StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Johnson and Johnson Marketing Strategies Against GlaxoSmithKline - Case Study Example

Cite this document
Summary
The paper “Johnson and Johnson Marketing Strategies Against GlaxoSmithKline” is a spectacular version of a case study on marketing. The pharmaceutical industry in the new millennium has become a highly complex sector. Advances in drug discovery and development technologies are now at the limits of human comprehension…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91% of users find it useful

Extract of sample "Johnson and Johnson Marketing Strategies Against GlaxoSmithKline"

Competition and marketing strategies in pharmaceutical industry: Analysis of Johnson & Johnson marketing strategies against GlaxoSmithKline Abstract The pharmaceutical sector is currently witnessing unprecedented challenges. Expiry of patents, regulatory policies and high pressures from healthcare providers combine to create an environment which diminishes the sector’s growth and increases risks. Some established pharmaceutical companies to survive the current state they have to adopt to competitive responsiveness strategies. Competitive responsiveness is characterized by firms initiating competitive marketing strategy which focuses on forecasting of outcomes. Technology is at the cutting edge, medicine development has not been left behind therefore pharmaceutical manufacturers need to initiate new policies by observing past policies to forge decisions that considers both industry endogenous and exogenous constraints. This paper has dissected views and market structure in the pharmaceutical industry, pointing out issues that distinguish it from marketing concepts applied in other industries. Most important to note is the huge expenditure incurred in drug development, patent rights protection and competition from generic products. In addition consumer behavior in this sector lies at the center of manufacturers and doctors. The paper concludes with an elaboration on the role of digitalized access to health information and how competition in the pharmaceutical industry is shaped around it (Shugan 2005). Table of Contents Abstract 1 Table of Contents 2 Introduction 3 Analysis framework and Models 3 Literature review 4 Johnson & Johnson 6 GlaxoSmithKline 8 Discussion 9 Marketing Mix 12 Conclusion and Recommendations 14 Bibliography 16 Introduction The pharmaceutical industry in the new millennium has become a highly complex sector. Advances in drug discovery and development technologies are now at the limits of human comprehension. The great number of pharmaceutical manufacturers combine with new technologies and processes undertaken presents enormous challenges in organizational management. While overhead costs in management of supply chain and marketing have skyrocketed (Rasmussen 2002). The most profound challenge is winning competition as a necessary benchmark for a company’s survival in the global pharmaceutical environment. Uncertainty surrounds drug discovery processes, but the huge potential returns following a single discovery is comparable to oil drilling or random selection of black beans from a jar full of white ones. Success in this industry is highly dependant on risks and luck. Therefore, excelling in the pharmaceutical industry requires adoption of business strategies and models capable to cope with uncertainties. For example Colonel Ely Lilly achieved success by manufacturing ‘true to label’ products to face competition with ‘snake oils’ plus other vague concoctions of his era (Rasmussen 2002). Analysis framework and Models The industry is characterized by highly skewed returns, such that the prevailing volatile conditions contradict with normal principles like diversification of portfolios to gain predictable returns. Success in pharmaceutical industry by established firms all depends on building scales through acquisitions and mergers with hope that in latter stages, their product lines will at least have sizeable prospects of blockbuster drugs. Building scales provide modes of funding in house research and drawing external discoveries through alliances and licensing agreements as well as the much needed resources for marketing. Estimates show that marketing of pharmaceutical products alone consumes about 35% of revenues products. Expiry of patent rights is the biggest threat to returns from blockbuster drugs resulting to another M&A round. Some of the strategies adopted to cope with these pressures involve questionable expansions by diversifying business activities, for example Johnson & Johnson diversity into household and health products (Rasmussen 2002). However, focusing on a comparatively broad market niche for drugs rather than concentrating on blockbusters is among the best diversification strategy. This strategy is adopted by majority of European companies where total sales returns places them on a higher ranking in the pharma companies despite having only one or two blockbuster drugs. Sales of wider drug ranges reduce dependence on discovery to new blockbusters. However, development and marketing costs need to be closely monitored due to the smaller markets to remain economically viable. Breakthrough in this complex industry has been achieved by engaging in marketing alliance with a global pharma rather than agglomeration tendencies. For example biotech firms initiated funding of independent drug discoveries by accessing direct funds from capital markets (Rasmussen 2002). Therefore, three models have shaped the industry, 1. The blockbuster model involving searches for distribution of small numbers of drug in order to gain substantial global sales. 