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DEDICATION

This report is dedicated to our teachers and parents who have shown an untiring faith in us and have helped us in every aspect of life; including this report.

ACKNOWLEDGEMENTS

Praise be to Allah, the most Gracious and Merciful, who blessed us with the knowledge and wisdom and enabled us to overcome this task. We would like to thanks our Professor Rasheed Khalid, who motivated us and helped us a lot to do this project which was challenging but his guidance and encouragement let us to do this task in a great manner.

Introduction

Novartis was created in 1996 as a result of the merger of the Swiss companies, Ciba-Geigy and Sandoz. Headquartered in Basel, Switzerland, Novartis is one of the fastest growing healthcare companies worldwide, operating in over 140 countries with over 91,000 employees. The name, Novartis, derived from the Latin novae artes, meaning "new skills," reflects our commitment to focus on research and development to bring innovative products to the communities we serve. History & Evolution

On 7 March 1996, an earthshaking announcement was made to the business world: Sandoz and Ciba-Geigy, the two Swiss-based chemical/life sciences giants, had agreed to become one. Novartis, as the new company was called, was at that time the result of the largest corporate merger in history. Both Sandoz and Ciba-Geigy already had a rich history of their own.

Geigy, Ciba and Sandoz (1758-1970)

First there were three companies: Geigy whose history goes back to the middle of the 18th century, Ciba, founded around 1860, and Sandoz, which was set-up in 1886.

Ciba-Geigy and Sandoz (1970-1996)

In 1970 Ciba and Geigy merged. The newly created Ciba-Geigy Ltd. and Sandoz continued to follow separate paths for two and a half decades.

Novartis (1996-present)

In 1996 Sandoz and Ciba joined to form Novartis in one of the largest corporate mergers in history. Since then, Novartis has been marked by many interesting events and success stories Purpose The purpose of Novartis to discover, develop and successfully market innovative products to cure diseases, to ease suffering, and to enhance the quality of life. We also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company. Novartis Group Novartis is a world leader in providing medicines to protect health, prevent and treat disease, and to improve well-being. Novartis is the only company with leadership positions in patented and generic pharmaceuticals, vaccines and over-the-counter medicines

Operating through 360 independent affiliates in 140 countries, Novartis offers its products and services through its Pharmaceuticals, Sandoz and Consumer Health divisions.

Novartis Pharmaceuticals Division is a world leader in the discovery, development, manufacture, and marketing of prescription medicine. Our goal is to provide a broad portfolio of innovative, effective and safe products and services to patients through healthcare professionals around the world.

Novartis has been transformed since its creation in 1996 - when only 45% of net sales came from healthcare - into a leader focused on fast-growing areas of healthcare.

Novartis is currently organized into four divisions:

Pharmaceuticals: Innovative patent-protected medicines Vaccines and Diagnostics: Human vaccines and diagnostic tools to protect against lifethreatening diseases

Sandoz: Generic pharmaceuticals that replace branded medicines after patent expiry and free up funds for innovative medicines

Consumer Health: Readily available products that enable healthy lifestyle choices: OTC (Over-the-Counter), Animal Health and CIBA Vision.

Pharmaceuticals

The Pharmaceuticals Division of Novartis is recognized worldwide for the innovative medicines we provide to patients, physicians and healthcare organizations. This growing business develops and markets patent-protected prescription drugs for important health needs. Our products are concentrated in major therapeutic areas including: Cardiovascular and Metabolism Oncology Neuroscience and Ophthalmic Respiratory Immunology and Infectious Diseases

The current product portfolio includes more than 50 key marketed products, many of which are leaders in their respective therapeutic areas. In 2008, Novartis launched 11 products in the United States and Europe. The product development pipeline has 148 projects in various stages of clinical development, including potential new products as well as potential new indications or formulations for existing products.

Vaccines and Diagnostics

The Novartis Vaccines and Diagnostics Division provides more than 20 products to fight vaccine-preventable viral and bacterial diseases, and makes sophisticated equipment to test blood donations for infections. Novartis formed this division when it acquired Chiron Corporation in 2006.

The division consists of two businesses - Novartis Vaccines and Chiron, the blood testing business.

Novartis Vaccines Novartis Vaccines is dedicated to delivering on the promise of prevention through the research, development and production of innovative, safe and effective vaccines. At the heart of everything we do is our commitment to preventing the spread of life-threatening diseases, protecting vulnerable populations, and keeping healthy people healthy. By focusing on disease prevention, Novartis Vaccines plays a key role in the company's core mission: keeping people healthy, alleviating suffering and enhancing quality of life. The current vaccine portfolio includes vaccines to prevent:

Influenza Meningitis Rabies Japanese encephalitis Tick-borne encephalitis

Haemophilus Influenza type B Polio Diphtheria Tetanus Pertussis (whooping cough)

Sandoz

Novartis is the only pharmaceutical company with a global leadership position in both patented prescription and generic pharmaceuticals. Sandoz plays a critical role in the Novartis strategy of offering a range of treatment options to patients, physicians and healthcare providers worldwide. This broad portfolio helps to make affordable, high-quality medicines available to patients around the world and stabilize healthcare systems. There are two main elements to the Sandoz business strategy:

Global reach and reputation: In addition to its unique position within Novartis, Sandoz benefits from a strong global presence and powerful brand recognition worldwide.

Unique expertise: Sandoz differentiates itself primarily through its ability to develop and produce difficult-to-make medicines. Sandoz is the pioneer of biosimilars follow-on versions of biopharmaceuticals following patent expiry with the first three approved and marketed products in the EU (human growth hormone Omnitrope, anemia medicine Binocrit / epoetin alfa Hexal, and oncology medicine Zarzio / Filgrastim Hexal).

Human Resources With approximately 100 000 associates in 140 countries worldwide, Novartis associates share a vision of a better today and tomorrow for patients a vision that drives our growth and success. The greatest job satisfaction for our associates is the knowledge that they improve the quality of life for patients with increasing precision and efficiency through breakthrough science and innovation.

Associates/Employees by Region
Europe USA Africa/Asia/Australia Canada/Latin America 50000 21000 20000 9000

Sales
Canada/Latin 9%

Africa/Asia 20%

Europe 50%

USA 21%

Associates/Employees by Division
Pharmaceutical
Sandoz Consumer Health 51000 24000 13000

Vaccines and Diagnostics Pharmaceutical Research Corporate

5000 5000 2000

Pharma Research Corporate 7% 3% Vaccines 6%

Sales

Consumer Health 17% Pharma 67%

Physical Resources
Novartis is having the presence with its different operational and manufacturing facilities in different parts of the world having the total amount of 208 sites which includes World Wide Offices Pharmaceutical Research Centre Manufacturing Facilities

Pharmaceutical research centers


Pharmaceutical research within Novartis is conducted primarily through the Novartis Institutes for BioMedical Research (NIBR). Headquartered in Cambridge, Massachusetts, and with locations worldwide, NIBR is committed to discovering innovative medicines that treat disease and improve the lives of patients. NIBR scientists strive to improve the drug discovery process

by pursuing a comprehensive, multi-disciplinary approach that integrates novel concepts across multiple disease areas. The location of the headquarters in Cambridge a worldwide biotechnology hub puts NIBR close to renowned US academic institutions and in the midst of an impressive pool of scientific talent. The Novartis Institutes for BioMedical Research (NIBR) is the global pharmaceutical research organization of Novartis. With approximately 5 000 scientists and physicians around the world, the research is focused on discovering innovative new drugs that will change the practice of medicine. They have an open and entrepreneurial culture, encouraging collaboration to make effective therapies.

