Question: To continue generating the returns enjoyed by the industry over the past decade, pharmaceutical companies would be forced to rethink how they identify and exploit opportunities to gain a competitive edge in an increasingly complex market ?
In my opinion if a Pharmaceutical company aims to continue generating the returns and gain competitive edge , should conduct Pharmaceutical Industry Analysis which will help to find out opportunities and then should try to match them with its Strengths and finally achieve to competitive benefits through new strategy formulations, so first I would like to bring a summary of strategic issues which Eli Lilly is face to them, second I will describe Eli Lilli external condition, through industry analysis and porters 5 forces ( to analyze external environment), third I try to bring SWOT analysis and SWOT matrix and finally according to the Opportunities, I try to bring some recommendations for strategy formulation which will place Lilly in a much stronger position to achieve and maintain sustainable competitive advantage in the dynamic competitive international pharmaceutical market.
Summary of Key Strategic Issues which Eli Lilli face to them
1)In Eli Lilli Imbalanced portfolio and lagging international sales was the consequence of its dependence on just a few key products. This type of a strategy with a focus on neuroscience drugs such Zyprexa was not well suited to the more cost conscious international regions whose their focus was treatment of disease.
2) Other factors that played against Eli Lilli were the regulations in non-US developed countries on pricing and payment programs for pharmaceutical drugs through national health insurance programs. Due to this fact, Lilly wouldn't have earned as high of a profit margin on its blockbuster drugs, Prozac and Zyprexa, in Europe and Japan as it did in the less price-conscious U.S. market.
3)Eli Lilly's recent decline in market capitalization was brought through the rapidly changing market conditions, intensifying pressures of competition, rising R&D expenditures and the erosion of prices on leading products.
4)Eli Lilly also faced to several legislative problems, (a)such 300 lawsuits accusing of failing to stop Robert Courtenty from diluting cancer drugs, (b)patent litigation involving both Prozac and Zyprexa,(c)charges of deceptive marketing for Evista
5)some problems were originate from FDA,( When found quality problems at several of the company’s manufacturing sites) so one of the item which should be under attention of Eli Lilli is FDA policies and rules.
6)Additional issues that seems to have limit the performance were Eli Lilli failure to meet international sales expectations, expiration of key patents, and its poor performance against competitors. I can say ,this can be attributed to the fact that Lilly act rigid, because centrally controlled operating structure did not fit well with today's rapidly changing pharmaceutical market environment.
Eli Lilli External conditions
I will explain external environment of Eli Lilli through two parts ,the industry environment and operating environment ,both of these environmental sectors affect the firm's operations in competitive situations.
As we know Industry is made up of the entry barriers, supplier power, buyer power, substitute availability, and competitive rivalry. These forces are of the greatest importance to the firm in strategy formulation. Lilly was heavily involved in strategic alliance for the benefits of R&D. Eli Lilly used this to strengthen its standing in the industry, hoping that it would make up for revenue they stood to lose according to the Prozac patent protection expiration which effect its sales and profitability both in 2001 and 2002 .
In pharmaceutical industry :
1)Rivalry among competitors is intense as brand recognition has...