Gsk - Strategic Analysis of GSK PDF

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Strategic Analysis of GSK...

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SUKKUR INSTITUTE OF BUSINESS ADMINISTRATION

SUBMITTED TO: SIR MANSOOR JUNEJO SUBMITTED BY: BARKATULLAH|MAHNOOR REHMAN|DANIYAL HAIDER| A Group Project on GSK Analysis

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Contents SUKKUR INSTITUTE OF BUSINESS ADMINISTRATION ................................................................................... 1 OUR VISION ................................................................................................................................................... 4 OUR VALUES AND STANDARDS ..................................................................................................................... 4 

BE PATIENT FOCUSED ........................................................................................................................... 4



ACT WITH INTEGRITY ............................................................................................................................ 4



DEMONSTRATE RESPECT FOR PEOPLE .................................................................................................. 4



OPERATE WITH TRANSPARENCY ........................................................................................................... 4

PORTER 5 FORCES ......................................................................................................................................... 5 

THREAT OF RIVALRY .............................................................................................................................. 5



THREAT OF SUBSTITUTION ................................................................................................................... 5



BARGAINING POWER OF CUSTOMERS ................................................................................................. 5

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BARGAINING POWER OF SUPPLIERS ..................................................................................................... 5



THREAT OF NEW ENTRANTS ................................................................................................................. 5

PESTEL ANALYSIS:.......................................................................................................................................... 6 1.

POLITICAL FACTOR ................................................................................................................................ 6

2.

ECONOMIC FACTOR .............................................................................................................................. 6

3.

SOCIOCULTURAL FACTOR ..................................................................................................................... 6

4.

TECHNOLOGICAL FACTOR ..................................................................................................................... 6

5.

LEGAL .................................................................................................................................................... 7

6.

ENVIRONMENTAL: ................................................................................................................................ 7

EFE MATRIX: .................................................................................................................................................. 8 COMPETATIVE PROFILE MATRIX ................................................................................................................... 9 CPM ........................................................................................................................................................... 9 GSK ............................................................................................................................................................ 9 Pfizer ......................................................................................................................................................... 9 Novartis ..................................................................................................................................................... 9 SWOT ANALYSIS ............................................................................................................................................ 9 1.

STRENGTHS ........................................................................................................................................... 9

2.

WEAKNESSES....................................................................................................................................... 10

3.

OPPORTUNITIES .................................................................................................................................. 10

2

4.

THREATS .............................................................................................................................................. 10

APPLYING VIRO FRAMEWORK ON GSK ....................................................................................................... 12 BCG MATRIX ................................................................................................................................................ 13 STAR: ........................................................................................................................................................... 13 CASH COW: ................................................................................................................................................. 14 QUESTION MARK: .......................................................................................................................................14 DOG: ............................................................................................................................................................ 14 IE MATRICX OF THE COMAPNY ................................................................................................................... 14 SPACE MATRIX FOR THE GSK COMPANY .................................................................................................... 15 PURPOSE OF IMPLEMENTATION PLANNING ..............................................................................................16 WHY STRATEGY NEEDS TO BE IMPLEMENTED? .......................................................................................... 16 IMPLEMENTATION OBJECTIVES .................................................................................................................. 16 CONSTRAINTS ............................................................................................................................................. 16 PLANNING ................................................................................................................................................... 17

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OUR VISION

“The opportunity to make a difference to millions of lives every day” OUR MISSION

“to do more, feel better and live longer” OUR VALUES AND STANDARDS “Doing the right thing without having to be told to do it – because you know in your heart and mind, it’s the right thing to do. Our values guide our day-to-day actions. They reflect our belief that it’s not just what we achieve that counts, it’s also how we achieve it. Operating responsibly and ensuring our values are embedded in our culture and decision-making helps us better meet the expectations of society.”

BE PATIENT FOCUSED “We focus on the individual doing what is right for patients and consumers. We work with our partners and customers to improve healthcare and find new medicines and vaccines.”

ACT WITH INTEGRITY “We are a successful business that acts responsibly with integrity and transparency, living up to the standards that are rightly expected of us.”

DEMONSTRATE RESPECT FOR PEOPLE “We support and inspire our colleagues to help them be the best they can be and to achieve great things. We listen to the world outside of GSK and use our science and scale to take actions that advance healthcare.”

OPERATE WITH TRANSPARENCY “We are honest and transparent about what we do, how we do it and the challenges we face. We are open to challenge, to discussion and to improving how we work to reflect our values.”