Reseacrh and Development Locations

Novartis Institutes for BioMedical Research

Pharmaceutical Development

Vaccines and Diagnostics

Corporate Research

Locations USA UK Switzerland Italy India China Shanghai Emeryville Horsham Basel Siena Hyderabad Changshu Hanover Horsham Basel Siena Basel Cambridge California

Singapore Indonesia

Singapore Makassar

Novartis has about 183 000 active suppliers worldwide. Class 3 suppliers represent a sub-group of about 900 suppliers (contract manufacturing, waste management, etc.) deemed to have a significant influence on Novartis business activities. Class 3 suppliers are subject to on-site audits for HSE/labor practices. In addition, a second category of 8 600 Class 2 suppliers (chemical products, construction, etc.) are required to submit self-assessments covering their HSE/labor practices.

Organizational Resources Other organizational resource that Novartis is proud of includes its patents, trademarks and licensing. Mainly the organizational resources of Novartis comprises of a lot of Patents, trademarks and other intangible assets which contributes a lot in the development of an organization. Novartis is the only company with leadership positions in patented and generic pharmaceuticals, vaccines and over-the-counter medicines.

The total carrying value of marketed products and significant capitalized trademarks and product rights are as follows:

Gross Carrying Value

Accumulated

Net carrying Value

Net Carrying Value

Dec31,2008 USD million

amortization Dec 31,2008 USD million

Dec 31,2008 USD million

Dec 31,2008 USD million

Famvir Voltaren Tegretol Other Pharma Products Total Pharma Division Vaccines and Diagnostics Sandos Division Consumer Health Division Total

1716 1869 607 5313 9505 1319 2611 2358 15793

790 1168 380 3114 5452 90 602 991 7135

926 701 227 2199 4053 1229 2009 1367 8658

1011 782 254 1677 3724

2194 1310 7228

Vision
We want to be recognized for having a positive impact on people's lives with our products, meeting needs and even surpassing external expectations. We strive to create sustainable earnings growth, ranking in the top quartile of the industry and securing long-term business success. We want to build a reputation for an exciting workplace in which people can realize their professional ambitions. We strive for a motivating environment where creativity and effectiveness are encouraged and where cutting-edge technologies are applied. In addition, we want to contribute to society through our economic contribution, through the positive environmental and social benefits of our products, and through open dialogue with our stakeholders

Mission

Novartis wants to discover, develop and successfully market innovative products to prevent and cure diseases,to ease suffering and to enhance the quality of life. Novartis also want to provide a shareholder return that reflects outstanding performance and to adequately reward those who invest ideas and work in our company.

GOALS AND OBJECTIVES


Meeting Projected Financial Goals Achieving Projected Sales Increase the return towards Shareholders Leadership in term of patented and Generic Medication Research and Development Expansion

Development of innovative pharmaceutical Products

Meeting Projected Financial Goals:Goals are objectives are the terms which any organizations want to achieve and achieving the goals and objectives determine the progress of the organization. There are certain projections by Novartis regarding financial goals which the includes the certain variables 1. Maintaining the operations cost 2. Return on the Investment 3. Debt Ratio 4. Liquidity Ratios The above the certain sub-objectives which the Novartis wants to achieves it includes maintaining and reducing the operation cost as well as it all includes the prosper return on investment. The feasibility of debt and liquidity ratios and maintaining these ratios are also important for Novartis. Achieving Projected Sales:According to the industry analysis Novartis comes in the fifth place if the comparison is made on the basis of Revenue and Assets. It is the goals of the Novartis to increase its projected sales which are an increase of 10%. The achievement of such a huge target is difficult but it is the goal of Novartis. Increase the return towards Shareholders:The ultimate goal of any PLC company is to increase the return towards its shareholders. The return towards their common and preferred stock will let the shareholders to trust more towards company and this thing can lead to raise the share price of Novartis. Leadership in term of patented and Generic Medication:-

Novartis is doing well in terms of patented products but Johnson & Johnson is ahead in pharmaceutical industry in terms of patented medications so it is goal if Novartis to increase its patented medication if the lead is to be reduced by Novartis

Industry Analysis

Pharmaceutical Industry Analysis


Novartis is surrounded by other competitors who are major player in Pharma industry who give tough time to Novartis in terms of sales and revenues. If we analye the standing of Novartis in Pharma industry it comes fourth based on the sales variable. Pfizer ,Johnson & Johnson are ranked higher as compared to Novartis in terms of sales. The over Pharma industry analysis can be fairly seen in the table below.

Pharmaceutical and Biotech Industry Competitive Operating Metrics (2008)


SanofiAventis SA (SNY)
Total Revenue Gross Profit Revenue Growth from 2007 $35.80 $26.30 (-1.7%)

Johnson & Johnson Pfizer (JNJ) (PFE)


$63.75 $45.24 4.34% $48.30 $40.18 0.00%

BristolAbbott Meyers Eli Novartis Laboratories Merck Squibb Lilly (NVS) (ABT) (MRK) (BMY) (LLY)
$42.58 $30.02 9.34% $29.53 $16.92 13.94% $23.85 $18.27 (1.44%) $20.60 $14.20 13.21% $20.38 $16.00 9.41%

Amgen Allergan (AMGN) (AGN)


$15.00 $12.71 1.55% $4.40 $3.58 11.81%

The over all analysis of the industry shows an increase in terms of sale and growth, meanwhile Novartis is growing too with the pace of 9.3% and at the same time J&J showed a growth of 4.43%.

Industry Life Cycle


R&D

Introduction

Growth

Maturity

Patent Expires

If we closely look at the industry in which Novartis is operating, we come to in pharmaceutical industry every thing starts with the research and development. Without research a pharmaceutical company cannot survive, as the new disease, whether it viral or bacterial is found or exist in society the company first do research to find the remedy after this the medicine or diagnostics are introduced in the market. After the introduction the product start growing if market accepts the product and then reaches to its maturity but problem arises when the patent expires. When the patents expire then competitors can imitate the technology and can produce the substitutes. Due to Food and Drug Administration (FDA) regulations, pharmaceutical patents last 17 years, during which a pharmaceutical company has an exclusive right to manufacture a particular drug. The patent period begins when the company begins researching the drug and files a patent with the patent office. After clinical trials, the average patent is only in effect for an additional 11-12

years. After the patent expires, generic versions of the product can be produced and sold by competitors. Generic medication is cheaper than brand medication, and the lower cost is often a strong incentive for consumers to choose generic drugs over branded ones. In addition, the presence of a generic alternative may prompt a decrease in the brand name medication's price.

