Pharmaceutical Industry

Business Communication Assignment Submitted By: Ajit Kumar K (F-214) Amit Gupta (Ph. D 10/03) Manoranjan Kumar (F-179) Indushree Gokak (F-106) Sumedha Agarwal (Ph. D 10/01) Nishant Verma(F-182) Ajit Kumar K (F-214) Amit Gupta (Ph. D 10/03) Manoranjan Kumar (F-179) Indushree Gokak (F-106) Sumedha Agarwal (Ph. D 10/01) Nishant Verma(F-182) Table of Contents 7 C’s of effective business communication2 Report9 Negotiations10 Barriers to Communication15 Persuasive letters20 Compare and contrast the eastern and western communication styles26 Corporate Communication31 7 C’s of effective business communication . Completeness – The communication must be complete. It should convey all facts required by the audience. The sender of the message must take into consideration the receiver’s mind set and convey the message accordingly. The sender should answer all the questions and with facts and figures and when desirable, go for extra details. Complete communication not only develops but also enhances and enhances the reputation of an organization. Moreover, they are cost saving as no crucial information is missing and no additional cost is incurred in conveying extra message if the communication is complete.

A complete communication always gives additional information wherever required. It leaves no questions in the mind of receiver. Complete communication helps in better decision-making by the audience/ readers/ receivers of message as they get all desired and crucial information. It is a very effective tool to persuade the audience. For Example- Due to lack of completeness a distributor, when replying to a dealers letter, answered only four of seven questions because the original questions were unnumbered and somewhat buried in five long paragraphs, the respondent apparently overlooked or disregarded three of them.

The reply, incomplete and unfriendly, caused the distributer to lose the business and goodwill of a potential customer. Bad Example Hi John, I wanted to write you a quick note about Daniel, who’s working in your department. He’s a great asset, and I’d like to talk to you more about him when you have time. Best, Skip What is this email about? Well, we’re not sure. First, if there are multiple Daniels in John’s department, John won’t know who Skip is talking about. Next, what is Daniel doing, specifically, that’s so great? We don’t know that either. It’s so vague that John will definitely have to write back for more information.

Last, what is the purpose of this email? Does Skip simply want to have an idle chat about Daniel, or is there some more specific goal here? There’s no sense of purpose to this message, so it’s a bit confusing. Good Example Let’s see how we could change this email to make it clear. Hi John, I wanted to write you a quick note about Daniel Kedar, who’s working in your department. In recent weeks, he’s helped the IT department through several pressing deadlines on his own time. We’ve got a tough upgrade project due to run over the next three months, and his knowledge and skills would prove invaluable.

Could we please have his help with this work? I’d appreciate speaking with you about this. When is it best to call you to discuss this further? Best wishes, Skip This second message is much clearer, because the reader has the information he needs to take action. Checklist Always Remember the five W’s : Who? What? When? Where? Why? While responding to a letter. Try to answer all questions, i. e. not only the stated question but also the implied question. Give extra information when desirable so that completeness of communication is not compromised. 2. Conciseness – Conciseness means wordiness, i. e. ommunicating what you want to convey in least possible words without forgoing the other C’s of communication. Conciseness is a necessity for effective communication. Concise communication is both time-saving as well as cost-saving. It underlines and highlights the main message as it avoids using excessive and needless words. Concise communication provides short and essential message in limited words to the audience and is more appealing and comprehensible to the audience. It is also non-repetitive in nature. Bad Example Hi Matt, I wanted to touch base with you about the email marketing campaign we kind of sketched out last Thursday.

I really think that our target market is definitely going to want to see the company’s philanthropic efforts. I think that could make a big impact, and it would stay in their minds longer than a sales pitch. For instance, if we talk about the company’s efforts to become sustainable, as well as the charity work we’re doing in local schools, then the people that we want to attract are going to remember our message longer. The impact will just be greater. What do you think? Jessica This email is too long! There’s repetition, and there’s plenty of “filler” taking up space. Good Example When we take out the filler words:

Hi Matt, I wanted to quickly discuss the email marketing campaign that we analyzed last Thursday. Our target market will want to know about the company’s philanthropic efforts, especially our goals to become sustainable and help local schools. This would make a far greater impact, and it would stay in their minds longer than a traditional sales pitch. What do you think? Jessica 3. Consideration – Consideration implies “stepping into the shoes of others”. Effective communication must take the audience into consideration, i. e, the audience’s view points, background, mind-set, education level, etc.

Make an attempt to envisage your audience, their requirements, emotions as well as problems. Ensure that the self-respect of the audience is maintained and their emotions are not at harm. Modify your words in message to suit the audience’s needs while making your message complete. Emphasize on “you” approach as this helps in connecting with the audience. Empathize with the audience and exhibit interest in the audience. This will stimulate a positive reaction from the audience. Show optimism towards your audience. Emphasize on “what is possible” rather than “what is impossible”.

Lay stress on positive words such as jovial, committed, thanks, warm, healthy, help, etc. Example: We-attitude: I am delighted to announce you that we will be extending our hours to make shopping more convenient. You-attitude: You will be able to shop in evenings with the extended hours. 4. Clarity – Clarity implies emphasizing on a specific message or goal at a time, rather than trying to achieve too much at once. Clarity in communication makes understanding easier. It shows complete clarity of thoughts, ideas and enhances the meaning of message. Clear message makes use of exact, appropriate and concrete words. Bad Example Hi John,

I wanted to write you a quick note about Daniel, who’s working in your department. He’s a great asset, and I’d like to talk to you more about him when you have time. Best, Skip What is this email about? Well, we’re not sure. First, if there are multiple Daniels in John’s department, John won’t know who Skip is talking about. Next, what is Daniel doing, specifically, that’s so great? We don’t know that either. It’s so vague that John will definitely have to write back for more information. Last, what is the purpose of this email? Does Skip simply want to have an idle chat about Daniel, or is there some more specific goal here?

There’s no sense of purpose to this message, so it’s a bit confusing. Good Example Let’s see how we could change this email to make it clear. Hi John, I wanted to write you a quick note about Daniel Kedar, who’s working in your department. In recent weeks, he’s helped the IT department through several pressing deadlines on his own time. We’ve got a tough upgrade project due to run over the next three months, and his knowledge and skills would prove invaluable. Could we please have his help with this work? I’d appreciate speaking with you about this. When is it best to call you to discuss this further? Best wishes,

Skip This second message is much clearer, because the reader has the information he needs to take action. 5. Concreteness – Concrete communication implies being particular and clear rather than fuzzy and general. Concreteness strengthens the confidence. Concrete message is supported with specific facts and figures. Concrete messages are not misinterpreted as it makes use of words that are clear and that build the reputation of an individual or an organization. Bad Example Consider this advertising copy: The Lunchbox Wizard will save you time every day. A statement like this probably won’t sell many of these products.

There’s no passion, no vivid detail, nothing that creates emotion, and nothing that tells people in the audience why they should care. This message isn’t concrete enough to make a difference. Good Example How much time do you spend every day packing your kids’ lunches? No more! Just take a complete Lunchbox Wizard from your refrigerator each day to give your kids a healthy lunch AND have more time to play or read with them! This copy is better because there are vivid images. The audience can picture spending quality time with their kids – and what parent could argue with that?

And mentioning that the product is stored in the refrigerator explains how the idea is practical. The message has me alive through these details. 6. Courtesy – Courtesy in message implies the message should show the sender’s expression as well as should respect the receiver. The sender of the message should be sincerely polite, judicious, reflective and enthusiastic. Courtesy implies taking into consideration both viewpoints as well as feelings of the receiver of the message. A Courteous message is positive and focused at the audience. It makes use of terms showing respect for the receiver of message and is not at all biased.

Bad Example Jeff, I wanted to let you know that I don’t appreciate how your team always monopolizes the discussion at our weekly meetings. I have a lot of projects, and I really need time to get my team’s progress discussed as well. So far, thanks to your department, I haven’t been able to do that. Can you make sure they make time for me and my team next week? Thanks, Phil Well, that’s hardly courteous! Messages like this can potentially start office wide fights. And this email does nothing but create bad feelings, and lower productivity and morale. A little bit of courtesy even in difficult situations can go a long way.

Good Example Hi Jeff, I wanted to write you a quick note to ask a favor. During our weekly meetings, your team does an excellent job of highlighting their progress. But this uses some of the time available for my team to highlight theirs. I’d really appreciate it if you could give my team a little extra time each week to fully cover their progress reports. Thanks so much, and please let me know if there’s anything I can do for you! Best, Phil What a difference! This email is courteous and friendly, and it has little chance of spreading bad feelings around the office. 7.

Correctness – Correctness in communication implies that there are no grammatical errors in communication. The message is exact, correct and well-timed. If the communication is correct, it boosts up the confidence level. Correct message has greater impact on the audience/ readers. It implies checking for the precision and accurateness of facts and figures used in the message. It makes use of appropriate and correct language in the message. Bad Example Hi Daniel, Thanks so much for meeting me at lunch today! I enjoyed our conservation, and I’m looking forward to moving ahead on our project.

I’m sure that the two-weak deadline won’t be an issue. Thanks again, and I’ll speak to you soon! Best, Jack Miller There are two errors in this letter; the first error is that the writer accidentally typed conservation instead of conversation. This common error can happen when you’re typing too fast. The other error is using weak instead of week. Again, spell checkers won’t catch word errors like this, which is why it’s so important to proofread everything! Report A report is an objective, impartial and planned presentation of facts to one or more persons for s significant business purpose.

Reports can be of many kinds like Functional Reports, Subject Matter Report, a Formal Report, Frequent Report, etc. There is no prescribed format of report suitable for all the occasions but generally, the main components of a standard report are: 1. Introduction 2. Main Body 3. Termination Introduction Part The main ingredients of introductory part of report are Purpose, Authorization, Sources, Scope, Definitions, Background, Limits, Brief mention of results, List of topics to be discussed. We should omit the title “Introduction”, if the report’s introductory elements are to be stated in one or two short paragraphs at the beginning.

Main Body This is the longest part of the report and should be carefully presented. It contains various details like Elaboration on the problem, Methodology, Data and Analysis, Results and Findings. The main precautions which should be kept in mind in this part are: a) Present all relevant facts accurately and impartially b) Organize your report by the inductive plan or deductive plan c) Emphasize important ideas by showing details, placing them in prominent positions and using stylish means such as capitalization, underscoring, boldface, italics, more space and repetition d) Include visual aids like graphs, tables and pictures ) Use headings to guide the reader through the report f) Use topic sentences for most paragraphs and use an introductory paragraph at the beginning of major section that contains two or more subdivisions g) Apply 7 C’s of effective communication. Termination Section It is basically the summary of your findings and usually contains the conclusion of the report. It may also include your personal recommendations, future plan of actions and propositions. But one point of caution is that it should include any new material. Negotiations

Negotiation is defined as a discussion among individuals to reach to a conclusion acceptable to one and all. It is a process where people rather than fighting among themselves sit together, evaluate the pros and cons and then come out with an alternative which would be a win win situation for all. Sam wanted to purchase a mobile handset, he tried his level best to buy it at the lowest possible rate and the shopkeeper also ensured that he could earn his profits as well. Thus the negotiation benefited Sam who didn’t have to shell out loads of money and the shopkeeper was also satisfied because even he earned his profits.

Negotiation helps in reducing conflicts and disputes among each other. Negotiation is essential in every walk of life for a peaceful and stress free living. Models of negotiation:| | 1. Win Win Model – In this model, each and every individual involved in negotiation wins. Nobody is at loss in this model and everyone is benefited out of the negotiation. This is the most accepted model of negotiation. Let us understand it with the help of an example: Daniel wanted to buy a laptop but it was an expensive model. He went to the outlet and negotiated with the shopkeeper to lower the price.

Initially the shopkeeper was reluctant but after several rounds of discussions and persuasion, he quoted a price best suited to him as well as Daniel. Daniel was extremely satisfied as he could now purchase the laptop without burning a hole in his pocket. The negotiation also benefited the store owner as he could earn his profits and also gained a loyal customer who would come again in future. 2. Win Lose Model – In this model one party wins and the other party loses. In such a model, after several rounds of discussions and negotiations, one party benefits while the party remains dissatisfied.

Please refer to the above example once again where Daniel wanted to buy a laptop. In this example, both Daniel and the store owner were benefited out of the deal. Let us suppose Daniel could not even afford the price quoted by the storeowner and requests him to further lower the price. If the store owner further lowers the price, he would not be able to earn his profits but Daniel would be very happy. Thus after the negotiation, Daniel would be satisfied but the shopkeeper wouldn’t. In a win lose model, both the two parties are not satisfied, only one of the two walks away with the benefit. 3.

Lose Lose Model – As the name suggests, in this model, the outcome of negotiation is zero. No party is benefited out of this model. Had Daniel not purchased the laptop after several rounds of negotiation, neither he nor the store owner would have got anything out of the deal. Daniel would return empty handed and the store owner would obviously not earn anything. In this model, generally the two parties are not willing to accept each other’s views and are reluctant to compromise. No discussions help. Let us understand the above three models with an example from the corporate world. Mike got selected with a multinational firm of repute.

He was called to negotiate his salary with Sara- the HR Head of the organization. Case 1 – Sara quoted a salary to Mike, but Mike was not too pleased with the figure. He insisted Sara to raise his salary to the best extent possible. After discussions Sara came out with a figure acceptable to Mike and she immediately released his offer letter. Mike got his dream job and Sara could manage to offer Mike a salary well within the company’s budgets – A Win win Situation (Both the parties gained) Case 2 – Sara with her excellent negotiation skills managed to convince Mike at a little lower salary than he quoted.

Mike also wanted to grab the opportunity as it was his dream job and he was eyeing it for quite some time now. He had to accept the offer at a little lower salary than expected. Thus in this negotiation, Mike was not completely satisfied but Sara was – A win lose negotiation Case 3 – Mike declined the offer as the salary quoted by Sara did not meet his expectations. Sara tried her level best to negotiate with Mike, but of no use. -A lose lose model of negotiation. Nobody neither Mike nor Sara gained anything out of this negotiation. 4.

RADPAC Model of Negotiation RADPAC Model of Negotiation is a widely used model of negotiation in corporate world. Let us understand it in detail Every alphabet in this model signifies something: R – Rapport A – Analysis D – Debate P – Propose A – Agreement C – Close R – Rapport: As the name suggests, it signifies the relation between parties involved in negotiation. The parties involved in negotiation ideally should be comfortable with each other and share a good rapport with each other. A – Analysis: One party must understand the second party well.

It is important that the individual understand each other’s needs and interest. The shopkeeper must understand the customer’s needs and pocket, in the same way the customer mustn’t ignore the shopkeeper’s profits as well. People must listen to each other attentively. D – Debate: Nothing can be achieved without discussions. This round includes discussing issues among the parties involved in negotiation. The pros and cons of an idea are evaluated in this round. People debate with each other and each one tries to convince the other. One must not lose his temper in this round but remain calm and composed.

P – Propose: Each individual proposes his best idea in this round. Each one tries his level best to come up with the best possible idea and reach to a conclusion acceptable by all. A – Agreement: Individuals come to a conclusion at this stage and agree to the best possible alternative. C – Close: The negotiation is complete and individuals return back satisfied. Let us again consider Mike and Sara’s example to understand RADPAC Model R – Rapport between Mike and Sara. They must be comfortable with each other and should not start the negotiation right away.

They must first break the ice. The discussions must start with a warm smile and greetings. A – Both Mike and Sara would try their level best to understand each other’s needs. Mike’s need is to grab the opportunity while Sara wants to hire an employee for the organization. D – The various rounds of discussions between Mike and Sara. Mike and Sara would debate with each other trying to get what they want. P – Mike would propose the best possible salary he can work on while Sara would also discuss the maximum salary her company can offer.

A – Both Mike and Sara would agree to each other, where both of them would compromise to their best possible extent. C – The negotiation is complete and probably the next course of action is decided, like in this case the next step would be generation of the offer letter and its acceptance. Other negotiation styles Individuals can often have strong dispositions towards numerous styles; the style used during a negotiation depends on the context and the interests of the other party, among other factors. In addition, styles can change over time. 1.

