AstrazenecaEssay Preview: AstrazenecaReport this essayCONTENTSINTRODUCTIONPage 2SECTION APage 3-201) The nature of competition: analysisPage 3-111.1) Market structurePage 3-7a) Market definitionPage 3b) Market valuePage 3-4c) SegmentationPage 5-6d) CompetitorsPage 6-71.2) Pharmaceutical pricing/cost (Dr Freeman explanations)Page 8-91.3) Research and developmentPage 9-112) Nature of the risks and strategiesPage 11-153) S.W.O.T analysisPage 154) Advertising/productPage 16-18SECTION BPage 19-235) CalculationPage 19-21a) Demand curvesPage 19b) Price and output valuePage 19-20c) Upper and lower limitsPage 20d) Total profits and profits per boxPage 20-21e) Diagram and explanationsPage 216) RhincortPage 21-23a) Tree diagramPage 21b) Expected valuesPage 22c) Re-adjustmentPage 22d) Strengths and weaknessesPage 23BIBIOGRAPHYPage 24IntroductionAstraZeneca was formed on 6 April 1999 through the merger of Astra AB of Sweden and Zeneca Group PLC of the UK.It is one of the top ten largest pharmaceutical companies in the world.It employs 64 000 people all over the world including 11 900 people in R&D and 15 000 in production.It has 30 manufacturing facilities in twenty countries.AstraZeneca produce drugs for seven healthcare areas:Cancer,Cardiovascular,Respiratory,Central nervous system,Gastrointestinal,Pain control,And infection.Astra Zenecas sales for the fiscal year ended December 2004 increased 13.7% to $21.4 billion. Net income increased 25.6% to $83.8 billion.This case study is based on the Datamonitor Report 2005.Section A1) The nature of competition: analysis1.1) Market structurea) Market definitionThe pharmaceuticals market consists of both ethical and over the-counter (OTC) drugs, but does not include consumer healthcare or animal healthcare. Market values have been calculated at ex-factory prices (the value at which manufacturers sell the drugs to distributors). Any currency conversions have been made at the 2004 annual average exchange rate.
b) Market valueThe global pharmaceuticals market has known a growth until 2003 but in 2004, there was a decrease (about 6,5%) as the figure 1 shows. However in 2005, there was a resumption and reaches a value of $ 534,8 billion.
According to the figure 4, the market will to have a value of $579,2 billion in 2006 with a growth of 8,3%. Despite this value growth, the figure 4 shows that the rate growths of the market will decrease from a rate of 7,5% in 2005 to a rate of 7,1% in 2010.
c) SegmentationThe market is dominated by the United States generating 48,4% of the sales following by Europe (28,1%), Asia-Pacific (18,2%) and Rest of the world (5,3%).
The largest sector is the cardiovascular drugs with 20% of the market share following by the central nervous system drugs with 17%.Since a century, the drugs number has constantly increased and we can say that the pharmaceutical market is more and more segmented.d) CompetitorsTable 1: Top ten Global Pharmaceutical MarketCompanyTurnover in $billion% shareGrowth ratePfizer50,909,80%4,90%GlaxoSmithKline32,706,30%1,90%Sanofi-Aventis27,105,20%9,10%Jonhson & Johnson24,604,70%8,00%Merck & Co23,904,60%3,50%Novartis22,704,40%7,50%AstraZeneca21,604,20%9,30%Roche17,703,40%10,70%Bristol-Myers Squibb15,503,00%3,20%Wyeth14,202,70%9,80%250,9048,30%Source: IMS HealthAccording to the table 1, Pfizer hold 9,80% on the market and realise a growth of 4,90%. In spite of its market share (4,20%), AstraZeneca realise a growth of 9,30%.
Competing companies include Johnson & Johnson; Merck-Plyck; Aventis-Biotherapeutics; Bayer-Hegel; Roche-Johnson&Cann; Johnson & Johnson; and AstraZeneca Corporation.
All of the publicly held companies with an operating profit/loss ratio below 30% have the largest share price at $17 for an enterprise. Of course, Pfizer is a private company as its top market share is at $4. The largest competitors are, on average, the combined top market value of $16.
Pfizer and AstraZeneca were the top 10 on the ‘sustainable’ market share market, but their share, however, was down by 10%. However, Pfizer have one of the largest number of active and growing markets in the world with a total market capitalisation of $17.2 billion (as per the Global Research survey). We are not able to discuss for now, with regards to the future of Pfizer and AstraZeneca, their market share at the latest rate, but it seems clear that their share share does not change. What is being discussed is to find a new way of taking advantage of this new market.
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The second highest share price is also obtained by S-bionics (11.6%) and is also achieved by the new ‘graphene cell’ or biomedicine (13.2%) (source: Biotherapeutics Group of India