PORTER S FIVE FORCES MODEL

Barriers to Entry--High

Industry Competition-High

Bargaining Power of Supplier--Low

Novartis

Bargaining Power of Buyer--Low

Threat of Substitue-High

Barriers to entry
Although the licensing requirements, patents and setup of regional distributors are somewhat barriers to entry but in reality, Pharmaceutical industry is one of the most easily accessible industries for an entrepreneur in Pakistan. The capital requirement for the industry is low;

creating a regional distribution network is also easy in Pakistani scenario. However, creating brand awareness and franchisee among doctors is the key for long term survival. Also, quality regulations by the government may put some hindrance for establishing new manufacturing operations. The new patent regime has raised the barriers to entry. But it is unlikely to discourage new entrants, as market for generics will be as huge. Pharmaceutical products continue to increase and the industry thrives. One of the key reasons for high competitiveness in the industry is that as an ongoing concern, pharmaceutical industry seems to have an infinite future. However, in recent times the advances made in the field of biotechnology, can prove to be a threat to the synthetic pharmaceutical industry.

Bargaining power of suppliers


The pharmaceutical industry depends upon several organic chemicals. The chemical industry is again very competitive and fragmented. The chemicals used in the pharmaceutical industry are largely a commodity. The suppliers have very low bargaining power and the companies in the pharmaceutical industry can switch from their suppliers without incurring a very high cost. However, what can happen is that the supplier can go for forward integration to become a pharmaceutical company or may brought forward a generic product to earn higher margins.

Bargaining power of buyers


The unique feature of pharmaceutical industry is that the end user of the product is different from the influencer (read doctor). The consumer has no choice but to buy what doctor says. However, when we look at the buyers power, we look at the influence they have on the prices of the product. In pharmaceutical industry, the buyers are scattered and they as such do not wield much power in the pricing of the products. However, Govt. with its policies may play an important role in regulating pricing.

Threats of substitutes

There is always a threat that consumer may shift to the substitute health solutions like Homeopathic or Ayurvedic. But that threat is not that much significant in scope as more the population is being educated more they tend to rely on pharmaceutical products. Industry competition Pharmaceutical industry is one of the most competitive industries in the country with as many different players fighting for the same pie. The rivalry in the industry can be gauged from the fact that the top player in the country has only 6 %(2006) market share, and the top 5 players together have about 18 %(2006) market share. Thus, the concentration ratio for this industry is very low. High growth prospects make it attractive for new players to enter in the industry. Another major factor that adds to the industry rivalry is the fact that the entry barriers to pharmaceutical industry are very low. The fixed cost requirement is low but the need for working capital is high. The fixed asset turnover, which is one of the gauges of fixed cost requirements, tells us that in bigger companies this ratio is in the range of 3.5-4 times. For smaller companies, it would be even higher. Many small players that are focused on a particular region have a better hang of the distribution channel, making it easier to succeed, albeit in a limited way. An important fact is that, pharmaceutical is a stable market and its growth rate generally tracks the economic growth of the country with some multiple. Though volume growth has been consistent over a period of time value growth has not followed in tandem. The product differentiation is one key factor which gives competitive advantage to the firms in any industry. However, in pharmaceutical industry product differentiation is not possible. Consequently product differentiation is not a driver, cost competitiveness is. However, companies like Pfizer and Glaxo have created big brands over the years which act as product differentiation tools.

Managerial Decision Making


Managerial decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them. This stresses the information-gathering function of decision making. It should be noted here that uncertainty is reduced rather than eliminated. Very few decisions are made with absolute certainty because complete knowledge about all the alternatives is seldom possible. Thus, every decision involves a certain amount of risk.
Role and Functioning of Board The Chairmans Committee

The Role and Functioning of Board


The Board holds the ultimate decision-making authority of Novartis AG for all matters except for those decisions reserved by law for shareholders. The agendas of Board meetings are set by the Chairman. Any Board member may request a Board meeting or that an item be included on the agenda. Board members are provided, in advance of Board meetings, with adequate materials to prepare for the items on the agenda. Decisions are taken by the Board as a whole, with the support of its four committees described below (Chairmans Committee, Compensation Committee, Audit and Compliance Committee, and Corporate Governance and Nomination Committee).

The primary functions of the Board include:


Providing the strategic direction of Novartis

Determining the organizational structure and the manner of governance of the company; Supervising the business operations overall; Approving major acquisitions or divestments Structuring the accounting system, the financial controls and the financial planning; Reviewing and approving the annual financial statements and results release of Novartis AG and the Group; Appointing and dismissing members of the Executive Committee, the Head of Internal Audit and other key executives; Promulgating fundamental corporate policies, in particular on financial matters, corporate governance and citizenship, personnel or environmental matters and overseeing compliance therewith;

Preparing the matters to be presented at the General Meeting, including Novartis AGs financial statements and the consolidated financial statements for the Group; Evaluating regularly the performance of the Chairman and Chief Executive Officer and reviewing the performance of the members of the Executive Committee Performing a self-evaluation once a year.

The Chairmans committee


The Chairmans Committee is composed of four Board members; the Chairman and Chief Executive Officer, the two Vice Chairmen, one of whom is the Lead Director and one other member of the Board. The Chairmans Committee takes decisions on financial and other matters delegated by the Board to the Chairman's Committee in accordance with the Regulations of the Board. In addition, the Chairmans Committee also takes decisions and preliminary actions on behalf of the full Board in urgent cases.

Top Managment

Middle Managment

Front Line Managment

Lower Managment Traditional Approach

Communication in Organization & with Stakeholders


Novartis is committed to open and transparent communication with in organization, employees, shareholders, investors, financial analysts, customers, suppliers and other interested parties. Material information pertaining to Novartis businesses is timely and broadly disseminated in a manner that complies with obligations under the rules of both the SWX Swiss Exchange and the New York Stock Exchange. Novartis voluntarily complies with Regulation FD of the United States Securities and Exchange Commission (SEC). Forward-looking statements, which reflect

Managements understanding of the situation and performance as of the date of such statements, are made in an effort to help stakeholders better understand the progress of Novartis businesses.

The Environment and Corporate Culture


At Novartis Pharmaceutical Corporation, performance-oriented culture and responsible approach are the foundations of success. Novartis recognizes that the business depends on the creativity, dedication and performance of employees. Novartis encourage associates to focus on achievement through collaboration and innovation. A global healthcare leader, Novartis has one of the most exciting product pipelines in the industry today. A pipeline of innovative medicines brought to life by diverse, talented, performance driven people. All of which makes Novartis one of the most rewarding employers in pharma field.

Novartis Cultural Leadership standards Drive for superior results Display analytical and conceptual thinking Exercise good judgment and drive change Inspire continuous improvement and breakthrough thinking Energize the team Build the talent pipeline Set clear direction and align the team Display passion for 3 C's (Consumer, Customer, Competition

Managing a Global Environment


Novartis Institutes for BioMedical Research Pharmaceutical Development Vaccines and Diagnostics Corporate Research

Locations USA UK Switzerland Italy India China Singapore Indonesia Shanghai Emeryville Horsham Basel Siena Hyderabad Changshu Singapore Makassar Hanover Horsham Basel Siena Basel Cambridge California

Novartis is having its research centers through out the world catering different markets of the world. Novartis conducts operations worldwide, and manages business in three geographic regions: the Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific-Japan (APJ).

The Americas region covering Canada, USA, Mexico and other Latin American countries The APJ (asia-pecific Japan) caters India, Pakistan, Malaysia and other Asian countries The European regions covers the all European countries including UK, Italy, Germany etc. Novartis has invested in high growth countries such as Italy, USA, India, and China for research & development and continues to expand global infrastructure as international business continues to grow.