Accommodating: Individuals who enjoy solving the other party’s problems and preserving personal relationships. Accommodators are sensitive to the emotional states, body language, and verbal signals of the other parties. They can, however, feel taken advantage of in situations when the other party places little emphasis on the relationship. 2. Avoiding: Individuals who do not like to negotiate and don’t do it unless warranted. When negotiating, avoiders tend to defer and dodge the confrontational aspects of negotiating; however, they may be perceived as tactful and diplomatic. . Collaborating: Individuals who enjoy negotiations that involve solving tough problems in creative ways. Collaborators are good at using negotiations to understand the concerns and interests of the other parties. They can, however, create problems by transforming simple situations into more complex ones. 4. Competing: Individuals who enjoy negotiations because they present an opportunity to win something. Competitive negotiators have strong instincts for all aspects of negotiating and are often strategic.

Because their style can dominate the bargaining process, competitive negotiators often neglect the importance of relationships. 5. Compromising: Individuals who are eager to close the deal by doing what is fair and equal for all parties involved in the negotiation. Compromisers can be useful when there is limited time to complete the deal; however, compromisers often unnecessarily rush the negotiation process and make concessions too quickly Barriers to Communication Barriers in communication arise due to the fact that no people are exactly alike in the world.

They differ mentally, physically or emotionally. Apart from human differences there are cultural, social and environmental differences which may act as barriers to communication. Each person’s mind is a unique filter. Communication barriers are more pronounced when the communication filters are sharply different. Communication barriers can be at every stage of communication process. Encoding Barriers:  The process of selecting and organizing symbols to represent a message requires skill and knowledge. Barriers listed below can interfere with an effective message. 1.

Lack of Sensitivity to Receiver:  A breakdown in communication may result when a message is not adapted to its receiver. Recognizing the receiver’s needs, status, knowledge of the subject, and language skills assists the sender in preparing a successful message. If a customer is angry, for example, an effective response may be just to listen to the person vent for a while. 2. Lack of Basic Communication Skills:  The receiver is less likely to understand the message if the sender has trouble choosing the precise words needed and arranging those words in a grammatically-correct sentence. . Insufficient Knowledge of the Subject:  If the sender lacks specific information about something, the receiver will likely receive an unclear or mixed message. For example, if someone is shopping for an item such as a computer, and experienced how some salespeople can explain complicated terms and ideas in a simple way. Others cannot. 4. Information Overload:  If one receives a message with too much information, he/she may tend to put up a barrier because the amount of information is coming so fast that they might have difficulty comfortably interpreting that information.

For example, while selling an item with twenty-five terrific features, salesman generally picks two or three important features to emphasize instead of overwhelming customer’s receiver with an information avalanche, which they can’t really process. 5. Emotional Interference:  An emotional individual may not be able to communicate well. If someone is angry, hostile, resentful, joyful, or fearful, that person may be too preoccupied with emotions to receive the intended message. If you don’t like someone, for example, you may have trouble “hearing” them. Transmitting Barriers:

Things that get in the way of message transmission are called “noises. ”  Communication may be difficult because of noise and some of these problems:  1. Physical Distractions:  A bad cellular phone line or a noisy restaurant can destroy communication. If an E-mail message or letter is not formatted properly, or if it contains grammatical and spelling errors, the receiver may not be able to concentrate on the message because the physical appearance of the letter or E-mail is sloppy and unprofessional. 2. Conflicting Messages:  Messages that cause a conflict in perception for the receiver may result in incomplete communication.

For example, if a person constantly uses jargon or slang to communicate with someone from another country who has never heard such expressions, mixed messages are sure to result. Another example of conflicting messages might be if a supervisor requests a report immediately without giving the report writer enough time to gather the proper information. Now report writer has an inner conflict between emphasizing on speed in writing the report, or accuracy in gathering the data. 3. Channel Barriers:  If the sender chooses an inappropriate channel of communication, communication may cease.

Detailed instructions presented over the telephone, for example, may be frustrating for both communicators. If you are on a computer technical support help line discussing a problem, it would be helpful for you to be sitting in front of a computer, as opposed to taking notes from the support staff and then returning to your computer station. 4. Long Communication Chain:  The longer the communication chain, the greater the chance for error. If a message is passed through too many receivers, the message often becomes distorted.

If a person starts a message at one end of a communication chain of ten people, for example, the message that eventually returns is usually liberally altered. Decoding Barriers: The communication cycle may break down at the receiving end for some of these reasons:  1. Lack of Interest:  If a message reaches a reader who is not interested in the message, the reader may read the message hurriedly or listen to the message carelessly. Miscommunication may result in both cases. 2. Lack of Knowledge: If a receiver is unable to understand a message filled with technical information, communication will break down.

Unless a computer user knows something about the Windows environment, for example, the user may have difficulty organizing files if given technical instructions. 3. Lack of Communication Skills:  Those who have weak reading and listening skills make ineffective receivers. On the other hand, those who have a good professional vocabulary and who concentrate on listening, have less trouble hearing and interpreting good communication. Many people tune out who is talking and mentally rehearse what they are going to say in return. 4.

Emotional Distractions:  If emotions interfere with the creation and transmission of a message, they can also disrupt reception. If you receive a report from your supervisor regarding proposed changes in work procedures and you do not particularly like your supervisor, you may have trouble even reading the report objectively. You may read, not objectively, but to find fault. You may misinterpret words and read negative impressions between the lines. Consequently, you are likely to misunderstand part or all of the report. Responding to Barriers: The communication cycle may be broken if feedback is unsuccessful. 1.

No Provision for Feedback:  Since communication is a two-way process, the sender must search for a means of getting a response from the receiver. If a team leader does not permit any interruptions or questions while discussing projects, he may find that team members may not completely understand what they are to do. Face-to-face oral communication is considered the best type of communication since feedback can be both verbal and nonverbal. When two communicators are separated, care must be taken to ask for meaningful feedback. 2. Inadequate Feedback:  Delayed or judgmental feedback can interfere with good communication.

If your supervisor gives you instructions in long, compound-complex sentences without giving you a chance to speak, you may pretend to understand the instructions just so you can leave the stress of the conversation. Because you may have not fully understood the intended instructions, your performance may suffer. Facilitators to Communication Each barrier to communication can be turned into facilitator by removing them along with some technique to facilitate communication. Encoding facilitator: Encoder can facilitate communication by keeping in mind the following 1.

Sensitivity to receiver: Encoder should adapt the message to its receiver. Recognizing receiver’s needs, status, knowledge of subject and language skills facilitate communication. 2. Basic Communication skills: Encoder should have clear idea in choosing correct words and arrangement of words in grammatically correct sentence. 3. Sufficient knowledge of subject: Encoder need to have specific information so that receiver can have clear message. 4. Correct level of information: Information should be balanced, not too much or not too less. So that, receiver correctly interpret the message/information. 5.

Non-interference of emotions: Message should be given in emotionally neutral tone so that message is not emotionally laden by encoder. Transmitting facilitator: Ensure that communication is happening in a noise free environment with correct channel of communication and straightforward message. A short communication chain can also act as a facilitator to communication. Decoding facilitators: At the receiver’s end there are following facilitators 1. Interest: Interest of receiver act as a facilitator at decoder’s end. 2. Knowledge: Knowledge level can be facilitator if encoder’s level of knowledge is sufficient to understand message. . Positive Emotion: Receiver’s positive emotional state is a facilitator to communication. Responding Facilitator: Feedback is necessary and act as a facilitator to communication when adequate feedback is given. Body Language: Body language is a strong non-verbal facilitator to communication. Body languages include facial expressions, gestures and postures. Facial expressions: Eyes and face can facilitate communication by conveying emotions – joy, interest, love, sorrow, surprise, anger, fear, enthusiasm and other emotions. Direct eye contact facilitates communication by building trust.

Gestures and Posture: Gestures and postures facilitate communication. Firm handshake shows confidence and promptness and open communication. To show interest listener lean forward towards the speaker, that act as facilitator. When listener shows interest speaker is encouraged and enthused to communicate. Touch can also act as facilitator by conveying friendship, love, anger and other feelings. But, they should be used in context of culture where person is communicating. Some culture sees touch as positive and friendly but in some culture touch can be considered offensive. Persuasive letters

PURPOSE: In a persuasive letter, the writer expresses an opinion about a relevant issue. People write persuasive letters to convince others to think a certain way and/or take an action. Persuasive writing is a type of writing where your main goal is to persuade or convince someone to do something that you want them to do. A form of persuasive writing is a letter written to someone telling him or her a complaint that you have. In order to write a persuasive letter you need to have reasons why the person should do what you are suggesting. You also need reasons why your idea might not be the greatest.

So you basically have reasons from your perspective and from someone who thinks the opposite of you. The difference between negative and positive persuasive letters is the intent. Negative persuasive letters may be a complaint about the lack of service or maintenance or shoddy quality of a product. A positive persuasive letter could be a letter asking a voter to donate to the campaign for the political party of the writer. Both need almost the same structure and elements and characteristics. AUDIENCE: Persuasive letters are written daily to a variety of audiences, including businesses, government officials, parents, and school personnel.

They call for actions which range from voting for or against proposed legislation to replacing a defective product with a new one. While similar to editorials and letters to the editor, persuasive letters differ in that they address a more specific audience than the general readership of a publication. CHARACTERISTICS A good persuasive letter should include most of the following characteristics: * Addresses the appropriate audience (reader), one with the authority to take the action the writer desires * Engages the reader in the first paragraph * Expresses the situation clearly and succinctly Indicates a thorough knowledge of the situation and evidence of deliberation * Acknowledges and addresses the reader’s anticipated point of view * Provides specific details to support the writer’s opinion * Develops ideas through a logical sequence of information * States clearly the outcome the writer desires with suggestions for implementation * Leaves the reader with a vision of why the action desired would be beneficial * Follows business or friendly letter format, depending on the audience STEPS FOR WRITING A PERSUASIVE LETTER

Step 1 – Choose your model in accordance to the situation The letter must target succinctly the situation, current issue, problem, etc which the writer addresses. The writer must be able to translate his opinion into words onto the letter and then substantiate it with proof as is available. He should decide pre-hand the techniques which he may use the persuade the writer, the layout of the text and the arrangement of the information. Care must be taken not to lose track of the situation at hand and the tone of the letter must be carefully decided through the correct words and phrases.

He must also decide on the options for action which the reader will have. Step 2 – State the desired outcome In one sentence, state your opinion on the subject and the outcome you desire. It should not be very outlandish for the reader. Step 3 – Determine and analyze the appropriate audience Writing the letter to the right person is a key factor in achieving the outcome you desire. Letters written to the wrong person often end up in trashcans with no action taken. To help determine the appropriate audience, we should decide who has the right authority and power to take the action we have decided to full effect.

The letter must target only that particular audience so as not to lose it efficacy. Once the audience is identified, we must supplant our discussion with more information regarding the subject. If the reader is well-informed, care must be taken so as to not repeat the same information. What will be the reader’s view point at that particular moment, is also valuable and we must take care not to object him directly. We should carefully choose an approach, find what values or beliefs the reader holds in importance and target those to get his/her attention. Step 4 – Plan the supporting details and information

To determine the kinds of information you might use to develop your ideas and accomplish your tasks, we should select those facts, statistics, examples, or illustrations which will help the reader see the importance of changing his or her position. We should make the reader feel uncomfortable in his present position and negate his counter-arguments and objections. These details must force the reader to action. In a negative letter, it could be a harsh rebuke (though not abusive), whereas in a positive letter it could be an urging asking the reader to attain greater heights by comparison with peers.

Step 5 – Comprehensive Research Often persuasive letters lack substance. Student writers tell how they feel about an issue or situation and what they would like to see done, but they fail to persuade anyone else to share their point of view. In order for persuasive writing to be successful, you need to do the necessary research. You need to find facts and illustrations to support your argument. Also look for ways to address potential concerns/resistance of your reader. This information might come from: 1. Personal experience 2. Other situations or examples from the past or present 3.

Statistical information from surveys or personal interviews 4. Other primary or secondary research Step 6 – Organize to conquer Student writers have a tendency to present information without ever considering the needs of their reader. In order to change someone’s opinion and/or influence that person to take some action, the writer, must keep the reader in mind. Before drafting, you need to consider different ways of presenting your case and then develop a plan. Begin to organize the details you have gathered by using a combination of the following approaches: 1. LOGIC: Consider the following approaches: Analogy – a situation familiar to the reader is compared with one the writer wants to focus on (example: mandatory AIDS testing is compared with McCarthyism or the Salem witch trials) * Cause-and-effect relationships – one event is proven to be the cause of another * Facts, example, and illustrations – used to support or explain a given situation or idea * Judgments or opinions – used to support ideas that cannot be proven 2. EMOTIONAL APPEAL: Help the reader become personally involved in the argument by appealing to one or more of the following: * Physiological needs such as food, drink, and shelter Psychological needs such as the need to be loved or to be attractive, accepted, or successful * Emotions such as love, hate, guilt, loyalty, pride, self-esteem 3. CREDIBILITY: You can achieve credibility by: * Treating the reader as an equal * Avoiding illogical thinking * Using only subtle emotional appeal * Showing a clear understanding of the topic You also need to consider whether you will present your points in order of most important to least important or least important to most important. Step 8 – Development of draft 1. First paragraph Attention getting device- Rhetorical question – a question posed for emphasis of a point, not for the purpose of getting an answer * Imagery – the words or phrases a writer selects to create a certain picture in the reader’s mind. Imagery is usually based on sensory details. * Anecdote – a short story told to illustrate a point * Startling fact or statistic – a fact or statistic that will shock the reader * Quotation – use words of a well-known individual 2. Background Information The background information must be written and structured keeping in consideration what the reader wants to read and what can change his stance. . Thesis Statement- a statement of the purpose, intent, or main idea of writing. Example: FMS should increase graduation requirements from twenty-two credits to twenty-four credits. 4. Body Paragraphs Present the two, three, or even four arguments supporting the thesis statement and acknowledge the strongest opposing point of view and present counter-arguments. Present your arguments using logical appeal and emotional appeals. * Logical appeal is a combination of valid reasons and evidence like facts, statistics, anecdotes, examples, expert opinion. Emotional appeals – appealing to basic feelings within the audience: sense of belonging, security, love, pity, etc. 5. Conclusion Summarize all the points and leave the reader with a call to action. Compare and contrast the eastern and western communication styles Business practices are shaped by deeply-held cultural attitudes toward work, power, trust, wealth—and communication. Communication is fundamental in business, because business is a collaborative activity. Goods and services are created and exchanged through the close coordination of many persons, sometimes within a single village, and sometimes across global distances.

Coordination of this kind requires intense communication. Complex product specifications and production schedules must be mutually understood, and intricate deals between trading partners must be negotiated. Communication styles vary enormously around the world, and these contribute to a staggering variety of business styles. Probably the single most useful concept for understanding cultural differences in business communication is distinction of low-context and high-context cultures. It explains much about how negotiation proceeds, how agreements are specified, and how workers are managed.

High and Low Context Communication In high-context communication, the message cannot be understood without a great deal of background information. Low-context communication spells out more of the information explicitly in the message. Western cultures rely more heavily on low-context communication. These include Australia, Canada, New Zealand, United States, and Europe. The rest of the world tends toward high-context communication. Low-context communication is becoming common in high-context cultures, due to Western influences and a desire to accommodate travellers.

One of the examples of a low-context culture is the proliferation of signs and written instructions. The smallest town in the United States carefully labels every street with a street sign and numbers the buildings consecutively. Yet very few streets in the huge city of Tokyo are labelled or even have names, and building numbers are non-existent or arranged in random order. The United States and Japan are the world’s most extreme cases of low-context and high-context cultures. Regulating Behaviour In a low-context culture, behaviour norms are often communicated by putting them in writing them.

A New York City manager transmits behaviour norms through employee manuals. Employees are expected to consult these sources for whether they are entitled to a holiday. They follow prescribed procedures for filing a request, which is granted according to company policy. Managers don’t feel comfortable in exercising personal judgment that they may have to defend. Employees in Bogota will more likely approach the boss. They will explain how important it is to attend a niece’s wedding in Miami or grandfather’s funeral. The request is ultimately granted by the boss on the basis of personal decision.

Rules that are not personally enforced may be seen as non-binding. The company may not want employees to use company cars for personal business, but a failure to monitor vehicle use may be interpreted as granting them permission. Contracts Western contracts are marvels of thoroughness. A simple transaction of renting a bicycle for a day may require three pages of fine print to spell out how to deal with every possible contingency. After signing the contract, there is no flexibility in the terms unless both parties agree to renegotiate.

