WOTS-UP Analysis and Company Capability Profile for Roche - Case Study Example

2 Company Capability Profile and WOTS-UPp Analysis By: Mitsutaka Hamada, Gina LeeTravis Noland, Kelly Mossburg, Travis Noland, and Michelle Wong, Gina Lee, and Mitsutaka Hamada Introduction By: Michelle Wong Roche is a research-orientated healthcare company. The company is active in the discovery, development, and manufacture of pharmaceuticals and diagnostic systems. The activities of the groupRoche focus on the prevention, diagnosis, monitoring and treatment of diseases and on the promotion of general well being. i Throughout the years, Roche has followed a policy of making strategic acquisitions and divestures to position the company for growth and ensure it remains at the forefront of the health industry. It is important to provide a safe, quality, and cost efficient products in order to open up new avenues for growth. However, in order to build on these the company needs to overcome exploit theits Sstrengths and overcome its Wweaknesses to have a strong stage for future growth. ii Company Capability Profile By: Michelle Wong The Company Capability Profile, which examines a company's Strengths and Weaknesses by assessing the degree of its Managerial, Competitive, Financial, and Technical Strengths and Weaknesses. iii Within each of these four categories, there are a number of criteria to be ranked either higher if the company performs better in this area, or lower if the company performs worse or if company activity in this area is lacking. This assessment not only shows what the strategic position of the company is today, but also contributes to defining a company strategy based on capability. Specific markets and opportunities can then be determined which match the Company Capability Profile. To be accurate and useful, a Company Capability Profile also requires comprehensive data from the company compared with its position in the market and, by the nature of the exercise, includes a certain element of subjectivity when the evaluation is done. In order for this to happen, the establishment must perform a company capability profile to assess its internal environment for particular strengths and weaknesses that must be addressed. As a following step, a Finally, a Sstrategic Pposition and Aaction Eevaluation (SPACE) may also be done to takes into account the firm's financial strengths and competitive advantages with respect to the strength of its industry and the overall environmental stability. WOTS-UPp Analysis By: Michelle Wong WOTS-UPp Analysis, short for as Weaknesses, Opportunities, Threats, and Strength, is a highly effective method used for synthesizing information gathered on aspects that may be internal or external to the company via a funnel process. This will helps the companyPlanning Committee highlight major issues and then narrow them to the few that are most vital. These decisions will help create a mission statement, select priority roles, and identify goals and objectives. WOTS-UPp Analysis captures the Sstrengths and Wweaknesses within Roche and the Oopportunities and Tthreats that exist outside in theirits surroundings. These analyses emphasize areas to be leveraged and stress areas for improvement within the firm and within their industry and market. iv Company Capability Profile: Roche Central Nervous System Segment Company Capability Profile: Central Nervous System By: Michelle Wong Managerial Factors By: Michelle Wong The key to reviving Roche's own drug development is new to emphasize value-based management, more consistent with the systematic "Winning For The Future" manifesto. Especially Wwithin the past decades especially, Roche played a much less significant role in the Central Nervous System segment of the pharmaceuticals market, which accounted for which accounted for .16% of the market share globally. Although, Rocheit is managesing to exceed its limitsobjectives in its Oncology and Diagnostic segments, but if Roche does not stand uptake action and start to learn how to balance in all segments then Roche's corporate image will be justifiednegatively impacted. Roche faces intense competition from several other large pharmaceutical companies. Sales have also dropped from 24.7% of all Roche pharmaceutical sales in 1997 to only 3% in 2007. However, the Central Nervous System segment has very high growth rates, and accounts for 18.5% market share of the Pharmaceutical Industry, which making it the second largest segment, after the Cardiovascular Segment. Competitive Factors By: Michelle Wong As Roche and many other of its competitors are is currently in the start-up process of entering stepping into developing countryies, it is important to study the nature of the out what are the cultureal barriers and come up with the best product to fit into the needs of the foreign country. This way, Roche will ultimately out beat other competitors. For its Central Nervous System offering, Roche faces competition from other large pharmaceutical corporates such as Abbott and Sanofi-Aventis, but also from the manufacturers of generic drugs. Within the products announced for the partnership with Synosis for example, Roche's competitors Abbott and Sanofi-Aventis are also targeting areas such as schizophrenia, cognitive disorders and pain. Yet they all face a common enemy, the generic drug manufacturer. Abbott for example will see its product Depakote ER, a treatment for bipolar disorder, lose patent protection in the coming years. Depakote generates some $1.5 Billion in the U.S. alone in sales for Abbott. This figure can be compared also to the total market for Central Nervous System drugs, estimated at $68.7 