GROWING GLOBALLY

Novartis in ASIA
In the recent years Novartis invested Billions of Dollars in Asia mainly in China and India for Research & Development purposes. Novartis splashed its cash in Asia and invested$100m (79m) in China and INR5bn (90m) in India to establish large new R&D centres. From these areas Novartis can cater the Asia market very easily and can manage the global perspective. Novartis is now having pharmaceutical development and research labs in Hyderabad India and having Biomedical research centres in China.

Novartis in EUROPE
Novartis is having its research operation in different countries of European union like having Research centre in Siena Italy and having its head quarters in Basel Switzerland from where it manages it affairs and link the other networks of Novartis

Novartis in Americas
Novartis is having its manufacturing facilities and research centres in USA covering all the US and other Latin American country needs. Novartis recently acquired Chiron, a vaccine manufacturer, and so it has been able to expand its production and research in this area. In July 2009, Novartis received an order from the United States government for $690 million worth of H1N1 vaccines. Novartis is currently building a new facility to manufacture the vaccines that should be ready by Q4 2009.

STRATEGIES FORMULATION AND IMPLEMENTATION FOR MULTINATIONAL


Multinationals needs a process to formulate a strategy , it includes market research that what is the current position of company it also called situational analysis including internal and external and based on the research best strategy should be adapted. To be competitive in the global world it is necessary to understand the local culture of the country while operation outside the home country. Different countries have different set of norms and cultures so it is good for multinationals to learn the culture first and then implement its strategies. Strategy formulation is a complex and it is done at corporate level mainly in the head quarters. Same is the case with Novartis. Strategies are made in the head quarter based in Basel Switzerland and then are implemented in the different parts of the world. Corporate strategy Novartis Corporate Level Strategy is too be innovative in research & development and make its operations qualitative with the provision of high quality products. Novartis established its corporate learning department in 1998 with the goal of developing a stable of future leaders who could grow with the business. Creating this pipeline entailed identifying and selecting top talent with high potential, providing them with the right job experiences and supporting continuous learning with instruction from the best institutions.
10 Elements of Novartis Corporate Strategy Success and Learning Program

. Secure top management support

Based on experiences on different advisory boards and through benchmarking with many different companies, theres one clear message regarding the success of the Novartis corporate learning program: Its a result of the participation and commitment of senior executives. Over the past 10 years, the senior management executive team has remained focused on all of the learning programs in Novartis, both in designing the programs and providing a presence at them.

Novartis always involves top management in the design of its training programs, right from the beginning. Corporate learning talks about content and direction, about participant profiles, and about who will make the decisions regarding content. Theres very close interaction with all the sponsors of the training programs during the three to six months of the design process.

Once the program is established, the sponsor attends the course as a participant or as a speaker. This is true for every course program. The course portion represents about 50 percent of the overall learning program; the rest is made up of video and other training elements, such as Web-based resources.

2. Focus on key initiatives


Learning must be directly aligned with corporate strategy and business challenges. Companies will struggle if their learning functions do not focus on these key issues. Because of its mandate from the executive committee and the quality of the programs it has consistently delivered to management, corporate learning at Novartis has emerged as an excellent "brand." Its experience, combined with a centralized budget for training, has also contributed to this status. But while becoming more known and respected is rewarding, the threat

for the corporate learning team is that it could lose its focus. It is vital for the group to ensure it is aligning learning programs with the organizations strategy, and not just creating programs for any functional group that requests one. For instance, the corporate learning department may get a request for a program from a Novartis function that is important for only about 30 people in the company. For those 30 people, its really important, but for the overall company, its not very strategic. While it might not deliver exactly the program thats originally requested, the corporate learning department does help other Novartis functions build up their learning programs. Like many companies, the company has limited resources. It has to be careful to focus its resources on the right programs that continually align with the overall strategy and challenges that the company faces. 3. Hire the right people

In the past, only HR people served in training departments. While the corporate learning function at Novartis, together with global talent management, is a key component of corporate human resources, an HR background is not the only knowledge needed for the learning group. Whats needed is a mix of backgroundscommercial, finance and marketing people with business acumen, along with professionals who have "people understanding," such as a psychology background. We might even include a trader or a dealer, someone with in-thetrenches business experience. So, even though it is a learning department, the company doesnt necessarily look for academics. Novartis team is now a 50-50 mix of colleagues with HR and business experience. The corporate learning group has very little attrition, resulting in a considerable buildup of expertise over the years. 4. Put quality first Novartis focuses directly on the top 10 percent of people in the organization. Its very important for a corporate learning function to deliver programs of extremely high quality for this top tier of management. The intention is always to have these top-quality, top-level programs in place, and then it can diversify its other activities.

The most important programs at Novartis are done through its strategic partnership with Harvard Business School or other business schools. This has significantly helped the corporate learning function at Novartis to establish its reputation as an exclusive provider of training programs. Novartis does not provide Harvard programs to first-time or middle managers. It reserves these programs for top-level senior management. The corporate learning department has credibility with these leaders, who know it can deliver quality programs to align with the strategic initiatives that are driving the organization. It is important to maintain this kind of reputation and build on the momentum it creates. In other words, think of your learning group as an exclusive boutique that sets trends and draws elite customers, not as a shopping mall that offers something for everyone. 5. Manage carefully and with consensus Novartis has a centralized learning function for the top 10 percent of the company, and decentralized learning for the lower levels. There are functions with direct reporting lines to the local HR organization, rather than to corporate learning. Of course, cultural awareness and sensitivity must be taken into account in this type of organization. While diversity is an asset, differences present communication and management challenges, underscoring the need for respectful and globally collaborative processes. For instance, certain cultures are less likely to speak up, and otherssuch as Japan and Chinahave more formal business protocols. 6. Act globally It goes without saying that the people working in a global organization must have excellent cross-cultural skills. But the programs that such an organization puts in place require a global standard. Novartis, for example, delivers its "Leading on the Frontline" program to first-time managers 90 to 100 times a year in 12 languages around the globe. But the basic elements of 80 percent of the content cannot be changed, because it contains the global standard for how Novartis wants to see its leaders behave. Some customization is possible, for business or cultural reasons. If there is a restructuring in one country or region, for example, and people must be released from their jobs, the business

would need to adjust its training module to place more emphasis on how to hold difficult conversations. While the weight and focus of the program can be adjusted, the central elements must be included. In addition to Novartis programs and training, the corporate learning group is also responsible for creating strategic learning projects in the organization. It identifies growth opportunities in emerging markets, such as Latin America, and in countries such as China and Russia, where it expects significant growth in the future. With that in mind, Novartis elected to focus on China and opened a learning center in that country, where employee retention has been a problem. Novartis discovered that employee learning could greatly improve retention in a company, since employees like to feel valued and connected within a growing organization that is willing to invest in its personnel.