If a party fails to deliver, the legal system is expected to enforce compliance. In high-context society contracts, it is not necessary to write everything because mutual understanding and a handshake suffice. A written contract may be more of a memorandum of understanding than a binding legal document. There is also room for adjustment as the situation develops. The parties are more likely to rely on a pre-existing trust relationship for compliance than a legal system. Managers may draw up contracts to please their Western business partners, but they may alter the terms the day after the document is signed.

Negotiation and Decision Making In low-context cultures, meetings provide an occasion for the company to consider pros and cons and perhaps even arrive at a decision on the spot. In high-context cultures, deliberation and decision-making tend to take place behind the scenes and at upper levels. A meeting might be an occasion to announce and explain the decision. In high-context communication, the object of bargaining is to arrive at a price with as little information exchange as possible. A Westerner believes that the price should be dictated by the logic of the market.

If there is no well-defined market price, a price below my maximum and above the seller’s minimum must be arrived at. Low-context Western commerce reveals an equilibrated market price on a price tag or web site. Negotiation may discover a price on the seller and I can agree, allowing mutually beneficial trade to proceed. Relationship-based and Rule-based Cultures Behaviour in relationship-based culture relies on high-context communication, is regulated through close supervision by authority figures and requires that authority be respected. Behaviour in rule-based culture relies on low-context communication and is based on respect for rules.

People respect the rules for their own sake, while rules in relationship-based cultures derive their authority from the persons who lay them down. Rule-based cultures are frank because of a confidence that rules have objective validity and serve as a basis for resolving disputes. Relationship-based cultures fall back on courtesy and face saving. Family and friendship ties provide a sense of security in relationship-based societies because these institutions provide a refuge in difficult times. Because social control does not rely totally on personal relationships, these tend to weaken, and people seek security and predictability elsewhere.

Rule-based peoples turn to the system around them for security than to family and friends. Transparency The issue of transparency comes in finance and investment. Western-style investment places a premium on publicly available information. All rely on strongly rule-based activities and are possible only in rule-based cultures. Investment in a relationship-based society occurs through pre-existing trust relationships. The phenomenal growth of the Chinese economy in recent decades has been fuelled largely through family-based investment and financial statements are of secondary importance.

Transparency-based investing is not necessarily superior. Both systems can generate spectacular success, as witnessed by Western economies on one side and the explosive growth of the Chinese and Korean economies on the other. Transparency-based finance has the efficiencies but it tends to be unstable because it is prone to massive movements of capital and relies on fragile public institutions to implement its rule-based structure. Relationship-based finance requires slow cultivation of trust, but it can be remarkably stable in the presence of institutional turmoil. Marketing and Advertising

Western networking involves approaching strangers at a trade fair or cocktail party, and the relationship rarely develops beyond a casual acquaintance. Networking in a relationship-based business works through pre-established connections to build trust relationships. It can be very effective for consumer marketing as well, even in the West, when movies become popular through “word of mouth. ” Mass consumer marketing relies on low-context communication and is unnatural for relationship-based cultures. People in these cultures traditionally prefer to take advice from someone they trust than from advertisements.

High-context cultures are more alert to symbolic meaning than Western European and North American cultures, which are sensitive to visual impressions. Certain colours may be chosen in a Western advertisement to give it the right kind of look, while in much of Asia colours powerfully symbolize abstract qualities—red for happiness and marriage, white for mourning, blue for immortality etc. Communication Style European Americans use a linear style. Africans and people of Latin, Arab, and Asian cultures use a circular or contextual discussion style.

The strength of a linear style may be in efficient, short-term task completion, while its limit is in developing inclusive relationship. The strength of a contextual style is its facilitation of team building and consensual creativity, while its limit is that it is slow. European and African Americans tend to be rather direct in their style of confrontation, compared with the indirectness of many Asians and Hipics. People socialized in the more indirect style tend to seek third-person intermediaries for conducting difficult discussions.

Northern Europeans tend to be direct about intellectual topics but relatively indirect about relational matters. U. S. Americans are more indirect on intellectual topics. But those same Americans may be quick to state to his or her face how much they like a new acquaintance. Self-Construal, Uncertainty Avoidance, and Verbal Aggression Eastern cultures, which possess interdependent self-construal, seem to be permissive of direct verbal aggression compared with Western cultures. Hostility strategies were associated with cultures possessing a high degree of uncertainty avoidance (Korea) as opposed to cultures possessing a low egree of uncertainty avoidance (US Americans). Eastern cultures have a lower tolerance for “uncertainty and ambiguity, which expresses itself in higher levels of anxiety and energy release and less tolerance for groups with deviant ideas and behaviour. ” People from Eastern cultures tend to display their emotions more than those from Western cultures. Furthermore, though US Americans have been found to be more argumentative and assertive than Koreans, Koreans were found to be more aggressive in their communication than US Americans.

Therefore, it is possible that despite their need to be indirect, members of the Korean culture could be more likely to resort to using verbal aggression than the US American culture. Corporate Communication Corporate communication is the message issued by a corporate organization to it internal or external stakeholders. Internal stakeholders include employees and shareholders, while external stakeholders include agencies, channel partners, media, government, other industries, institutes and general public. The communication has to be coherent and credible meaning that the same message should be sent to all the stakeholders.

Corporate communication helps organization to explain its mission, vision and values to stakeholders. Corporate communications is the tool used in an organization to effectively reach desired audiences. Organizations use corporate communications to strategically communicate their: 1) Corporate culture (the overall environment) 2) Corporate identity (how others outside of the organization should view them) 3) Corporate philosophy (what’s their stance on issues) Corporate communications is also about managing perceptions and creating timely dissemination of information.

So another sub area under Corporate communications is media relations. It is important to build on-going relationships with the media so when you need to get your message out, by press releases, media conferences or any other event they’d be more inclined to alert your desired external audiences Types of corporate communications: 1) Management Communication – Communication between management and its internal and external audiences. 2) Marketing Communication – This consists of product advertising, direct mail, personal selling and sponsorship activities. ) Organization Communication – This is from specialists in public relations, public affairs, investor relations, environmental communications and corporate advertising. Key tasks of Corporate Communication 1) Corporate branding – to flesh out the profile of the company endorsing the brand 2) To minimize discrepancies between the company’s desired identity and brand features 3) To delegate tasks 4) To formulate and execute effective procedures to make decisions on communication matters 5) To mobilize internal and external support for corporate objectives 6) To coordinate with international business firms

Body language Body language is a form of non-verbal communication, consisting of body posture, gestures, facial expressions, eye movements etc. According to psychologists, 70 percent of human communication happens through body language and only 30 percent is through words. Body language provides cues about a person’s attitude and state of mind. It provides indications of boredom, aggression, pleasure, happiness, intoxication etc. Some common body language expressions and their interpretations The study of body movements and expressions is known as kinesics.

Research has shown that humans use body language when communicating because it seems to ease the mental effort when communication is difficult. 1. Crossing arms across the chest – This can indicate that a person is putting up an unconscious barrier between themselves and others. If the situation is amicable, it can indicate that person is thinking deeply about the matter being discussed. If situation is confrontational, it may mean that the person is expressing opposition, especially if the person is leaning away from the speaker. 2.

Eye Contact – Consistent eye contact can mean that the person is thinking positively of what the speaker is saying. Lack of eye contact can indicate negativity. People with anxiety disorders are often unable to make eye contact without discomfort. If the person is looking at you but is making arms across chest signal, the eye contact could indicate that something is bothering him and he wants to talk you about it. In other scenario, if a person is making direct eye contact, but is fiddling with something, it could indicate that his attention is elsewhere.

If a person looks from one eye to another and then to forehead, this may indicate that he is taking an authoritative position. If the person’s eye movements are from one eye to another and then to lips, this could indicate romantic feelings. 3. Averted gaze, scratching the chin or touching the ear – This happens when a person is not convinced by what someone is saying. 4. Head tilting to one side, eyes looking straight but unfocused – This indicates boredom. 5. Touching the face – This could indicate deceit or act of withholding information or lying.

However, according to Infor, a global provider of enterprise business solutions to select manufacturing and distribution industries such as GSK, to survive in this competitive industry, pharmaceutical companies must cost effectively manage traditional production variables such as raw materials, formulas, inventories and production scheduling to produce products that generate profitable revenue.

Because of the sensitivity of the products, pharmaceutical manufacturers are particularly challenged by strict government regulations, potency requirements, retailer quality specifications, pack variations and allocation constraints on where products can be shipped. Due to the competitive nature of the pharmaceutical industry, a systematic industry analysis using Harvard Business School competitive strategy professor Michael E. Porter’s model of “Five Competitive Forces” which will shed light as to how to develop an edge over firms by understanding how the pharmaceutical industry operates.

This concept involves a relationship between the degree of rivalry of pharmaceutical companies, threats of substitutes, buyer power, supplier power and barriers or threats to entry. This model is followed from QuickMBA. com website: The intensity of the rivalry in the pharmaceutical industry is influenced by a large number of firms which must compete for the same customers and resources thus leading to a struggle for the market leadership. In the pharmaceutical industry context, GSK must compete with leading healthcare company such as Roche in providing healthcare solutions to its consumers around the world.

When it comes to prescription and over the counter drugs, GSK must compete with companies such as Pfizer. Another factor is the slow market growth which causes the firms to fight for market share in the expanding market. Since the firm must sell large quantity of product, high levels of production lead to fight for market share. Also, high storage costs or highly perishable products cause pharmacies to sell medicines as soon as possible. The competition also intensifies if the pharmaceutical companies unload their products at the same time.

The low switching costs also increases rivalry if products from one company are not that expensive as the other company’s brand which makes switching of brands easier. Here, brand recognition and loyalty is very important. Pharmaceutical companies must work extra hard to capture its market which can also heat up the rivalry. Diversity of rivals is also very important especially in countries which can produce its own brand of medicine such as in countries like China, Japan and India who have pharmaceutical companies for its own drug research and development projects.

Another factor which can increase rivalry is industry shakeout. This happens when there is a growing market which causes new firms to enter the market and old firms to increase its production. For example, if there is a growing market for anti-allergy products, new pharmaceutical firms will compete with old firms in the market. This can lead to an increase in supply since the demand cannot support the products of the new firms. In turn, the industry becomes crowded, creating a situation with too many goods chasing too few buyers. Due to price wars and intense competition, a shakeout happens. Read about variable costs for pharmaceutical companies

The year 2000 saw the two fastest growing pharmaceutical companies Pfizer and Warner-Lambert, enter into a merger where Pfizer acquired Warner-Lambert Pharmaceutical Company. Pfizer is a global pharmaceutical company that is based in the US and has activities in the pharmaceuticals, consumer healthcare and animal health industries. Warner-Lambert is also a company started in the United States that is engaged in the global manufacture and sale of products in pet care, confectioneries, consumer healthcare and pharmaceuticals (European Economic Commission 2).

The $93. 4 billion merger was going to create a company that is the world leader in four major therapeutic areas which include cardiovascular, lipid-lowering, central nervous systems and infectious diseases (Roller, 2000). The acquisition of Warner-Lambert allowed Pfizer to gain product lines ranging from Parke-Davis pharmaceuticals, Listerine brand of mouthwash and the Wilkinson Sword wet- shave products (Pfizer, 2000).

This merger was as a result of a strategic relationship that goes back to 1996 when both companies agreed to co-market worldwide the cholesterol lowering drug known as Lupitor that was first developed by Warner-Lambert (DePamphilis 125). This combination of two world class organizations would create a fast-growing pharmaceutical company that is well known in the world and position it for global leadership in the discovery of new medication that would benefit people around the world. History of Pfizer and Warner-Lambert The Warner-Lambert company traces its history back to the mid 1800s when in 1856; William R.

Warner launched his own drug store in Philadelphia. He was the first person to invent a tablet-coating process to encase harsh-tasting medicines in sugar shells. This innovation earned him recognition with the Smithsonian Institution. He gave up his retail store in 1886 and launched fully into the drug manufacturing business using the name William R. Warner and Co. while in the Midwest, Jordan Wheat Lambert launched Lambert Pharmacal Company in St. Louis. Lambert’s main product was Listerine antiseptic which was only marketed to the medical professionals.

Lambert soon realized that Listerine had a huge consumer potential which led him to begin mass marketing the product through an advertising campaign (Pfizer, 2000). William R. Warner and Co. was later bought in 1908 by a St. Louis based company known as Pfeiffer Chemical which expanded the business through more acquisitions. The paths of Warner Company and Lambert firm merged in 1955 and created Warner-Lambert Pharmaceutical Company which grew by acquisitions of companies such as American Chicle Company, a New York based company that dealt with the production of gums and mints.

In 1965 it purchased and expanded a small company in the United Kingdom that dealt with cough tablets known as Halls Mentholyptus (Pfizer, 2000). 1970 saw the company acquiring the Schick wet shave product line from the Eversharp Company and the Parke-Davis company’s line of drugs and medications such as Dilantin, Salk polio vaccine and bacterial vaccines (Pfizer, 2000). A greater expansion of the company took place in 1996 when Warner-Lambert entered a co-marketing agreement with Pfizer on the Lipitor product.

In 1999 Warner-Lambert acquired Agouron which was mainly involved with protein based drug designs and a marketer of protease inhibitors known as Vuracept. Pfizer Company was founded in New York by Charles Pfizer and Charles Erhart in 1849. The company known as the Chas. Pfizer and Company Inc. was a manufacturer of chemicals including tartar, borax and refined camphor. Santonin was their first product which was used as a drug to treat intestinal worms. 1862 saw the company produce its first product line of tartaric acid and cream of tartar which were vital in the food and chemical industries.

The demand for painkillers and preservatives during the Civil War saw Pfizer expand its tartaric production line and other vital drugs such as morphine, iodine and chloroform to help meet the needs of the Union Army (Pfizer, 2000). With the start of a new century, Pfizer’s main product was Citric acid because it had many industrial applications such as providing a flavoring to food, drinks and medicine. The Second World War saw an urgency and need to develop medication that was able to fight off infections.

One such drug was Penicillin which was discovered by Alexander Flemming in 1928. In 1942, Pfizer used its expertise in the fermentation process to produce for the first time penicillin in large volumes. This made it to become the world’s largest producer of penicillin. Pfizer began its global expansion by moving to Canada in 1953. It opened its headquarters in Manhattan in 1959 where it is still based to this day (Pfizer, 2000). Background and Details of the Merger In late 1998, Pfizer became aware of numerous rumors surrounding the merger of Warner-Lambert and an unknown company.

The CEO of Pfizer, William Steere, sent a letter to the CEO of Warner-Lambert, Lodeijk de Vink in 1999 inquiring on whether there was a potential for Pfizer to broaden its strategic relationship with the company to include a merger. Vink responded expressing concern that the letter violated the standstill agreement by indicating interest in a merger. Pfizer had entered into a standstill agreement with Warner that prohibited Pfizer from making a merger proposal unless invited to do so by Warner.

The speculation about a merger between Warner-Lambert and American Home Products came to the fore in November 1999 when an article appeared in the Wall Street Journal announcing the merger between the two companies that was valued at $58. 3 billion. The announcement of the merger released Pfizer from the standstill agreement (DePamphilis 126). Mr. Steere’s reaction to the merger was a letter outlining the reasons why a merger between Pfizer and Warner would be beneficial for both companies and their shareholders. He stated that combining both companies would result in a global powerhouse in the pharmaceutical industry.

Also Pfizer’s products complemented those of Warner including Warner’s over the counter drug presence and a new line of medication with Pfizer’s global marketing and strong sales infrastructure. Steere also argued that the merger would enable the two companies to generate annual cost savings of at least $1. 2 billion annually within a year of completing the merger (DePamphilis 126). The savings would be achieved by consolidating more than 100 manufacturing factories and combining the two headquarters and administrative offices in over 30 countries.

In addition to the letter from the CEO, Pfizer announced that it had started legal action against Warner, its Directors and American Home Products in a court in Delaware. The action sought to impose the $ 2 billion termination fee and stock options granted by Warner to American Home Products allowing them to acquire 14. 9% of Warner’s common stock valued at $83. 81 per share as part of the agreement. The lawsuit stated that the termination fee and stock options were not in the best interests of Warner’s shareholders and they would prevent potential takeover attempts.

