Salix Pharmaceuticals, Inc: Succeeding on the Road Less Traveled - Case Study Example

Key Issues The innovations and strategies that Salix Pharmaceuticals has implemented into their company have allowed them to continue to grow within the market. However, for this success to continue, new strategies, development and diversification need to be considered. The changes that are now a part of the medical field on a global basis are also changing the needs of physicians and patients and are leading to new opportunities for Salix. The foundational aspects of the company, which include providing 4 main drugs for gastrointestinal diseases, while providing platforms for information, are helping them to remain as a top provider of the drug. To continue on this path, are several new areas of expansion that need to be developed. An area that needs to be considered for Salix is based on the competition that is currently in the market. When Salix began, it developed prescription drugs that were applicable during that time. Since then, new competition has emerged and other physicians and individuals have begun to find new options for gastrointestinal diseases. Even though the prescription medicines are continuing to work for patients, the combination of competition and development of new options may cause Salix to move back into the field. Analyzing new innovations, developing new drugs and looking into competition are primary concerns for Salix to continue to move forward. The second consideration of Salix is with their emergence into a global market. Since 2004, there have been several opportunities for growth that have moved through Australia, Europe and other developed countries. Even though other companies are in affiliation with the company, there is the need to continue to expand the market in the correct direction. Initially, Salix was required to have approval through the United States and by the FDA. To continue with this, there is the need to create a diversity of products that fit in at a global level. To completely expand the field, there is the need to establish a stronger base in the countries where Salix has incorporated the drugs to pharmacies while looking at unique gastrointestinal diseases that may be more diverse in other areas. Concentrating on the development of products at a global level will then begin to change the strategy of the corporation. Situational Analysis When Salix began, the competition in the field was scarce with the drug being a leader in the field. However, there are currently competitors in the market that are in other countries. The strength of Salix is that it has taken initiatives to create agreements to sell drugs with other established pharmaceutical companies. However, competitors such as Shire Pharmaceuticals, King and Pharmatel are the three leading companies that aren’t distributing only Salix products. These different competitors have similar options for gastrointestinal disorders. At the same time, they have a market in different global areas, such as Europe and Australia. If Salix wants to expand at a global level, then it will need to compete with well – established companies that are selling similar products or who have individuals that are used to different types of products within their country. The internal environment of Salix is another concept that has several strengths and weaknesses. The establishment of the company is one that incorporates over 300 employees, including 68 staff that is designated to specifically make sales among physicians on a national basis. This also includes alternatives for presentations, information, research and development and sponsorships to show a high level of expertise with gastroenterology related concepts. The combination of sales, sponsorship and information based advertisements from the research of the company is one of the strengths used. This is combined with the strong marketing approach, which is specifically related to selling only prescription drugs, as opposed to generic or OTC alternatives. This helps Salix to have a specific market that provides focus and high quality alternatives to the drugs. Even though the internal environment has strength in the research, development and marketing, there are some weaknesses in the overall initiatives that can be taken. One is based on the sales force used. The 68 sales representatives are not enough to expand at a national or international level. More importantly, the target market of working specifically with physician limits what the individuals can sell as well as the information that they understand about the specific drugs. Restructuring the sales initiatives will also provide higher amounts of sales with physicians. The second weakness is related to the global expansion. Currently, Salix is known for increasing agreements at an international basis. However, the agreements are to sell the drugs to other companies that then distribute the Salix drugs to other physicians. For Salix, this can lead to a loss of money and the inability to monitor and grow the available alternatives. At the same time, it allows competitors in other countries to remain ahead of the corporation with the distribution of the Salix product under their name. With these different concepts, Salix still has the ability to grow and expand. The strong foundation, the brand name that is known for gastrointestinal disorders and the information basis that continues to develop allows Salix to remain a top competitor. More importantly, the ability to work into different countries can provide Salix with more opportunities to begin to expand into the market by beginning to understand what is available in other arenas. As this is done, it can help the company to begin to expand and to build a different strategy that is needed for the success of the corporation. Strategy Formulation The adaptive strategy is the main focus that Salix will need to have. The adaptation begins with developing new and innovative products. Since all the medications are prescription based, Salix will need to continue with innovations and research that develops better medications for gastrointestinal disorders. Expanding the options is one that takes an average of 3 years for approval by the FDA. Because of this, Salix needs