2. The diversification model which emphasizes on marketing larger number of drugs in smaller market niches. 3. and the intermediary model that incorporates both. This paper is more concerned with current success or failures in the distribution strategies undertaken by Johnson & Johnson in comparison to GlaxoSmithKline (Tech Connect 2003). Literature review Pharmaceutical industry in U.S. is open to a competitive environment for consumers and manufacturers from foreign countries. It is mandatory for any pharmaceutical firm fighting for a share of U.S. market to have R&D, Supply chain, and marketing strategies. This is because the American market constitutes one-third of global prescription market, with a total value of $700 billion. The U.S. expenditure on prescription drugs is one of the highest in the world’s healthcare system. This assertion is supported by industry statistics on marketing expenditure between 2005 and 2007 (figure 1). Figure 1 Shows the U.S. expenditures on promotion of drugs (Source: Catalyst online The Authority in Healthcare Search Engine Marketing). The market is currently characterized by various key factors driving demand, for example high life expectancy has led to high population of aged people, utilization rates, advances in medical technology, general disease levels, economic situations and government regulations and policies. The industry is focused on raising resources on diseases affecting the elderly like cardiovascular, diabetes, sleep disorder, and obesity. Most pharmaceutical giants seems to have strategies which focus R&D on targeting these diseases early in order to be the pioneers in launching new brands and capitalize on high profit margins through sale of patents (Florent et al 2008). However, enormous expenditure involved in research, design and manufacturing of new products is a deterrent to majority of pharmaceutical manufactures. This requires immense investments and risk taking for a firm to bring a product to market. According to estimates, only one out of 5, 000 newly discovered chemical agents make it to market. In addition, the manufacturer spends 10 to 15 years and approximately $ 1,300 million before a new product is launched. This challenges in the pharmaceutical industry calls for senior executives to adopt strict balancing acts in R&D, lobbying, advertisement, and cost cutting against tight profit margins in order to remain competitive (Florent et al 2008). The market experiences highly variable profit margins depending on the products status, whether it is still under exclusive patent rights or not against the backdrop of generics competition. Statistics show that generic products claims 85% of market share in terms of sales just within ten weeks after expire of patent rights for a given product. This is because generics prices are about 60% to 90% cheaper than the original brand. For this reason, giant pharmaceutical manufacturers fight fiercely to retain intellectual and patent rights through litigation. However, some company’s either buys the generic outright or produces its own generic alternative to the parent product in order to fight off competition and retain profits (Tech Connect 2003). Industry leaders in the U.S market include Pfizer 15%, followed by Johnson & Johnson and GlaxoSmithKline (GSK) tied at 13% and Merck with 8%. Although the firms have diverse business segments, they hold pharmaceutical and medical manufacturing as their core businesses. Competition between Johnson & Johnson and GSK is head to head in the global market arena, through bold cost-cutting and marketing strategies. This paper has objective of evaluating unique key performance indicators for each of the two companies, future prospects in marketing strategies, and analysis of latest business ratios to determine strengths of each company (Tech Connect 2003). Johnson & Johnson Johnson and Johnson is an established company in health care, its extensive research and developments programs have impacted positively on patient treatments and outcomes. This firm was chosen for this analysis, first due to its long historical background, and second to assess the company’s effective operations and competitive niche in the domestic and global market. Johnson & Johnson has been in existence for more than 120 years, since its inception in 1886, by Robert Wood Johnson and Brothers Edward and James (Florent et al 2008). The firm has grown over generations from a small family oriented business to global leader in healthcare industry. The firm draws its strategy from legacy