A Case Study on AstraZeneca in Pharmaceutical Industry

Table of Contents

A case study: Investigating how AstraZeneca can strengthen its management strategies
Methodology
Findings and Discussion
Personal Learnings and Reflections

19 Pages 4729 Words

A case study: Investigating how AstraZeneca can strengthen its management strategies

The following report is a research study on the use of strategic management models to establish brand equity and trust in pharmaceutical businesses. The report will explain the current situation of the industry using SWOT and PESTLE frameworks and focus on a certain literary paper to gather information on the pharmaceutical brand, AstraZeneca. The project will focus on building a case study around their current operating strategies and recommend future strategies against the issues identified in the analysis of the strategic tool. In this process, the project objectives are:

To determine how global pharmaceutical companies build brand equity and trust
To use strategic management models, SWOT and PESTEL to analyse the current global pharmaceutical industry
To identify current issues and trends in the global pharmaceutical industry
To conduct a case study evaluating AstraZeneca’s current and future operating strategies

Link to New Assignment Help's comprehensive assignment help offerings from a trusted UK-based company.

Methodology

The current research has followed the qualitative methodology on data collected from secondary sources. The study requires a thorough review of all relevant papers covering the global pharmaceutical sector. The company’s annual report has been used to examine the company’s governance and the management team’s efficacy to build the brand. Although the major focus has been on a specific paper on pharmaceutical research by Sundgren and Styhre (2004), other secondary sources have been adopted to analyse the market and the concepts of brand equity and trust.

Findings and Discussion

Findings

SWOT Analysis of the Pharmaceutical Industry

*Strengths*	*Weaknesses*
· Pharma businesses now focus on transcending the product and clinical value. Patient and provider outcome-based values are focused on quality, experience, and efficiency. This outcome-based paradigm relies on these metrics. Companies are using social media and digital technology to engage patients and provide more individualised illness conditions and benefit messages. · This industry has so many levels that unskilled workers cannot manage any subsectors. Thus, the industry employs well-trained executives. This keeps the industry’s standards high. · Chemicals and labour are needed in this sector. Asia and Africa provide cheap labour. However, Europe and America are rich. They may purchase medications’ chemicals. · Competing and engaging consumers at all levels are as vital. Salespeople, brand marketers, and medical liaison officers connect providers via direct-to-consumer, mobile marketing, and tailored communications. · Medical professionals must follow the pharmaceutical industry’s strict standards. Pharmaceuticals are a medical subsector. Thus, by doing well, the business is setting an example for the medical sector. · Customers abound in this sector. This base is also supported by its medication production. This guarantees this industry has adequate buyers. Pharma has a strong market presence. Its size scares off competitors and attracts clients.	· Pharma businesses still use conventional vendors. Its machinery is outdated. Since consumers want new healthcare products, it’s obsolete and uninteresting. Modern tech might speed up manufacturing. · Pharma businesses must grasp the patient-provider connection in today’s environment of multiple touchpoints. There is room for improvement in creating intricate interactions between care providers. · Profits are usually low in this industry since resources are expensive. Not just certain firms. Most firms make little profit. This makes the industry poorer. · This industry is huge. Thus, implementing a fresh or revolutionary choice may take time. This delays everything. Industry decision-making delays are the key factor. Since each company has a board of directors and chairman, they seldom agree quickly. Users may see 360° without interconnected systems. Building custom apps keeps businesses in silos. · In this business, employees are unmotivated. This explains the low output. Because psychological studies show that poor morale hurts human performance. Staff morale is poor.
*Opportunities*	*Threats*
Conforming to the Industry Life Cycle, this industry is growing. Thus, it may still fly further and wider. With proper marketing and publicity, it may still dominate the market. Globalization has brought the globe together. All customers. Global pharmaceutical sales are promising. This should eliminate resource shortages and poor profit margins. · Data is abundant in this business. However, data utilisation and monetization are unexplored. Real-world proof requires real-world facts. · Government favours this business. Thus, they get all government assistance. The industry thrives because of it. Laws and taxes favour them. Insurance firms and the government support this business. They obey acceptable rules. They’re also uninterested.	· Pharma businesses need talented people who can apply these new digital technologies to real-world scenarios. Data scientists and engineers are still developing, leaving a gap in learning and using data and new technologies at the appropriate time with the right resources. · Current currency depreciation is worse. The pharmaceutical sector is suffering. It complicates everything. Price inflation is a constant scourge. In an industry with expensive raw resources, price inflation just makes things worse. Many industrial businesses now lack the basics. This raises manufacturing costs and lowers earnings. · Due to data privacy requirements, the sector is threatened by a lack of privacy policy standards. Pharma businesses must avoid fines by having these technologies grasp privacy policy requirements and respond intelligently. · Globalization has increased industry competition. Ayurvedic, homoeopathic, and other alternative medicine industries are popular. Pharma faces a major danger. In such rivalry, a poor power supply might threaten an organisation. Pharma needs plenty of electricity. However, the large-scale power supply is difficult. Thus, many industrial businesses lack the power to do their duties. · The technology stack in AI/ML (artificial intelligence/machine learning) sector is fluid. Companies are still choosing a tech stack and platform for their new digital journey. Pharma corporations are hesitant to invest in these start-ups since they are still developing.

