This report is aimed at presenting the strategic analysis of one of the world’s leading pharmaceutical companies, AstraZeneca, which is dedicated to the discovery, development, manufacturing and marketing of high quality, effective prescription medicines that bring benefit for patients and add value for shareholders and wider society. The specificobjectives of the report include external and internal environment analysis of AstraZeneca; and generalized options development considering suitability, acceptability and feasibility.
Framework for Analysis:
This report uses a framework for prescriptive strategy given by Lynch (2003) in order to structure the work. Therefore main subsections in this report are analysis of environment (1),analysis of resources (2) and strategic options development (3, 4 & 5). The framework by Lynch (2003) is drawn as follows:
Analysis of the Environment
Vision, Mission & Objectives
Analysis of the Resources
Finding the Strategic Route
Organizational Structure and Style
Long Term Monitoring
Strategic Management Process adopted from Lynch (2003)
AstraZeneca was formed on 6 April 1999 through the merger of Astra AB of Sweden and Zeneca Group PLC of the UK – two companies with similar science-based cultures and a shared vision of the pharmaceutical industry (AstraZeneca, 2005). AstraZeneca is a pharmaceutical company thatinvests, develops and commercializes drugs. The products of the company are concentrate in the field of gastrointestinal, cardiovascular, cancer, respiratory, central nervous system, pain control and infection (Euromonitor, 2004). According to Datamonitor (2005), within this therapeutic structure, the company builds up teams with scientific, medical, regulatory and customer expertise.
The companymarkets its products in more than 100 countries with a total staff of 65,000 people worldwide – 58% in Europe, 28% in the Americas and 14% in the rest of the world (AstraZeneca, 2005). Company’s corporate headquarters are in London, UK, while R&D headquarters are in Sodertalje, Sweden. It has reported a sale of $24 billion, with an operating profit of $6.5 billion for the fiscal year endedDecember 2005 (Datamonitor, 2005). This made the company third largest pharmaceutical company in Europe and fifth largest in the US.
External Environment Analysis:
The pharmaceutical industry operates in an environment of radical change and stringent constraints for the last couple of decades. A combination of powerful technological, competitive, political and customer-related forces hasshaped the industry. A summary of the external environment is presented with the help of a PEST, Industry Lifecycle and Porter’s Five Forces analyses as follows:
* A medicine needs to be approved by the different regulatory authorities in each of the markets in which it will potentially be sold. The processes for approval of a new medicine are complex,time-consuming and expensive (Tucker, 1984). Even after launch of new medicines, regulatory agencies continue to require numerous conditions to be met.
* The accession of 10 Baltic states and consequent expansion of EU have increased the pressure of parallel trading within the members states (Schoeff, 2006).
* The health of economy is a vital influence on the extent of discretionarybuying and how much is spent on necessity purchases. The trends in personal disposable income has seen steady rise since 1998 (Mintel, 2005). But it has been forecasted that an overall economic downturn is expected globally, though the sales of pharmaceutical drugs would continue but both volume and value of brands is likely to suffer, due to cost containment programs of health care providers...