of being the first manufacturer of sterilized surgical dressings. One of the successful brands is the Johnson & Johnson baby powder which is a familiar name in most households worldwide, others include sanitary napkins, dental floss, antiseptic mouthwash, and non-irritating shampoo amongst others (Florent et al 2008). General Robert Wood Johnson, Son of Robert Wood Johnson become chairman of the company in 1932, and in 1943 He initiated the first competitive strategy which placed customers first, one of his famous salvo “ We believe our first responsibility is to Nurses, Doctors, Patients, fathers and Mothers all who consume our services and products…We have responsibility to our employees, both women and men working across the globe…We have responsibility to the entire communities in which we work and stay and to the world community as well…Our final responsibility lies to our stakeholders” (Johnson & Johnson services 1997-2009). The above initiative led to realization of continued growth both internationally and domestically and it form core evaluation strategy in the context of this paper. Johnson & Johnson was listed on New York Stock Exchange in 1944, which opened new avenues for tremendous expansion and investment. Currently, Johnson & Johnson has three business divisions, pharmaceutical, consumer, and professional. It has over 250 company operation sites in 57 countries, with employ capacity approximating 120,000. With the current global financial imbalances, Johnson & Johnson operates in joint venture with Merck and has acquired multiple companies like Pfizer, Cordis, McNeil Labs, Life Scan and Neutrogena make it a global powerhouse firm rising from a modest beginning as a wallpaper manufacturer to withstand test of time (Florent et al 2008). GlaxoSmithKline GSK has a rich historical background dating back to eighteenth century. Plough Court pharmacy in 1715 was the forerunner owned by Allen and Hanburys ltd in London, by 1830, John K Smith, opened the first drugstore in Philadelphia and was joined by his younger brother George in 1841 to form John K Smith & Co. in 1842, Thomas Beecham launched his famous Beacham’s pills in England, Mahlon Kline joined Smith in 1865, a series of events between 1850 -1900 characterized by acquisitions and collaboration led to the current GSK. The company boasts of 31,000 workers in global manufacturing and supply chain, forming a huge network at 78 sites in 37 countries (GlaxoSmithKline 2001-2009) GSK is a market leader in pharmaceutical sector holding an estimated 70% fraction of the global market. It is currently among few companies sanctioned by World Health Organization to research on both vaccines and medicines in the three key priority areas of Tuberculosis, HIV/AIDs and malaria. The company has its headquarters in UK while operations are based in U.S. Among GSK’s globally ranking brands include Panadol which is sold OTC, Aquafresh and MacLean’s dental product, Lucozade/Ribena energy and nutritional drink and Nicorette/Niquitin used as antismoking control products (GlaxoSmithKline 2001-2009) GSK has a strong business development program which focuses on forward thinking, recognition of collaborations value and commitment to identifying talent, new medicines and ideas outside internal R&D community. The company is committed to research as well as working with surrounding communities, investors and building careers (GlaxoSmithKline plc. 2001-2009). The 2008 annual report details immediate actions for GSK in combating current challenges facing the pharmaceutical industry. Among the strategies adopted include global business diversification, delivery of more value products, and simplification of its operating model. (GSK Annual Report 2008) Discussion Efficiency in marketing provides major impacts to the company’s value. Survey results suggest that marketing and sales capability in U.S. pharmaceutical firms accounts for 42% variation in their financial performances (Rasmussen, 2002). Currently, launch of new products in both Johnson $ Johnson and GSK is characterized by a wide range expensive and comprehensive global marketing campaigns (Figure 2). The strategies employed in this campaigns basically relies on marketing tools which include comprehensive information packs, media promotions, organization and donations to doctors special events, conference presentations, spirited sales forces and internet marketing. This is a departure from traditional frameworks that relied heavily on distribution channels (Rasmussen 2002). The U.S healthcare facilities engaged in clinical practice accounts for 25% of pharmaceutical sales leaving the remainder to be covered by retailers and wholesalers. Therefore it is imperatively risk for GSK and Johnson & Johnson to target doctors alone as the center for marketing campaigns. This situation has been complicated further over the past decade with emergence of mail order firms and Pharmacy managers (PBMs). While mail order firms facilitate drug distributions to chronic sufferers for longer-term management and treatments at a single dispensing fee, PBMs prohibit participating doctors