Warner rejected Pfizer’s proposal in a press release on November 5, 1999 and reaffirmed its commitment to merge with American Home Products (DePamphilis 126). Pressure for Warner to terminate the merger with American Home intensified with some of it coming from its major shareholders, California Public Employees Retirement System and the New York City Retirement Fund. After three months of struggle, Warner-Lambert agreed on February 8 2000 to be acquired by Pfizer for $92. 5 million making it the world’s largest pharmaceutical company.

Even though Pfizer was able to merge with Warner, it still had to pay American Home Products a break-up fee for terminating its merger with Warner (DePamphilis 127). Conclusion: The merger allowed Pfizer’s shareholders to own 61% of the new company on a diluted basis while the Warner-Lambert shareholders would own 39% of the shares. The chairman and executive of the newly formed company was Pfizer’s CEO, William Steere. Warner’s chairman made a personal decision to not be included in the management team (Koo, 2000).

Apart from Lupitor which Pfizer co-promoted with Warner in 1996, the new company would have products worth $1 billion in the market. These products were Zoloft, Zithromax, Diflucan, Celebrex, Norvasc and Viagra (Koller, 2000). The merger created some side effects for Pfizer that would last for several years. A study conducted in 2000 by the Boston-based medical research firm, Center watch, found that after the merger, drug companies spent less on research and development over a period of three years.

It used the example of Pfizer’s Arthritis drug trial which was cancelled during the merger transition (Herper, 2000). A spokesman for Pfizer said that even though the expected increase in revenue would result in expanding research and development activities, the merger would not affect the operations of the Pfizer’s Animal Health department which was purchased from SmithKline Beecham in 1995 (American Veterinary Medical Association, 2000). Works cited Pfizer. 2000: Pfizer joins forces with Warner Lambert. 29 April 2010

http://www. pfizer. com/about/history/pfizer_warner_lambert. jsp Pfizer. Pfizer Inc: Exploring Our History. 29 April 2010 http://www. pfizer. com/about/history/1849_1899. jsp DePamphilis, Donald M. Mergers, acquisitions, and other restructuring activities. London: Elsevier Academic Press. 2005. Print. pp. 125-127 Pfizer. Pfizer’s History: Humble beginnings. 29 April 2010 http://www. pfizer. ca/english/pfizer%20canada/pfizers%20history/default. asp? s=1 Koo, Carolyn. Pfizer, Warner-Lambert Ink Merger Deal.

July 2, 2000. 30 April 2010 http://www. crystalra. com/media/The%20Street. com%20- %20Pfizer%20Warner%20Lambert%20-%2002-07-00. pdf European Economic Commission. Regulation No. 4064/89 Merger Procedure Article 6(1) (b) Non opposition, Case No. COMP/M. 1878-Pfizer/Warner-Lambert. 22 May 2000. p. 2 Roller, Kim. Pfizer, Warner-Lambert merger forms pharmaceutical powerhouse. 6 March 2000, 30 April 2010. http://findarticles. com/p/articles/mi_m3374/is_3_22/ai_60122861/ Herper, Matthew.

Pfizer’s Warner-Lambert Acquisition Has Side Effects. June 21,2000. 30 April 2010 http://www. forbes. com/2000/06/21/mu5. html Pfizer. com. Pfizer Inc: Evolving to meet the needs of a changing society. 30 April 2010 http://www. pfizer. com/about/history/history. jsp American Veterinary Medical Association (AVMA) . Pfizer acquires Warner Lambert in latest of Megamergers, Journal of the American Veterinary Medical Association. March 15 2000. 30 April 2010. http://www. avma. org/onlnews/javma/mar00/s031500i. asp

Pharmaceuticals: Merck Sustaining Long-term Advantage Through Information Technology Hiroshi Amari Working Paper No. 161 Working Paper Series Center on Japanese Economy and Business Columbia Business School December 1998 Columbia-Yale Project: Use of Software to Achieve Competitive Advantage PHARMACEUTICALS: MERCK Sustaining Long-term Advantage Through Information Technology Prepared by Hiroshi Amari Research Associate, Yale University William V. Rapp and Hugh T. Patrick Co-principal Project Investigators

Center for International and Area Studies Yale University New Haven, CT 06520 203-432-9395 (Fax: 5963) e-mail: william. rapp@yale. edu Revised December 1998 Table of Contents 1. Introduction: Objective of this Study 2. The Pharmaceutical Industry in a Global Context 3. Product R&D and Clinical Trials 4. Manufacturing and Process R&D 5. Technological Factors Structure-Based Drug (“Rational Drug”) Design Structure-Based Drug (“Rational Drug”) Design 6. Merck 7. Managerial Decision Making 8. Decision Making on IT projects 9. Joint Ventures 10. Information Technology and Organization 11.

Appendix I – Summary Answers to Questions for Merck – Strategy & Operations 12. Appendix II – INDUSTRY AND FIRM BUSINESS DATA 13. Bibliography 2 Introduction: Objective of this Study This case study of Merck was completed under a three year research grant from the Sloan Foundation. The project’s purpose is to examine in a series of case studies how U. S. and Japanese firms who are recognized leaders in using information technology to achieve long-term sustainable advantage have organized and managed this process. While each case is complete in itself, each is part of this larger study. This pharmaceutical industry case together with other cases2 support an initial research hypothesis that leading software users in both the U. S. and Japan are very sophisticated in the ways they have integrated software into their management strategies and use it to institutionalize organizational strengths and capture tacit knowledge on an iterative basis. In Japan this strategy has involved heavy reliance on customized and semicustomized software (Rapp 1995) but is changing towards a more selective use of package software managed via customized systems. In turn, U. S. ounterparts, such as Merck, who have often relied more on packaged software, are doing more customization, especially for systems needed to integrate software packages into something more closely linked with their business strategies, markets, and organizational structure. Thus, coming from different directions, there appears some convergence in approach by these leading software users. The cases thus confirm what some other analysts have hypothesized, a coherent business strategy is a necessary condition for a successful information technology strategy (Wold and Shriver 1993). These strategic links for Merck are presented in the following case. Industries and firms examined are food retailing (Ito-Yokado and H. Butts), semiconductors (NEC and AMD), pharmaceuticals (Takeda and Merck), retail banking (Sanwa and Citibank), investment banking (Nomura and Credit Suisse First Boston), life insurance (Meiji and USAA), autos (Toyota), steel (mini-mills and integrated mills, Nippon Steel, Tokyo Steel and Nucor), and apparel retailing (WalMart). The case writer and the research team wish to express their appreciation to the Alfred P.

Sloan Foundation for making this work possible and to the Sloan industry centers for their invaluable assistance. They especially appreciate the time and guidance given by the center for research on pharmaceuticals at MTT as well as Mr. Sato at Takeda. This refers to cases for which interviews have been completed. See footnote 3. These and other summary results are presented in another Center on Japanese Economy and Business working paper: William V. Rapp, “Gaining and Sustaining Long-term Advantage Through Information Technology: The Emergence of Controlled Production,” December 1998 strategy (Wold and Shriver 1993). 3 These strategic links for Merck are presented in the following case. Yet this case along with the other cases also illustrates that implementation and design of each company’s software and software strategy is unique to its competitive situation, industry and strategic objectives. These factors influence how they choose between packaged and customized software options for achieving specific goals and how they measure their success.

Indeed, as part of their strategic integration, Merck and the other leading software users interviewed have linked their software strategies with their overall management goals through clear mission statements that explicitly note the importance of information technology to firm success. They have coupled this with active CIO (Chief Information Officer) and IT (information technology) support group participation in the firm’s business and decision making structure.

Thus for firms like Merck the totally independent MIS (Management Information Systems) department is a thing of the past. This may be one reason why outsourcing for them has not been a real option, though their successful business performance is not based solely on software. Rather as shall be described below software is an integral element of their overall management strategy and plays a key role in serving corporate goals such as enhancing productivity, improving inventory management or strengthening customer relations.

These systems thus must be coupled with an appropriate approach to manufacturing, R, and marketing reflecting Merck’s clear understanding of their business, their industry and their firm’s competitive strengths within this context. This clear business vision has enabled them to select, develop and use the software they require for each business function and to integrate these into a total support system for their operations to achieve corporate objectives. Since this vision impacts other corporate

These and other summary results are presented in another Center on Japanese Economy and Business working paper: William V. Rapp, “Gaining and Sustaining Long-term Advantage Through Information Technology: The Emergence of Controlled Production,” December 1998 3 4 decisions, they have good human resource and financial characteristics too (Appendix I & ii). Yet Merck does share some common themes with other leading software users such as the creation of large proprietary interactive databases that promote automatic feedback between various stages and/or players in the production, delivery and consumption process.

Their ability to use IT to reduce inventories and improve control of the production process are also common to other leading software users. They are also able organizationally and competitively to build beneficial feedback cycles or loops that increase productivity in areas as different as R, design and manufacturing while reducing cycle times and defects or integrating production and delivery. Improved cycle times reduce costs but increase the reliability of forecasts since they need to cover a shorter period.

Customer satisfaction and lower inventories are improved through on-time delivery. Thus, software inputs are critical factors in Merck’s and other leading users’ overall business strategies with strong positive competitive implications for doing it successfully and potentially negative implications for competitors. An important consideration in this respect is the possible emergence of a new strategic manufacturing paradigm in which Merck is probably a leading participant.

In the same way mass production dramatically improved on craft production through the economies of large scale plants that produced and used standardized parts and lean production improved on mass production through making the production line more continuous, reducing inventories and tying production more closely to actual demand, what might be called “controlled” production seems to significantly improve productivity through monitoring, controlling and linking every aspect of producing and delivering a product or service including after sales service and repair.

Such controlled production is only possible by actively using information technology and software systems to continuously provide the monitoring and control function to what had previously been a rather automatic system response to changes in 5 expected or actual consumer demand. This may be why their skillful use of information technology is seen by themselves and industry analysts as important to their business success, but only when it is integrated with the business from both an operation and organization standpoint reflecting their overall business strategy and clarity of competitive vision.

Therefore at Merck the software and systems development people are part of the decision making structure while the system itself is an integral part of organizing, delivering and supporting its drug pipeline from R through to sales post FDA approval. This sequence is particularly critical in pharmaceuticals where even after clinical trials there is a continuous need to monitor potential side effects. Therefore Seagate Technology may be correct for Merck too when they state in their 1997 Annual Report “We are experiencing a new industrial revolution, one more powerful than any before it.

In this emerging digital world of the Third Millennium, the new currency will be information. How we harness it will mean the difference between success and failure, between having competitive advantage and being an also-ran. ” In Merck’s case, as with the other leading software users examined, the key to using software successfully is to develop a mix of packaged and customized software that supports their business strategies and differentiates them from competitors. However, they have not tried to adapt their organizational structure to the software.

Given this perspective, functional and market gains have justified the additional expense incurred through customization, including the related costs of integrating customized and packaged software into a single information system. They do this by assessing the possible business uses of software organizationally and operationally and especially its role in enhancing their core competencies. While they will use systems used by competitors if there is no business advantage to developing their own, they reject the view that information systems are generic products best developed by outside vendors who can achieve low cost through economies of scale and who can more easily afford to invest in the latest technologies. 4 In undertaking this and the other case studies, the project team sought to answer certain key questions while still recognizing firm, country and industry differences. These have been explained in the summary paper referenced in footnote 3. We have set them forth in Appendix I where Merck’s profile is presented based on our interviews and other research.

Readers who wish to assess for themselves the way Merck’s strategies and approaches to using information technology address these issues may wish to review Appendix I prior to reading the case. For others it may be a useful summary. 5 Merck and the other cases have been developed using a common methodology that examines cross national pairs of firms in key industries. In principle, each pair of case studies focuses on a Japanese and American firm in an industry where software is a significant and successful input into competitive performance.

The firms examined are ones recognized by the Sloan industry centers and by the industry as ones using software successfully . To develop the studies, we combined analysis of existing research results with questionnaires and direct interviews. Further, to relate these materials to previous work as well as the expertise located in each industry center, we held working meetings with each center and coupled new questionnaires with the materials used in the previous study to either update or obtain a questionnaire similar to the one used in the 1993-95 research (Rapp 1995).

This method enabled us to relate each candidate and industry to earlier results. We also worked with the industry centers to develop a set of questions that specifically relate to a firm’s business strategy and software’s role within that. Some questions address issues that appear relatively general across industries such as inventory control. Others such as managing the drug pipeline are more specific to a particular industry. The focus has been to establish the firm’s perception of its industry and its competitive position as well as its advantage in developing and using a software strategy.

The team also contacted customers, competitors, and industry analysts to determine whether competitive benefits or impacts perceived by the firm were recognized outside the organization. These sources provided additional data on measures of competitiveness as well as industry strategies and structure. The case studies are thus based on extensive interviews by the project team on software’s use and integration into management strategies to improve competitiveness in specific industries, augmenting existing data on industry dynamics,firmorganizational structure and management strategy collected from the Sloan industry enters.

In addition, we gathered data from outside sources andfirmsor organizations with which we worked in the earlier project. Finally, the US and Japanese companies in each industry that were selected on the basis of being perceived as successfully using software in a key role in their competitive strategies in fact saw their use of software in this exact manner while these competitive benefits were generally confirmed after further research.

The questions are broken into the following categories: General Management and Corporate Strategy, Industry Related Issues, Competition, Country Related Issues, IT Strategy, IT Operations, Human Resources and Organization, Various Metrics such as Inventory Control, Cycle Times and Cost Reduction, andfinallysome Conclusions and Results.

They cover a range of issuesfromdirect use of software to achieve competitive advantage, to corporate strategy, to criteria for selecting software, to industry economics, to measures of success, to organizational integration, to beneficial loops, to training and institutional dynamics, andfinallyto interindustry comparisons. 7 The Pharmaceutical Industry in a Global Context In advanced countries that represent Merck’s primary market, the pharmaceutical industry is an exceptionally research intensive industry where many firms are large multinationals (MNCs).

It is also heavily regulated for both local producers and MNCs. Regulations work as both constraints and performance boosters since drugs are used with other medical and healthcare services. Therefore, healthcare expenditures are divided among many industries and providers of which pharmaceuticals are only one. All parties involved are interested in influencing the regulatory environment and in participating in the growth in healthcare services. This means understanding the industry requires appreciating its political economic context.

In this regard, healthcare providers in rich nations are currently under pressure to control costs due to aging populations. Regulators who have the authority to change the demand structure through laws and regulations are considering various measures to reduce costs such as generic drug substitution which may mean lower returns for discovering and developing drugs. Still, if drugs are more effective at reducing healthcare costs compared to other treatments, Pharmaceutical companies can benefit.

Since R is at the heart of competition, each drug company must respond to these cost containment pressures cautiously and strategically in competing for healthcare expenditures. Another important aspect of this industry is technological change arising from the convergence of life and biological sciences. Many disciplines now work together to uncover the mechanisms that lie behind our bodies and various diseases. Examples are molecular biology, cell biology, biophysics, genetics, evolutionary biology, and bioinformatics.

As scientists see life from these new chemical and physical viewpoints, the ability to represent, process and organize the massive data based on these theories becomes critical. Because computers are very flexible scientific instruments (Rosenberg 1994), progress in information technology and computer science has broadened scientific frontiers for the life and biological sciences. These advances have opened new doors to 8 attack more complex diseases, including some chronic diseases of old age.

These therapeutic areas are present opportunities for pharmaceutical companies since they address demographic and technical changes in advanced countries. Still, to take advantage of these opportunities requires information technology capabilities. Historically, the drug industry has been relatively stable where the big players have remained unchanged for years. This has been due to various entry barriers such as R costs, advertising expense, and strong expertise in managing clinical trials. It is difficult and expensive for a new company to acquire this combination of skills quickly.

However, there are signs the industry and required mix of skills may be changing. There have been several cross national mergers especially between U. S. and European companies. In addition, new biotechnology companies are very good at basic research, which may force pharmaceutical R to transform itself. For example, no single company even among the new mega-companies is large enough to cover all new areas of expertise and therapeutic initiatives. Thus, many competitors have had to form strategic alliances to learn or access new technologies and to capture new markets. Conversely, a stand-alone company can have a lot to lose.

