An Analysis On The Most Admired Pharmaceutical Company Business Essay Example

Depositary Shares (ADSs) were listed on the New York Stock Exchange (NYSE).

Dr. Daniel Vasella assumed the positions of Chairman of the Board of Directors and Chief Executive Officer at Novartis, bolstering his leadership within the company.

An important milestone that enhanced Novartis' reputation in the healthcare sector was the announcement made by the Novartis Research Foundation about establishing the Novartis Institute for Functional Genomics.

Furthermore, Novartis entered into an agreement to purchase Merck's crop protection business, thereby expanding its reach and diversifying its portfolio.

The extensive and diverse history of Novartis serves as a strong basis for the company's success.

However, as a healthcare organization focused on promoting patient well-being, it is vital for Novartis to continuously strive for improvement and adaptability to meet evolving needs.

Noteworthy Recent Achievements by Novartis

In recent years, propelled by technological advancements, Novartis has played a significant role in advancing the pharmaceutical industry and maintaining its position as a global leader in healthcare with notable accomplishments.

Novartis has received numerous rankings and awards that solidify its reputation as an exceptional workplace. These accolades include The Scientist Best Places to Work in Industry 2010, National Organization for Rare Disorders Corporate Awards, DiversityInc Top 10 Global Diverseness Companies, Vaccine Industry Excellence Awards, Fortune's World's Most Admired Companies, The Scientist's Best Places to Work for Postdocs, Fast Company's World's Most Advanced Companies, Dow Jones Sustainability Indexes, PharmaVOICE's Top 100 List, MedAdNews' Most Admired Pharmaceutical Company, and Universum's World's Most Attractive Employers. These recognitions further validate Novartis as a superb workplace according to experts and associates. Additionally, Novartis is renowned for its innovative products.Novartis, recognized as a top employer, is dedicated to making significant contributions in the pharmaceutical and biomedical

sciences industry. Equipped with advanced technology, this pharmaceutical company has numerous opportunities for significant contributions. One area of focus is research and early development of treatments for neglected diseases. As part of these efforts, Novartis established the Novartis Institute for Tropical Diseases (NITD), specializing in studying dengue fever, malaria, and drug-resistant tuberculosis (TB).

Novartis has implemented measures to address the global issue of diabetes, which is the fourth leading cause of death. The company offers advanced therapies for diabetes intervention and contributes to improving global health through the development of pharmaceuticals, vaccines, diagnostics, Sandoz, and consumer health.

Novartis Model:

Novartis International AG has established a model that supports the enhancement of organizational capabilities and individuals. This model also establishes a shared language across the company. It includes the following components:

• Mission of Novartis International AG: Our objective is to discover, develop, and successfully market innovative products that prevent and treat diseases, reduce suffering, and enhance quality of life. We also strive for outstanding performance that generates shareholder returns and appropriately rewards those who contribute ideas and work towards our company's objectives.

Novartis demonstrates its core competences through practices that yield superior results and motivate both oneself and others to achieve desired outcomes. The company places customer satisfaction as a top priority, actively listens to clients, and offers solutions for unmet needs. By fostering effective relationships with clients, Novartis establishes trust and respect while continuously improving customer satisfaction through monitoring quality standards.

Furthermore, Novartis exhibits innovation and creativity by generating new and unique ideas, challenging the status quo, and finding connections between seemingly unrelated elements. Leadership is also a strong suit of Novartis as it provides clear directions, establishes ambitious

goals, and rallies associates behind common objectives. The development of core competences within the organization is promoted by the company.

Additionally, Novartis values fast action, taking initiative, and embracing simplicity. Its individuals are action-oriented in facing challenges head-on while making prompt decisions to ensure timely execution. Simplicity and clarity are highly regarded approaches within Novartis's operations as they promote avoiding bureaucratic processes.

The text emphasizes the importance of empowerment and accountability along with setting clear performance goals within a defined "playing field" accompanied by corresponding personal responsibility.In addition, Novartis emphasizes the importance of a clear and flexible engagement process. This involves utilizing the right associates at the appropriate time to maximize efficiency and effectiveness. The text highlights the significance of teamwork and leveraging diversity for superior business success, as well as sharing outcomes with all involved parties. It also advocates for commitment, self-discipline, supporting decisions, and striving to achieve agreed-upon goals.

Perseverance is encouraged in challenging situations while mutual respect, candor, trustworthiness, integrity, and loyalty are emphasized in interactions with others. Acting in accordance with one's words and committing to honesty and ethical conduct are stressed. Keeping promises, admitting mistakes, and avoiding personal gain are also important.

Moreover, open communication and collaboration are promoted along with compassion and clear interaction. Effective listening skills are highlighted while demonstrating genuine care and empathy as a team player. Novartis recognizes that shared beliefs accompanied by corresponding actions are crucial for competitive success. This is demonstrated through how employees and products are perceived by customers according to the Novartis Model's values placed on them.
Novartis' continued prominence in the pharmaceutical industry can be attributed to its unwavering focus.

