasible to better appreciate a product’s marketable prospects before substantial resources are committed. Merck also works directly with suppliers worldwide through their system call Supplier Value Management and Sourcing Management Process to preserve certainty of supply, quality, and service while decreasing costs. Human Resource Management Concerning significant human resources management goals, strategies, and measures, the roles vary.
In general, these goals, strategies, and measures are acknowledged by the organization leader or the senior managers with human resources group effort. They determine what is most important to the organization based on the challenges the organization will encounter in the upcoming years. Merck’s human resources professionals’ focuses on two important goals: business performance and employee satisfaction. According to Merck & Co. Inc (2009-2011), “Merck values candidates with people skills and strategy and metrics tools for its opportunities in talent management, organizational learning, and recruiting and staffing” (Defining and developing our workforce. , para. 1). The advancement of employees refers to enhancing the knowledge, skills, and competencies of employees, which develops their performance ability and potential. “Human resource development aims to improve and enhance both the employees’ and the organizations performance and capabilities.
Increasing the employees’ performance and enhancing their skills and capabilities will result to a better performing organization” (Shetty, para. 10). Human resources also has a focal point on employee diversity and is interlaced into every facet of their work. They have three major resources to help them employ their diversity strategy: diversity and work environment center of excellence, global constituency groups, and employee resource groups. According to Merck & Co. , Inc (2009-2011), “Diversity and work environment center of excellence is Merck’s central office for overseeing diversity and inclusion in all business practices.
The Global Constituency Group represents the diverse constituencies of their company, customers, and society. The group represents different geographies, cultures, and areas of expertise. Together they reflect Merck’s employees and customers globally. Employee Resource Groups network to foster professional development, find informal mentors, participate in teams within and across work groups, and serve as an educational and cultural resource for other employees and business groups at Merck” (Diversity is woven into every aspect of our work. , para. -3). Some examples of the Merck-supported groups are: Veterans Leadership Network; Merck Interfaith Network; Merck Women’s Network; Disability Advisory Council; Merck Hispanic Organization; Gay and Lesbian Employees and Allies at Merck. These groups act as contact points within their communities outside of work. Conclusion I would be willing to invest in Merck & Co. as a mutual fund’s manager. Merck holds a great deal of pride in their ethical standards and practices. They are solid financially and have been the lead in the pharmaceutical industry.
Merck offers a competitive and innovative business environment and their financial health continues to improve and grow yearly. They are known globally for their continued contributions to underdeveloped countries, their positive influence on the environment, and relief efforts given to countries in need. As they continue to implement new strategies and tactics, Merck will always be a leading organization in the pharmaceutical industry. References Drug Discovery & Development. (2011). Merck Outlines Long-Term Prospects and Progress on Strategic Plan. Retrieved from http://www. dddmag. com/news-Merck-Outlines-Long-Term-Prospects. spx Merck & Co. , Inc. (2009-2011). Career Choices: Human Resources. Retrieved from http://www. merck. com/careers/explore-careers/career-choices/human-resources. html Merck & Co. , Inc. (2009-2011). Employee Diversity. Retrieved from http://www. merck. com/about/how-we-operate/diversity/employee-diversity. html NASDAQ. (2011). Global conditions to influence pharmaceuticals – Industry report featuring OXiGENE and Merck & Co. , Inc.. Retrieved from http://www. nasdaq. com/aspx/company-news-story. aspx Scheller, A. (April 2011). Merck chairman discusses corporate responsibility at speaker series.
Kogod News. Retrieved from http://www. american. edu/kogod/news/20110324_ksb_richard_clark. cfm Shetty, N. (January 2011). Human Resource Management of Merck and Company [MP GURU]. Message posted to http://www. managementparadise. com/forums/human-resources-management-h-r/214262-human-resource-management-merck-company. html Van Arnum, P. (2008). Merck makes strides in executing a new supply strategy. Pharmaceutical Technology Sourcing and Management, 4(1). Retrieved from http://pharmatech. findpharma. com/pharmtech/Ingredietns+Article/Merck-Makes-Strides-in-Executing-a-New-Supply-Strategy