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



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%



4



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.



• 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.

–



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



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



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



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



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:



Product Samples

http://www.google.com/imgres?imgurl=http://www.cbdistributorsinc.com/images/Visine-Advanced.gif&imgrefurl=http://www.cbdistributorsinc.com/health_&_beauty_aids.htm&usg=__WGyP7lkg0h8OMeOMdv-rxurpk34=&h=600&w=328&sz=110&hl=en&start=5&zoom=1&itbs=1&tbnid=fD7rEoNRMTEkTM:&tbnh=135&tbnw=74&prev=/images?q=visine&hl=en&gbv=2&tbs=isch:1

http://www.google.com/imgres?imgurl=http://contactlensespostal.com.au/cms/images/MOIST%2090pk%20packshot.jpg&imgrefurl=http://contactlensespostal.com.au/cms/index.php?main_page=index&cPath=1&usg=__FQCCvn5G33wEbw4WO2VE5W_ptn4=&h=449&w=496&sz=22&hl=en&start=33&zoom=1&itbs=1&tbnid=rT46-MNhnQbIoM:&tbnh=118&tbnw=130&prev=/images?q=johnson+and+johnson+products&start=20&hl=en&sa=N&gbv=2&ndsp=20&tbs=isch:1

http://www.google.com/imgres?imgurl=http://www.dentalproductshopper.com/files/product/images/listerine-antiseptic-reach-ultraclean_src_1.jpg&imgrefurl=http://www.dentalproductshopper.com/listerine-antiseptic&usg=__YWlstsVGbX974o5xTbGpKSm1xAw=&h=400&w=400&sz=91&hl=en&start=36&zoom=1&itbs=1&tbnid=-aO--oyMfl20iM:&tbnh=124&tbnw=124&prev=/images?q=johnson+and+johnson+products&start=20&hl=en&sa=N&gbv=2&ndsp=20&tbs=isch:1

http://www.google.com/imgres?imgurl=http://www.clinicaladvances.com/images/industry_links/hem_onc/doxilLogo.jpg&imgrefurl=http://www.clinicaladvances.com/index.php/our_publications/hem_onc-links/&usg=__LtXRJlPyA-GaiUKQ5GrfozJDhq4=&h=161&w=201&sz=7&hl=en&start=11&zoom=1&itbs=1&tbnid=KHomkwH24FHuTM:&tbnh=83&tbnw=104&prev=/images?q=doxil&hl=en&gbv=2&tbs=isch:1

http://www.google.com/imgres?imgurl=http://www.topnews.in/files/FDA-Topamax-Approval.jpg&imgrefurl=http://www.topnews.in/us-fda-approves-topamax-tablets-2145155&usg=__leWIXnjZcUSr6YFsE8rA_MQk82M=&h=198&w=216&sz=39&hl=en&start=2&zoom=1&itbs=1&tbnid=bsss4e0ZiasnmM:&tbnh=98&tbnw=107&prev=/images?q=topamax&hl=en&gbv=2&tbs=isch:1

http://www.biosensewebster.com/products/therapeutic/thermocool.aspx

http://www.biosensewebster.com/products/navigation/cartoxp.aspx

http://www.google.com/imgres?imgurl=http://www.drug3k.com/img2/neutrogena_17152_4_(big)_.jpg&imgrefurl=http://www.drug3k.com/imagepages/17152/image4.html&usg=__kDvvlAX1NQa8o8ypB02wwZCLEbY=&h=300&w=300&sz=17&hl=en&start=2&zoom=1&itbs=1&tbnid=iZ7DDrMV6F4Q2M:&tbnh=116&tbnw=116&prev=/images?q=neutrogena&hl=en&gbv=2&tbs=isch:1

http://www.google.com/imgres?imgurl=http://mygloss.com/fit/files/2009/12/Tylenol_Arthritis.jpg&imgrefurl=http://mygloss.com/fit/2009/12/29/tylenol-expands-recall-pain-reliever-can-cause-nausea-stomach-pain/&usg=__Ez7A1nkYsuSNhPAtrEc45SWkJAE=&h=300&w=300&sz=23&hl=en&start=6&zoom=1&itbs=1&tbnid=7nY-TXrXSXTimM:&tbnh=116&tbnw=116&prev=/images?q=tylenol&hl=en&gbv=2&tbs=isch:1

http://www.google.com/imgres?imgurl=http://www.thefreecenter.com/wp-content/uploads/2009/02/splenda.jpg&imgrefurl=http://www.thefreecenter.com/2009/02/free-splenda-sample/&usg=__qw_6RxpIRBN_3cUEdYXJHvKKTkw=&h=249&w=250&sz=42&hl=en&start=9&zoom=1&itbs=1&tbnid=arXAPSgAqRUqnM:&tbnh=111&tbnw=111&prev=/images?q=splenda&hl=en&gbv=2&tbs=isch:1

http://www.google.com/imgres?imgurl=http://contrarianedge.com/wp-content/themes/blix-091/images/text/SomeThoughtsOnJNJandAbbottLabs_A6E8/jnj8.jpg&imgrefurl=http://contrarianedge.com/2007/01/26/some-thoughts-on-jnj-and-abbott-labs/&usg=__TINn37Qc8A2Hukv1gn6U422QL0Q=&h=480&w=568&sz=157&hl=en&start=20&zoom=1&itbs=1&tbnid=wwUFgwXEv5193M:&tbnh=113&tbnw=134&prev=/images?q=johnson+and+johnson+products&hl=en&gbv=2&tbs=isch:1



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



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



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



16

•

• Vision/Mission

•

Next slides can be ratings fordifferent areas of the scorecard

CompanyOverview

OBJECTIVE MERTICS/ FINANCIAL PERFORMANCE

INITIATIVES



17

OBJECTIVE MERTICS/(D=DRIVERS)

FINANCIAL PERFORMANCEINITIATIVES

FY1 FY2 FY3• Maximize returns

• Profitable growth


• 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



18


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



19

•

• Vision/Mission

•

Next slides can be ratings fordifferent areas of the scorecard

CompanyOverview

OBJECTIVE MERTICS/ FINANCIAL PERFORMANCE

INITIATIVES



20



FY1 FY2 FY3• Maximize returns




• ROCE

• Revenue growth



14%

6%

80%

$150

14.5%

8%

85%

$140

15%

12%

90%

$125


• Customer Satisfaction Rating 80% 85% 90% • Customer loyalty program



21


FY1 FY2 FY3

Business Growth• Capitalize on deregulationopportunities• Optimize trading opportunities• Develop innovative services



• % 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


• 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



23

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

http://www.google.com/imgres?imgurl=http://www.medisave.ca/Images/DrugImages/Fosamax_from_Canada.gif&imgrefurl=http://www.medisave.ca/DrugMoreInfo494.aspx&usg=__DvgktXTB8kg5R_IbfCONwHn6eQY=&h=98&w=158&sz=10&hl=en&start=13&zoom=1&um=1&itbs=1&tbnid=8zSa7iZ_P1Jx9M:&tbnh=60&tbnw=97&prev=/images?q=fosamax&um=1&hl=en&sa=N&rls=com.microsoft:*&tbs=isch:1



24

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



25



FY1 FY2 FY3• Provide investors

superior rate of return

Increase Shareholder Wealth




• ROCE

EPS

• Revenue growth



14%

6%

80%

14.5%

8%

85%

15%

12%

90%

• 2008 Restucturing Programsaves cost• Layoffs eliminate duplicate

positions from merger


• 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



26


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



• 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


• 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



29

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

•

•

http://www.merck.com/

http://www.merck.com/

balance score card - international business

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