7. Select and partner with the best training providers


Ten years ago, 90 percent of Novartis training providers were Swiss or German not ideal for a global learning function. That was changed. In your organization, too, the key is to look globally to find the best training providers wherever they are, not just in your own headquarters back yard. The best providers may not necessarily be in the U.S., although it has an excellent pool. At Novartis, which is now investing heavily in Asia, and China in particular, we are looking more and more to find providers in that part of the world. In total, Novartis corporate learning department has about 450 different providers for its programs. This number includes its business school partners, but also individual professors from these schools. In addition, Novartis uses consulting companies, training consulting companies and individual consultants. It currently works with about 150 of these providers a year. The companys local affiliates now ask the corporate learning experts for help in finding local sources for their training programs. 8. Fully integrate into overall processes, but focus on the business First and foremost, the business is the most important contributor to program development. The corporate learning department conducts many interviews and a great deal of research with

the business sponsors and potential participants. This level of detail and collaboration with managers leads to more valuable and relevant programs. When it comes to selecting participants, the business is again the primary driver. When Novartis selects a participant for its top-level training, it carefully considers his or her potential and past performance. Considerable time is spent with the business functions and departments, actually dealing with the potential candidates and upper management while leveraging valuable HR information. There is no open enrollment for the top management training; the nominations are done top-down in the organization.

9. Assess learning results and align with the business


Novartis prefers to get direct feedback from participants immediately after the conclusion of a learning program. Then, six months later, it conducts random telephone interviews with the alumni to check on what they have learned, as well as what they have retained and executed. Those are the only two steps the company uses regularly to assess its programs. For instance, every two to three years it also gets the external assessments needed for certificationsuch as from the European Foundation for Management Development, the leading global organization in the area of management training and development. Some advice here: If a program is good, you should talk about it, but if its bad you should still talk about it. At Novartis, the corporate learning function is so visible that if something is going wrong, its seen early. If corporate strategies change, it is nimble enough to adapt to those changes. So the key is to use some formal assessment tools, as well as informal discussion with participants and initial follow-up with participants after the program. Obtain their input; listen, learn and continuously improve your programs.

10. Persevere and thrive


I want to take special note of the economic climate of the day. We are in the midst of a global recession, and more and more companies are cutting back programsincluding corporate learning. Although that is a reality in some organizations, its important that learning leaders not

resign themselves to such a fate. Instead, you should view this time as an opportunity to operate in a lean fashion. Trim the fat in your learning organization, then refocus and prioritize. Keep your ego in check and continue to improve programs so that they become indispensable to your organization, its survival and its ultimate success when the economy turns.

Secure top management support Persevere and thrive Focus on key initiatives

Fully integrate into overall processes

Hire the right people

Novartis

Select and partner with the best training providers

Put quality first

Act globally

Manage carefully and with consensus

Novartis Energy and Climate Strategy


Increasing energy efficiency is a way of life at Novartis. As a leader in tackling global environmental problems, the company takes advantage of opportunities to achieve its ambitious energy efficiency and greenhouse gas emission reduction targets.

Political instruments like emission trading and the Kyoto Protocol are seen as a chance to profit rather than to avoid financial penalties. That is why, early in the climate discussion, Novartis made a voluntary commitment to reduce greenhouse gas (GHG) emissions globally in line with the objectives of the Kyoto Protocol i.e. a reduction of 5% by 2012 compared with 1990 levels. In 2007, the company exceeded its annual 2.5% energy efficiency target with an improvement of 7.5%. A new target was established that called for a further 10% improvement by 2010, based on 2006 figures. In 2007, for the first time, Novartis was able to reduce GHG emissions in absolute terms for both on-site emissions and emissions from purchased energy despite the continued growth of the company.

Novartis realizes the following benefits from investing in energy and climate efficiency:

Cost savings at sites and for individual businesses Benefits for its associates Environmental sustainability Benefits for the company as a whole

After Implementation of Energy Strategy In 2007 the company exceeded its annual 2.5% energy efficiency target with an improvement of 7.5%. A new target was established that called for a further 10% improvement by 2010, based on 2006 figures.

Business Level Strategies


If we talk in terms of business levels strategies Novartis is having tend to follow certain business strategies to achieve its goals and objectives. Novartis uses combination of business level strategies for better and prosper results. Cost Leadership Through vast number of Suppliers Focus on Different Regions of World Targeting Broad Markets

The combination of above written strategies provide Novartis a competitive edge on its rivals and due to proper implementation Novartis come up to increase its Revenues.

There are certain qualities which makes Novartis an important player in the Pharma industry.

Efficient supply chain/distribution system Just-In-Time inventory system reduces costs Internet increases good relations with consumers & suppliers Impressive Supply Chain Management Strong strategic alliances with other companies

Cost Leadership Through vast number of Suppliers

Focus on Different Regions of World

Targeting Broad Markets

Managerial Ethics and Corporate Social Responsibility


Multinationals give much more importance to corporate social responsibility same is the case with Novartis. Novartis commitment rest upon four pillars

1) 2) 3) 4)

Patients People and Communities Business Conduct Environmental Care

1) Patients
Novartis Pharmaceuticals Corporation puts patients first by providing innovative medicines to treat and prevent illness and promote quality of life. We have a long history of helping patients in need, launching our first Patient Assistance Program in 1997. Last year, the Novartis Patient Assistance Foundation (PAF) and Institutional PAP (which serves state programs and free clinics) provided free product valued at $169 million dollars to 109,000 patients in need. Novartis is also committed to assisting patients from around the world. In 2007 our global access-to-medicines programs, valued at USD 937 million, reached 66 million patients. In the developing world, we extend free leprosy and tuberculosis treatment and offer our antimalarial drug Coartem without profit through multilateral institutions and public-private partnerships. Patient Safety To improve patient health and well-being, Novartis medicines must have the complete confidence of those who prescribe and use them. As a corporate citizen, we are committed to this goal. Patients and healthcare-providers know that, beyond meeting regulatory requirements for product safety and efficacy, Novartis does everything possible to communicate concerns based on clinical trials and other research. Labels and package inserts often describe possible side effects and other risks, and provide directions for avoiding potential problems.

Novartis discloses data from our clinical trials no matter what the outcome. We assess safety concerns throughout the development of our products. Ensuring patient safety does not end at product approval. We continue to assess risks or safety signals that emerge when a product is on the market. We work to find new and better ways to identify problems and communicate them as clearly as possible. Our pharmacovigilance programs quickly identify, address and communicate new adverse events to regulatory agencies, including the US Food and Drug Administration (FDA) and healthcare professionals and patients. We also work to protect patients from counterfeit products, which have created a growing concern around the world. Responsible corporate citizenship is about open communication, going beyond the letter of the law and placing patients front and center in all our efforts. There is nothing more important than the safety of our products and those who use them.

Patient Assistance A new easy-to-use, comprehensive resource that allows patients to access programs that may help them afford their Novartis medicines and find information to take care of their health. This integrated, single point of access allows patients to learn about:

Programs that may help pay for medicines Access to disease and conditions educational programs Information on clinical trials Novartis Medicines Novartis Global Access to Medicines Programs

