A Strategic Pharmaceutical Acquisition Proposal for Novartis a Global Pharmaceutical Multinational Corporation
Presentation Type
Oral Presentation
Major
Business Administration, Finance
Abstract
Novartis is one of the top ten global pharmaceutical companies with Net Sales reaching $58.57 Billion in 2011, a growth of 16% from 2010.iIn addition, Novartis had 6% Market Share in the United States while Novartis’ Global Pharmaceutical Market Share was at 4.5% in 2011.ii Its main competitors are Johnson & Johnson, Pfizer, Merck & Co., Sanofi, GlaxoSmithKline, and AstraZeneca. These companies alone made up 31.9% Market Share in United States according to its Net Sales (3.8%, 7.8%, 6.0%, 3.7%, 4.4%, and 6.2% respectively) and 30.93% (6.44%, 7.05%, 5.03%, 4.5%, 4.4%, and 3.51% respectively) in Global Pharmaceutical Market Share in 2011.iii Although the majority of Novartis' competitors focus solely on the branded pharmaceutical segment, Novartis derives its strength from diversified and complementary operations that reduce overall volatility and create cross-segment synergies. Further, Novartis is very well positioned for growth with a successful track record of acquisitions and an industry-leading pipeline of potential block-buster drugs. However, like its peers, Novartis is faced with the limiting factors for its growth in developed markets coupled with recent economic constraints and expiration of patents such as Valsartan in 2012.iv Novartis is responding to these challenges by executing strategies that benefit from industry trends. For example it has 15 major regulatory approvals in 2011, a complete acquisition of Alcon in early 2011 that will greatly boost its position in fast growing eye-care market and its purchase of 85% holding in Zhejiang Tianyuan Bio- Pharmaceutical Co., China’s largest privately held vaccine company, which will substantially increase its footprint in the vaccines division.
Recommendations for Corporate Strategy were developed through an in-depth Industry Analysis and Company Assessment. Seven evaluative measures were used to determine the most profitable and successful strategy. Eight recommendations were proposed out of which the Acquisition of an Indian Pharmaceutical Company Dr. Reddy’s Laboratories Ltd. (Dr. Reddy’s) was selected as a strategy for accelerated growth. Acquiring Dr. Reddy’s is a strategic fit for Novartis due to its extensive knowledge and experience of the rapidly growing emerging markets, its highly technical but Low-Cost Manufacturing facilities, and an evolving R&D for its proprietary drugs . Through this acquisition, Novartis will expand in emerging markets, establish operational synergies for cost effective drug development and drive its productivity.
Faculty Mentor
V. Seshan
Funding Source or Research Program
Academic Year Undergraduate Research Initiative
Presentation Session
Session B
Location
Plaza Classroom 189
Start Date
21-3-2014 5:15 PM
A Strategic Pharmaceutical Acquisition Proposal for Novartis a Global Pharmaceutical Multinational Corporation
Plaza Classroom 189
Novartis is one of the top ten global pharmaceutical companies with Net Sales reaching $58.57 Billion in 2011, a growth of 16% from 2010.iIn addition, Novartis had 6% Market Share in the United States while Novartis’ Global Pharmaceutical Market Share was at 4.5% in 2011.ii Its main competitors are Johnson & Johnson, Pfizer, Merck & Co., Sanofi, GlaxoSmithKline, and AstraZeneca. These companies alone made up 31.9% Market Share in United States according to its Net Sales (3.8%, 7.8%, 6.0%, 3.7%, 4.4%, and 6.2% respectively) and 30.93% (6.44%, 7.05%, 5.03%, 4.5%, 4.4%, and 3.51% respectively) in Global Pharmaceutical Market Share in 2011.iii Although the majority of Novartis' competitors focus solely on the branded pharmaceutical segment, Novartis derives its strength from diversified and complementary operations that reduce overall volatility and create cross-segment synergies. Further, Novartis is very well positioned for growth with a successful track record of acquisitions and an industry-leading pipeline of potential block-buster drugs. However, like its peers, Novartis is faced with the limiting factors for its growth in developed markets coupled with recent economic constraints and expiration of patents such as Valsartan in 2012.iv Novartis is responding to these challenges by executing strategies that benefit from industry trends. For example it has 15 major regulatory approvals in 2011, a complete acquisition of Alcon in early 2011 that will greatly boost its position in fast growing eye-care market and its purchase of 85% holding in Zhejiang Tianyuan Bio- Pharmaceutical Co., China’s largest privately held vaccine company, which will substantially increase its footprint in the vaccines division.
Recommendations for Corporate Strategy were developed through an in-depth Industry Analysis and Company Assessment. Seven evaluative measures were used to determine the most profitable and successful strategy. Eight recommendations were proposed out of which the Acquisition of an Indian Pharmaceutical Company Dr. Reddy’s Laboratories Ltd. (Dr. Reddy’s) was selected as a strategy for accelerated growth. Acquiring Dr. Reddy’s is a strategic fit for Novartis due to its extensive knowledge and experience of the rapidly growing emerging markets, its highly technical but Low-Cost Manufacturing facilities, and an evolving R&D for its proprietary drugs . Through this acquisition, Novartis will expand in emerging markets, establish operational synergies for cost effective drug development and drive its productivity.