from prescribing non-formulary or approved list drugs. In addition they offer guidance to doctors’ drug choices based on cost-effectiveness. This means drug manufacturers have to market to PBMs in a highly structured process and on their terms (Rasmussen 2002). However, when Merck purchased Medco a PBM firm in 1993 followed by SmithKline, industry dynamics changed drastically. Marketing to physicians is strictly by having more sales representatives in the field, however, motivation and skills of sales force accounts for 33% of marketing and sales performance. Secondly, the number of sales reps is increasing at 20% compared to 3% increase of doctors. This means on average a doctor assigns a sales rep only 100-300 seconds for presentation, thus this route is virtually blocked and now pharmaceutical companies have to seek different channels that directly targets customers and internet delivery (Rasmussen 2002). As more consumers shift to online seeking for healthcare information, pharmaceutical companies are spending heavily in R&D to ensure necessary steps are taken for the consumers to find information about their brands online. Competitive ranking of top eleven firms were compared on their top five brand performance in 2008 as shown in figure 2. from this results GSK is strongly ranked in 3rd position based on its two brands Advair and Avandia while Johnson & Johnson score dropped slightly with Topamax scoring and impressive 0.62 points to keep it in 4th position. Competition among the top five companies stems from investments in organic research which is paying off. Both GSK and Johnson & Johnson maintain strong online presence which mirrors their offline efforts as long-term strategy for marketing. This strategy will serve both firms better as they take advantage of customer interests resulting from DTC campaigns (Figure 2) (Rasmussen 2002). Emergences of direct-to-customer (DTC) techniques have generated diverted trends in marketing strategies for both Johnson & Johnson and GSK. The rationale behind the techniques is through dedicated internet sites for providing information to patients and doctors concerning certain drug(s). Thus every new drug is launched by a dot.com site to attract doctors’ attention as well as alerting potential patients on the positive attributes of the drug. Likewise TV ads form the media marketing strategy to announce new product lines. The main challenge to manufacturers is translation of these campaigns into sales, because prescription by the doctor is the passport to obtain the drugs except for OTC drugs (Rasmussen 2002). Video conferencing has emerged as the battle ground between these two firms. From the internet site a doctor can call a highly qualified sales rep for a discussion on drug attributes. This is commonly referred to as eDetailing and forms an effective means of raising awareness of products to doctors. Both GSK and Johnson & Johnson have a well established media and internet campaigns. The company’s innovations, research, environment care, and community support programmes are supported by Online Videos and Podcasting. They have build in sites with links similar to LinkMedica as a tool, where via internet a personalized information service is shared to both patients and doctors (Rasmussen 2002). The interaction with customers electronically is an important avenue in management of customer satisfaction and significantly contributes to sales performance. However, new trends have emerged as medicine become personalized complicating the marketing strategies that target mass patient segments. Advances in technology and genomics have brought forth customized targeting drugs that suit patient’s genetic makeup as elucidated through genome mapping. Mark Levin, the CEO of Millennium pharmaceuticals was quoted as follows ‘time will come when everyone’s genomes will be mapped and stored in memory chips, thus doctors will be expected to sort information from the chips a basis for drug prescription.’. This trend is already being witnessed in the Americas ageing population who prefer certain medicine for the comfort of their lives (Rasmussen 2002). Marketing Mix As mentioned above Johnson & Johnson and GSK comparison is based on their business process strategies. Analysis of their corporate strategy as a vital tool in management of organizational change since it forms the foundation in building future forecasts, settings and building resource base. This strategy emphasizes on assessment of evolving and changing markets, key competitors and evaluation of IT and human resources as well as core business processes. Analysis of corporate strategy in the two firms revolves around the conceptual models, which focuses on endeavors geared towards support to business processes that stimulates organizational change in various aspects. GSK has scored highly in most of these strategies, for example it reduces risks by broadening to new product areas capturing cross section of the global market (Wolff and Frank n.d.). Secondly, from business processes perspective, conceptual model in the both GSK and Johnson & Johnson involves a