to continue with new innovations while expanding the prescription drugs that are patented under their name. This will immediately lead to more demand within the market while allowing physicians to become attracted to the diversity of products among the company. The market entry that Salix will need to use is one that is one of the strengths because of the movement into informational fields, such as magazines and through presentations. To continue with this, the new innovations and products will need to carry the same prestige. Salix can combine the built brand name of other products with new innovations that are used. They can then combine this with specific and patented drugs that are tested by physicians and which receive positive feedback at all testing stages. The other area of market entry Salix will need to consider is the global options. This is the main competitive strategy that Salix will need to include. To do this, there will need to be the internal environment and infrastructure expansion with different outlets in various countries. This will make the market entry into other areas easier and more efficient. It will also change the competitive structure with other companies that are already established in these regions. Recommendations For Salix to continue to develop and expand, they first need to redefine their market, not only on a national level, but also by thinking globally. Even though they are doing this by outsourcing their drugs to different companies, they will need to expand their way into the market. Having a presence in different countries will help to expand and establish the brand name in a different manner while providing the same drug to different physicians at a global level. When doing this, the company will immediately have access to other types of gastrointestinal disorders that they can use for new innovations and patented products. However, this can only be effective if there is an internal structure that reflects the company. Even though drugs are FDA approved, there will need to be established agreements with other countries for the manufacturing and distribution of the products. The effectiveness of Salix’s products is dependent not only on an international presence, but also by the innovation of new products. Currently, Salix is focused on four main drugs that are used to target the major gastrointestinal disorders. Salix can continue to expand their product line and brand name by both upgrading the products currently used and by finding new needs within the market. Other types of disorders, expansion on older versions and the ability to continuously work on innovative brands will help Salix to remain a leader in the market. The expansion can include not only physician drugs but can also expand into alternatives such as OTC medicines. This will help to establish the brand in a different manner while providing a diversity of options for individuals that are suffering from gastro-disorders. Implementation Strategies The service delivery of products needs to keep the brand name of the company, which has a largely established reputation within the company. This should be combined with continuing to be recognized for quality while supporting scientific findings within the brand. This can be supported through FDA approval as well as through other levels of approval. If Salix moves into the international market, then support strategies can also be developed through alternative organizations which provide tests, experimentation and approval of the products for different social and cultural needs. The directional strategy that will be provided is based on changing the market for international sales. To do this, Salix will need to establish their brand name outside of other pharmaceutical companies while continuing to expand their market in regions such as Europe and Australia. The adaptive strategy will be based on moving into OTC medications for mild disorders. Many of the trends are moving toward OTC for problems such as mild IDC. To move into the market entry at this level, Salix will need to establish a brand name under the prescription drugs. Salix can remain the top brand name, as it is recognized by physicians, then will be combined with a name specific to OTC medications. The adaptive methods will include prescription medicines that don’t contain the same level of chemicals and are used specifically for mild symptoms that can be solved without physician prescriptions. Since the drugs are FDA approved and in the market, the adaptation into a different market can then provide Salix with more opportunities for sales. At the same time, the competition in the OTC for gastrointestinal disorders is not as high, which will allow Salix to easily move into this market. Benchmarks for Success and Contingency Plans There are three main areas of development that Salix will need to consider. The first is the adaptation into OTC medications used under a brand name. Adapting the current medications, working toward FDA approval and entering the market will take an average of 3 years, which includes the trial drugs as well as the ability to establish a brand name. With the correct marketing, this level of innovations can begin to succeed within 1 – 2 years after being provided. The international market will also take 3-5 years to establish. Salix will need to find one area to move into and to develop a similar infrastructure as in the US. From this point, the medications can be approved by the government and introduced to physicians. Moving into an already established area for pharmaceuticals will help Salix to continue moving into needed innovations. The third aspect of this will be new innovations offered. A newer product will include basic research, typically which will take 1-2 years to establish a market, specific needs and newer chemicals that can be used for new products. 3 years will then be needed for approval by the FDA. The market will then take 1-2 years to establish as a prescription drug. For Salix to continue to remain a leader, is the need to build benchmarks of 3-5 years while continuing to find new and innovative ways to reach different markets. References Salix. (2010). “Case 2: Salix Pharmaceuticals, Inc: Succeeding on the Road Less Traveled.” Read More