Billion for 2005. As things stand, Abbott is looking to a new drug in a different field (Simcor for cholesterol treatment) to replace lost revenues rather than a replacement Central Nervous System offering. Sanofi on the other hand is not only targeting this market but also has a new drug Saredutant for sale as a treatment for depression. Other players in the Central Nervous System market and their products include: Pfizer with Lyrica (pain) and Asenapine (schizophrenia/depression); Johnson & Johnson with Paliperidone (schizophrenia); Wyeth with DVS233 (depression) and Bifeprunox (schizophrenia, in association with Solvay and Lundbeck); Sumitomo/Merck with Lurisadone (schizophrenia); and GlaxoSmithKline/Neurosearch with NS2359 (depression). Technical Factors By: Michelle Wong By partnering with Synosis, Roche is giving these potential medicines the best chance of success by creatively extending our innovation base in an important therapeutic area and focusing on its technology to improve this segment. In January 2007, Roche announced a partnership with the Synosis company for the development of development of treatments for schizophrenia, cognitive disorders, Parkinson's disease, drug dependency and pain. The partnership is focused on five drug candidates that Synosis will acquire from Roche,which target the Central Nervous System. These candidates include including four phase 1 molecules that Roche had discontinued in order to pursue other priorities. Synosis will be tasked with the clinical development and, in some cases, commercialisation of the drug candidates. Roche will retain specific opt-in rights to these programs. Roche will thus have the possibility to capitalize on work it has already done, but avoid the renewed investment and risk automatically associated with the additional development required. Financial Factors By: Michelle Wong Roche will need to invest more onin the Central Nervous Systemis segment in order to increase its overall revenue. In order to meet its demand from all consumers, Roche will have to execute price arrangements which iswill be achieved by coming up with a plan that will satisfiedto satisfy both sectors. Once it they accomplishes this goal, it they can be satisfied with its financial state and customer satisfaction. Exhibit 2.1. 1 Capaability Profile: Roche Central Nervous System 2008 By: Michelle Wong Exhibit 2.1. 2 Capability Profile: Roche Central Nervous System 2008 By: Michelle Wong WOTS-UpP Analysis: Roche Central Nervous System Disease By: Michelle Wong External analysis: Tthreats By: Michelle Wong Diseases of the Ccentral Nnervous Ssystem represent some of the greatest needs in the medical industry worldwide. However, iIn 2007, the Roche has further enhanced theirits five main therapeutic areas of interest: Ooncology, Vvirology, Iinflammatory Ddiseases, Mmetabolic Ddiseases and diseases of the Ccentral Nnervous Ssystem. Each of these areas now encompasses all activities from regulatory changes, threats of growing popularity of generic drugs to strategic marketing.v Regulatory changes are now one of the biggest threats to the Ppharmaceutical Iindustry. Within the past 5 years in U.S., there have been a numbers of legislative and regulatory changes to the healthcare system which has had a significant influence on the Ppharmaceutical Iindustry as well as toon the pricing of the group's products. Payment levels under the new Medicare program, for instance, may lower the payments undercompared to the previous versionprogram. New legislation and other pricing reforms and reimbursement restrictions could negatively impact the group's revenues. vi In addition to the threats of regulatory changes, Roche is also faced with the threats of the growing popularity of generic drugs. Generic drug companies are aggressively targeting patented drugs before the expiry of the patent. viiThis has significantly increased the competition for compounds manufactured by the group. In 2006, Ccentral Nnervous Ssystem's sales by therapeutic area accounted for 3% as compared to other division. However, in 2007, its sales in that area had remained the same as the previous year. viii External Analysis: Opportunities By: Michelle Wong The Pharmaceuticals Division of Roche continued its strong, above-market performance in 2007. Sales for the full year rose 11% in local currencies and 10% in Swiss francs (15% in US dollars) to 36.8 Bbillion Swiss francs, around twice the global market growth rate of 6%. However, from the Sales for the full year by therapeutic area chart, the Ccentral Nnervous Ssystem only accounted for 3%. From recent reports, Roche Pharmaceuticals currently has 92 projects in pre-clinical research across five therapeutic areas and 85 development projects in six therapeutic areas. The Ccentral Nnervous Ssystem disease alone has 19 research projects planned in 2008. Out of the upcoming 19 Research there are 6 in the development stage. This serves as an opportunity for Roche to move forward as planned. ix Roche currently has five projects in early clinical development in the Ccentral Nnervous Ssystem area. However, aAmong these five projects, R1678, a novel compound that is designed to restore appropriate levels of the neurotransmitter in patients with Sschizophrenia, is scheduled to enter phase II clinical trials in 2008. This movement is in line with Roche's strategy to expand further than before. In order to strengthen the Groupcompany's innovation capacity and drive to development of personalized medicines, Roche Pharmaceuticals implemented a major reorganization of its Rresearch and Ddevelopment activities in July. The new organization, which is built around five