(Source: Hoq, Ahsan and Tabassum, 2013; Lidstone and MacLennan, 2017; Paulus, 2020; Dispas et al., 2022)

PESTLE Analysis of the Pharmaceutical Industry

*Political*	In most countries, there are established systems of regulation that dictate things like certification and safety standards. They also draw attention to the dangers of illicit drugs. Financial losses might be substantial for a pharmaceutical company that disobeys such regulations. The government often shows its support for this sector. So, the government provides them with all the assistance they need. It is also the reason why the market is so healthy right now. Several rules and levies work to their benefit. The government’s support for this sector is mirrored by that of several insurance firms. They are required to abide by fair conditions and regulations. They also have a low degree of interest.
*Economic*	Profits in this industry are often low due to the high cost of materials. In addition, this is not a situation that just certain businesses face. Profit margins are low across the board. Because of this, the sector’s financial standing deteriorates. The depreciation of currencies in today’s society has reached a new low. The pharmaceutical business is seeing a severe impact from this. The situation is complicated even more by this. Furthermore, price inflation is an ever-present evil that cannot be ignored. Inflation is particularly painful in an industry whose input costs are high, to begin with, such as the mining, logging, and construction industries. The industry as a whole is feeling the pinch as the price of basic supplies skyrockets. Because of this, the cost of manufacturing skyrockets and revenues plunge to all-time lows.
*Social*	There is a sizable audience for the products and services offered by this sector. Certain popular medicines are made there, which are used to supplement this economy. This also guarantees that there will be enough customers in the market for these goods. When it comes to market share, the pharmaceutical business is among the most formidable. Because of its size and authority, it can impress and frighten off both competitors and would-be rivals. With so many people involved in a patient’s care nowadays, pharmaceutical firms must comprehend the nature of the patient’s connection to each of these individuals. Despite progress, there are still voids to fill and room for improvement in the intricate web of relationships between the many care providers. There is a lack of drive among the workforce. This explains why production levels are so low. Several papers in the field of psychology demonstrate that human performance suffers significantly when morale is poor or non-existent. Thus, poor morale amongst staff members is a problem. To ensure that data and new technologies are learned and deployed at the correct time and with the proper resources, there is a significant shortage in the skill pool of data scientists and data engineers.
*Technological*	The pharmaceutical industry is nevertheless slow to abandon its reliance on conventional suppliers. It is hampered by an absence of cutting-edge technology. Because of this, it seems pretty antiquated and boring, especially considering how eager consumers are to find cutting-edge healthcare products. With today’s technological aids, manufacturing may go much more swiftly. The availability of data is not an issue in this sector, despite its central position. Nonetheless, there is more research to be done into how to put this data to use and how to make money off of it. To provide tangible proof, it is necessary to make use of actual world facts. Emerging artificial intelligence and machine learning have a fluid technological stack. As they prepare to begin their new digital adventure, many businesses are still weighing their options for the best technology stack and platform to utilise. As a result, pharmaceutical firms are hesitant to engage in some of these businesses since they are still developing.
*Legal*	Due to the critical nature of pharmaceuticals, there are strict regulations in place to prevent fraudulent activity surrounding drug manufacturing and expiration dates. A company could be taken to court if it does not follow the rules. Different laws concerning this information pose a risk to the industry because of the lack of rules governing privacy policies and how they should be handled. Since the General Data Protection Regulation (GDPR) in Europe forbids using individual patients’ information for marketing purposes, getting the most out of digital assets is becoming difficult.
*Ecological*	Because of the massive quantity of carbon dioxide (CO2) emitted during the manufacturing process, several countries are passing measures to decrease the environmental effect of pharmaceutical making. Compliance with these rules might be expensive for start-ups, which could lead to their demise. Various biotechnology contaminants are produced throughout the medicine manufacturing process. Potential health risks have been attributed to them. When it comes to people’s health and safety, the corporation in question must deal with the waste generated by them.

