Bristol-Myers Squibb and other pharmaceutical companies have very limited space for the development of competitive advantage. This is due to the limitations set in patents available for new pharmaceuticals. Most chemicals in pharmaceutical products have an equivalently functional substitute making it possible to have multiple products on the market that have identical uses and outcomes. This being the case, pharmaceutical companies can’t rely on one particular product to provide competitive advantage.
Resources and Competencies| Value| Rarity| Imitability| Organized| Competitive Advantage?| R & D| Yes| Yes| Yes| Yes| Sustained|
Brand Name| Yes| No| No| No| Parity|
Product Diversification| Yes| No| Yes| Yes| Temporary| Research and Development
Bristol-Myers Squibb’s greatest competitive advantage comes from their Research and Development (R & D). With nearly 40 compounds in development, a network of research facilities around the globe, and an annual R&D budget of more than $3.58 billion annually, Bristol-Myers Squibb’s organization ranks as one of the premier R&D organizations in the industry. It put 17% of its sales into Research and Development for 2009 which is 11% higher since 2007. This creates a great deal of value for the customer because it shows that they are dedicated to developing products that will provide excellent health benefits. This is rare because there are only a handful of large, research-based pharmaceutical companies willing to put such a large amount of annual sales into R & D. Merck, a research-based company, put almost 20% of their sales into R & D but Bristol-Myers Squibb’s other competitors like Johnson & Johnson and Proctor and Gamble Pharmaceuticals put only 1.3% and 2.6% of annual sales into R & D, respectively. This is because it is difficult to imitate research-based companies. Research-based companies have to focus on research as the driving force of their...