multidimensional analysis of competition, products, customers and organizational capabilities. The general view in this perspective is that both firms have steered organizational strategies to produce a common image full of positive success in future environments by identifying the organizations points of weaknesses and strengths. GSK and Johnson & Johnson competitive comparison has prepared the organizations in undertaking a swift change of tactics in the face of other competitors in order to have market advantage, however the competitive advantage seems to favor GSK (see figure 2) (Wolff and Frank n.d.). Figure 2 shows online strategy ranking for top eleven pharmaceutical companies in 2008. (Source: Catalyst online The Authority in Healthcare Search Engine Marketing). Conclusion and Recommendations Business operations in the pharmaceutical industry require insights and business intelligence. The healthcare and pharmaceutical executives have an obligation as observed in the two organizations above to build strategies of driving businesses forward. This can only be achieved by adhering to accurate, incisive products, up-to-date, company and market analysis as the basis for crystallizing key business decisions. There is evidence of laxity in Johnson & Johnson as compared to GSK in terms of modeling business functions through diversification of long-term strategies. However, both organization need to re-focus much efforts in market analysis, industry analysis, and opening up new business opportunities. This can be achieved by either setting up a strategic insights team from within or seeking consultancy services in strategic insights and investment planning. This will build visionary market intelligence in drug design and development to fight off anti-effective related disorders that are prevalent due to the increasing numbers of drug-resistant infectious pathogens which are a major threat in world healthcare system currently (Business Insights n.d.). This paper recommends Johnson & Johnson to identify weaknesses to gain in market share through franchises by emulating GSK, Abbot, Merck, Pfizer and others who are well positioned in anti-infectives development (Figure 2). Sales forecasts show that anti-infective drug brands will be major contributors for the period 2008-2013. Therefore, both companies should strive to 1 identify strategies which will generate great success potential for in future, 2. Shifting of R&D focus to vaccines especially in HIV and HPV, 3. Be in position to predict pipeline and currently marketable anti-infective products that will generate more returns over 2008-23, and 4. Become vigilant on forecasts and epidemiology of prevalent anti-bacterial, antifungal, anti-viral and vaccine markets (Business Insights n.d.). Bibliography Business Insights.n.d. Business Intelligence for the Pharmaceutical Industry. Retrieved October 9, 2009 form Catalyst online. 2007. Catalyst online Search Marketing Blog: The Authority in Healthcare Search Engine Marketing. Retrieved October 9, 2009 from < http://www.catalystsearchmarketing.com/blog/> Florent, J, Huml, S, Whiddon, M, Mras, S, Stoddard, B, and Trent, R. 2008. Financial Analysis of Johnson and Johnson. U.S. Army Baylor Program. Retrieved October 9, 2009 form . GlaxoSmithKline plc. 2001-2009. Website GSK Annual Report 2008. Retrieved October 9, 2009 from Johnson & Johnson services, Inc.1997-2009. Company: History. Author. Retrieved October 9, 2009 form < http://www.jnj.com/connect/?flash=true> Rasmussen, B. 2002. Implications of the Business Strategies of Pharmaceutical Companies for Industry Developments in Australia. Melbourne: Australia. Retrieved October 9, 2009 form Shugan, S .M. 2005. Comments on Competitive Responsiveness. Marketing Science, 24(1) 3 - 7 Retrieved October 9, 2009 from Tech Connect.2003. Market Strategy: Industry analysis, target market, and competition. Pennsylvania partnership for Economic Education. Retrieved October 9, 2009 form Wolff, F, and Frank U. n.d. A multi-perspective framework for evaluating conceptual models in organizational change. Retrieved October 9, 2009 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Competition and Marketing Strategies in the Pharmaceutical Industry - Case Study, n.d.)
Competition and Marketing Strategies in the Pharmaceutical Industry - Case Study. https://studentshare.org/marketing/2032763-competition-and-marketing-strategies-in-the-pharmaceutical-industry-johnson-johnson-marketing-strategies-against-glaxosmithklines-ones
(Competition and Marketing Strategies in the Pharmaceutical Industry - Case Study)
Competition and Marketing Strategies in the Pharmaceutical Industry - Case Study. https://studentshare.org/marketing/2032763-competition-and-marketing-strategies-in-the-pharmaceutical-industry-johnson-johnson-marketing-strategies-against-glaxosmithklines-ones.
“Competition and Marketing Strategies in the Pharmaceutical Industry - Case Study”. https://studentshare.org/marketing/2032763-competition-and-marketing-strategies-in-the-pharmaceutical-industry-johnson-johnson-marketing-strategies-against-glaxosmithklines-ones.
  • Cited: 0 times