2) People and Communities


Novartis Pharmaceuticals Corporation believes that we are more than just an employerwe believe that we are an integral part and a contributing citizen to the places where we live and work As such, giving back to the community and its people is at the very center of our mission we believe it is the right thing to do and essential to maintaining our license to operate, innovate and grow. The communities around Novartis are the lifeblood of our organization, they are where our employees live, work and raise their families; they maintain the infrastructure so that our operations function smoothly; and they provide the support network of family, friends, neighbors and institutions that are essential to a high quality of life that we all deserve. For all that the community and its people provide Novartis, we feel it is our commitment and responsibility to give back and support them in various ways. Contributing to a better community Our philanthropic contributions include annual grants to nonprofit organizations that are tax exempt in accordance with section 501(c)(3) of the Internal Revenue Code. Philanthropic grants support programs focused upon underserved populations promoting health and disease state awareness, science, math and technology education, and civic and community development initiatives. Between 2006 and 2007, Novartis Pharmaceuticals Corporation awarded over USD 4 million to nonprofit organizations. This figure also represents funds donated by the company, or
by employees through workplace giving campaigns such as the United Way and the Novartis

matching gifts program

Our Employees give Back

Novartis Pharmaceuticals Corporation employees have the opportunity to support several local and national charitable initiatives via opportunities offered in the workplace. United Way partners with Novartis Pharmaceuticals Corporation to build better and stronger communities for children and teenagers; families and individuals making progress toward greater independence; seniors and people with disabilities; those facing hunger and homelessness; and people in crisis. Novartis matches the total value of contributions made by employees. In 2006 and 2007, Novartis Corporation, Novartis Pharmaceuticals Corporation, and Novartis Consumer Health contributed USD 1.7 million dollars through the United Way to support the local community. Spirit of Giving is a gift donation program to benefit individuals that receive services from New Jersey nonprofits. In 2007, more than 1,500 gifts were collected from Novartis employees. Our Matching Gift Program encourages individual financial support of 501(c)3 health organizations and education institutions by providing employees with the opportunity to make contributions which the company will match dollar-for-dollar for gifts up to USD 5000 per employee in each calendar year.

3) Business Principles
Responsible Business Practice Business integrity and values are key drivers of success for Pharmaceuticals Corporation. Our values, Code of Conduct, business-conduct policies and standards guide our associates in their activities and performance. High standards of integrity are central to achieving responsible research, sourcing, production, distribution, marketing and sales activities. Ethical marketing practices As a pharmaceutical company, we are responsible for providing accurate information and education to healthcare professionals and consumers. As well as adhering to the principles of ethical business conduct outlined in our Code of Conduct, Corporate Citizenship Policy and Guidelines, Novartis Pharmaceuticals Corporation associates are guided by the specific standards for marketing activities described in the Novartis Pharma Promotional Practices Policy (NP4). Similar policies are in place for the other Novartis divisions.

Third-party management We deal with a large network of suppliers and other third parties that contribute to our success. The way we purchase supplies and contract out operations influences our cost and pricing structures and affects our reputation as a responsible corporate citizen.

Complaints handling
We support an open culture in which employees are required to report violations and are protected from retaliation or penalties. We believe this is key to deterring and preventing misconduct, and provides associates with the confidence that action is taken. The Business Practices Office provides our company with a formalized system for dealing with complaints of actual or suspected cases of misconduct. It offers employees and external stakeholders a channel through which grievances and allegations can be submitted, without fear of reprisal or penalty. All complaints are investigated and substantiated cases are brought up to management so that appropriate action can be taken.

Responsible R&D Healthcare companies play dominant roles in conducting and funding research and development (R&D). The pharmaceutical industry invests more than USD 50 billion a year in R&D the most important source of investment in health research. During 2007, Novartis increased R&D investments by more than 20% to USD 6.4 billion. This is one of the highest figures in the industry relative to sales (16.9%). Novartis R&D efforts are driven by human health and well-being, contributing to overall prosperity and quality of life. Working at the frontier of science and technology in the field of human health means our activities may involve ethical issues, including animal welfare, stemcell research and access to medicines. Novartis recognizes the importance of informed debate about such issues and welcomes the opportunity to engage in constructive dialogue.

4) Environmental Care
Green initiatives For example, the company's two newest buildings and parking garage on the East Hanover Campus (known as the "East Village") embodies "sustainable design" construction that reduces use of non-renewable resources, minimizes environmental impact and land disturbance and fosters a health workplace.* These sustainable design features include:

Energy efficient roof that minimizes energy usage and lasts longer than a traditional roof; Recycled waste during construction, including metals, ceiling tiles, glass, bottles, paper and plastic;

Clean renewable sources of energy like wind and hydroelectric power; Bathroom fixtures that reduce water consumption; A 1,075-car parking garage that includes preferred parking for low-emitting and fuel-efficient vehicles and bike storage for those who ride;

Special attention to indoor air quality during construction by using high performance filters to prevent construction dust from entering duct work and using construction materials like lowemitting paints, sealants, adhesives and carpeting;

Open floor plan with access to natural daylight and under-floor air distribution system for greater individual temperature control, comfort and air quality;

Scenic landscape that fosters interaction and preserves natural environment.

Value Chain Analysis


A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. Novartis is a medicine manufacturing company and its basic value chain is as follows:

Acquisition of raw material

The activity starts from the procurement of raw material from the trusted suppliers of the Novartis around the world with which Novartis has strategic alliances. However sometimes material is acquired from third party suppliers who are asked to adhere the Novartis third party code of conduct for ethical, labor and safety standards.
Manufacturing and packaging of Products

Novartis produces its products on the following locations around the world. Basel, Switzerland Grimsby, England Huningue, France Kundl, Austria Kurtkoy, Turkey Lincoln, Nebraska Ringaskiddy, Ireland Schaftenau, Austria Schweizerhalle, Switzerland Singapore Stein, Switzerland Suffern, New York

At present the company is dealing in: Pharmaceutical comprises a portfolio of prescription medicines which are provided to patients through healthcare professionals. These are mainly products of original research of the Novartis Group. Vacancies and diagnostic

Generic products comprise Retail Generics products. The business unit primarily focuses on the therapeutic segments such as Anti-TB, Anti-DUB (Gynaecology), Antihistamines, Antibiotics, Anti-ulcerants, Anti-diabetes and Cardiovascular.

Animal health products are primarily in the cattle, poultry and aquaculture market segments. Contact lenses and care products The OTC segment is mainly in the VMS (vitamins, minerals and nutritional supplements) and CoCoA (cough, cold and allergy) market segments.

The research and development is the essence of the industry Novartis is dealing in. these activities are performed at: Basel, Switzerland Cambridge, Massachusetts East Hanover, New Jersey Horsham, England Shanghai, China

Warehousing The products are temporarily stored at the warehouses adjacent to the production facility and afterwards dispatched through the logistic network of the company around the world in 140 Countries Company is operating at present.

Distribution

The distribution of the product is made as follows:

Leadership in Novartis
In organizations characterized by poor leadership, employees expect nothing positive. In a climate of distrust, employees learn that leaders will act in indecipherable ways and in ways that do not seem to be in anyone's best interests. Poor leadership means an absence of hope, which, if allowed to go on for too long, results in an organization becoming completely nonfunctioning. The organization must deal with the practical impact of unpleasant change, but more importantly, must labor under the weight of employees who have given up, have no faith in the system or in the ability of leaders to turn the organization around.

The leadership team of Novartis consists of respected industry leaders and visionaries who share a common passion for innovation and excellence in execution.

The success of Novartis Pharmaceuticals Corporation is made possible by the members of our Commercial Executive Committee and the Corporate Management Committee. Under the leadership of Ludwig Hantson, Head Pharma, North America and CEO, these Committees are responsible for overseeing the business operations of Novartis Pharmaceuticals in the US and Canada.

