Balance Score Card - International Business
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Transcript of Balance Score Card - International Business
8/8/2019 Balance Score Card - International Business
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PHARMACEUTICALS
Amy Cline Srikanth Adusumilli Lesley Ott
Amy Steinlage Susan Stephens
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Industry OverviewIndustry forecast is
expected to decline from2009 – 2014.
– Projected growthdown to 5.5%(Datamonitor, Mar,2010)
•
• Americas – Increases in R&D;
layoffs; genericcompetition; limitedreimbursement fromMedicare; increase in
M&A• Europe
– Generic competition;increased demands forvaccines
• Asia-Pacific –
Increase in MNC;profitability invaccines; aging
Category Share %
Americas 50.5Europe 25.7
Asia-Pacific 18.2
Rest of the
World
5.7
Total 100%
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CompanyOverview
• Vision/Mission: To discover, develop,manufacture and market of
branded prescription medicationsfor humans and animals.
Accomplished through develop-ment of biologic, small moleculemedicines, vaccines, nutritionaland consumer products.
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• Common Pfizer Drugs: – Antibiotics: Zithromax, Vfend, Terramycin, Diflucan – Cardiovascular: Liptor, Caduet, Norvasc, Fragmin – Oncology: Sutent, Camptosar – GU/Sexual: Viagra, Dep-Provera –
Opthamology: Xalatan, – Musculoskeletal: Celebrex, Bextra, Lyrica, Neurontin – Respiratory: Spiriva, Chantix/Campix (smoking cessation) – Alzheimers medications - Aricept
• Animal: – Improvac – Swine vaccine –
Palladia – oncology agents (canine and feline) – Convenia – antibiotics
• Wyeth agents – an entire new realm of OTC, generic andprescription medications that will broaden the portfolio.
–
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Balanced ScorecardMetrics
• Learning and Growth – Investment in R&D
• $7.8 billion in 2009 down from $8.1
billion in 2007 – Growth is still occurring in Asian
markets due to Wyeth acquisitionand focus on Emerging Mkts
–
Emerging Market Business Units aretargeting disease of the developingworld. Ex. Nicotine addiction.
• Internal Processes – Acquisitions: Wyeth - $68 billion in
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Balanced ScorecardMetrics
• Customer Perceptions – Increasing mergers
– Corporate integrity agreement –
Impact of lawsuit looking at off labelmarketing
• Financial – Revenues experiencing a progressive
decline with loss of exclusivitybased on patent expiry.
– Work force reduction
– Worksite consolidation
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OBJECTIVE ERTICS or DRIVERS INANCIAL PERFORMANCENITIATIVES
2007 2008 2009
Maintain strong financial bottom
line
Return toshareholders
Support company growth and key
objectives
Net revenue
Revenue growth
Asset utilization rate
/Operating costscustomer
Industry leading customer loyalty
Support health care in developing
.countries
Customer SatisfactionRating
,Acquisitions employment and plants in Developing
nations
% % % Customer loyaltyprogram
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OBJECTIVE /( = )ERTICS D DRIVERS INANCIAL PERFORMANCENITIATIVES
2007 2008 2009
usiness Growth Mergers and Aquisitions ,Recalls Lawsuits Develop innovative services
ptimize Core Business Optimize asset utilization
% revenue from deregulated/products services
% trading revenue Revenue from new services % customers served through
alliances and joint ventures
%14
%8
%85
$140%30
5
.3 3
%15
%12
%90
$125%40
5
.4 4
Customer loyaltyprogram
Pipeline for blockbusterdrugs
&R D growth
Customer Satisfaction Rating
Financial Support
Number of products in Phase IIIdevelopment
%
.$8 1
16
%
.$7 9
26
%
.7 8
34
Maintain investments&in R D for pipeline
growth
Promote aggressive research to find the
blockbusters
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CompanyOverview
•
• Company Credo:Patients,
Employees,Communities,Shareholders
• Operating Model:Human Health,Long-Term,Decentralization,People & Values
•
• Product Lines:Consumer,
Pharmaceuticals,Medical Devices &Diagnostics
• 115,500 Employees
• 250 OperatingCompanies Locatedin 59 Countries
•
FYE09 Revenue:
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Product Samples
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Content AnalysisWord # of Occurrences
Research 270Income & Revenue 262
Patent 221
Lawsuit, Litigation & Alleged 119
Employee 108Acquisition 88
Advertising & Promotion 49
Shareholder 49
Environment 15Regulation 15
Product Line 14
Patient 11
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OBJECTIVE MERTICS/(D=DRIVERS) FINANCIAL PERFORMANCEINITIATIVES
2007 2008 2009• Maximize profitability
• Increase shareholder wealth
• Enterprise growth
• Leverage asset base
• Robust financial position
• ROE
• EPS
• Sales growth (+/-)
• Asset utilization rate (ROA)
• Debt/capital ratio
25.6%
$3.67
14.6%
14.0%
13.6%
30.2%
$4.62
4.3%
15.6%
15.6%
26.4%
$4.45
(2.9%)
13.7%
13.7%
• Customer satisfaction
• Invest in communities
• Accrued returns (millions)
• Charitable contributions (% of
pre-tax income)
648
3.8%
794
3.0%
689
3.7% •Outreach programs
