MBA 519 – Competitive Strategy
Case Analysis #4
Beginning as a small scale manufacturer of chemical in the United States, Merck Research Labs (MRL) became the top notch research institution in the pharmaceutical industry by World War II. By attracting the top talent in chemistry, biology, and pharmacology, MRL emerged as the leader in human pharmaceuticals with the release of highly necessary drugs to treat infections, and tuberculosis. MRL focused their strengths on three key areas: vitamins, antibiotics, and hormones. With the best scientists in their industries, MRL developed a reputation of being the best and their profitability put them at the top of their own industry. By the 1970’s, pharmaceutical research had advanced dramatically and MRL expanded their leadership in the market by providing “breakthrough drugs to the market.” In doing so, MRL tripled their bottom line by the 1980’s and were continually one of the most valuable companies on an annual basis. MRL’s profitability was hard to match by their competitors along with their innovations in the human therapeutic drug market while maintaining a science-based business model. MRL biggest core strengths was not only maximizing their top-talent to produce profits and cutting-edge drugs to be sold on the open market, but being very disciplined in their drug development process. Every one of MRL’s competitors put their newly designed drugs thru the same development process as they do, but the difference is post-marketing clinical studies (Phase V) makes sure their products are positioned correctly and they are utmost effective to whoever consumes their products for medical reasons.
In 1984, the pharmaceutical business world was shook up with the passing of the Hatch-Waxman Act which tore down a barrier that MRL had created with their innovations for other competitors to enter the market. This new law enacted allowed generic drugs to be manufactured which made a...