(Source: Holland and Bátiz-Lazo, 2004; Hamza, Cook and Hadzic, 2013; Tukdeo et al., 2016; Belkhir and Elmeligi, 2019; Dispas et al., 2022)

Intuition and Pharmaceutical Research on AstraZeneca

What matters most to a company’s bottom line is its capacity for managing creativity, which in turn determines how innovative it can be. Although creativity is a highly debated and multifaceted concept, for Sundgren and Styhre’s (2004) article it has been used to refer to the original ideas and analysis that provide the groundwork for an invention. The capacity to precisely specify what kinds of thoughts and cognition are regarded as creative or demonstrated to be creative is a key challenge in the studies of creativity in the workplace. The prevailing view takes a functionalist and instrumentalist perspective on creativity, which views creative output as a result of external factors that can be manipulated. As far as management theory is concerned, this rationalist viewpoint has been the standard for quite some time now. There is still a place for reason in management theory and practice, but it is vital to have an open mind. To produce original work, managers must allow for the influence of less rational human faculties like emotion and intuition.

If Sundgren and Styhre (2004) define intuition as the capacity for synthesis based on existing data, then they may set it against the reductionistic and analytical modes of thought. Although the AstraZeneca professionals who participated in this study felt that intuition is a very important human skill, using intuition as the foundation for judgments is still divisive. Intuition operated as a type of complement to more traditional ways of thinking since it was more strongly related to emotionality and embodiment than to cognitive capabilities. Even Nevertheless, researchers in the pharmaceutical industry recognise the value of intuition, particularly when faced with decisions that need them to take into consideration a large number of factors. Therefore, the intuitive capacity must be acknowledged in the organisational creativity literature that is strongly supportive of the concept of remarkable and ground-breaking innovations.

Brand Equity and Brand Loyalty in Pharmaceutical Industry

Vats’ (2014) research aimed to understand the value of branding in the pharmaceutical sector, as well as the processes and practices that go into creating and successfully communicating a pharmaceutical brand. Internally, brand equity develops in a way that’s similar to how one’s beliefs and convictions do. Brand value, which is defined as the counterfeit value of a brand and suggests a company-based viewpoint, is comprised of numerous components, one of which is brand equity which indicates a consumer-based focal point and influences consumer choice processes in a way linked to attitude strength. Primary and secondary data were obtained for the research. The intended audience consisted of medical professionals, pharmacists/chemists, and patients. Today’s highly competitive market for pharmaceuticals has increased the importance of branding. How a pharmaceutical brand is developed and conveyed to its intended market is crucial to the brand’s ultimate success.

Case of Branding Process in AstraZeneca

It has been claimed on the website of AstraZeneca (2022) that every one of AstraZeneca’s operations, markets, and value chain is designed to have a beneficial effect on society and to promote ethical behaviour. The business does this by encouraging openness, honesty, and diversity among its employees, customers, and vendors. Value creation that goes beyond the effect of their medications on patients is essential. All of their actions are geared toward earning consumer trust towards brands by being honest and forthright while also treating them fairly. From the AstraZeneca Annual Report & Form 20-F Information 2021, information regarding the branding process of the company to gain brand equity and trust among consumers has been obtained. With continuous releases in HFrEF, Forxiga’s popularity soared in 2021 owing in large part to the country of China’s acceptance of the drug in their massive domestic market (AstraZeneca PLC, n.d). The company’s Fasenra(benralizumab) product became a global bestseller and has since strengthened its hold as the most often prescribed innovative biologic for severe asthma in major regions throughout the globe.