The challenge facing large pharmaceutical companies is how fast and how effectively they can move to foster both technological innovation and cost containment without exposing themselves to too much risk. The pharmaceutical industry in all of Merck’s major markets reflects these cost containment pressures, the need to harmonize expensive and time consuming clinical trials, and the impact of extensive regulations. Information technology has had its impacts too. For example, to respond to these challenges Merck is using more management techniques based on consensus decision making among top functional managers.

This requires better communication support using e-mail and groupware combined with face-to-face communication. This is part of an industry trend towards greater parallel decision making in R&D and less sequential decision making where A must first concur on a project before moving to B, etc Now all elements of the firm evaluate the project simultaneously at each 9 stage. In this manner, Merck has significantly reduced coordination costs while centralizing and speeding the overall decision making process. Additionally, first-tier irms have had to follow a trend in R&D strategies that increasingly use information technologies. Exchange of data and ideas across national borders has become relatively easy, and contracts may specify access to another company’s database. Because many companies share similar R instruments and methods, one company’s instruments may be compatible with other companies’. Indeed, the trend towards greater use of Web-based technology in R and other operations may change our notion of a firm and its boundaries. Firms may eventually be characterized by knowledge creating capabilities (Nonaka and Takeuchi 1995).

Having more ways to communicate with other companies makes frequent communication with greater nuance possible. This supports the trend towards more strategic alliances unless overtaken by the creation of larger firms through continued mergers. This is also partially due to the nature of the industry which is part of the fine chemical industry where changes in technologies are rapid and often discontinuous. It therefore requires different management skills from other technology based industries, especially as the knowledge required for innovation tends to be more specialized thus demanding less coordination than assembly industries.

Transferring mass production know-how to R is also limited. Still, the U. S. and European industries have been undergoing massive reorganization to achieve economies of scope and scale in R and marketing where firms are taking advantage of the fact that the U. S. industry is much less regulated than most foreign industries (Bogner and Thomas 1996). The U. S. companies grew after World War II due to a huge home market combined with the global market for antibiotics this was before British firms began to recapture market share.

At that time, European firms did not have the resources to sell drugs directly to U. S. doctors. The European recovery period gave U. S. firms enough time to take advantage of antibiotics. Then, when the U. S. market became saturated, U. S. 10 firms expanded into global markets in the early 1960s. This forced U. S. firms to diversify their R as well. At the same time, in 1962 amendments to the Food, Drug and Cosmetic Act increased the rigor of drug regulation creating an entry barrier to industry R that favored large established firms (Bogner and Thomas 1996).

The U. S. effectively tightened their regulations after their industry had acquired sufficient R skills and resources. This timing seems to account for today’s industry success. Another factor is that unlike the European industry, U. S. firms had few incentives to integrate vertically. During the War the military distributed antibiotics. Therefore, the U. S. firms were generally bulk chemical producers such as Merck and Phizer or sellers of branded drugs such as Abbott and Upjohn. At the end of the War, only a few firms such as Squibb were fully integrated.

However, as promotion and other downstream functions became more critical, controlling functions such as distribution became a strategic objective. To accomplish this they acquired other firms (Merck acquired Sharpe and Dohine and Phizer acquired Roerig), developing expansion via merger and acquisition as a business strategy and core competency. This helped lay the foundation for subsequent industry consolidation. Today, American healthcare is based on the belief that while making progress in science is the best way to solve medical problems, cost containment is also important.

As a result, while American healthcare is the most expensive in the world, it is also not available to everyone and is the most subject to cost scrutiny. Indeed, since drugs are just one way to improve health, consumers should want to remain healthy and choose cost effective means to do this. However, the reality is that insurance systems covering different services give incentives and disincentives for particular care (Schweitzer 1997). Thus, coordinated adjustment of prices for healthcare is necessary to get markets for healthcare products to work better. In the U. S. , this has led to a public policy push for HMOs.

These healthcare purchasers have in turn set the reward schemes available to healthcare providers such as pharmaceutical companies so as to reduce transaction costs (Ikegami and Campbell 1996) 11 and promote innovation. These developments and trends are putting more pressure on major firms to put more resources into R&D, to focus more critically on just ethical drug development for the global market, and to be more careful in gathering information on clinical trials and side effects. The most important market for Merck in this regard is the U. S. where NTH has pursued a unified approach.

This is because the NIH (The National Institutes of Health) has actively supported basic life science research in U. S. universities, especially after World War II. NSF (National Science Foundation) also encouraged collaboration between academia and industry with partial funding by the government. Other federal and state funding has been important to the scientific community as well, especially in biotechnology. In biotechnology, the funding of basic research has led to a complex pattern of university-industry interaction that includes gene patenting and the immediate publishing of results (Rabinow 1996).

U. S. drug companies are of course profit motivated but are regulated by the FDA (Federal Drug Administration) which is rigorous about its drug approvals, demanding clear scientific evidence in clinical research as its operation is basically science oriented. Product R&D and Clinical Trials Still, despite this R&D support, industry economics are driven by pharmaceutical R&D’s very lengthy process, composed of discovering, developing and bringing to market new ethical drugs with the latter heavily determined by the drug approval process in major markets such as the U.

S. , Europe and Japan6. These new therapeutic ethical products fall into four broad categories (U. S. Congress, OTA 1993): one, new chemical entities (NCEs) – new therapeutic entities (NTEs) – new therapeutic molecular compounds never before used or tested in humans; two, drug delivery mechanisms – new approaches to delivering therapeutic agents at the desired dose to the desired part of the body; three, 6 Ethical drugs are biological and medicinal chemicals advertised and promoted primarily to the medical, pharmacy, and allied professions.

Ethical drugs include products available only by prescription as well as some over-the-counter drugs (Pharmaceutical Manufacturers Association 1970-1991). 12 next stage products – new combinations, formulations, dosing forms, or dosing strengths of existing compounds that must be tested in humans before market introduction; four, generic products – copies of drugs not protected by patents or other exclusive marketing rights. From the viewpoint of major pharmaceutical firms such as Merck, NCEs are the most important for the R of innovative drugs that drive industry success.

Since it is a risky and very expensive process, understanding a company’s R&D and drug approval process is critical to understanding the firm’s strategy and competitiveness both domestically and globally. Statistics indicate that only about 1 in 60,000 compounds synthesized by laboratories can be regarded as “highly successful” (U. S. Congress, OTA 1993). Thus, it is very important to stop the R process whenever one recognizes success is not likely.

Chemists and biologists used to decide which drugs to pursue, but R is now more systematic and is a collective company decision since it can involve expenditures of $250 to $350 million prior to market launch, thus the need for more parallel decision making. Key factors in the decision making process are expected costs and returns, the behavior of competitors, liability concerns, and possible future government policy changes (Schweitzer 1997). Therefore, stage reviews during drug R are common, and past experiences in development, manufacturing, regulatory approvals, and marketing can provide ample guidance.

NCE’s are discovered either through screening existing compounds or designing new molecules. Once synthesized, they go through a rigorous testing process. Their pharmacological activity, therapeutic promise, and toxicity are tested using isolated cell cultures and animals as well as computer models. It is then modified to a related compound to optimize its pharmacological activity with fewer undesirable biological properties (U. S. Congress, OTA 1993). Once preclinical studies are completed and the NCE has been proven safe on animals, the drug sponsor applies for Investigational New Drug (IND) status.

If it receives approval, it starts Phase I clinical trials to establish the 13 tolerance of healthy human subjects at different doses to study pharmacological effects on humans in anticipated dosage levels. It also studies its absorption, distribution, metabolism, and excretion patterns. This stage requires careful supervision since one does not know if the drug is safe on humans. During phase II clinical trials a relatively small number of patients participate in controlled trials of the compound’s potential usefulness and short term risks.

Phase III trials gather precise information on the drug’s effectiveness for specific indications, determine whether it produces a broader range of adverse effects than those exhibited in the smaller phase I and II trials. Phase III trials can involve several hundred to several thousand subjects and are extremely expensive. Stage reviews occur before and during each phase, and drug development may be terminated at any point in the pipeline if the risk of failure and the added cost needed to prove effectiveness outweigh the weighted probability of success.

There is a data and safety monitoring board in the U. S.. This group has access to “unblinded data” throughout the conduct of a trial but does not let anyone else know what the data shows until it is necessary. For example, they will not divulge the efficacy data until the trial reaches a point where it seems appropriate to recommend stopping it because the null hypothesis of efficacy has been accepted or rejected. The FDA will usually insist on the drug proving efficacy with respect to ameliorating a disease before giving approval.

If clinical trials are successful, the sponsor seeks FDA marketing approval by submitting a New Drug Application (NDA). If approved, the drug can be marketed immediately, though the FDA often requires some amendments before marketing can proceed (Schweitzer 1997). However, successful drug development and sales not only requires approval of therapeutic value and validity but also that the manufacturing process meet stringent “best-practice” standards. To meet U. S. regulations, Phase IV trials are required. Manufacturers selling drugs must notify the FDA periodically about the 14 erformance of their products. This surveillance is designed to detect uncommon, yet serious, adverse reactions typically not revealed during premarket testing. This postapproval process is especially important when phase III trials were completed under smaller fast track reviews. These additional studies usually include use by children or by those using multiple drugs where potential interactions can be important (Schweitzer 1997). Furthermore, because drug development costs are so high relative to production costs, patent protection is another key aspect of a company’s management strategy. Under U. S. aw, one must apply for a patent within one year of developing an NCE or the innovation enters the public domain. Therefore, patenting is usually early in the development cycle or prior to filing the NCE. But as this begins the patent life, shortening the approval period extends a drug’s effective revenue life under patent. This makes managing clinical trials and the approval process an important strategic variable. Although creating a drug pipeline through various stages of development is relatively standardized, it is changing as companies use different methods to reduce time and related costs of new drug development.

Companies are constantly pressuring the authorities to reduce NDA review times. As a consequence, the FDA did introduce an accelerated approval process for new drugs in oncology, HIV (AIDS) and other life threatening illnesses. A familiar feature of this new fast track review is the use of surrogate end points, or proxies for clinical end points which are measured by laboratory values but lack supporting clinical outcomes data. Accelerated approval speeds new drugs to market saving companies tens of millions of dollars in negative cash flow.

However, it does not generate clinical values that insurers and managed care organizations demand. Countering this situation is thus the trend among drug firms to increase the complexity of their analyses during clinical trials. Companies have begun to use cost-effective analysis in their evaluation of new drugs in assessing competing product development investment alternatives and by integrating cost effectiveness analysis into their clinical trials. They also try to capture quality of life 15 measures such as how patients perceive their lives while using the new drug.

Companies vary their analysis by country (Rettig 1997) since measures of effectiveness shift according to clinical practice, accessibility to doctors, and what different cultures value as important. There are no universal measures of the quality of life. At present, the components measured depend largely on the objectives of each researcher but some companies are trying to introduce more systematic measures. Nevertheless, no matter what components are chosen for these studies, capturing, storing and using the data requires sophisticated software and data base management techniques which must be correlated with various families of molecules.

Also, to avoid the moral hazard of focusing on the weaknesses in a competitor’s drug or molecule, some analysts argue companies should examine all domains and their components (Spilker 1996) and move towards agreed performance standards. Furthermore, quality of life measures should only be used when they are of practical use to doctors in treating patients (Levine 1996). Such judgments should be sensitive and informed and should cover criteria related and important to a broad spectrum of patients while balancing measures which can be easily gathered and those that are more complex due to multiple treatments.

These trends make clinical trials and data gathering complex and expensive and put a premium on a firm’s ability to manage the process efficiently, including creating and using large patient and treatment databases. Manufacturing and Process R&D The research process differs from production. Yet, both are important, particularly the firm’s knowledge of scale-up. This is difficult because production requires uniformity at every stage. Making the average chemical make-up constant is not enough.

Careful scale-up is essential to avoid contamination. Variations from the mean in commercial production must be very small. This requires constant control of variables such as the preparation of raw materials, solvents, reaction conditions, and yields. Often, experience will help achieve purer output in the intermediate processes. This better output alleviates problems in later processes. Thus, there is a learning curve in process R which starts at 16 the laboratory. An important distinction is between continuous process and batch process.

In the continuous process, raw materials and sub-raw materials go into a flow process that produces output continuously. This continuous process is more difficult because many parameters and conditions have to be kept constant. This requires a good understanding of both optimizing the chemical process and maintaining safeguards against abnormal conditions. However, continuous processes are less dangerous and require fewer people to control at the site than batch processing where the chemicals are produced in batches, put in pill form and then stored for future distribution and sale (Takeda 1992).

The following compares initial process R once a compound is discovered and commercial manufacturing for a representative chemical entity proceeds (Pisano 1996). Comparison research process and commercial production for representative chemical 17 Process R in chemical pharmaceuticals involves three stages: (1) process research, where basic process chemistry (synthetic route) is explored and chosen; (2) pilot development, where the process is run and refined in an intermediate-scale pilot plant; and (3) technology transfer and startup, where process is run at a commercial manufacturing site (Pisano 1997).

Pisano argues that the scientific base of chemistry is more mature than biotechnology and this difference accounts for the more extensive use of computer simulations in drugs made by chemical synthesis than biotechnology-based drugs. Codifying the knowledge in chemistry and chemical engineering in software has a higher explanatory power than in biotechnology. In chemistry, many scientific laws are available for process variables such as pressure, volume, and temperature.

Computer models can simulate these in response to given parameters to predict cost, throughput and yield (Pisano 1997). By contrast, biotechnology has aspects that resemble art dependent on an opprator’s skill more than science which only requires the proper formulation. This is particularly true for large-scale biotechnology process (Pisano 1997). Simulation is thus less reliably extrapolated to commercial production. An additional factor is the importance of purification after large-scale production in bioreactors in biotechnology-based drugs.

It is not rare at this stage of extraction and purification that commercial application becomes impossible, even though the scale-up is successful. Since avoiding contamination is the key in biotechnology-based drugs, extracting and purifying a small amount of the desired materials from a large amount of broth is critical. This process is done using filters, chromatography, and other methods specific to organisms (Koide 1994). Technological Factors All scientific frontiers affect pharmaceutical companies.

Since no company can be an expert on everything, what technology to develop in-house and what to license or subcontract have become important issues. In general, pharmaceutical companies were skeptical of new developments in small biotechnology firms. Yet the latter now provide new techniques in basic research and fermentation to the MNCs. Other pharmaceutical 18 companies then tend to follow when competitors adopt ideas from less well known biotech companies. This is why many such companies announce platform deals with drug companies to get more financial resources and opportunities.

Biotechnology based pharmaceuticals have entered a new development stage which requires the capital, manufacturing and marketing expertise of the large companies. New drug discovery methods and biotechnology each demand skills different from earlier times. Emerging biotech companies offer new ideas and research tools. Other new technologies such as stripping out side effects, specialized drug delivery systems, and “antisense” which cancels out the disease causing messages of faulty RNA also come from biotechnology (Fortune 1997).

These are promising areas of drug research and potential products. Further, these biotech companies develop new drugs more quickly than large firms. Where they often have difficulty is in managing clinical trials and the approval process, an area where large firms have considerable experience and expertise, including sophisticated software for tracking the large data bases and handling the new computerized application procedure. In addition, biotechnology demands skills in large scale commercial production which smaller startups may not possess.

Thus, close association with large firms is logical and efficient, and one should expect more future alliances and joint ventures, though outsourcing to organizations that will manage clinical trials is growing. Another important factor which further encourages specialization in a network of companies is the industry’s heavy use of information technology. Indeed, software strategies have become an important part of the industry through their impact on R, drug approval, including clinical trials, and control of manufacturing.

If decisions in a science based industry are generally driven by knowledge creation capability dependent on human resources, having information sharing and access mechanisms so complementary capabilities can be efficiently exchanged and used becomes key to successful corporate strategy, especially when that knowledge is growing and becoming increasingly diverse. 19 There is some evidence suggesting when innovation is dependent on trial and error, it is best done when many players try different strategies and are held responsible for the projects they choose (Columbia Engineering Conference on Quality September 1997).