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OBJECTIVE MERTICS/(D=DRIVERS)PERFORMANCE
INITIATIVES
2007 2008 2009
Business Growth• Develop innovative products• Maximize global sales force• Increase global presence
Continued Public Support• Use alliances and joint ventures• Communicate/educate customers
Optimize Core Business• Optimize asset utilization• Decentralize management
• R&D as % of sales• SG&A as % of sales• Number of operating companies
• Investment in M&A for R&D• Advertising
• ROA
• Number of employees
12.6%33.5%250
√√
14.0%119.2K
11.9%33.7%250
√√
15.6%118.7K
11.3%32.0%250
√√
13.7%115.5K
•Late-stage pipeline – 15 new launches by2014•In-licensing deals
• Increase employees healthawareness
• Improve environmental efforts
• Tobacco use• High blood pressure (above140/90)
• Environmental fines paid
• CO2 Net Emissions• Hazardous Waste
4.2%6.4&
$31.4K
93233.8
4.2%6.4%
$164.1K
96329.4
3.9%6.3%
$6.6K
89124.0
• Working with
suppliers to recycle products for packaging
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•
• Vision/Mission
•
Next slides can be ratings fordifferent areas of the scorecard
CompanyOverview
OBJECTIVE MERTICS/ FINANCIAL PERFORMANCE
INITIATIVES
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OBJECTIVE MERTICS/(D=DRIVERS)
FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3• Maximize returns
• Profitable growth
• Leverage asset base
• Manage operating costs
• ROCE
• Revenue growth
• Asset utilization rate
• Operating costs / customer
14%
6%
80%
$150
14.5%
8%
85%
$140
15%
12%
90%
$125
• Industry leadingcustomer loyalty
• Customer Satisfaction Rating 80% 85% 90% • Customer loyalty program
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OBJECTIVE MERTICS/(D=DRIVERS) FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3
Business Growth• Capitalize on deregulationopportunities• Optimize trading opportunities• Develop innovative services
Continued Public Support• Use alliances and joint ventures• Ensure reliable service• Communicate/educate customers
Optimize Core Business• Optimize asset utilization
• % revenue from deregulated products/services• % trading revenue• Revenue from new services• % customers served through alliances
and joint ventures
• NPV product/service pipeline• % R&D projects meeting protocolgates (D)• Customer/partner satisfaction (5 pointscale)
• Reliability index
• Communication/education coverage(%)
14%
6%
80%
$15020%4
2.2
14%
8%
85%
$14030%5
3.3
15%
12%
90%
$12540%5
4.4
Customer loyalty program
• Industry leading customer loyalty
• Ensure Market-driven skill• Industry leading employee satisfaction• World Class Leadership effectiveness
• Customer Satisfaction Rating
• Strategic skill coverage ratio• Hours in strategic skills training (D)• Employee satisfaction rating (5 point
scale)
80%
3/4
85%
4/5
90%
3/5
• Customer loyalty program
• Competency profiling• Performancecompensation link
• Leadership training program
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•
• Vision/Mission
•
Next slides can be ratings fordifferent areas of the scorecard
CompanyOverview
OBJECTIVE MERTICS/ FINANCIAL PERFORMANCE
INITIATIVES
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OBJECTIVE MERTICS/(D=DRIVERS)
FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3• Maximize returns
• Profitable growth
• Leverage asset base
• Manage operating costs
• ROCE
• Revenue growth
• Asset utilization rate
• Operating costs / customer
14%
6%
80%
$150
14.5%
8%
85%
$140
15%
12%
90%
$125
• Industry leadingcustomer loyalty
• Customer Satisfaction Rating 80% 85% 90% • Customer loyalty program
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OBJECTIVE MERTICS/(D=DRIVERS) FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3
Business Growth• Capitalize on deregulationopportunities• Optimize trading opportunities• Develop innovative services
Continued Public Support• Use alliances and joint ventures• Ensure reliable service• Communicate/educate customers
Optimize Core Business• Optimize asset utilization
• % revenue from deregulated products/services• % trading revenue• Revenue from new services• % customers served through alliances
and joint ventures
• NPV product/service pipeline• % R&D projects meeting protocolgates (D)• Customer/partner satisfaction (5 pointscale)
• Reliability index• Communication/education coverage(%)
14%
6%
80%
$15020%4
2.2
14%
8%
85%
$14030%5
3.3
15%
12%
90%
$12540%5
4.4
Customer loyalty program
• Industry leading customer loyalty
• Ensure Market-driven skill• Industry leading employee satisfaction• World Class Leadership effectiveness
• Customer Satisfaction Rating
• Strategic skill coverage ratio• Hours in strategic skills training (D)• Employee satisfaction rating (5 point
scale)
80%
3/4
85%
4/5
90%
3/5
• Customer loyalty program
• Competency profiling• Performancecompensation link
• Leadership training program
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Vision:• We make a difference in the lives of people globally through our
innovative medicines, vaccines, and consumer health andanimal products. We aspire to be the best healthcare companyin the world and are dedicated to providing leading innovationsand solutions for tomorrow.