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PORTER 5 FORCES THREAT OF RIVALRY There are about 800 pharmaceutical companies operating in Pakistan of which 25 are multinational and 400 manufacture drugs themselves and fulfills almost 70% of the company’s demand and market share is equally divided in national and multinational companies. Therefore we can say there is intense competition in market and threat from rivalry is very high.

THREAT OF SUBSTITUTION According to PPMA (Pakistan Pharmaceutical Manufacture’s Association) there are more than 800 pharmaceutical companies operating in Pakistan including various local as well as international companies and most of the local companies produce the counterfeit drugs. Most of the local companies buy from the same seller put their own label and name and market accordingly. Therefore threat of substitution is extremely high.

BARGAINING POWER OF CUSTOMERS As GSK is one of the 5 top pharmaceutical companies all over the world, its extensive research and development is its core strength to enjoy its own prices. It is one of the oligopolistic markets to produce high quality drugs, it controls prices and customers have low influence in industry over GSK

BARGAINING POWER OF SUPPLIERS As the company has its own manufacturing plant and it manufactures its drugs and medicines itself so threat of suppliers to GSK is low.

THREAT OF NEW ENTRANTS Entering in pharma industry of Pakistan was quite easy before 2007 but after those Government policies and its regulations has restricted companies to enter the market. Moreover, now it requires heavy costs and investments to enter the market as continuous huge research and development is required in this industry due to expiry of patents and new diseases. However, recent changes in pharma industry are resulting in new mergers and acquisitions and some joint ventures which can be a threat for GSK. To conclude we can say there is moderate threat of entrants.

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PESTEL ANALYSIS: 1. POLITICAL FACTOR Political factor has huge impact upon the GSK because in Pakistan as the government policies are not stable, which can effect upon business like increase in business tax and regulations imposed by government authorities. As in 2016 according to Income Tax Act 2001, pharma industry was allowed only 5% of exemption from taxes and any expense above than that will not be exempted and will be considered taxable for all the promotional expenses in the industry.

2. ECONOMIC FACTOR Pharma industry contributes only 1% in the GDP of Pakistan besides the facts that it entails a huge number of national and multinational companies and according to PPMA (Pakistan Pharmaceutical Manufacturer’s Association) the industry is continuously growing. During 2008-2012, it contributed 12% annually. But due to increasing life expectancy rate, spending pattern in the healthcare will also increase which sounds favorable for GSK and there lies an opportunity keeping in view the intense competition of locals approaches to almost 53% of the industry where multinationals account for only 47% and GSK having only 11.6% of market share.

3. SOCIOCULTURAL FACTOR In Pakistan OTC selling is high; most of the medicine is being sold by shopkeepers, who don’t have any pharmacy degree. And the education is increasing in Pakistan so in future if the OTC stop so there may be decrease in sell of few products like Voltaren, Panadol and other products that sell at OTC. As educational trend is increasing Pakistan so in future there may be buyer ask for the pharmacy degree. In this factor GSK focus upon the population of Pakistan and the culture of Pakistan is different many communities and families living in their own life style, the demographic of Pakistan involve the ages of people’s child; young, old people lived in different areas in Pakistan. GSK has also seen the rural areas of Pakistan.

4. TECHNOLOGICAL FACTOR Upgrading the system with the technology has been the policy of the GSK since its inception. Today GSK is using the latest information technology to keep the contact with the market team and for market analyst, that allow them to save the travelling cost and 6

travelling time from one place to another because they use the video conferencing and audio conferencing to contact with their team. By using the latest art of technology they are maintaining the quality management system in the company and maintaining the quality of product. Using QMS they are controlling the unintentionally accident like fire or other and save the human lives because GSK do cares for their employee. Maintaining the QSM GSK won the award of “4th Annual Fire and safety award” in Pakistan.

5. LEGAL Since the inception with merger in Pakistan, we are following all the rules and regulation of Pakistan law and the entire legal act. In 2016 GSK has paid the tax of Rs.282.93 million taxes to the government of Pakistan that is 30% from the profit. As the legal policies in the Pakistan has been improving and making it more strictness for the companies to operate. Any policy for the patent can have positive or negative impact on the company because in upcoming five years company is losing the 10 patent and they have lose many patent in the past many years.

6. ENVIRONMENTAL: GSK Pakistan believes that “Do more, Feel better, live Longer”. They make to positive image contributing in community by investing in health and educational programs; they also focus upon the wastage of water and through their resource with innovation to develop a water management system. Their consumption cutback programs have resulted 17% decrease in consumption of water and energy. GSK boosts environment welcoming ways at work. To align our operations with the supervisory philosophies on ecological protection and resource/energy preservation, we have assumed the subsequent initiatives in 2015. 1. 2. 3. 4.