If the large drug companies can successfully form principal-agent relationships with biotechnology companies doing advanced research in a particular area in the same way that Japanese parts manufacturers have with large assemblers, there may be opportunities for major breakthroughs without the drug companies having to put such trial and error processes inside the company where they may be less easy to manage. If the make or buy decision in a science based industry is generally driven by knowledge creation capability dependent on human resources, the basis for new product, i. . drug development, becomes more dependent on the nature and facility of information exchange between groups and individuals than asset ownership. Creating information sharing and access mechanisms so that complementary capabilities can be efficiently exchanged and used then becomes the key to successful corporate strategy in knowledge based industries, especially when that knowledge base is growing and becoming increasingly diverse as in the ethical drug industry. Another information sharing issue related to biotech is pharmacology.

Classical pharmacology models are often irrelevant for biotech-based drugs. While some proteins express their activities across other species, others can be more species specific. Neither poor results nor good animal trial results need be predictive for humans. Particularly difficult problems are those related to toxicology since some animals develop neutralizing antibodies (Harris 1997). Technical support systems are important in biotechnology as well. One is transgenic animals. They provide information on the contribution of particular genes to a disease.

This is done by inserting genes that have the function of expressing the phenotype, or interbreeding heterozygotic animals to produce “knockout animals” that suffer from inherited metabolic diseases. Transgenic animals are relevant to early phase clinical trials since the data from these animals contribute useful data on dose-selection 20 and therapeutic rations in human studies. In addition, they offer hints to which variables are secondary. This simplifies the clinical trial design.

In general, significant input in the design and running of phase I and II trials must come from the bench scientists who built the molecule (Harris 1997). Since clinical trials for biotech drugs lack clear guidelines, inhouse communication among drug discovery, preclinical and clinical trials is important, especially due to the increased use of transgenic animals bred to examine inherited diseases. This process in phase I/II trials can be greatly facilitated by information sharing technologies and acts as another driver towards a more integrated approach to decision making using IT.

Structure-Based Drug (“Rational Drug”) Design This is also true of structure-based drug (“rational drug”) design or molecular modeling which is a range of computerized techniques based on theoretical chemistry methods and experimental data used either to analyze molecules and molecular systems or to predict molecular and biological properties (Cohen 1996). Traditional methods of drug discovery consist of taking a lead structure and developing a chemical program for finding analog molecules exhibiting the desired biological properties in a systematic way. The nitial compounds were found by chance or random screening. This process involved several trial and error cycles developed by medicinal chemists using their intuition to select a candidate analog for further development. This traditional method has been supplemented by structure-based drug design (Cohen 1996) which tries to use the molecular targets involved in a disorder. The relationship between a drug and its receptor is complex and not completely known. The structure-based ligand design attempts to create a drug that has a good fit with the receptor.

This fit is optimized by minimizing the energies of interaction. But, this determination of optimum interaction energy of a ligand in a known receptor site remains difficult. Computer models permit manipulations such as superposition and energy calculation that are difficult with mechanical models. They also provide an exhaustive way to analyze molecules and to save and store this data for later 21 use or after a research chemist has left. However, models must still be tested and used and eventually, chemical intuition is required to analyze the data (Gund 1996).

Then the drug must proceed through animal and clinical trials. Still the idea behind this modeling is the principle that a molecule’s biological properties are related to its structure. This reflects a better understanding in the 1970s of biochemistry. So rational drug design has also benefited from biotechnology. In the 1970s and 1980s, drug discovery was still grounded in organic chemistry. Now rational drug design provides customized drug design synthesized specifically to activate or inactivate particular physiological mechanisms.

This technique is most useful in particular therapeutic areas. For example, histamine receptor knowledge was an area where firms first took advantage of rational design since its underlying mechanism was understood early (Bogner and Thomas 1996). The starting point is the molecular target in the body. So one is working from demand rather than finding a use for a new molecule. The scientific concepts behind this approach have been available for a long time. The existence of receptors and the lock-and-key concepts currently considered in drug design were formulated by P.

Ehrlich (1909) and E. Fischer (1894). Its subtleties were understood, though, only in the 1970s with the use of X-ray crystallography to reveal molecular architecture of isolated pure samples of protein targets (Cohen 1996). The first generation of this technology conceived in the 1970s considered molecules as two topological dimensional entities. In 1980s it was used together with quantitative structureactivity relationships (QSAR) concepts. The first generation of this technology has proven to be useful only for the optimization of a given series (Cohen 1996).

The second generation of rational drug design has considered the full detailed property of molecules in the three dimensional (3-D) formula. This difference is significant, since numerical parameters in the QSAR approaches do not tell the full story about the interaction between a ligand and a protein (Cohen 1996). 22 This has been facilitated by software and hardware becoming less costly. Thus many scientists are paying attention to computational techniques that are easier to use than mechanical models.

This underscores the role of instrumentation in scientific research stressed by Rosenberg (1994). Availability of new instruments, including computers, has opened new opportunities in technological applications and furthered research in new directions. Three dimensional graphics particularly suits the needs of a multi-disciplinary team since everyone has different chemical intuition but appreciates the 3-D image. Rosenberg (1994) notes scientists who move across disciplines bring those concepts and tools to another scientific discipline such as from physics to biology and chemistry.

This suggests the importance of sharing instruments, particularly computer images and databases that help people work and think together. The predominant systems of molecular modeling calculations are UNIX workstations, particularly three dimensional graphics workstations such as those from Silicon Graphics. But other hardware such as desktop Macintoshes and MS-DOS personal computers on the low end and computer servers and supercomputers on the high end have been used. Computational power is required for more complex calculations and this guides the choice of hardware.

A variety of commercial software packages are available from $50-$5,000 for PC-based systems to $100,000 or more for supercomputers. Universities, research institutes, and commercial laboratories develop these packages. Still, no one system meets all the molecular modeler’s needs. The industry therefore desperately needs an open, high-level programming environment allowing various applications to work together (Gund 1996). This means those who for strategic reasons want to take advantage of this technology must now do their own software development. This is the competitive software compulsion facing many drug producers.

In turn, the better they can select systems, develop their capabilities, and manage their use, the more successful they will be in drug development and in managing other aspects of the drug pipeline. 23 The choice of hardware is based on software availability and the performance criteria needed to run it. Current major constraints are the power of graphics programs and the way the chemist interacts with the data and its representation (Hubbard 1996). Apple computers have frequently been used in R because of superior graphics, though this edge may be eroded by new PCs using Pentium MMX as well as moves to more open systems.

However, Dr. Popper, Merck’s CIO, feels that the real issue, is the software packages for the MAC that research scientists know and rely on but that are not yet available for Windows NT. Thus, MACs continue to be used for Medical R&D which keeps the Windows market from developing. There are, in addition, the elements of inertia, emotional attachment and training which are apparent at major medical schools too. In sum, rational design has opened a wide range of new research based on a firm’s understanding of biochemical mechanisms. This means tremendous opportunities to enter new therapeutic areas.

However, since rational design is very expensive, it has raised entry costs and the minimum effective size for pharmaceutical firms by putting a premium on those with a sequence of cash generating drugs. It also has favored firms with broader product lines able to spread the costs of equipment over many projects and to transfer knowledge across therapeutic areas, contributing to the increased cost of new drugs through higher R and systems support spending (Bogner and Thomas 1996). A similar analysis applies to the use of other new technologies because major U. S. nd Japanese companies to discover and develop drugs systematically, such as combinatorial chemistry, robotic high-throughput screening, advances in medical genetics, and bioinformatics. These technologies affect not only R but also the organization and the way they deal with other organizations as many new technologies are complementary. For example, high-throughput screening automates the screening process to identify compounds for further testing or to optimize the lead compound. Thus, both regulatory and technological change have raised the advantage of developing innovative drugs, even 24 hough it is inherently risky and forces firms to develop better skills in using information technology to support the process. The Pharmaceutical Industry in the United States As explained above, healthcare and the pharmaceutical industry are closely intertwined, especially in the U. S.. Ever since the election of the Clinton Administration, U. S. healthcare has been the focus of heated debate. The pricing of pharmaceuticals in particular is one of the most controversial aspects of the industry. Estimates of the cost of bringing a new drug to market are up to over $250 million (DiMasi et. l. 1991). However, once drugs are on the market, the costs of manufacturing, marketing and distribution are relatively small. This loose connection between marginal cost and the market price seems to require further justification for drug pricing. While the obvious answer lies in the high fixed cost of drug development and the expensive and time consuming approval process prior to any positive cash flow, the answer is still not easy. Furthermore, the drug market is very complex for several reasons. First, there are many drug classes for which only a few products exist.

Secondly, FDVIOs (health maintenance organizations) and other managed-care plans can negotiate substantial discounts because they are able to control the prescription decisions made by their participating physicians and because they buy in large quantities. These health organizations are highly price sensitive. This means drug prices are substantially determined by the purchaser’s demand elasticity. This demand in turn determines investment decisions (Schweitzer 1997). Thirdly, the market for pharmaceuticals is highly segmented, both domestically and internationally, and price discrimination between and within national markets is common.

Research studies cannot even agree on a common measure of wholesale price. Indeed, no measure captures actual transaction prices, including discounts and rebates (Schweitzer 1997). Fourth, consumers do not have enough scientific knowledge to assess different drugs. Thus, gatekeepers such as doctors are important (Hirsch 1975). 25 Yet, the current trend is towards managed care and HMOs who closely control costs. This development clearly indicates physicians are losing some autonomy in drug selection. Thus it is not surprising the market share of generic drugs has increased from 15% to over 41% between 1983 and 1996.

This has forced the ethical drug manufacturers to communicate both more effectively with the HMOs and managed care organizations in addition to physicians and to demonstrate the improved efficacy of their products as compared with generics. The acquisition of PBMs (pharmacy benefit managers) by pharmaceutical companies is an important development in this regard. Physicians now have to prescribe drugs available in the formularies of the managed-care organization. PBMs suggest cheaper alternatives to physicians for a given therapeutic benefit to save money.

Eighty percent of the 100 million patient/member PBM market as of 1993 is controlled by the five big PBMs (Schweitzer 1997). In turn, when PBMs and mail-order companies expand, the small pharmacies lose the data necessary to examine various drug interactions. Since current U. S. law protects the propriety data of pharmacists and pharmacy chains, information on prescription for those patients who use pharmacies and mail-order companies actually becomes fragmented. It is likely this development could affect pharmacists’ jobs as well. A fifth reason is FDA approval does not mean new drugs are better than old ones.

As noted above, this has pressured drug companies to prove the effectiveness in cost and quality of life their drugs bring to patients. Recently, drug companies have often tried to show how their drugs can help patients restore a normal quality of life. As already described, these concerns complicate the design of clinical trials. Consolidation among wholesalers, the greater complexity of clinical trials and globalization favor firms with substantial resources and are part of the reason for the industry’s merger trend, especially between U.

S. and European companies. The leading pharmaceutical firms ranked by 1994 sales are as follows (Scrip Magazine, Jan. 1996), with five of them the result of cross border mergers. Merck ranks 2d: 26 27 *3: Comparison is based on U. S. dollars *4: Calculation based on the sales of companies before mergers *5: Including OTC (over the counter drugs) *6: Excludes sales through strategic alliances Merck Merck is a multibillion dollar pharmaceutical firm with a long history going back to the 19th century in the U. S. and the 17th century in Germany.

While in the past they have diversified into areas like animal health care, they are now very focused almost exclusively on human health, in particular, on ethical branded prescription drugs within human health care since they have found this is their most profitable business area. Also, given the many opportunities that exist, it will demand all their capital and energy for the foreseeable future. It has therefore spun off its animal health care business to a joint venture and sold its specialty chemical business.

This strategy and motivation is similar to Takeda’s focus on human health, whose market is more lucrative than its other businesses. The company appears to stress their ability to bring innovative drugs to market. Merck briefly tried to produce generic versions of their drugs, but found it was not worth the investment. In addition, they now assume someone else will produce their OTC (over the counter) versions too. This strategic focus is now underscored by their active formation of strategic alliances. For example, in the OTC medicine market in the U. S. nd Europe, but not in Japan, Merck relies on Johnson & Johnson through a joint venture with J to market, distribute and sell the OTC versions of Merck’s prescription drugs. This means Merck has seen the OTC market as one way to lengthen the revenue stream for some of its products after their patents expire. In Japan, Merck’s agreement is with Chugai Pharmaceutical Co. Ltd. They formed a joint venture in September 1996 to develop and market Merck’s OTC medicines there (Merck 1996 Annual Report). Moreover, Merck and Rhone-Poulenc have announced plans to combine their animal health and poultry genetics businesses to form 28

Merial, a new company that will be the world’s largest in animal health and poultry genetics (Merck 1996 Annual Report). Their primary strategic focus on ethical drugs seems appropriate, but as explained above it is also critical with respect to this strategy that they maintain relationships with those in scientifically related fields. Their work with Rhone-Poulenc must be examined in this light since improving their competence in the genetic business seems a good part of their strategy given developments in biotechnology and the Human Genome Project. This is because biotechnology-related drugs are often species-specific (Harris 1997).

More knowledge about the genetic make-up of human and animal bodies may provide some insights into the appropriate choice of animals in pre-clinical trials from which to extrapolate observations to humans. Since this extrapolation is never perfect and you have to do animal experiments anyway, they have added to their competence in genetics via a joint venture with Du Pont called Du Pont-Merck Pharmaceuticals Co, whose investors are E. I. Du Pont (50%) and Merck (50%). This firm has capabilities in fermentation, genetic engineering/rDNA, cell culture, hybridoma, protein engineering, and tissue culture.

By forming this alliance, Merck was able to exchange its strengths with Du Pont, an early investor in biotechnology. Du Pont-Merck Pharmaceutical has also developed its own drugs in cardiovascular disease. 7 Like other pharmaceutical companies, they continue to sell their branded products as long as they can once they have gone off patent but at a lower price in order to meet generic competition. Cost conscious HMO’s increase this downward price pressure. Yet, according to Merck some demand for the branded product continues once they adjust the price downward.

This is due to better quality, consistent dosage, and brand awareness of the original. Strategically, Merck sees itself as a growth company with a growth target of about 15% per year. This signals a continuing need for cash flow, i. e. from existing drugs, and a Merck sold its share to Dupont in 1998 for over $4billion, apparantly due to its ability to manage more drugs itself. 29 constant flow of new drugs, i. e. from R&D. They need this growth to continue to offer their shareholders the return they expect and to attract the personnel they need to develop drugs which is their corporate mission.

Their products now cover 15-16 therapeutic categories. In five years this will expand to between 20 and 25 categories depending on the success of various stages of drug testing. Important new products in the pipeline include Singulair for asthma, Aggrastat for cardiovascular disorders, Maxalt for migraine headaches, and VIOXX, an anti-inflammatory drug, which works as a selective inhibitor targeted at rheumatoid arthritis. They are in phase III trials for all of these new drugs. Propecia for male pattern baldness recently received FDA approval. Merck’s R is done internationally.

To avoid duplicate investment, each research center tends to be focused. For example, the Neuroscience Research Centre in the Untied Kingdom focuses on compounds which affect the nervous system. Maxalt was developed in this Centre. The one laboratory in Italy studies viruses; while the one laboratory in Tsukuba, Japan (Banyu Pharmaceuticals) emphasizes the circulatory system, antibiotics, and anti-cancer research (Giga, Ueda and Kuramoto 1996). This concentration pattern often reflects the comparative strengths in R and the therapeutic demand structure in each local market.

Still, selecting the appropriate R projects while critical to their success is very difficult. This is because no discipline in science has as blurred a distinction between basic and applied research as biotechnology. The distinction is usually not well-defined because applied research often contributes to basic research. Indeed, in molecular biology, science often follows technology. Still, as a general approach, Merck tries to focus on applied research and development rather than basic science. They rely on universities and smaller biotech firms for the later.

However, they do some basic research. For instance, th

MISSION STATEMENT

Beximco Pharmaceuticals Ltd (BPL) is a leading manufacturer of pharmaceutical formulations and Active Pharmaceutical Ingredients (APIs) in Bangladesh. With decades of contract manufacturing experience with global MNCs, skilled manpower and proven formulation capabilities, the company has been building a visible and growing presence across the continents offering high quality generics at the most affordable cost. The company is committed to enhancing human health and well- being by providing contemporary and affordable medicines, manufactured in full compliance with global standards. The company continually strive to improve their core capabilities Strengthening research and development capabilities, creating partnerships and building presence across the globe.

To address the unmet medical needs of patients and to deliver outstanding results for our shareholders. Our vision is to be one of the most trusted, admired and successful pharmaceutical companies in the region with a focus on.