•
Mission:• To provide innovative, distinctive products and services that save
and improve lives and satisfy customer needs, to be recognizedas a great place to work, and to provide investors with asuperior rate of return.
•
What Merck Stands For:• Excellence in science and healthcare innovation, with an emphasis
on addressing unmet medical needs.
• Focus on patients and anticipating customer’s needs.
• Commitment to expand access to our medicines and vaccines, andto improve global health.
CompanyOverview
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Product Portfolio
CompanyOverview
Therapy Products:OncologyEndocrinologyFertility
Cardio-Metabolic Care Neurodegenerative Diseases
Consumer Health Care Products:Joint CareVitaminsCough & Cold
Animal HealthcarePerformance Materials: pigments for the plastics,
printing and coatingsindustriesspecial raw materials for usein skin care and decorativecosmeticshigh-tech chemicals and
materials for LCDs andOLEDs, or anic
Advancing Life Science:
(Food/Biosciences/Pharma)Food-Supplies cleaning anddisinfecting solutions, rawmaterials, products anddocumentation for in-processand quality controlsBiosciences R&D
Pharma research throughindustrial-scale roduction to
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Content Analysis o rd # f
ccurrencesEmployee 970&Income Revenue 659, &Lawsuit Litigation Alleged
638Merger 543
Patent 346 Research 282
Shareholder 153
Patient 136Global 107
&Advertising Promotion 83 Acquisition 64
Regulation 60
Environment 47 Eliminate Positions 33Innovative 20
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OBJECTIVE MERTICS/(D=DRIVERS)
FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3• Provide investors
superior rate of return
Increase Shareholder Wealth
• Profitable growth
• Leverage asset base
• Manage operating costs
• ROCE
EPS
• Revenue growth
• Asset utilization rate
• Operating costs / customer
14%
6%
80%
14.5%
8%
85%
15%
12%
90%
• 2008 Restucturing Programsaves cost• Layoffs eliminate duplicate
positions from merger
• Industry leadingcustomer loyalty
• Customer Satisfaction Rating 80% 85% 90% • Fight against river blindness inAfrica, Latin America, & Yemen.Gives away for free!• Company makes no profit onHIV/AIDS vaccines for poorest,hardest hit countries
•Time to talk Cardio:
patient/doctor tools
OBJECTIVE MERTICS/(D DRIVERS) FINANCIAL PERFORMANCE
INITIATIVES
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OBJECTIVE MERTICS/(D=DRIVERS) FINANCIAL PERFORMANCEINITIATIVES
FY1 FY2 FY3
Business Growth & Innovation• Develop innovative services, focus onthe patient, unmet medical needs, andthe customer needs• Increase global presence & access to
our drugs
Continued Public Support• Use alliances and joint ventures• Ensure reliable service• Communicate/educate customers
Optimize Core Business• Optimize asset utilization
• Revenue from new services
• M&A investment• Customer/partner satisfaction (5 pointscale)• % R&D projects meeting protocolgates (D)• Communication/education coverage(%)
• ROA
14%
6%
80%
$15020%4
2.2
14%
8%
85%
$14030%5
3.3
15%
12%
90%
$12540%5
4.4
• Diverse supplier baseallowing for more globalaccess• Mentorship programcultivating successful
supplier partnerships• Strong focus on R&D
• Recent Joint venture with-S ch e rin g Plou g h to
b rin g B iotech n o lo g y
in to its p o rtfo lio• Lawsuits/recalls?
Xxxxx
GO Green
Biotechnology
• Customer Satisfaction Rating
• reduce waste• become a steward of naturalresources
• conserve energy
80%
3/4
85%
4/5
90%
3/5 • Use solar energy to power headquarters &reducing waste withimproved vaccinemanufacturing
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Conclusion
The companies adapting to the changes inthe industry will withstand industrypressures for the future such as:
• Threat of generics and patent expirations• Healthcare reform
• Focus on emerging markets (BRIC nations)
•
Demographic trends
For the long run, we predict, based on thesefactors listed above, that Novartis will
outperform the others.
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Questions?
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Sources
• www.merck.com
• Merck 10-K reports
• Merck profile-business sourcecomplete
• Google Insights
•
•