Roche: External Environment/Industry Analysis and Company Assessment
Authors:Christian Babikian, Adam Cole, Matthew Curtis, Amir Fardghassemi, Edward Kamarga, Young Joon Kim, Lucy Li, Stephen Louderback, Ivan Pesik, Albert Putera, Ashley Robinson, Rachel Rosen, Jeffrey Suk, Ashley Torres
Mentor:Venkatachalam Seshan, Professor of Management, Pepperdine University
At $42 billion in sales, Roche is one of the largest pharmaceutical and biotechnology companies globally. Roche currently holds 4.7% of the pharmaceutical industry’s market share. Its top competitors are Pfizer, Merck & Co., Johnson & Johnson, AstraZeneca, Novartis, Eli Lilly, and GlaxoSmithKline. Roche’s mission is to expand the field of medicine in an effort to improve the quality of human life. Roche achieves this by heavily investing in R &D to meet unmet medical needs; in 2011 it spent $8 billion in R&D expenses, 19% of its total sales. Roche has one of the strongest pipelines in the industry. As of January 2012 it included 122 projects: 79
involving new molecular entities and 43 additional indications or line extensions for existing medicines. Roche faces an increase in competition in the healthcare sector, particularly as an increase in generics is adding cost pressure to the industry. Regulation agencies in Roche’s top markets include the Food & Drug Administration in the U.S., the European Medicines Agency, and the Japan Pharmaceuticals and Medicines Agency. These agencies have all increased their regulation and scrutiny of new products in their benefit/risk assessment ratio of drugs, making it substantially more difficult to get drugs approved and to the markets in a timely process. Roche does not have or enforce patents in 54 countries worldwide, as a means to provide
medicine to low-development countries as easily as possible. However, political volatility and ‘copycat’ versions of Roche’s medicine in these countries can limit Roche’s total market potential in such countries. The goal of this undergraduate research project is to analyze Roche’s Share of Market (SOM) in order to develop a comprehensive strategy the company should follow. Upon completion of this project, we will have developed an implementation strategy for the Roche group to sustain its SOM globally.