EXECUTIVE SUMMARY

Beximco Pharmaceuticals Ltd. belongs to Beximco Group, the largest private sector business conglomerate in Bangladesh. It was incorporated in the late 70s, Beximco Pharma began as a distributor, importing products from global MNCs like Bayer, Germany and Upjohn Inc. , USA and selling them in the local market, which were later manufactured and distributed under licensing arrangements. The Company introduced its own branded generic products in 1983.

Since then, the journey continued, and today, Beximco Pharma is a leading manufacturer and exporter of pharmaceuticals in the country, winning National Export Trophy (Gold), a record four times. Beximco Pharma’s manufacturing facilities have been accredited by major Global regulatory bodies and it has expanded its geographic footprint across four continents. Having a broad portfolio of more than 500 products and a dedicated team of around 2,700 employees, Beximco Pharma is committed to provide access to medicines which are affordable and manufactured in strict compliance with global standards. During the year 2011 we have successfully registered 48 products in overseas markets.

In 2011, we introduced 40 new generics in 55 presentations, five of which were launched for the first time in Bangladesh. The 55 new products include the sectors given below:

•  Analgesic
•  Anti-effective
•  Cardiovascular
• CNS
•  Endocrine & Met Disorders
• GI System * IV Fluid
• Muscular Skeletal
• Ophthalmic
• Respiratory
• Skin
• Vitamins and Minerals
• Others

We maintained our record of uninterrupted growth, achieving a 21. 6% increase in sales to Tk. 7,890. 24 million (2010: Tk. 6,490. 85 million). In 2011 we significantly enhanced our prescription share in sales of the formulation products and maintained, as expected, growth in all our key therapeutic segments. Sales of our Active Pharmaceutical Ingredients (APIs) also recorded a significant 37. % growth to reach Tk. 486. 91 million (2010: Tk. 355. 24 million). However, its impact on the overall profitability of the company is currently low because of a low gross margin predominantly due to the high cost of import of intermediate materials to manufacture these APIs. In 2011 export sales grew by 18. 1% to Tk. 390. 32 million (2010: Tk. 330. 54 million). Along with sales growth, Beximco Pharma also achieved a marked growth in profit in 2011. Our pre-tax profit increased 23. 2% to Tk. 1,677. 85 million (2010: Tk. 1,361. 53 million). Gross margin as percentage of sales however, slightly declined to 48% as against 48. 9% for the prior period.

As the company continue to evolve into a stronger company, their strategy for growth is to build a strong and diverse product portfolio; to expand our geographic reach; and to develop and leverage our generic drug capabilities. All these will drive them to build a future for our employees, to create value for shareholders and to focus on the reason for being in this business – to enhance the health and wellbeing of people. They are confident that their Company will continue to deliver strong financial results and achieve sustained growth in the coming days. Organogram Organisational Chart * Member’s name| * Designation| BOARD of DIRECTORS| |

A S F Rahman| Chairman| Salman F Rahman | Vice Chairman| Nazmul Hassan MP| MD| Iqbal Ahmed| Director| Md. Abul Qasem| Director| Osman Kaiser Chowdhury| Director| A B Siddiqur Rahman| Director| Ad. Ahsanul Karim| Director| Dr. Abdul Alam Khan| Independent Director| | | Management Committee| | Nazmul Hassan MP| MD| Osman Kaiser Chowdhury| Director| Rabbur Reza| Chief Operating officer| Ali Newaz| Chief financial officer| Afsar uddin Ahmed| Director, commercial| Lutfur Rahman| Director, manufacturing| Zakaria Seraj Chowdhury| Director, international marketing| A R M Zahidur Rahman| Executive Director, production| Shamim Momtaz| Executive Director, manufacturing| Md.

Tahir Siddiqui| Executive Director, Quality| Jamal Ahmed Chowdhury| Executive Director, Finance and Accounting| | | Executive Committee| | Osman Kaiser Chowdhury| Director| Nazmul Hassan MP| MD| Rabbur Reza| Chief Operating officer| Ali Nawaz| Chief financial officer| Afsar Uddin Ahmed| Director, commercial| SITUATION ANALYSIS Situation analysis is a method managers use to analyze both the internal and external environments of an organization in order to understand the firm’s own capabilities, customers and business environment. INTERNAL FACTORS: Refers to the environment inside the organization within which a manager works. LEVELS OF MANAGEMENT: Strategic level:

The Board of Directors A S F Rahman Chairman Salman F Rahman Vice Chairman Nazmul Hassan MP Managing Director Iqbal Ahme Director Mohammad Abul Qasem Director Osman Kaiser Chowdhury Director Abu Bakar Siddiqur Rahman Director Advocate Ahsanul Karim Director Dr. Abdul Alim Khan Independent Director The strategic level must make sure the technical level operates within the bounds of the society.

Thus the strategic level determines the long range objectives and directions for the organization- in other words, how the organization interacts with its environment. (Textbook) Technical level: Middle floor managers, Branch Managers, Factory Managers work like a connector and works in the middle. At this level, the managerial task is twofold: 1. Managing the operations functions. 1. Serving as a liaison between those who produce the product or service and those who use output. In other words, for the operations level to do its work, managers at the technical level must make sure they have the correct materials and see that the output gets used or sold. (Textbook) Operational level:

Rabbur Reza Chief Operating Officer Ali Nawaz Chief Financial Officer Afsar Uddin Ahmed Director, Commercial Lutfur Rahman Director, Manufacturing Zakaria Seraj Chowdhury Director, International Marketing A R M Zahidur Rahman Executive Director, Production Shamim Momtaz Executive Director, Manufacturing Mohd. Tahir Siddique Executive Director, Quality Jamal Ahmed Choudhury Executive Director, Accounts & Finance. In any organisations, the operations level focuses on effectively performing whatever the organization produces or does.

In Beximco pharmaceuticals, the operations fuction is at the core of their business. The managerial task here is to develop the best allocation of resources that produces the desired output. (Textbook). Research & development R&D is the key to success for any pharmaceutical company. We have given it top priority and have made substantial investment in upgrading our generic drug capabilities as we firmly believe R&D plays the most important role in spurring innovation and helps a company go up the value chain. Our research and development activities are closely focused on market needs and driven by technological progress in order to create product differentiation.

Our team comprising top class formulation scientists with extensive experience of working in leading pharmaceutical companies in the world continuously strives to integrate the advanced technological changes to create competitive edge and match international standards. There has been a series of positive developments in the year and our team successfully introduced 40 new generic formulations in 55 different presentations and expanded our dosage delivery portfolio with technology driven products like prefilled syringes, total parenteral nutrition, dry powder inhalers, etc. Beximco Pharma’s well defined organizational structure, policy guidelines and internal controls ensure efficiency of operations, and compliance with applicable regulations. The Company continuously upgrades these systems in line with the best practices in the industry.

Other initiatives to keep our team updated with the recent advances in analytical methodology, platform technology, and regulatory affairs include frequent in-house and overseas workshops and training programs. The benefits we derive as a result of these initiatives will only increase in the coming years. Beximco Pharma’s R&D team works meticulously towards creating generic formulations that are comparable to innovators’ formulations. Their dedication can be witnessed in their successful development of challenging formulations such as multi-layer tablets, sustained release formulations, dispersible tablets, melt-in mouth tablets, and chewable vitamins; to name just a few.

To add to that, Beximco Pharma was the pioneering local generic company to produce anti-retroviral drugs and to proactively launch CFC–free metered dose inhaler formulation. In addition, we are also developing a number of APIs to ensure availability of raw materials across the range of therapeutic classes. Our capability to produce hi-tech, specialized niche products as well as drug delivery systems has been our core strength to transform BPL into an innovation-driven generic drug company. Human Resource We recognize it is our people’s unwavering values that molded us into who we are today. It is their tireless contributions that have propelled us to greater heights over the years. They are indeed our greatest assets in the way they create meaningful difference.

Every product, every experience, and every breakthrough we ever presented for the betterment of human health and well-being have been made possible by our people. We are prouder than ever of the collective intentions and determination we have witnessed time and time again. The shared vision and values, reflected in our leadership and execution, help us attract the very best. Currently, the Company employs almost 2,700 people including around 400 white-collar professionals such as Pharmacists, MBAs, Doctors, Chemists, Engineers, Microbiologists etc. In 2011, we welcomed into the Beximco Pharma family highly experienced expatriates in key positions to deliver a fresh take on strategic direction as we steadily progress towards our aspirations of becoming a global pharmaceutical company.

We are strong advocates of the notion that learning never really ends simply with the completion of formal education. One of the best perks of being a part of the Beximco Pharma family is that the people undergo continuous training and development programs to further develop their skills. In 2011 alone, over 30 such workshops and training, covering various departments, were conducted. Within Beximco Pharma, we support employees interested in reaching out to others. In 2011, we launched our very own internal Knowledge Center as a platform for continuous learning and interconnectivity; an initiative that is stills quite a novel concept in Bangladesh.

However, we know that competence alone is not enough; it is them intricate threads of connectivity, binding us as one family, which makes our organizational culture truly coveted and one of a kind. We have also undertaken a major corporate branding initiative as a reflection of our rejuvenated drive and aspirations. Financial Position We maintained our record of uninterrupted growth, achieving a 21. 6% increase in sales to Tk. 7,890. 24 million (2010: Tk. 6,490. 85 million). In 2011 we significantly enhanced our prescription share in sales of the formulation products and maintained, as expected, growth in all our key therapeutic segments. Sales of our Active Pharmaceutical Ingredients (APIs) also recorded a significant 37. % growth to reach Tk. 486. 91 million (2010: Tk. 355. 24 million). However, its impact on the overall profitability of the company is currently low because of a low gross margin predominantly due to the high cost of import of intermediate materials to manufacture these APIs. In 2011 export sales grew by 18. 1% to Tk. 390. 32 million (2010: Tk. 330. 54 million). Along with sales growth, Beximco Pharma also achieved a marked growth in profit in 2011. Our pre-tax profit increased 23. 2% to Tk. 1,677. 85 million (2010: Tk. 1,361. 53 million). Gross margin as percentage of sales however, slightly declined to 48% as against 48. 9% for the prior period.

This was due principally to depreciation in the value of the Taka against the Dollar and the high level of domestic inflation. However, with our constant drive to contain costs and effective profit optimization strategies, the negative impact of rising cost on profit has been kept to the practicable minimum. The Board of Directors has recommended 21% stock dividend for approval of the shareholders for the year ended 31 December, 2011. Technological Advancement Beximco Pharma has always been a pioneer in adopting innovative technologies. This brings both sophistication and the potential to sustain growth to our business. Over the past couple of years we have made considerable nvestments in facilities and processes to improve productivity, drive growth and achieve excellence in operations. Situated near Dhaka, the capital city of Bangladesh, our manufacturing site extends over an area of 23 acres. The site houses manufacturing facilities for producing various drug formulae in different strengths and delivery systems such as capsules, tablets, intravenous fluids, metered dose inhalers, ophthalmic drops, injectables and nebulizer solutions. The site has its own utility infrastructure to ensure adequate generation and distribution of electricity with an installed capacity of 10 MW, in addition to water purifying and liquid nitrogen generation facilities.

The bulk drug unit for producing paracetamol is also located within this site. The Company’s penicillin API and formulation units are situated at Kaliakoir, a few kms from the main site. The company has diversified into innovative delivery systems such as dry powder inhalers, total parenteral nutrition, prefilled syringes and lyophilized products. * Oral Solid Dosage * Metered Dose Inhaler * Intravenous Fluid * Inject able, Ophthalmic and Nebulizer * Liquid, Cream and Ointment Val EXTERNAL FACTORS These are the forces that act on the organization from outside. DIRECT FORCESThese are the forces that have direct and immediate influence on the organization. CUSTOMERS

We offer our customers a comprehensive and high-quality product portfolio encompassing all major therapeutic categories, available in various dosage forms including tablets, capsules, syrup, suspension, sterile eye drops, injectables, nasal sprays, creams, ointments, suppositories, IV fluids, metered dose inhalers, dry powder inhalers, prefilled syringes etc. Over the years, we have nurtured and developed a special bondage with the medical community. We stand by healthcare providers and appreciate their valiant services to the community at large. COMPETITOTORS Square Pharma Reneta GlaxoSmith Klein’ ACI Limited Eskayef Bangladesh Limited The ACME Laboratories Limited EDCL Aristropharma Limited Orion Pharmaceuticals limited Indirect Forces * Political Analysis: Political analysis creates a great impact on business growth.

The Beximco Pharmaceuticals is an established company, it gets many positive support of Bangladesh government, which enables it to advance its product. In addition it suffers many political unexpected conditions, like- political instability, and high risk investment, high rate of tax, high barriers of rules and regulation and so on. Because of strikes, obstruction and any other political issues, it noses a lot. But now they adopt with rules of exporting, producing, importing and so on. They use BCP (Business Continuation Plan) to fight against any critical political issues. [ Documentary,Newspaper] * Economic Analysis: In economy, the biggest threat for “ Beximco Pharmaceuticals” would be economic recession.

During the recession, the Beximco’s growth will be adversely affected. Because of the high interest rate, inflation rate and economic downturn it’s growth is not just affected by the local economy but also in the international economy. * * Social Analysis:”Beximco Pharmaceuticals “ has performed many social activities, to improve the company image. To reach the goal, the group implements the local job creation program as well as health and education program Corporate Social Responsibility: Our vision is to make significant contribution to humanity by improving health. This vision guides our Company’s operations, including its commitment to corporate responsibility.

We work together with non-profit organizations who work to improve people’s lives through research, information, and advocacy. As the Company writes its success story as an emerging leader in the pharmaceutical industry, we also realize that responsibility towards all our stakeholders increases in tandem. We remain committed to being a good corporate citizen. Prevention is the best cure and the first step is to create awareness. Every year, we launch campaigns touching on different forms of heath impediments ranging from asthma, diabetes, hypertension and many more. Campaign activities include rallies in addition to organizing and sponsoring scientific seminars and conferences for various associations and societies in medical disciplines. ANNUAL REPORT Culture

Culture is a very complex environmental influence, encompassing knowledge, beliefs, values, laws, morals, customs and other habits and capabilities an individual acquires as a member of society. As BEXIMCO is a global MNC, management must adapt its managerial practices to the specific and unique aspects of culture. Most of the time they follow formal ways to control the employees, and get their full potentiality. They also follow the profit oriented by doing more customer service and social responsibilities.

SWOT ANALYSIS

Strength: Diversification The strength of Beximco Pharmaceuticals Ltd. lies in its diversified products and dosage forms.

BPL has been producing solid products like tablets and capsules and liquid products like syrup, suspension and solution, as well as semisolid products like cream and ointment. It is  the pioneer company to manufacture and market nasal sprays, inhalation aerosols and suppositories in Bangladesh. In 2001, Beximco Pharmaceuticals Ltd. stepped into a new path–bringing SmallVolume Parenteral(SVP) or injectable dosage form. Arixon is it’s first small volume injectable product It is a preparation of Ceftriaxone, which is considered as a breakthrough antibiotic in the history of medicine, . In 2002, Arixon is predicted to be one of our leading brands interms of sales revenue.

The company has lot of diversified products like, Napa: Neoceptin R: Neofloxin: Tycil : Aristovit M etc. Achivement of National Export Trophy First export market operation with finished pharmaceutical products1994-95 : Achievement of National Export Trophy (Gold) as the first pharmaceutical company of the country. R ; D B P L is a company that is continuously searching for the next treatment advancements. BPL’s portfolio features a range of high-quality, effective products. This product portfolio, combined with the steady stream of promising new products in development, is one of the many reasons BPL is among the nation’s leading pharmaceutical companies. We have introduced 26 new products in 2001.

Around 70 new products are in our development pipeline. They will obviously enrich our portfolio to employment of the employees so that they can cope with the rapidly changing business environment. Innovation is a major priority that we want to promote. Accordingly, training programs are regularly undertaken for the staff to seek opportunities for skills improvement. Weakness: Too many departments There are too many departments under the supervision of the gm which can cause low productivity due to large p of supervision. Diseconomy of scale: If the company exceeds the optimum size there would be diseconomies of sale. Availability of substitutes Availability of very close substitute goods.