Identification of Strategies
Porter Generic Strategy

Competitive Advantage Competitive Scope


Lower Cost
GENERAL COST LEADER

Differentiation
GENERAL DIFFERENTIATION (Novartis)

Broad

FOCUED COST LEADER

FOCUS DIFFERENTIATOR

Novartis has been very successful in the pharmaceutical industry due to its broad and general differentiation. Research and development is the key success factor of any company dealing with pharmaceutical industry and Novartis is having strong research and development as compared to its competitors. The success of Novartis is due to: Introduction of new patented innovative products Price Skimming on patented products Leader in generic products Continuous improvement in the current medication and equipments Diverse Work Force

If we conclude all the factors Novartis comes in General Differentiation as its products are differentiated to innovative technology and research and development on the other hand its competitive scope is bit broad.

Narrow

Ratio Analysis
Income statement Revenue Net Income Revenue Growth Net Income Growth Operating Margin Net Margin 31.0 Billion 5.54 Billion -24.8% 26.7% 23.3% 17.8%

Balance Sheet (Most Recent Quarter) Debt/Equity Current Ratio Quick Ratio Interest Coverage Ratio Book Value Per Share Cash Per Share 0.701 1.70 1.35 22.8 23.4 6.22

Industry Metrics Revenue R&D R&D/Sales 31.0 Billion 7.22 Billion 17.4%

REVISED BCG MATRIX MAINTENANCE AND SUPPORT


Maintaining the current standards of R&D with the diverse workforce.

DIVERSED
Diversity in different products helps the business to reduce the risk level and can tackle the market changes and competitors very easily

VOLUME
Volume can lead a business to success if the product is a hit; Novartis personal health care products do the same. As the volume increases the profitability increases on the other hand

STALEMATE
In the stalemate quadrant, profitability is low as of competitors because the reason can be the size of the business. There are certain products which are acceptable in market but their profitability to company is low

SPECIALIZATION
Specialization achieving can a difficult task but once it is achieved, it can work as fruit tree, and with this companies can differentiate them from competitors by providing specialized products to customers.

UNPROFITABLE SEGMENT
Unprofitable segments are formed to serve the public and functions without the purpose of achieving profits.

PROFITABLE FRAGMENT
Profitability can achieve by competitive advantage or with differentiation but only if the product is hit, if not then I can lead to disasters.

BCG Matrix

BCG Matrix Analysis for Products:

As there are many products of the Novartis and all could not be presented here foe BCG Matrix analysis. We have chosen the most significant products according to the revenue stream of these products for the analysis

Diovan (USD 1.4 billion, +7% ), The worlds top-selling branded medicine for high blood pressure, achieved 10% lc growth in key regions outside the US that represented nearly 60% of total sales. Japan delivered dynamic growth for the Diovan franchise ahead of the March 2009 introduction of Co-Dio, a single-pill combination with a diuretic that gained approval in January. In the US, Diovan rose 3% as growth was hampered by inventory reductions among some wholesalers, but maintained its leading 40% share. Due to its market share, revenues and average growth we consider it as Cash Cow.

Gleevec/Glivec (USD 894 million, +13% ), A targeted therapy for certain forms of chronic myeloid leukemia (CML) and gastrointestinal stromal tumors (GIST). It is a top driver of incremental sales growth based on leadership positions in treating these cancers. Gleevec was approved as the first post-surgery (adjuvant setting) therapy for GIST in the US (December 2008) and in Switzerland (February 2009), and is also recommended for approval in Europe (March 2009). All these prospects indicate towards a moderate growth prospective and the revenue stream is stable therefore, we consider it as Cash Cow. Zometa (USD 342 million, +10% ), An intravenous bisphosphonate therapy for patients with cancer that has spread to the bones has seen renewed expansion from improved compliance for existing indications as well as landmark data presented in 2008 showing a significant anticancer benefit. In February 2009, The New England Journal of Medicine published these data showing Zometa reduces the risk of cancer recurrence or death in premenopausal women with hormone-sensitive, early-stage breast cancer. More studies are underway to review other potential anticancer benefits of Zometa. The growth is somewhat average so is the revenue stream. So we would put it in Question mark category.

Femara (USD 286 million, +15% ), An oral therapy for women with hormone-sensitive breast cancer, maintained strong growth leading to sustained market segment gains in the US, Europe and Japan. The entry of generic competition in some markets in 2008, including some European countries, has had a modest impact on global growth. The moderate growth perspective and average revenues instigate us to put this product in question mark category.

Sandostatin (USD 258 million, +6% ), For acromegaly and neuroendocrine tumors of the gastrointestinal tract and pancreas, benefited from an increasing use of Sandostatin LAR, the once-monthly version that accounts for over 85% of net sales. New data from a Phase III study presented in January showed patients with metastatic neuroendocrine tumors of the midgut who received Sandostatin LAR had significantly increased time to tumor progression compared with those given a placebo. The modest growth and revenue stream make the product a question mark. Lucentis (USD 229 million, +43% ), It is a biotechnology eye therapy approved in more than 80 countries, has become a leader in its segment as the only treatment proven to maintain and improve vision in patients with wet agerelated macular degeneration, a leading cause of blindness in people over age 50. Broad sales expansion has been seen in Europe since the first launch in early 2007, while Lucentis was approved and launched in Japan in the 2009 first quarter. Enrollment has been completed for a Phase III trial in diabetic macular edema (DME) and a regulatory submission in Europe is still expected for 2010. Very high growth perspectives of the product make it as a Star product investment in which would be beneficial for the company. Exelon/Exelon Patch (USD 203 million, +21% ), It is a therapy for mild to moderate forms of Alzheimers disease dementia and also dementia linked with Parkinsons disease, has benefited from the late 2007 launch of Exelon Patch, a novel skin patch, that has led to significant market segment gains in the US and other countries.

Growth perspectives and potentials seem to be somewhat high with an adequate modest current revenue base making this product a star. Exforge (USD 136 million, +114% ), It is a single-pill high blood pressure medicine with the angiotensin receptor blocker Diovan (valsartan) and calcium channel blocker amlodipine, continues to grow rapidly due to data underscoring its differentiated efficacy profile. This product is having a spectacular growth potential and current revenue stream is not bad either. These indications induce us to put this product too in star category. Exjade (USD 122 million, +24% ), This medicine has been approved in over 90 countries as the only once-daily oral therapy for transfusional iron overload, received the first major approval for a new dose of 40 mg/kg in Switzerland, providing a new dose for high-risk patients needing more intensive iron chelation. This product also has the good growth perspective and would be considered as star. Reclast/Aclasta (USD 85 million, +128% ), It is he first once-yearly infusion therapy for different kinds of osteoporosis, has shown dynamic growth due to increasing access to patient infusion centers and improving reimbursement levels. More than 5,700 infusion centers have been established in the US, more than double from early 2008. Known as Aclasta in Europe and Reclast in the US, this medicine has 100% reimbursement on US Medicare formularies and full reimbursement status in France, Germany and the UK. Although the revenue stream seems to be a bit weaker but the impressive growth potential make this product a Star. Lotrel (USD 83 million, 13% , only US), It is a single-pill combination for high blood pressure, provides sales from higher doses with market exclusivity. Sales of lower doses fell after an at risk generics launch in 2007 despite a US patent still valid until 2017. The weak revenue stream and negative growth make the survival of this product difficult in long run so we put this product under Dog category. Myfortic (USD 73 million, +30%),

It is a therapy for kidney transplant patients. It has seen rapid growth due to its novel entericcoated formulation of mycophenolic acid. But the revenue stream is somewhat weaker but the growth perspectives are above average and would be considered as good but still in relation to growth perspectives of other products these seem to be less attractive so we would put this product under question mark.
Xolair (USD 61 million, +77% , only Novartis sales), It is a biotechnology drug for moderate to severe allergic asthma, was approved and launched in Japan during the 2009 first quarter. It now has approvals in more than 60 countries worldwide. The Xolair Liquid formulation to ease administration was approved in Europe in February. In December 2008, Xolair was submitted for US and EU approval for use in children age 6 to less than 12 years old. Novartis copromotes Xolair with Genentech in the US and shares a portion of operating income. Genentechs Xolair US sales were USD 133 million in the first quarter of 2009. Despite somewhat average revenue stream the prosperous growth figures induce us to put this product under Star category.

