Novartis SWOT Analysis

adam March 3, 2011 Health & Pharmaceutical No Comments

Novartis International AG is a multinational pharmaceutical company based in Basel, Switzerland. The company was founded in 1996 through the merger of reputable Swiss companies Ciba-Geigy and Sandoz Laboratories. Company’s current CEO is Joseph Jimneze and Daniel Vessella is the chairman. The company ranks number three in industry worldwide with respect to sales. Company’s sales were recorded 36.173 billion US Dollars in year 2008. At present, Novartis is the sixth largest pharmaceuticals company in terms of revenue which was calculated 41.5 billion US dollar in year 2009. The company has three subsidiaries Siba Vision, Sandoz and Alcon with 119,418 employees total in year 2010. Novartis produces medicines under the categories of pharmaceuticals, generic drugs, over the counter or consumer drugs, vaccines, diagnostics, animal health and contact lenses. Some of the famous drugs produced by Novartis include Comtan, Diovan, Tegretol, Zometa, Tavist, Voltaren, Ritalin, Femara, and Clozaril.

Strengths

• Excellent reputation in developing first class Rx pharmaceuticals that maintain high entry barriers to new entrants and competitors

• Wide product range

• Well developed and rapidly expanding research and development centers in Basel, Shanghai and Boston (Ross, 2010).

• Superb portfolio of young fast growing medicines

• Led industry with thirteen new drugs approved between 2000 to 2004

• Have seven drugs in current registration

• Diversified business model comprising core Rx pharmaceuticals units supported by generic drugs, vaccines, consumer health care and ophthalmology offerings (Mark, 2010).

• Second largest maker of generic drugs in the world

• Second largest biotech company in the world

• Market leader in terms of sales

• Good return providing company to the investors. ROI was 18 percent in year 2004

• Huge investments and research in oncology

Weaknesses

• Brand name harmed due to the legal case against the Indian government

• FDA charged the company with unethical advertising practices

• Charged and fined by US district court for practicing sexual discrimination against twelve female sales representatives which ruined the image of the company (Mattes, 2008).

• No special drug formulation for children

• Charged by US federal prosecutor for paying illegal kickbacks to healthcare professional which damaged the company’s name

• Failure of Galvus to position Novartis in the diabetes market

• Lack of resources to exploit prominent opportunities

Opportunities

• Revenue growth opportunity attached to Sandoz and vaccine elements of business will mitigate patent expiry risk associated to Rx portfolio

• Potential to establish Sandoz subsidiary as leading manufacturer of bio-similar.

• Strong research and development base can help in considerable movement to multiple sclerosis and respiratory markets (Thomasson, 2010).

• High market growth rate due to increasing rate of diseases because of pollution and other environmental factors

• Low threat of new entrants/high competition because of huge investments required to setup a major pharmaceutical firm

Threats

• Considerable risk of late stage pipeline attrition, lifted by these products accounting for noteworthy portion of year 2013’s forecasted sales

• Patent expiry for Diovan and Co-Diovan franchise in 2011 or 2012

• Long term patent expiry risk for Glivec. This patent will expire in year 2015

• Uncertain political environment world wide

References

1. Mattes WB, (2008). Public consortium efforts in toxicogenomics, Methods Mol Biol. 2008;460:221-38

2. Innovative Medicines Initiative. "IMI Call Topics 2008". IMI-GB-018v2-24042008-CallTopics.pdf. European Commission.

3. Ross, Casey (2010). "Novartis doubles plan for Cambridge". Boston Globe.

4. Thomasson, Emma (2010). "Novartis seeks to buy rest of Alcon for $39 billion". Reuters.

5. Mark Hamblett, (2010)."Novartis Hit with $250 Million in Punitives in Gender Bias Case", New York Law Journal.

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