For example: medicine produced by other pharmaceutical companies Opportunities: Adding new products BPL always tried to add new products of different therapeutic classes in its portfolio and these products are highly appreciated by the health professionals. Most important of them are Triocim, Arixon, Prosan, Recox, Atova etc. Introduction of these new products enriched it’s product portfolio and is contributing to enhance it’s sales. Apart from all these, we have intensified and consolidated our marketing efforts another overseas markets, like Myanmar, Kenya, Yemen and Vietnam. To capitalize immense opportunities in these overseas markets, we are bringing in more new and exciting brands in these markets.

Last year, BP donated one ‘Medical Information K i o s k’ to the Myanmar Medical Association of Mandalay which gained enormous attention and acceptance in the minds of the medical community of Mayanmar. In Kenya, number of salespeople has been increased to best exploit its huge market potentials. All these efforts are already bringing in desired results. Entering into new horizons and establishing new overseas markets will remain our top most priority in 2002 also. Russia, Ukraine, Sri Lanka, Cambodia, Nepal will be on the list. We are confident that our process of globalization will continue with a more and more accelerated speed in the coming days. Technology

Technology carries the promise of tomorrow. The benefits of technology belong to all of us benefits that create new opportunities and open doors toa better life. For example, the new inhaler plant of BPL has been design in a way to ensure highest-possible quality at every stage of manufacturing and quality control. World-class facilities are being employed in each and every step including mixing, filling, testing, labeling, batch printing and other procedures to ensure manufacturing of world class products. Threats: Supply cost effective materiaals BPL has a commitment to the society to supply world class Active Pharmaceutical Ingredients (APIs).

Therefore, BPL is not only engaged in formulations but also in fine chemicals business with a view to supplying cost effective quality materials to other local companies as well as for captive consumption. Competition Beximco Pharmaceuticals Ltd. has been preparing itself for the post-WTO open market competition. It has all the courage to compete with world leaders in pharmaceuticals business when the tariff and non-tariff barriers will be withdrawn The new USFDA standard plant is planned to be operational in early 2003. Once completed, this will be one of the finest facilities available anywhere in the globe.

OBJECTIVES

Increase rate of purchase by existing customers by 10 percent by the year end. Strategy Such a strategy may involve devising a marketing plan to encourage customers to purchase more of a product.

Tactics used to carry out the strategy could include price reductions, advertising stressing the many benefits of the product, packaging the product in different sized packages or making the product available at more locations. Design additional features into product that will induce new uses by existing buyers Strategy This strategy include much more than simply getting the product to the new market. Before considering sales techniques such as packaging and promotion. Company often find they must establish a foothold.

MANAGEMENT ISSUES

Centralization Centralization refers to the location of decision making authority in the hierarchy of the organization.

The upper level managers in the organization make all the significant decision and managers at all levels can command their subordinates to undertake legitimate work related activities. The idea of centralization can be difficult to grasp in a particular organization for several reasons. People in the in an organization can have different decision making authority. Moreover, all decisions are not of equal importance in organization. Thus subjectively they do not have authority but objectively they have authority. Matrix Organization The matrix organization structure attempts to maximize the strengths and minimize the weakness of both functional and product bases.

Matrix organization structure achieved the desired balance by superimposing or overlaying a horizontal structure of authority, influence and communication on the vertical structure. Matrix organization facilitates the utilization of highly specialized staff and equipment.

CONCLUSION

This is Beximco Pharmaceutical’s firm as a whole. I have discussed the mission, executive summary, organizational structure, situation analysis, swot analysis, objectives and management issues of the company. I have also given some important data regarding this company. I hope you can have the clear picture of Beximco Pharmaceuticals company at a glance.

APPENDIX

Appendix are given after this page

INTRODUCTION According to Hunter s. Thomas “you can turn your back on person, but never turn your back on a drug, especially when it’s waving a razor sharp hunting. ” The global pharmaceutical industry had done tremendous contribution to mankind, but now pharmaceutical companies are facing tough time in a decade. The case is broken in to different parts which is emphasized on how internal and external factors affecting the industry firstly, the main environmental forces currently affecting the industry through PEST analysis.

Secondly, the implications of the changes in business environment that is internal factors through porter’s five force theory. Finally, the use and limitations of the tools applied to solve case are discussed. ORIGIN AND EVOLUTION The present pharmaceutical industries are non-assembled and more of competitive but it had emerged in early 19th century in the Rhine valley near Basel Switzerland where dyestuffs were found to have antiseptic properties.

Companies like Hoffman-la rochy, Sandoz, Novartis are all started as Rhine based family dyestuff and chemical companies, which are still doing tremendous business even to day. Slowly these chemical companies started making pharmaceuticals and synthetic chemicals and evolved as global players. In early 1940’s the industry showed drastic changes such as introduction of penicillin and other drugs. In 1960’s industry growing rapidly with the setting up of R&D not only this economies prospered by the spending on health care in same period.

In 1970’s industry showed major development but a strong regulatory controls also came into existence with this development, and this regulatory controls had removed the rule of permanent patent to some fixed period which resulted in birth of branded generics. ENVIRONMENTAL FORCES EFFECTING PHARMACEUTICAL INDUSTRY The scan of external macro environment in which the firm operates can be expressed in terms P- POLITICAL E-ECONOMICAL S-SOCIAL T-TECHNOLOGY POLITICAL FACTORS AFFECTING THE SECTOR

Political factors includes government regulations and legal issues defines both formal and informal rules under which firm operates some example like tax policy, trade restrictions and tariffs, political stability. Political arena has huge influence up on the regulations of business and the spending power of consumers and other business. Over many years the pharmaceuticals industry has increased political attentions because of increase in recognitions of the economic important of healthcare as a component of social welfare .

It takes 10-15 years on average to experiment drug to travel from lab to patient consumption, as patent protection is fixed that is only 20 years but companies has to spend 15 years on experiments by the time it reaches to the market the patent will be almost comes to expired and which will result in birth of generic medicines which has exactly same ingredients as of branded drugs but shows huge difference in price, because the generic brand does not spend on clinical trials so the entry of generic are the major impact on pharmacy industry because of the legal policy set by political forces example in us 84% of sales had been dropped in 12 weeks by Allegra hay fever treatment because of expiry of patent in 2006. Another major problem affecting the industry in many countries are monophony which means only one powerful purchaser who are government. Since 1980 government around the world attracting pharmaceuticals as a politically easy target in their effort to control l in increasing health care expenditure like price and reimbursement controls and also the industry loosed both public and political support to resist this change.

In 1990 the effect of economic recession had lead to fall in tax revenue, the government forever changing cost containment plans had become operations of the company unstable in European market which is highly fragmented, moreover the expansion of EU had provided many opportunities but it also raised new challenges from generics and low priced imports. ECONOMIC FACTORS AFFECTING THE SECTOR Economic factors affect the purchasing power of potential customers and the firms cost of capital examples like economic growth, interest rates and exchange rates. The government price control is a major challenge to the industry in the form of parallel trade. Parallel trade is nothing but free movement of the product across the Europe with out any trade barriers which will affect the local manufacture because the distributor will buy drugs in low price markets and export them to high price markets example buying the product from manufacture in Poland and exporting them to Ireland.

The exchange rates and currency problem is also one of the major issue for example Canada has inflexible pricing and reimbursement criteria, where USA does not have price controls as a results the price drug in America is high compare to Canada which leads to damage of brand image in consumers mind for example price of Lipitor is 3. 20/pill in USA where in Canada which is 1. 89/pill for same drug. Not only this, the growth of pharmaceutical market is aligned with GDP growth. As R&D productivity is declined and development times were lengthened, as clinical trials are becoming more complex and costly there was sharp rise in R&D expenditure. SOCIAL CULTURAL FACTORS AFFECTING THE SECTOR

Social factors includes the demographic and cultural aspects of the external macro environment these factors effects customers needs and the size of potential markets, some social factors include health consciousness, population growth rate, age distribution, emphasis on safety and carrier attitudes. ageing populations are creating pressure on healthcare funding systems as over 65 consumes four times more than that of below 65 which leads to more expensive technology solutions and increase in patient expectations had created an unsustainable situation to the industry. Some countries cannot enjoy universal coverage system and latest treatments because they are not funded by the insurance companies like USA which can afford latest technology but cannot share the benefits because of increasing populations in different parts of the world.

In developed countries consumer are benefited by the insurance and can afford ethical drugs but the countries who cannot afford to ethical drugs are switching to generic to save coast which pressuring pharmacists to substitute generic drug as the first choice, patented drugs are only used if generic drug fails. The OTC(over the counter) comprise of 20% of market which may purchase without prescription specially OTC is more in developing countries and also for these the patented drug companies has introduce disease management initiatives to attack the challenges from generic. Some consumer does not want to use biopharmaceuticals because they genetically done. TECHNOLOGICAL FACTORS AFFECTING THE INDUSTRY Technological factors can lower barriers to entry, reduce minimum efficient production levels and influence outsourcing decisions. Some of the technological factors includes R&D activity, technology incentivise and rate of technology change. he technology is an competitive advantage to the companies and success of R&D lays in team working, knowledge management and close relation with external flexible and some indicates lean and flexible operations and out sourcing is a gate way of success not only these there are many questions raised that the investment on R&D is could not sustain for example in 2005 there are nearly 650 cancers drugs in development. The utilization of technology is very expensive because it includes latest instruments which is possible only for developed countries to use technology because they are funded by insurance companies and product developed by this technology cannot afford in developing countries because of its huge investment.

THE IMPLICATIONS OF THE CHANGING BUSINESS ENVIRONMENT OF THE PHARMACEUTICAL INDUSTRY Porter’s five force model “The porter’s model is an outside in business unit strategy tool used to know value of industrial structure. The competitive force analysis is made by the identification of five fundamental competitive forces. “(12MANAGE:2009) POTENTIAL ENTRANCE The threat of new entry is low in this sector because companies has to spend huge amount to produce a product, so investment for the capital is very huge and its as to follow many rules and regulations set up by the government and to maintain the standard which where set is very difficult for new companies which want to enter into market.

More over it is very risky business because it takes 10-15 years for new market to come into market and nobody is sure about the success of the products and patent time is also limited. POTENTIAL SUPPLIER Bargaining power of supplier is low because there are only few suppliers because the suppliers in this industry are different from other industries as ingredients used to make drugs are chemicals so the suppliers are chemical industries. It is very difficult for the suppliers to sustain in the market because if they increase their price the company may change supplier who supply raw materials comparatively low price compare to existing one and industry is not key customer group to the supplier. Brand image, role of quality, service of supplier is not considered by the industry. POTENTIAL BUYERS

Bargaining power of buyer is high because main buyers are generally government and the companies that is monophony and companies cannot go against them and they can only sell the product to government the other side of the buyer are consumers who’s buying power is also high because of substitute available in markets and brand loyalty is low in consumers. POTENTIAL SUBSTITUTES Threat of substitutes is high in this industries, there are many substitute products in market like generics, branded generics, biopharmaceuticals as they are very cheap compare to the branded drugs as discussed earlier that branded drugs will consider only when generic drugs fails. And import of drugs from china and India which are produce very cheaply compare to local producers. COMPETITIVE RIVALRY

Competitive rivalry is high in this sector because advantage gained by the first mover advantages (patent). As market is getting saturating companies are going global which means world wide launches, global branding and heavy investment in promotion as shorter product life cycle and to gain competitive advantage. In spite of taking care during launching the industry is still faces tough time from generic drugs and not only this merges and acquisitions as one of the major cause for competitive rivalry. SWOT ANALYSIS OF PHARMACEUTICALS “Swot analysis provide information that is helpful in matching firm resources and capabilities to the competitive environment in which it operates. “(QUICKMBA: 2007) S-STRENGTH W-WEAKNESS O-OPPORTUNITIES T-THREATS

The environmental factors internal are strength and weakness and external are threats and opportunities. STRENGTHS Patent is one of the major strength in this sector of industry which has strong brand names such as Pfizer, GlaxoSmithKline, Merck, Johnson and Johnson, Novartis. The above mentioned companies have good reputations among the consumers The sector have cost advantages from propriety know-how This sector company have exclusive access to high grade natural recourses The sector has favourable access to distribution networks WEAKNESS Patent is consider as strength of this sector but due to limited time for patent had become its weakness. The products from this sector have side effects.

The products take long time in development such as clinical trials which takes 10-15 years. It involves high cost structures such as investment on R;D, advertising. One of the major weaknesses is regulatory and legal issues by FDA. OPPORTUNIITIES Human needs are unfulfilled, so this unfulfilled needs are the opportunities for develop new products. The arrival of new technology as technology keeps on changing time by time. The removal of internal barrier like free movements of goods within EUROPEAN UNION. Due to pressure from big branded companies as this sector contributes major share to economy due to there pressure loosening of regulations may be happen in future. THREATS

Generics are the major threat to this sector The shift in customers taste away from the firm’s products, customer in this sector does not have particular brand. Availability of huge range of substitutes in markets Entry barriers to some countries Parallel trade is also one of the major threat to this industry. USES AND LIMITATIONS OF TOOLS PEST USE Pest analysis looks at the external environment and good tool to understand big picture of the environment in which business operates. And it will allow companies to take opportunities and reduces threat of a company which they are facing. Pest analysis provide further plan to a company to develop if strategic plan is done correctly.

With the pest analysis companies can see longer horizontal time and able to differentiate opportunities and threats and also help companies to look outside environment and what are the potential forces which going to affect. Pest is a mnemonic standing for political, economic, social and technology which are use to brain storm the characteristics of a industry and can draw conclusion as the significant forces of change operating with in it. More over it is useful to avoid taking actions which results in failure, it is very useful especially in starting new products because it will avoid assumptions and make to adopt quickly the reality of the new environment, it is straightforward and easy to adopt, broad categories covering major environmental factors and will provide more data about influence. LIMITATIONS

It is not a set of rigid compartment to store ideas more over pest analysis does not analyse all the details in the external environments like markets, share holder, creditors, supra-national bodies, pressure groups and labour markets. PORTER’S FIVE FORCE USE Porter’s five forces theory is valuable contribution to study competition it give important information in three aspects. STATICAL ANALYSIS: It determine industrial attractiveness and gives an over view of profitability, this model helps in entry and exit questioning a market segment and used to compare influence of competitor forces and influence of competitors . DYNAMICAL ANALYSIS: It helps to understand potential future attractiveness of the industry. ANALYSIS OF OPTIONS:

The knowledge and power of five forces help company to develop options to improve position of the company which results in new strategic direction like new differentiation for competitive products of strategic partnerships. Moreover, porter’s five force models gives systematic and structured analysis of market structure and competitive situation, this model is applicable universal such as particular company, market segment and industries. LIMITATIONS Care should be taken while using this model such as never under estimate the important of current strength of the company. The model design for analyzing individual business strategies and it will not support the interdependence and synergy with portfolio of larger corporate.

If we look from the theoretical side the model does not show possibility that an industry could be attractive because some companies in it. More over some times it may be possible to create complete new markets instead of selecting from existing one and also some people argued that environments which are characterized by rapid, systemic and quick changes require more flexible, dynamic approach for strategy formations. SWOT ANALYSIS USE The name it self say it is used to identify company’s strengths, weakness, opportunities and threats. And use to formulate strategies the analysis usefulness of SWOT is not limited to profit seeking organizations.

It is used in decision making situation when a desired end -state has been defined, and it is used in pre crisis planning and prevention and also used to in creating a recommendation during a viability study LIMITATIONS It has ability to over simplify the situation by dividing the firms environmental factors into categories in which they may not fit. The classifications of some factors as strength or weakness, or as opportunities or threats is some what peculiar CONCLUSION The pharmaceutical industry made tremendous contribution to man kind but, the industry is facing tough time in this decade. Yet it is targeted by government, media in spite of huge investment on R&D and the product life is getting shorter. Free trade, parallel trade and exchange rate are oreover the birth of generics, creating major problems to the industry. Niche areas getting crowded creating price pressure, but the presence of global expertise firms like Pfizer, Merck will stand as global opportunities. The industry more than ever needs to get a handle on the slippery business of scientific creativity and provided it critics with indisputable evidence of its value. BIBLIOGRAPHY Johnson et. al (2007). Exploring corporate strategy. 8th ed. England: Pearson Education. 915 Quickmba. (2007). Swot analysis. Available: http://www. quickmba. com/strategy/swot/. Last accessed 30 Oct 2009. Answers corporations. (2009). Swot analysis.

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