The CEO formed and chairs the Senior Executive Team (SET) as how he carries out the power bestowed upon him by the Board concerning the administration, development, as well as performance of AstraZeneca as an organisation. Several AstraZeneca products, including Crestor, Iressa, Brilinta, Nexium Oral, Losec Oral, and Arimidex, have been affected by the adoption of Value-Based Procurement (VBP), which has opened up more of the hospital volumes to eligible generics. To name just a few, the prescription drugs Pulmicort, Nexium IV, Onglyza, Betaloc Oral, and Casodex were included in the most current VBP rollout cycle. With a projected rollout in the first half of 2022, the next VBP cycle is planned to feature several AstraZeneca products. Sales in China and AstraZeneca’s Respiratory & Immunology therapeutic area have been negatively affected by COVID-19. Though sales have increased after the pandemic’s end, they are still much lower than they were before. This is especially true for inhalable products like Pulmicort, Fluimucil, and Bricanyl. Each franchise head is liable for incorporating transition risks into their brand’s goals and financial projections from a commercial perspective. Each company can benefit from the shift toward a low-carbon, patient-centred healthcare system by mitigating the risks associated with this shift.

When assessing the Group's performance, the SET takes into account all of the financial data available to it, in the same format and using the same methodology as the Group's IFRS Financial Statements. Due to the considerable initial investment required to find and create new items, paired with the relatively little and consistent unit cost of production, the margin earned on a product does not directly correspond to the income produced from its sale. Therefore, the SET does not track the profitability of certain pharmaceuticals or drug classes since it is not seen as an important indicator of the company’s success. Extra financial data looks at brand-level sales and gross margins in targeted regions. The research departments, operations, and supporting activities all undergo a thorough cost review, but none of the overhead fees incurred by the consolidated management team is assigned to specific products or labels. Per the discussion in their Directors’ Remuneration Report, SET members’ bonuses will continue to be based on the Group scorecard result.

AstraZeneca began working with Enterprise Risk Management (ERM) to learn about the potential financial impacts of the shift to a low-carbon economy on the company. For the top 10 brands for which life-cycle assessment (LCA) data is available, including examples from each of their disease categories, the company analysed the risks and possibilities at both the enterprise and product levels. This accounts for nearly 50% of Total Revenue. To better understand and manage risks and direct efforts toward minimising the products’ negative impact on the environment, AstraZeneca has implemented LCAs for its most important brands (both respiratory and more general).

However, AstraZeneca’s brand, company, financial condition, or results of operations might be severely harmed if they are unable to properly execute their business plan, including the seamless incorporation of of Alexion into the Group. The American healthcare system is quite complex. Pressure on patient access to branded pharmaceuticals is exerted by numerous payers and intermediaries due to mandatory rebates in government programmes and optional rebates granted to managed care organisations and pharmacy benefit managers for patients with commercial insurance. There is significant downward pressure on pricing due to payer consolidation, tight reimbursement rules, and cost control tactics such exclusionary formularies and price protection agreements. When there is a generic equivalent to a name-brand drug, several formularies implement a “generic first” policy or insist that doctors get clearance before prescribing the brand.

Discussion

The several sources used in the findings of the report mostly included literary papers on the pharmaceutical industry; however, it had to obtain data from online sources provided by market experts as well to establish the current matters of concern relevant to the subject. In this process, the primary focus of the research was on the evaluation of the research study by Sundgren and Styhre (2004) since their research contained a case study of the company of concern in this paper. This research mainly focused on the role of intuition and its execution for creativity in organisations operating in the pharmaceutical industry. From the interview among employees in AstraZeneca, the researchers have identified that creativity is conceptualised as an ability of the organisation to bring a new product section to the forefront. Thus, intuition is a resource for the company to increase product development for their branding and earn trust among their consumers. This has been highlighted by Vats (2014) as well when he claimed that brand recognition is more vital than ever in today’s cutthroat pharmaceutical industry. The success of a pharmaceutical brand depends critically on how the brand is conceptualised and communicated to its target audience.