An In-Depth Expression

External Environment Novartis International AG

operates in response to external factors that impact its internal functions, objectives, and strategies. The pharmaceutical industry's external environment has significant influences on Novartis. Unlike other industries with a limited number of key players, the pharmaceutical industry consists of approximately 200 major companies. Despite holding a significant market share (5.00%) globally, Novartis faces competition from companies such as Pfizer, GSK, and Sanofi-Aventis.

Socio-Cultural Analysis The following PESTEL analysis examines how political-legal, economic, socio-cultural, and technological forces affect Novartis' business and development, as well as its approaches to address these forces.

Political-Legal Due to the need for new medical developments to meet various healthcare demands, Novartis relies on political and legal support to expand its presence in the pharmaceutical and biomedical industry.

Additionally, as a multinational corporation, Novartis must comply with the statutory laws of different states. This has a significant impact on the advancement of Novartis as a global healthcare leader. According to a factual article, Novartis has achieved a certain level of stability in its involvement in politics across various states by participating in public affairs operations in Basel, Switzerland; Brussels, Belgium; and Washington D.C., in the US under the Novartis Global Public Affairs department. Novartis has also actively implemented ethical and legal approaches for their pharmaceutical research and development, involving members of certain trade unions who collaborate to achieve common goals in developing new medications.

Economic: The global economic crisis could significantly impact public trust in Novartis. Many fear that the company and its founders may resort to corruption, financial collapse, and unethical conduct during this crisis. Nonetheless, Novartis actively engages with ethicists, economists, and business experts through the Novartis Foundation for Sustainable Development (NFSD) to

showcase their strategy for addressing the current economic downturn. This collaborative effort enables them to meet consumer needs, uphold ethical business standards, and responsibly exploit natural resources without causing harm to the environment.

If Novartis does not adapt to globalization, it may have a negative impact on their business. Globalization has always been emphasized, and as advancements are announced, it could potentially harm Novartis. Socio-Cultural: In the past, consumers had little awareness of ethical guidelines for acquiring pharmaceutical products which led to issues and higher costs. However, today consumers prioritize affordable yet high-quality products that address current health concerns with proper prescriptions. This change in consumer perspective also drives Novartis International AG to develop high-quality products. To ensure the production of affordable medicines with strict quality standards, Novartis has implemented various measures. As part of this journey, they continue to extensively promote their products.

In 2009, a study found that Novartis had distributed medical supplies worth more than USD 1.5 billion to over 70 million patients worldwide through their access-to-medicine programs.
Regarding Technological Innovations: Novartis recognizes the impact of technological advancements on business growth and consistently updates its tools and infrastructure to maintain efficiency and productivity.
Analyzing the Task Environment: Using Porter's Five Forces Model, let's assess the state of consumers, competitors, intermediaries, and suppliers in relation to Novartis.
The Challenge of High Entry Barriers: Successfully entering the pharmaceutical industry requires companies to have a strong research and development department as well as hold patents for their products. However, the significant cost associated with initiating such research and development creates significant barriers for new entrants in this industry.

The obstacles of patent restrictions hinder the emergence of new companies in

the pharmaceutical industry. However, these restrictions also benefit Novartis by reducing the threat of new competitors.

Low Buyer Power

Novartis has a wide distribution network, resulting in limited bargaining power for buyers. Additionally, the protection of Novartis' products through patents limits the options for buyers to consider, therefore minimizing their influence on product pricing.

Supplier Power: Low

Novartis faces low supplier power as the competition among providers in their portal discourages suppliers from raising prices. The ease of switching to other providers without significant costs further reduces supplier bargaining power.

Threat of Substitute Products: Medium

While Novartis' products are protected by patents, preventing competitors from developing and producing alternative products, it should be noted that patents have a limited duration.

Once the patent expires, other companies can take advantage of being the first to obtain the patent for subsequent products, resulting in a replacement of Novartis's offerings.
Rivalry among Existing Firms is High
The pharmaceutical industry has a high concentration of emerging companies. Therefore, Pfizer and GSK are actively working to dominate the market through continuous product development. In this situation, Novartis faces intense competition from these firms in terms of securing patents for their products, effectively marketing them, and increasing Novartis's market share in the global pharmaceutical industry.

Internal Environment

Management
Novartis Organizational Structure
The organizational structure of Novartis International AG is shown in the following chart. Based on this main framework, it can be inferred that multiple directors lead and manage different departments within Novartis such as Novartis Institutes for BioMedical Research (NIBR), Pharma, Sandoz, and Vaccines and Diagnostics. This systematic approach allows Novartis to expand across various sectors.

The text describes

how each Director has their own section, but there are members of the Executive Committee of Novartis (ECN) who have a holistic view of the company's business operations. The text also discusses the emerged culture among Novartis associates, which is based on a shared vision initiated by top management. This vision aims to improve the lives of patients through scientific discovery and innovation, and has been embraced by the company's 100,000 associates in 140 countries. As a result, Novartis associates are focused on improving the quality of life for patients with precision and efficiency.

Selling

To compare how well Novartis and Pfizer are executing in terms of market place and selling mix, I have looked at the following information:

Novartis:
Operates in 140 countries. The global headquarters is located in Basel, Switzerland.

