Merck: SURP 2013 - Industry Analysis, External Environment, and Technological Assessment for the Development of an Acquisition Strategy (Novavax)
Authors:Jessica Freitas, Miluska Mogrovejo
Mentor:Venkatachalam Seshan, Professor of Management, Pepperdine University
At the end of 2012, Merck’s Net Sales totaled $47.27 B. The company’s Total Global Pharmaceutical Industry’s Share of Market (SOM) is about 4.3%, making it the seventh largest in the industry as of 2012. Merck’s biggest competitors include, Johnson & Johnson, Pfizer Inc., Novartis AG, Bayer AG, Roche Holding Ltd, and Sanofi. In order for Merck to maintain its U.S. and Global Market Share, sustain competitive advantage against its competitors, and maximize its Shareholder Wealth, it must assess its Environmental Threats and Opportunities. Merck greatest Threats are Competition, especially from generic products that devalue Merck’s brand drugs that lose patent protection, and Politics, as Merck’s success depends on whether its drugs are governmentally approved or not. Merck biggest opportunities are Technology, as technological advancements allow it to develop innovative drugs, and Social, as there is an increasing aging population that will raise the demand for Merck’s products. Merck’s Gap Analysis suggests that it must minimize three gaps: Product-Line, Distribution, and Competitive Gap. By taking advantage of its opportunities, assessing it threats, and developing strategies that take the Environmental Scan in consideration, it will be able to minimize those gaps to maintain or increase its market share. The background analysis of the Industry, Environmental Scan, and Technology Check served to develop and recommend a strategy to counteract infectious diseases: the acquisition of Novavax, a Biotechnology company that focuses on the development of Influenza vaccines. Acquisition of Novavax allows Merck to tap the growing Respiratory/Anti-Infectives Market Segment for pandemic and seasonal vaccines, as seasonal flu vaccines alone constitute a market worth $2.9B. Utilizing Novavax’s proprietary Virus-Like Particle technology in vaccine production is the Technological Opportunity Merck needs to revitalize its current products in the Respiratory/Anti-Infectives Market Segment.