A corporate strategy article by Thunderbird students John Angstadt, Christa Gyori, Charbel Haber, Christopher Jones and Mike Zehender
On March 23, 2010, President Obama signed the Affordable Care Act. The law puts in place comprehensive health insurance reforms that will roll out over four years and threatens to have a major impact on the Pharmaceutical Industry. This is just one of a myriad of factors impacting the industry. The industry, once described as profitable by Porter due to the corresponding low structural forces, is facing significant changes to the competitive forces operating in its space. Many factors are threatening to change the industry structure; these included imminent expirations of major patents in 2011-2012 (coined as the “patent cliff”), pricing pressure due to cuts in reimbursement, and new regulations with stricter focus on drug safety. Novartis Pharma has made many smart moves, but is it fully prepared for the future?
1. Company background
Novartis Pharma: Founded in 1996, Novartis is one of the largest pharmaceutical companies in the world with a diversified portfolio of products that span across a number of categories including pharmaceuticals, generics, vaccines and diagnostics, and consumer health products. Novartis has more than 110,000 associates in more than 140 countries. Its headquarters is based in Basel, Switzerland and their net sales reached $50 Billion in 2010. Their Product Leadership business model is reflected in their Mission Statement, “We want to discover, develop and successfully market innovative products to prevent and cure diseases, to ease suffering and to enhance the quality of life.”