Problem Identification:
Novartis is a Swiss multinational company with global pharmaceuticals businesses. During a period of boom in life sciences industry, Novartis’ president and CEO Daniel Vasella asked Steve Briggs, a PhD biologist, to propose a strategy to take global life-science giant Novartis into the rapidly expanding field of plant genomics. As its chief executive, Briggs is now facing the greatest challenge and risk of strategically managing a new research organization to be named as Novartis Agricultural Discovery Institute (NADII), a late entry in the life sciences industry which encompasses a number of strong contenders like Monsanto and DuPont which are technically stronger than Novartis. Briggs is now supposed to execute a strong strategy that can justify enormous investments required just to enter into the life sciences industry.
Situation Analysis:
As one of the world’s largest pharmaceutical companies with global reach in more than 140 countries, Novartis is a global leader in consumer health. It was a dominant force in each of its core industries: Healthcare, Agribusiness and Nutrition/Consumer Health. The company offers wide range of products in pharmaceuticals, vaccines, consumer health, generics and animal health. Novartis was a result of world’s largest merger worth $32 Billion. Since the merger, Novartis has evolved strong evaluation and compensation systems that helped the company to create a corporate culture that would move it beyond the Swiss traditions. Over the time, the company has developed a strong brand image in the eyes of the worldwide consumers because of its well established research and development and strong maintained relationships with the corporate office and executives. The R&D facilities are really a model of efficient and methodical laboratories that can help researchers to carry out an effective exploration on plant genomics.
However, unethical advertisements affected company’s brand image in a negative way. There were controversies about Novartis’s advertisement of certain products which affected its brand image. In addition, there were certain cases regarding Indian patent laws which also wedged its brand image. Establishing a new firm in a competitive market with controversies as a backdrop can create difficulties for Novartis and can create hurdles in its progress.
Conversely, the company has a lot of opportunities in the life sciences industry. The company can leverage its core business expertise and resources to create sustainable solutions in the field of genetic engineering especially plant genomics. Because of its strong R&D, Novartis can develop broad-based medical innovation in technologies and businesses across the spectrum of healthcare. It can also venture into health needs in under-developed and poor countries. Because the medicines are always needed as health related problems are getting increased day by day.
Most of the consumers have little understanding of genetic engineering and some of them totally oppose it on philosophical grounds which can be a threat to Novartis. It can impact the acceptance rate of Novartis’ products. Complex government regulations concerning healthcare products would be another challenge for Novartis to execute its new planning strategy for Novartis Agricultural Discovery Institute. Strong contenders like Monsanto and DuPont pose threats for the new research organization NADII to enter into the market. They have opted for very different approaches to technology development which have mostly driven up prices for the remaining independent technology providers and locked up several of the most important. It challenges Briggs to decide a strong financial strategy to emulate his contenders.
Alternative Solutions:
The first proposed strategy that Briggs can use for the establishment of Novartis Agricultural Discovery Institute (NADII) would be