Pfizer:
Operates in over 150 countries. The headquarters is located in New-York (USA), and the European headquarters is in Brussels (Belgium).

Promotion

Novartis invested $665.6 million (2007) to promote their products through media. They heavily rely on personal selling. According to SDI Report, Novartis sales representatives have increased calls to healthcare providers by 7%.

The Novartis Care CardSM offers eligible Medicare recipients savings of 25% or more on select Novartis outpatient prescription products. They spent approximately $1.253 billion (2007) on advertising their pharmaceutical products through magazines, newspapers, television, radio, and the internet. The Pfizer for Living Share Carda„? Program allows eligible participants to obtain Pfizer medicines at pharmacies by paying $15 for a 30-day supply of each medication.

Price

Most of the products are subsidized to ensure maximum access for consumers. Products are priced high to allocate significant

revenues towards research and development.

Merchandise

Novartis primarily manufactures products to meet specific public health needs, while also addressing identified consumer demands. This illustrates Novartis' focus on societal selling strategy. In contrast, Pfizer heavily relies on commercial selling strategy. Consequently, in terms of profit generation, Pfizer surpasses Novartis due to their different marketing approaches.

On the other hand, Novartis' offices are not as widespread as Pfizer's, suggesting that Novartis should consider expanding its offices to more locations worldwide.

SWOT of Novartis

Strengths
Excellent reputation among clients

Novartis is highly respected in the business world and has been featured in global rankings such as 'The World's Most Respected Companies 2005', which enhances its reputation and distinguishes its products among customers.

Patent protection

All of Novartis' innovative products are protected by patents, ensuring a secure market and preventing others from creating the same product.

Reasonably good access to natural resources

Novartis is dedicated to the Convention on Biological Diversity (CBD), ensuring ongoing access to biological resources in developing countries for research and development purposes.

Failings The company's high construction costs are a disadvantage as they impact profitability and the ability to cover investment expenses.

Discontinuance of products Some products developed to meet current demands may be discontinued later, resulting in losses for Novartis.

Opportunities The emergence of new technologies presents opportunities for growth and improvement.

Novartis has a significant opportunity to grow by manufacturing drugs, vaccines, and investing in the Research and Development sector.

There is a global demand for health products due to the increasing health concerns and prevalence of epidemic diseases. Novartis, as a pharmaceutical company with reliable research and confidence, can benefit from this by producing functional and high-quality healthcare products.

However, there are

potential threats such as political and legal factors. If Novartis does not receive patent protection due to legislative or political considerations in different countries, competitors could easily duplicate their products and sell them at lower prices, severely impacting Novartis' business.

In addition, competition within the pharmaceutical industry is fierce, with approximately 200 major companies vying for success through innovative healthcare products that address societal needs.

The success of Novartis could be greatly affected if other companies develop and produce drugs or vaccines that are more effective than Novartis' products. To determine the critical success factors of Novartis, we need to revisit their mission statement, which is to discover, develop, and market innovative products that prevent and treat diseases and improve quality of life. Some key factors include investing in research and development for neglected diseases and the aging population, expanding product pipelines for high-quality products, leveraging expertise to drive innovation, expanding global presence with a focus on developing countries, and providing a shareholder return that reflects exceptional performance and rewards those who contribute ideas and work to the company.Novartis should focus on investing more in marketing their merchandise. They regularly review the performance of their associates to ensure a consistent approach in their business. They measure and value the advancement and development of the global pharmaceutical opportunity. Gold Certificates are given to internal and external associates who consistently contribute constructive ideas and perform well in the company. The major strategic problem currently facing Novartis is the adoption of a social marketing approach.

Whereby, although this scheme does not guarantee a good level of profit for the amount of research and effort being put into the products, it is

beneficial in the eyes of society. However, as a company facing intense competition, alternative strategies need to be considered. One possible option is adopting a commercial marketing strategy to some extent. This can be achieved by increasing investments in advertising the products and partially focusing on healthcare products with identified consumer demand, such as Pfizer's Viagra product.

Conclusion

Novartis International AG has a well-defined framework in all aspects, which aligns with that of a pharmaceutical company.

The direction has successfully empowered the associate's return on investing ideas and work for the company with a clear mission and distinct core competencies. Additionally, Novartis deserves praise for complying with all the different countries' regulations in drug manufacturing and research. However, in order to become an even better pharmaceutical company with excellent progress in business and development, Novartis should consider implementing some recommendations. One recommendation is to review and potentially adjust the proportion of focus given to different sectors within the company. Currently, too much emphasis is placed on the Research and Development sector.

In the later phases, Novartis may face a high rate of discontinuance in pre-approval products. Additionally, I suggest that Novartis should focus on resource management. One way they can do this is by analyzing their resources effectively and identifying how much is being wasted. Once they recognize this factor, they can consistently allocate resources for future research. In conclusion, Novartis International AG has the potential to become the world's largest pharmaceutical company if they implement a better marketing strategy and comprehensive review system that covers all aspects affecting their business and growth.