Situation Analysis, Neurology DivisionLeadership Issues, External Conditions, Internal Strengths & Weaknesses, Strategy Presented by Team Mongol Horde October 26, 2011
I. Leadership Issues ✤ Culture inspired from GSK makes a good foundation. Future leaders and employees will built further upon it so make it Valeant’s own. ✤ Mr. O’Leary’s strategic path goes forward. Mr. Pearson will add his own ideas, concurrent with current economy. ✤ Despite experienced team, funds were not allocated properly to R&D. ✤ Leaders dependent on current drugs, not having contingency plan for expiring patents.
II. External Conditions A. General Environment - Act Fast! Demographic Trends: ✤ People live longer. Need drugs for long-term, comfortable management of diseases. ✤ Number of disorders and dieases ﬂuctuates - large market. Must track those trends and adjust as needed. Political and Economical Trends: ✤ Number of rules & regulations from FDA, government & insurance companies. Requires deep understanding of policies. ✤ Follow all requirements strictly. Could compromise the future of a drug. ✤ Base strategies around these regulations to establish competitive advantage. Sociocultural and Technological Trends: ✤ Cultural attitudes are changing worldwide Preferences switch to alternative medicines & surgery. ✤ Technological advancements are growing rapidly Key to increasing speed and efﬁciency to get drug to market.
A. General Environment - con’t. Global and Physical Trends: ✤ Globalization - The world is shrinking Outsourcing: Capitalize on labor and skills of other countries. ✤ Market products worldwide, as can the competition. ✤ Tariffs, trades and regulations affect costs or product. Sociocultural and Technology: ✤ Cultural attitudes are changing worldwide Preferences switch to alternative medicines & surgery. ✤ Technological advancements are growing rapidly Conclusion: Many factors out of Valeants direct control How (and how quickly) they respond means everything.
C. Competitor Environment - Stiff competition in a condensed market! Strategic Intent: ✤ Firms motivation to leverage its resources & capital to reach its vision.. Pharmacy companies aim to be the ﬁrst to create a product that will change the face of the medical industry. ✤ Market is condensed and controlled only by top 50 companies. These few companies drive the market & prices Current Competitor Strategy: ✤ Meaningful information about competitions strategy helps predict behavior. Examples: • Teva Pharmaceutical Industries -Controls 60% of the worldwide revenue -Banks on producing generic versions as soon as patents expire • GSK -Combines drugs to treat multiple problems ✤ Examining strategies gives useful information to get a leg up. -Target weaknesses and areas not focused on -Gives ideas to mimic similar behavior
C. Competitor Environment - con’t. External Strengths and Weaknesses: ✤ Must evaluate competitor’s resources as well as your own. ✤ Valeant possesses a number of strengths • Strong and experienced management team • Top neurological drugs on the market with no competition ✤ Valeant also has weaknessess • Competition from generic drugs that they cannot and have not been able to compete with. • External constraints (ie: regulations, outsourcing) that drive up price of products. Conclusion: Must respond quickly to challenges and highlight strengths.
III. Internal Strengths & Weaknesses Strengths: ✤ Strong, experienced leadership team, even after the passing of Mr. O’Leary. Acquisitions have also acquired talent, many from GSK. ✤ Financial efﬁciency and good health. Restructure debt, decrease operating expenses Improved global network and buying power ✤ Outsourcing secondary functions lowers costs, aid production time ✤ Product line is strong Diversiﬁed, some unique to Valeant with no competition ✤ Marketing through educational programs, national funding, and consumer aid ✤ Acquisitions strategy works well Quick product development and release Overcome barriers to entry Reduce competition ✤ Salesforce overhauled to extend reach and offer follow-ups Weaknesses: ✤ R&D reinvestment as a % of sales is too low ✤ Low proﬁt margins on products ✤ Each product has its own set of problems
IV. Strategy A. Product Strategy ✤ Continue drug alliances for licensing and adjunctive treatments. ✤ Increase pre-launch awareness and provide transparent supportive data. Tasmar plays catch-up; future products (i.e. Retigabine) will learn and beneﬁt. ✤ More research and drug trials. Diastase Acudial will become attractive to users and pull in more revenue. ✤ Keep eye on current environment and competitors’ activity. Migranol acquired through acquisition; acquire similar products that have no competitors. ✤ Improve formulas that call for new patents and increase proﬁt margins for current products. Mestinon has generic competition; watch for and prevent brand competition from entering market. B. Marketing Strategy ✤ Grow promoted brands with more product awareness campaigns. ✤ Each product should have its own salesforce. ✤ More pre-launch awareness.
C. Acquisitions Strategy ✤ Continue aggressive growth strategy of companies and products. ✤ Balance - more funds to R&D, even through patent acquisitions. ✤ Keep operating costs low. Rationalize manufacturing network by restructuring or selling plants. ✤ Look for additional opportunities for product growth. ✤ Increase long-term shareholder value.IV. Recommendations