Mgt 521 - Merck Swott Analysis and Stakeholders

Running head: Merck SWOTT analysis and stakeholders

Business Analysis Part 1:

Merck. SWOTT analysis and stakeholders

Andre Scheepers

University of Phoenix

Management - MGT521

Instructor: Diane Hunt-Wagner

May 27, 2011

Merck. SWOTT analysis and stakeholders

Merck, also trading as MSD (outside Canada and the United States of America) and Merck KGaA (in Germany), has a global presence and is one of the top seven pharmaceutical companies in the world (Merck, n.d.) Being a pharmaceutical giant, Merck has many stakeholders who need to be taken into consideration with every business decision it makes, legal challenges is a constant threat from competitors and other interest groups. In the SWOTT analysis that follows we can see where those threats come from and where Merck has positioned itself to overcome challenges from different areas and address stakeholder concerns and adhere to stakeholder interests.

SWOTT analysis

A SWOTT analysis is an integral part of the planning and strategic decision making process for any business, no matter how big or small the business (Yukl, 2010). From the SWOTT analysis of Merck (Table 1) it is evident that, although Merck is a pharmaceutical giant and has a global presence Merck (n.d), it lacks new drugs in the research and development (R&D) pipeline, and has three golden geese (Singulair ®, Cozaar ® and Fosamax ®) that is going off patent soon or has already lost it's patent.

However, on the positive side, Merck has mergers and acquisitions in place, both with ethical (brand products) companies such as Schering-Plough and generic companies like Sun Pharmaceutical Industries to offset possible loss of revenue due to loss of patents on other products. These acquisitions will also lead to better positioning within emerging markets. Although Merck acquired companies (GlycoFi and Abmaxis) in the bio-pharmaceutical industry (Turner, 2009), it still lacks a true presence, and market share within the bio-pharmaceutical industry (although the bio-pharmaceutical industry is new and very few bio-pharmaceutical companies are profitable), and therefor bio-pharmaceuticals are still on the "opportunities" side of the SWOTT analysis table.

Strengths

* Gardasil © has been approved for a line extension that with a doubling of potential market

* Zostavax © has been approved for line extension and now includes people 55 years and older

* Merger with Schering-Plough to increase market footprint

* Market leaders in oncology, vaccines, and other chronic disease states like asthma, diabetes, obesity and cardiovascular diseases

* Recent merger with Sun-Pharmaceutical industries to increase generic markets

* Sun-Pharmaceutical industries merger to increase company footprint in emerging markets

* Recent launch of Victrelis ™

Opportunities

* Generic market

* Emerging markets

* Bio-pharmaceutics Weaknesses

* Losing patent on a number of drugs, including Fosamax © and Cozaar®.

* Drug shortages in vaccine pipeline

* Not many new drugs in pipeline

* Need bigger footprint in biopharmaceuticals

Threats

* Merger of Pfizer and Wyeth

* Regulatory new product launch delays

* Pending patent expiration for Singlulair ®

* Still suffering from the controversy regarding Vioxx

Trends

* Bio-pharmaceutics

* Aging population

* Increase in obesity

* Move to cheaper/generic medication

* Last 3 years had slow flu seasons (due to more effective vaccination?)

Table 1.

At first glance Merck seems like a jewel to invest in, but after a SWOTT analysis (Table 1), a few cracks emerge that potential investors need to consider before investing in Merck. The company is investing a lot of money in R&D and acquisitions in new markets and in new products, but its investments are slow to yield significant profits and show capital growth, compared to the previous financial year. A lack of