CHECK THESE SAMPLES OF Johnson and Johnson Marketing Strategies Against GlaxoSmithKline

Marketing Strategy of GlaxoSmithKline

The main aim of this study is to analyze the marketing strategies adopted by GlaxoSmithKline Plc; a London-based pharmaceutical company (Chaffey et al.... The study would also analyze the factors affecting the marketing strategies implemented by GlaxoSmithKline Plc.... n analysis of the marketing mix of the company would help in highlighting the key elements of the marketing strategies adopted by the company (Zhou et al.... The paper "Marketing Strategy of glaxosmithkline" highlights that companies like glaxosmithkline have provided medical aid and improved the quality of life of people....
12 Pages (3000 words) Essay

International business strategy

marketing Strategy of Eli Lilly 11 4.... Hence, it can be stated that the mergers and acquisitions strongly influenced the structure of the industry which can prove to be a constraint from the marketing perspective (Hornke & Mandewirth, 2009).... International Business Strategy Table of Contents 1....
5 Pages (1250 words) Essay

Lucozade Company International Expansion

Lucozade Company is a trademark name that is used to encompass a series of sports energy drinks, which are produced by the glaxosmithkline Company.... The Lucozade Company ought to understand and fully analyses the nature of each of these forces which will give the necessary insight to enable them to come up with the best formulae for the best strategies to be successful in their market.... he Saudi marketing EnvironmentLucozade Company has to understand the dynamics of the industry and the Saudi Arabian market in order to compete favorably and effectively in the marketplace....
12 Pages (3000 words) Essay

The Human Resources Manager in the Global Market

This research paper examines the human resources manager which is mainly the focal point in ensuring organizations achieve and maintain benchmark performance to ensure leadership in the global market.... An important aspect of organizations is to remain competitive in a highly competitive market....
8 Pages (2000 words) Research Paper

The Development of an Export Market

As a product, it is currently in production in the UK, and as a brand, it represents a slew of sports drinks and related drinks owned by glaxosmithkline.... That said, officially the classification is that Lucozade is a soft drink brand (Answers Corporation 2013; glaxosmithkline Group of Companies 2013).... The US is a large and lucrative market for sports drinks, this export development plant for that export market has potentially great value for the brand and for glaxosmithkline....
11 Pages (2750 words) Assignment

New Organizational Forms - Innovativeness To Attain Competitive Advantage

The challenges faced by HR managers in attaining these objectives have led most of them to rethink strategies for ensuring organizations attain.... From the essay "New Organizational Forms - Innovativeness To Attain Competitive Advantage" it is clear that important aspect is to remain competitive in the highly competitive market and retain the highest caliber of the workforce to ensure the organization maintains competitiveness in the market....
8 Pages (2000 words) Essay

GlaxoSmithKline: The Shifting from Patented to Generic Drugs

The paper "glaxosmithkline: The Shifting from Patented to Generic Drugs" tells that the medical industry has attracted a lot of attention from many pharmaceutical companies, and glaxosmithkline Plc is among the global and well-known players within the industry.... glaxosmithkline Plc, as a trading company, has a statement of mission, which is 'provision and development of immunotherapeutic, as well as vaccines that are necessary for the improvement of human health globally'....
8 Pages (2000 words) Research Paper

Strategic Analysis of Pharmaceutical Sector Company - GlaxoSmithKline

The paper "Strategic Analysis of Pharmaceutical Sector Company - glaxosmithkline" discusses that the regulatory requirements, generic competition, limited approval of NCEs, decelerated growth and reduced inventions are some of the strategic issues that it faces.... glaxosmithkline Plc.... While disruptions in manufacturing and the unfavourable market conditions in key geographical areas have affected its performance, it has always taken the necessary steps and strategies to ensure future success....
12 Pages (3000 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us