Disease Biology Areas (DBAs) - Oncology, Virology, Inflammation, Metabolism and Central Nervous System - will enhance interfaces and streamline decision-making, while helping the Group to manage ourits expanding portfolio more efficiently and meet increasingly complex regulatory requirements.x Internal Analysis: Sstrengths By: Michelle Wong During the year, the company also reinforced its presence in China by opening a clinical development center for pharmaceuticals in Shanghai. The pharmaceutical operation in this key emerging market now expands the entire value chain from Rresearch and Cclinical Ddevelopment to Mmanufacturing, Mmarketing, and Ddistribution. Roche has partnered with SCYNEXIS for research collaboration in discovering and developing novel compounds for the Ccentral Nnervous Ssystem and metabolic diseases. The transaction will include access by Roche to the SCYNEXIS MEDCHEM-FACTORY technology and HEOS (Hit Explorer Operating System) software. This will accelerate the identification of novel leads against Roche's drug targets by producing large, focused, high-purity compound libraries and then utilizing rapid lead optimization to identify clinical candidates. This partnership movement allows Roche to strengthen its Rresearch and Ddevelopment focus on Ccentral Nnervous Ssystem diseases because it is one of the areas of greatest unmet medical need worldwide.xi Internal Analysis: Weakness By: Michelle Wong Roche has been cutting its dependence on Ccentral Nnervous Ssystem drugs, including Valium from the last century. There are still no blockbusters yet, and many of its products, which have been held up for years in development limbo, are getting into the market late. In addition, the company also has to wait for the results of a handful of projects still in the early stages of development. Within the past five years, Roche had collaborated with few other companies to focus on their central nervous system segment. However, there has been no significant development in this segment from Roche yet. Although Roche's overall pharmaceutical division has risen 15% compared to last year., i It was clearly not from the help of the central nervous system segment that moved up this performance moved up. Additionally, there was only one drug from Actemra tocilizumab, which is used for Rrheumatoid Aarthritis, that made it to Roche's top selling product lists. If this line pattern continues, it will ultimately have a negative impact on the company's overall profits. xii Exhibit 2.1. 3 WOTS-UpP Matrix: Roche: Central Nervous System By: Michelle Wong . WOTS-UpP MATRIX: ROCHE CENTRAL NERVOUS SYSTEM By: Michelle Wong Confront By: Michelle Wong Even though new partnerships werehave been formed to target the Ccentral Nnervous Ssystem, no significant new developments have been made. Roche should seek additional funding to expand theirits Rresearch and Ddevelopment efforts in search for new products that are not only competitive with generic drugs, but also innovative and comply with regulatory changes. The lack of attention to the development of new products will result in a negative impact on the group's revenues. This fundamentally new approach will enable the company to translate research activities into marketed products more efficiently and effectively. An alternative may be for Roche to seek new joint ventures with firms in India or China, where Rresearch and Ddevelopment costs are onat the lower end of the spectrum. Avoid By: Michelle Wong The basic issue at hand may be that Roche has been focusing too much of its efforts on the Central Nervous System segment. Although Roche has many products that are still in the development phase, Roche should also focus on developing new products for different diseases that will ultimately help the company's revenues. The 15% growth in the company's pharmaceutical division was clearly not a result from their central nervous system products. Search By: Michelle Wong Roche should search for opportunities in other markets outside of the central nervous systems markets. It should also expand its research and development efforts to create new and innovative products that can help expand its market share in the pharmaceutical industry. Even though Roche has a few late-stage products in the pipeline, it should also take into consideration whether or not it is even worth putting itthem through clinical trials when new regulatory changes have taken place. It should also pay extreme attention to patents about to expire as well as competing generic drugs in the market. Roche should continue to expand either through forming alliances or joint ventures to capitalize on newer technologies. Exploit By: Michelle Wong Roche should continue its efforts to expand in foreign markets to capitalize on lower overhead costs and new development in China and India. The partnership in Shanghai, China enables Roche to become a fully integrated pharmaceutical company. By vertically integrating its operations, Roche is able to lower costs and spendmake additional efforts in developing new products. If Roche's Actemra (also called tocilizumab) is approved by the FDA, it will enter a new market for the rheumatoid arthritis industry. Drugs called TNF inhibitors, such as Abbott's Humira, dominate the $13 billion market. Roche should continue to seek partnerships or even form joint ventures to expand in other segments of the pharmaceutical industry and capitalize on newer technologies. It's partnership with SCYNEXIS enables Roche to use its MEDCHEM-FACTORY technology and HEOS (Hit Explorer Operating System) software. Exhibit 2.1 10 WOTS-UpP Matrix: Roche Central Nervous System By: Michelle Wong Read More