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Alergan A Case Study

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Allergan

Case Analysis

Allemande Left, then Do-Si-Do,

Find a Partner

(2004)

Team 2

THE CURRENT SITUATION

A. Current Performance

Allergan is one of the smaller pharmaceutical companies in the industry, it's product lines include ophthalmology, neuromodulator, and dermatology. Allergan has experienced recorded sales growth; 16% over the previous year. As Allergan entered 2004, it has a strong pipeline of projects, with most of its resources focusing on ophthalmology and neuromodulator businesses. The company has indicated a desire to expand its smallest platform (i.e., dermatology) via external resources.

B. Strategic Posture

1. Mission:

Improving Lives: For more than half a century, Allergan's mission has remained constant: to deliver high quality products to our customers, and satisfy unmet medical needs, and improve patients' lives.

* To develop a unique level of understanding of our customers in order to implement operational strategies that provides the greatest value for our customers and stakeholders.

* To become the partner of choice for ever better health care through the value of our technological innovation, industry leadership, partnering skills and relationships, worldwide infrastructure, research, and manufacturing capabilities.

* To continue as an innovative, technology driven, global health care company focused on specialty pharmaceuticals and eye care products that deliver value to customers, satisfy unmet medical needs, and improve patients' lives.

2. Objectives: (Allergan 10-K, 2004)

 Profitability. Achieving a sufficient level of profits that allows us to finance our growth and fulfill corporate objectives through self-generated resources; in conjunction with profits, the company must maintain a healthy cash position to aid its flexibility and ability in pursuing future strategic transactions.

 Customers. Understanding and servicing unmet needs with useful, innovative products that add value to our customers' lives.

 Utilization of Resources. Focusing our efforts and resources on products with the highest potential, with respect to research and development.

 Employees. Attracting and retaining quality employees by offering competitive salaries, flexible benefits, opportunities for advancement, and support of personal development, as well as quality of life (Allergan: Careers, 2004).

 Innovation. Pursuing breakthrough Research & Development through internal discovery, complemented by a global network of discovery partnerships.

 Efficiency. Utilizing the principles of Six Sigma and Lean Manufacturing to control overhead costs, while capitalizing on the company's economies of scale.

 Citizenship. Providing a lasting and positive impact in the communities and neighborhoods our employees call home (Allergan: Careers, 2004).

 Environmental Health & Safety. Facilitating the company's objectives while enhancing the welfare of our customers, employees, and the communities in which we operate through sustainable reporting and EHS programs and goals (Allergan: About Allergan, 2004).

3. Strategy: (Allergan 10-K, 2004) To bolster our strengths in ophthalmology, neuromodulators, and dermatology and increase market leadership for each platform through heavy investment in R&D; to continue as an innovative, technology driven, global health care company focused on pharmaceuticals in specialty markets that deliver value to both our customers and shareholders.

4. Policies: (Allergan 10-K, 2004)

 Concentrating company resources on the most profitable projects through disciplined resource allocation and rigorous portfolio planning.

 Targeting underserved specialty therapeutic areas and consequently, enhancing the quality of people's lives by introducing products that address their unmet needs.

 Increasing each platform's market share and strength through continuous and substantial reinvestment in the company's key drivers: Research & Development and Sales & Marketing.

 Advancing employee quality of life both internally with competitive compensation packages and externally in their communities through the philanthropic arm of "The Allergan Foundation" (Allergan: About Allergan, 2004).

5. Specialty Market Platforms: (Allergan: About Allergan, 2004)

 Ophthalmology. Eye care therapeutics is Allergan's primary specialty market, comprising majority of the company's revenues both domestically and internationally. Through its broad range of products, Allergan effectively treats the following eye-related ailments: blepharospasm (frequent, uncontrolled blinking), dry eyes, glaucoma, itchy eyes, pink eye, and strabismus (crossed eyes).

 Neuromodulators/Botox®. Accounting for 90% of the worldwide neuromodulator market, Botox® has historically been used in the treatment of strabismus, blepharospasm, and cervical dystonia. Further investigation into this product's applicability have lead to its approval for cosmetic indications; though 60% of this platform's 2004 sales came from therapeutic usage, Botox® as a cosmetic agent is highly profitable and has much room for growth in the aesthetic market. Approval is currently pending for spasticity and excessive sweating conditions, while research into future applications involves headaches and overactive bladders.

 Dermatology. As Allergan's smallest specialty market, efforts in dermatology are focused on topical treatments for acne and psoriasis, with oral indications pending approval. With a greater presence in North America, the company is gradually penetrating the international market through product out-licensing. Furthermore, though this platform pales in comparison to the previous two, Allergan's participation in these niche markets is consistent with its mission and objective for servicing customers'

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