Installation of High Efficiency Motors (HEM). Variable Speed Drive (VSD) Compressor to reduce energy consumption Replacement of Air Handling Units (AHUs) for improved equipment efficiency & energy consumption. 5. Optimization of boiler operation, Steam system survey. 6. Natural Gas Consumption Reduction Program. 7. Steam Generation & Distribution System Optimization Program.

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EFE MATRIX:

OPPORTUNITIES 1. Untapped market of quality healthcare products 2. Expand into new markets through mergers and acquisitions 3. Increase in education and awareness, people are moving towards healthy life 4. Large portion of charities and taking care of environment, creates a positive image in general public Threats 1. Changes in government policies and regulations 2. Government may increase the business tax 3. Inflation rate causes increase in prices of raw material 4. Exchange rate can affect the business transaction worldwide because raw material is being bought from outside Pakistan 5. Instability in economy of Pakistan can effect company to withdraw their investments 6. Risk of unsuccessful new products due to lack of awareness in consumers Total

WEIGHT RATE .12

2

WEIGHTED SCORE 0.24

.10

3

0.3

.20

3

0.6

.10

3

.3

.00 .08

0.0 3

0.0 0.24

.10

3

0.3

.08

2

0.16

.08

2

0.16

.06

2

0.12

.08

3

0.24

1.00

2.66

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COMPETATIVE PROFILE MATRIX

CPM

GSK

Factors

1. 2. 3. 4. 5. 6.

R&D Market Share Sales (2014) Performance Employee Technology TOTAL

Pfizer

Novartis

Weight

Rate

Weighted score

Rate

Weighted score

Rate

Weighted score

0.2 0.2 0.15 0.15 0.15 0.15

2 4 4 2 3 2

0.40 0.80 0.60 0.30 0.45 0.30 0.475

3 3 3 3 4 3

0.60 0.60 0.45 0.45 0.60 0.45 0.525

4 2 2 4 2 4

0.80 0.40 0.30 0.60 0.30 0.60 0.5

SWOT ANALYSIS 1. STRENGTHS GSK has good brand image and sustain their position in the list of top 5 best pharmaceutical companies in world along with that in Pakistan too. Because of that they get success in achieving their targeted, according to the report of 2016 GSK sales has increase by 17% with the account of Rs.27, 564 million in the region of Pakistan. GSK is serving in the market of pharmaceutical industry more than the 150 years and got success in sustaining their availability in more than 100 countries throughout the world. GSK is investing heavy amount and has strong focus in the research and development and exploring the new market. GSK is very strong in financial with Rs.2, 762 million profits and 19.53% return on equity according to the report of 2016 that has increased by 1.54% from the preceding year 2015. Along with it GSK is also strong enough in human resources with the employees of 99300. Using the latest production technology and information technology to produce the high quality product and make continuous contact with the distributor and market team that allow them to save the travelling cost and time.

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2. WEAKNESSES GSK name has involved in the controversies regarding the safety of drugs that affect negatively on the company image. Company is losing their patent because of expiry and in upcoming time it may lose more patent of products.

3. OPPORTUNITIES Awareness of public toward the healthy life is increasing. According to the report of world health organization the expenditure of 2014 on health was 2.6% from GDP. Strategic agreement with medical colleges, universities and pharmaceutical companies to boost up the research. Increasing demand for quality health care solutions and also increasing awareness regarding health care needs.

4. THREATS Risk of failure of new product in the market that will lead of waste of investment in all research and production. Risk in slowdown in the Pakistan economy and unstable political and environment situation of Pakistan that may affect negatively in the sale of our product in the Pakistani market. Inflation rate is increasing so our research and production cost may increase. Inflation rate is 5.5% in Pakistan.

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IFE MATRIX: Strengths

Weight

Rating

Wscore

1: the great experience in the market almost over 110 years. 2: branches or outlays all over the world. 3: producing new innovative products, well known as innovation leader. 4: strong brand image. 5: intense research and development work 6: great profit margins 7: diversified investment in different units 8:global strategic alliances and acquisitions 9: production of new products 10: competitive advantage of using more advanced technology.

0.07

4

0.28

0.08 0.03

4 4

0.32 0.12

0.04 0.04 0.06 0.05 0.02 0.07 0.04

4 3 4 4 2 3 4

0.16 0.12 0.24 0.20 0.04 0.21 0.16

0.05 0.04 0.06 0.03 0.06 0.06 0.05 0.07 0.03 0.05 1.0

4 3 4 4 4 3 3 3 4 4
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