Novartis: BA 497.01- External Environment, Industry Analysis, and Company Assessment
Authors:Zachary Allen, Claudia Avitia, Chelsea Beagles, Felicia Chow, Daniel Flaherty, Nicole Gillespie, Prithvi Kanneganti, Tomonori Kimura, Christian Martell, Titus Rhode, Haley Scott, Cecile Sutowo, Andrew Synn, Ning Wang, Gregory Wenhold
Mentor:Dr. Venkatachalam Seshan, Professor of Management, Pepperdine University
Novartis’ 2011 net sales totaled $58.5 billion, making it the 5th largest pharmaceutical company in the world. Compared to 2010, Novartis’ sales have grown 15.6%, and the company now holds 6.1% of the global pharmaceutical industry’s Share of Market (SOM). Novartis’ biggest competitors are: Johnson and Johnson, Pfizer, Roche, and GlaxoSmithKline. The five companies together account for nearly 29% of global pharmaceutical sales.
Novartis’ mission is to discover, develop and successfully market innovative products to prevent and cure diseases. Novartis works towards this goal through extensive research and development. In 2011, Novartis’ total research and development expenses were $9.58 billion, which is 16.36% of its net sales. Novartis utilizes its large pipeline to continuously release new products into the market. In 2011, Novartis had 15 approvals for its drugs, the highest amount of approvals among all pharmaceutical companies that year. The importance of new drug and compound approvals through the FDA is crucial; if a drug is not approved, millions of dollars spent on research can amount to nothing. In 2012, Novartis will lose its patent for Diovan, its largest selling drug. This will result in a loss of sales as generics enter the market. This puts additional pressure on Novartis to secure its situation with Gleevec, the company’s top selling cancer-fighting drug.
The goal of this undergraduate research project is to analyze Novartis’ Share of Market (SOM) and develop new strategies to increase its current SOM. By implementing these strategies, Novartis will be closer to obtaining a sustainable competitive advantage within the pharmaceutical industry.