Tekturna/Rasilez (USD 52 million, +97% ) The first new type of high blood pressure medicine in more than a decade, has grown steadily in a competitive market, particularly in Europe, based on data affirming its ability to reduce blood pressure for over 24 hours and the potential to protect the heart and kidney, which is being studied in the ASPIRE HIGHER outcomes program. Rasilez HCT, a single-pill combination with a diuretic, is being launched in Europe after approval in January 2009. This combination is already available in the US as Tekturna HCT. Other single-pill combinations are in development, while a combination with Diovan was submitted for US approval at the end of 2008. Same as the case of Xoliar this product would also b considered as Star. Tasigna (USD 35 million), A new second-line therapy for patients with a form of chronic myeloid leukemia (CML) resistant or intolerant to prior therapy, including Gleevec/Glivec, was approved and launched in Japan while growing in key markets. Tasigna shows the potential to become a leading therapy for newly diagnosed CML patients, with results expected in 2010 from a Phase III trial comparing it with Gleevec/Glivec. Submissions for third-line use of Tasigna in GIST patients are now planned

by the end of 2009. This product cloud be placed under question mark as growth could be anticipated but the revenue stream associated with this product is weak.

Galvus/Eucreas (USD 26 million),

It is two new oral treatments for type 2 diabetes, have performed well in many European and Latin American markets after receiving approvals in early 2008 and late 2007, respectively. Galvus is the market leader in some Latin American countries due to its strong efficacy profile. Eucreas is a single-pill combination of Galvus with the oral anti-diabetes medicine metformin. Galvus has now been launched in over 30 countries, while Eucreas is now available in nearly 20 countries. Same as the case of Tasigna this product would also relate to question mark.

Market Share
High

Low

Star
Lucentis Exelon/Exelon Patch Exforge Exjade Reclast/Aclasta Xolair

Market Growth

Question Mark
Zometa Sandostatin Femara Myfortic Tasigna

High

Low

Cash Cow
Diovan Gleevec/Glivec

Dog
Lotrel

TOWS Matrix

Internal Strengths (S)


Market Leader Strong CNS image of Novartis Strong brand image-Heritage, Valuation Strong rapport with KOLs High acceptance of carbamazepine as an anti epileptic FDA approved Effective in multiple indications First line, first choice therapy

Internal Weaknesses (W)


High Dependency on Suppliers No formulation for children Mostly under dosage is recommended Frequent change in technology

External Opportunities (O)


High growth rate of the market More doctors particularly GPs are Diagnosing epilepsy High treatment gap Lot of potential in different indications New Molecules are high cost & with low safety profile

"Maxi-Maxi" Strategy
Capitalize on strong CNS franchise build further rapport with KOLs Patient Evaluation Programs: For KOL Development KEEP (Key Experts Evaluation Programs)- Painful Diabetic Neuropathies for 30 Physicians BOC - 2 Programs for 30 Doctors each for PDN Epilepsy Project CME Programs for Family Physicians (Epilepsy)

Maxi-Mini" Strategy
Conduct seminars and workshops to train GPs about Epilepsy and the usage of Tegral. Treatment gap should be reduced by awareness programs in rural areas. Cost - plus pricing should be practiced for new molecules exposures and regulations for safety should be enhanced

External Threats (T)


High competition Increasingly high acceptance of valproates Increased penetration of low cost Generics in institutions Epival has many galenical forms Introduction of new molecules Compliance is low

"Mini-Maxi" Strategy
Build further rapport with KOLs Exploit on strong CNS franchise Patient Evaluation Programs should be conducted for KOL Development Own distribution structure of Tegral, measuring highest in clinical evaluation, effectiveness & safety Summits of KOLs for top brands in neuroscience to increase share of voice Focus to minimize substitution. More Focus on RMOS Better Awareness of Epilepsy

"Mini-Mini" Strategy
Formulation should be introduced for children and young adults. Promotional Strategy to create awareness and increase mind share Promote KOLs to increase the number of patients Optimize the loyalty base of Tegral users Switch Epival users to Tegral

SWOT Analysis
Strength Market Leader Strong CNS image of Novartis Strong brand image-Heritage, Valuation Strong rapport with KOLs High acceptance of carbamazepine as an anti epileptic FDA approved Effective in multiple indications First line, first choice therapy Weaknes Only one formulation is available No formulation for children Mostly under dosage is recommended Lack of resources to tap attractive opportunities Opportunity High growth rate of the market More doctors particularly GPs are diagnosing epilepsy High treatment gap Lot of potential in different indications (PDN) New Molecules are high cost & with low safety profile Threat High SoV of competition Increasingly high acceptance of valproates Increased penetration of low cost Generics in institutions Epival has many galenical forms Introduction of new molecules Compliance is low

Conclusion

Novartis a company who come up with different mergers and acquisitions is now standing at a point having sales in billions of dollars with the market leadership in patented products and generic medication. Novartis is growing well as compared to its major rivals if we compare it with Johnson & Johnson. The state of the art research and development labs in different parts of the world covering different aspects of bio technology helped for the cure of the human body. The research on different aspects on viral, bacterial diseases along with the diagnostics of diseases takes place in the research labs of Novartis. The leadership in the patented drugs helped Novartis to generate the fruitful sales as compared to its rivals and not only in Patented but also in generic drugs Novartis is doing brilliantly. The diverse work force form different parts of the world work in Novartis for research and development and with the blend of mix cultures Novartis is catering the overall market needs.

Same like the research centers Novartis is having manufacturing facilities in different geographical regions of the world covering Asia pacific, Americas, Latin America, European market and Middle East. The provision of medicine from Novartis not only helped the ill to proper cure but also let the people to live a prosper life. The HR policies of Novartis are not only in the benefit of organization but also it concludes also the work force too, giving the employees the living wage rate etc.

References
http://www.novartis.com http://www.wikinvest.com/stock/Novartis http://www.corporatecitizenship.novartis.com/business-conduct/lobbying/politicalcontributions.shtml http://www.pharma.us.novartis.com/about-us/ourbusiness/leadership.jsp?usertrack.filter_applied=true&NovaId=2935376844066453 241 http://www.novartis.com/about-novartis/our-mission/index.shtml http://www.corporatecitizenship.novartis.com/.../novartis_energy_and_climate.pdf

http://www.scribd.com/doc/18178409/Novartis-Patent-Application-InfluenzaVaccines-with-Adjuvants http://www.novartis.com/newsroom/news/2009-11-25_biocamp.shtml

Book Strategic Management, Concepts and Cases, 11th edition. By Fred R. David, Prentice Hall of India, Private Limited Publications 2007