Merck Swot Analysis

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Merck SWOT Analysis

MGT/521
July 25, 2012

Merck SWOT Analysis

Company Overview

Merck is the 2nd largest pharmaceutical company in world offering prescription

medications, biologics, vaccines, animal health, and consumer care products. It generated 48

billion dollars in revenue in 2011 and has 40,000 employees. Research and development of

proprietary medicines for global marketing is the core of the business. Recent acquisitions and

transactions designed to take advantage of emerging markets. Stakeholders include:

shareholders, medical professionals, medical researchers, medical facilities, and patients.

Key Facts

Headquarters:One Merck Drive
P.O. Box 100
Whitehouse Station, NJ 08889-0100

Phone:(908) 423-1000

Web Address:merck.com

Revenue (USD Mn)48,000

Financial Year End:December

Employees:86,000

New York Stock Exchange TickerMRK

SWOT Analysis

Strengths

Continues to benefit from strong M&A activity

Has a diverse portfolio of product offerings

Strong research & developmental pipeline with 20 products in late-stage development.

Weaknesses

Pricing pressure caused by Health Care Insurance payment structure and government regulation in the United States and abroad.

Significant litigation involving Vioxx.

Uncertainty regarding new product development in Biologics

Opportunities

Emerging Global Markets are growing at double-digit percentage rates.

Generic Biologics Market to exploit competitor’s patent expirations.

New Mergers and Acquisitions, Joint Ventures, and Licensing agreements are promising.

Threats

Uncertainty in Global regulations, trade agreements, and political conditions.

Global economic austerity programs may cause pricing pressure or abandonment of projects.

Competition from generic drugs due to Patent expiration.

Strengths

Continues to benefit from positive M&A activity

In 2009 Merck merged businesses with Schering Plough and continues to benefit from

reduced costs as a result of the merger. In February, 2011, a Merger Restructuring Program was

announced, resulting in workforce reductions affecting sales and administration, consolidation of

headquarters, office staff, as well as the sale or closure of some manufacturing and development

sites have reduced the workforce by 17%. In July of 2011, the company announced an

additional work-force reduction of 12 to 13%. From February, 2010 until December 31, 2011

Merck has eliminated 18,430 positions from employee separations and elimination of

contractors. The program is expected to be largely complete by the end of 2013, and yield

annual savings of $4 billion to $4.6 billion

Other M&A activity will continue to enhance new product development. Inspire

Pharmaceuticals allows Merck to take advantage of ophthalmic products and medications. Smart

Cells offers new avenues introduce treatments for type 2 diabetes. Acquisition of rights to a

biosimilar version of Embrel for treatment of autoimmune disorders like rheumatoid arthritis.

Owns a diverse portfolio of current product offerings

Merck has a broad line of pharmaceuticals, animal health products, consumer care

products, biological medications, and vaccines. 42 products are divided into 9 divisions offering

reduced exposure to product patent expiration. The patent expiration of the largest revenue

producing product, Singuliar, with $5.5 billion in revenue, would not completely wipe out

company profits. This diversity provides an important safety net as the company continues to

invest in research and development of new products.

Strong research & developmental pipeline with 20 products in late-stage development

In the last 13 months the Food & Drug Administration has approved 6 major

medications: Zioptan and Cosoft PF both are...
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