There is great value in reviewing the road an organization has travelled to get it to the place it is today. Accordingly, the process of identifying where you have been is both a qualitative and quantitative process. This study will analyse the background of the company and determine in detail the internal resources.
Table of contents
Table of figures
I. Introduction
II. Company Background
2.1 Current Performance and Results
2.1.1 Results 1998-2003
2.1.2 Key financial developments in 2003 (nine month results) vs. 2002
2.2. Strategic Posture
2.2.1. Mission
2.2.2 Objectives and Strategies
III. Internal Scanning
3.1 Structure analysis: Corporate structure
3.2 Culture analysis: Corporate culture
3.3 Internal Analysis of Resources and Functions
3.3.1. Internal Resource Analysis
3.3.1.1. Financial Resources
3.3.1.2. Human Resources
3.3.1.3. Intangible Resources: Knowledge Networking
4.3.2 Analysis of functional areas
3.3.2.1. Marketing
3.3.2.2. Research and Development
3.4 Competitive advantages of Novartis
IV. Conclusion
V. Bibliography
Appendix 1: Key marketed products of the division Pharmaceuticals
Appendix 2: Key marketed products of the division Consumer Health
Appendix 3: US Pharmaceuticals, Pharmaceutical Executive Ranking (09/2003)
Appendix 4: Regional Corporate Citizenship Status
Appendix 5: Planned Filing (2004 – 2007)
Appendix 6: Broad Scope of Research Collaborations and Alliances
Table of figures
Figure 1: Performance of top ten products
Figure 2: World-wide Market Shares of the 9 largest pharmaceutical companies
Figure 3: Novartis Financial Development 1998 – 2002 (in USD)
Figure 4: Sales by Division
Figure 5: Sales by region
Figure 6: Novartis’ structure
Figure 7: Total assets
Figure 8: Total equity and liabilities
Figure 9: Employees by function and region (2002 averages)
Figure 10: Female employees by region
Figure 11: Portfolio rejuvenation
Figure 12: Novartis Pipeline is among the Best in Industry
"If you don’t know where you’ve been,
then it’s hard to figure out where you are.
If you don’t know where you are,
how can you decide where you want to go?
If you don’t know where you’re going,
any road will get you there.”
(Norton, 2002, p.1)
I. Introduction
There is great value in reviewing the road an organization has travelled to get it to the place it is today. Accordingly, the process of identifying where you have been is both a qualitative and quantitative process. This study will analyse the background of the company and determine in detail the internal resources.
II. Company Background
The company Novartis was formed from the merger of the Swiss companies Ciba-Geigy and Sandoz in 1996. Today, it engages in the research and development of products to protect and improve health and well-being.
Novartis’ businesses are organized into two divisions: Novartis Pharmaceuticals and Novartis Consumer Health. Novartis Pharmaceuticals engages in the discovery, development manufacture and marketing of prescription drugs (c.f. appendix 1). The Consumer Health division of Novartis focuses on a variety of differentiated drugs that restore, maintain or improve consumer or animal health and well being (c.f. appendix 2). Some of the most successful products are shown in figure 1.
Figure 1: Performance of top ten products
illustration not visible in this excerpt
Source: Novartis (2003d)
The organisation operates though 360 independent affiliates in 140 countries and employs approximately 74,000 people worldwide. According to Fortune (2003) Novartis is one of the ten best companies to work for in Europe. Fortune, as the Financial Times, publishes several ranking lists to business issues.
Novartis is one of the top 5 companies in the healthcare sector (Med Ad News, 2003), where the main competitors are among others Merck & Co., Johnson & Johnson, GlaxoSmithKline and Pfizer (c.f. figure 2 and appendix 3).
Figure 2: World-wide Market Shares of the 9 largest pharmaceutical companies
(2002 vs. 2003)
illustration not visible in this excerpt
Source: Novartis (2003d)
Daniel Vasella is Chairman as well as CEO of Novartis, which show that the company does not follow the European norm of separating these roles (Morningstar, 2003). It is the view of the board of directors that this dual role ensures effective leadership and communication between the shareholders, the board and the management (Novartis, 2003a).
2.1 Current Performance and Results
2.1.1 Results 1998-2003
In the following an overview of the financial development of Novartis, from 1998 to 2002 including also the nine months figure of 2003 (01/03 – 09/03).
Figure 3: Novartis Financial Development 1998 – 2002 (in United States Dollars (USD))
illustration not visible in this excerpt
Source: Adapted from http://www.hoovers.com (2003); data of Novartis Annual Reports
Novartis divests its agri and industry business in 2000 due to its focus on pharmaceuticals as its core business. For this reason, the number of employees went down from 81,854 in 1999 to 67,653 in 2000. Furthermore, Novartis increased its Operation Income Rate by 4.6 % within five years time.
It seems that Novartis has taken the right decision to separate from non-profitable parts of the business or parts, which are not according to their definition of their core businesses.
2.1.2 Key financial developments in 2003 (nine month results) vs. 2002
To get a better understanding of the business and the markets where Novartis operates in, it is useful to take a look to the key financial developments on a short time period. Pharmaceuticals accounted 65% of the total sales and Consumer Health 35%. The two divisions generated 78% and 22% of divisional operating income, respectively.
Figure 4: Sales by Division
illustration not visible in this excerpt
Source: Novartis (2003a)
The company’s presence in the United States has dramatically expended, achieving an increase from 19% of total sales in 1998 to 43% in 2002 by doubling the sales force and moving global research facilities to Boston (Morningstar, 2003).
Figure 5: Sales by region
illustration not visible in this excerpt
Source: Novartis (2003a)
Europe itself is the second largest market for Novartis with a part of 33 % of the overall sales. Both markets contribute 76 % of the sales. In the first nine months of 2003 the group sales increased by 18 % vs. the first nine months in 2002. The overall group operating income rose by 15 % to now USD 4.3 billion vs. the first nine month in 2002 (Novartis, 2003c). This shows that Novartis is continuing successful also in 2003.
2.2. Strategic Posture
2.2.1. Mission
The current Novartis mission statement was developed after the merger of Ciba-Geigy and Sandoz in 1996 and adapted after the discontinuation of the agri and industry business:
“We want to discover, develop and successfully market innovative products to cure diseases, to ease suffering and to enhance the quality of life. We also want to provide a shareholder return, that reflects outstanding performance and to adequately reward those who invest ideas and work in our company” (Novartis, 2003a, p. 10).
The mission statement helps the company to make consistent decisions, to build organizational unity, to integrate short-term objectives with longer-term goals, and to enhance communication.
2.2.2 Objectives and Strategies
As stated in the introduction, we will concentrate on the objectives and strategies on corporate level. Therefore, the different division and business unit objectives and strategies will not be analysed in this report.
The four main objectives on corporate level are:
- To become position as a global leader
- To be known as a top innovator
- To be recognized as an attractive employer
- To achieve a top reputation
The overall strategy of Novartis can be defined as a growth strategy. Novartis is currently focusing on market penetration due to its objective of gaining market shares and achieving sustainable and profitable growth, and also on the product development due to the fact, that one objective is the increase of the pipeline value (Novartis, 2003d).
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- Arbeit zitieren
- Fatma Torun (Autor:in), 2004, Novartis – an internal scanning of a pharmaceutical company, München, GRIN Verlag, https://www.grin.com/document/37239
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