In the process of branding and developing brand equity and trust, AstraZeneca has taken several initiatives, as per its annual report (AstraZeneca PLC, n.d). SET was established to monitor AstraZeneca’s overall operations, growth, and success. The PESTLE study revealed that the sector was subject to the pressures of governmental and legislative factors, as well as the pressures of the economy and the environment to turn a healthy profit. Extra financial information examines sales and gross margins at the brand level in specified geographies. Overhead expenses spent by the consolidated management team are not allocated to individual products or labels but are subject to a rigorous cost analysis that includes all research departments, operations, and supporting activities. Foreseeing the possible financial implications of the transition to a low-carbon economy, the corporation started working with ERM. AstraZeneca uses LCAs for its most valuable brands to better identify and manage risks and focus efforts on reducing the environmental effect of their products. These altogether seem to address the concerns developed in the SWOT and PESTLE analyses of the pharmaceutical industry. The concern that pharma businesses like AstraZeneca are facing in regards to creating brand equity and trust with innovation in the core approach is the lack of tendency in thinking beyond the traditional areas of operations.

This way, the market analysis using SWOT and PESTLE tools helps businesses to identify the gap in their operations against the demands, trends and patterns in building brand equity and trust in a competitive market. AstraZeneca claims that value creation that goes beyond the effect of their medications on patients is essential. However, the SET does not track the profitability of certain pharmaceuticals or drug classes since it is not seen as an important indicator of the company’s success. Besides, there is also a lack in the organisation forming a competent workforce and leveraging the use of technological advancement in utilising data and focusing on data privacy. The lack of experience and competent personnel is a significant obstacle for pharmaceutical organisations that want to comprehend and use these new digital technologies. Until these issues are addressed, the threats of a security breach and the issues identified in social and technological aspects will be left unaddressed.

Recommendation & Conclusions

Credibility building is more important than building brand equity or any other sort of relationship in the modern business world. According to Vats (2014), it is beneficial to transition consumer brands into corporate brands because customers are more likely to trust the company and, by extension, the brands it develops if they already trust the company. The industry may be able to close the gaps in completeness and accuracy with the assistance of new approaches like “imputation” and “prediction”, but only after it figures out how to gauge the fullness and quality of the data it has at its disposal (Lidstone and MacLennan, 2017).

When it comes to the two most important components of any data—integration and the delivery of relevant insights—companies have the means to work with specialised vendors/partners to establish platforms that would allow them to do so. Sundgren and Styhre (2004) recommend emphasising the need of implementing creativity across the organization’s process and among personnel via development to take advantage of these openings and boost brand equity and trust. This means that the intuitive faculty has to be acknowledged in the organisational creativity literature that is so supportive of the concept of remarkable and ground-breaking innovations. The authors argue that incorporating Bergsonian ideas into this effort might be beneficial.

Knowledge management theory is also criticised for not being critical enough of the conditions under which new knowledge is conceived of and developed, which is a problem that Sundgren and Styhre’s (2004) study seeks to address from the standpoint of innovation management research policy. There has to be a mechanism for these technologies to understand the rules controlling privacy and deliver a smart reaction so pharmaceutical businesses may avoid penalties imposed by such legislation and government regulations. In case of increasing their brand recognition, pharmaceutical companies like AstraZeneca must consider corporate social responsibility (CSR) programmes that focus on environmental protection in the same way that other sectors have (Dispas et al., 2022). They could raise their profile by supporting environmental causes or making charitable donations.

Personal Learnings and Reflections

From the completion of the research project on the AstraZeneca case study regarding the process of building brand equity and trust by pharmaceutical companies globally, I have come to know that acknowledging intuition’s role in the medicine development area would enrich the contextual thinking, which will further widen opportunities via radical thought-process and enrich the perception of creativity in an organisation. I have realised that creativity, especially in the case of technology adoption, in the core approach will lead management towards increasing the possibility of capturing concepts in the earliest and most effective way to develop brand equity and trust in the competitive market of the global pharmaceutical industry.

References

AstraZeneca. 2022. Ethics and transparency. [online] Available at: https://www.astrazeneca.com/sustainability/ethics-and-transparency.html [Accessed on: 6^th December, 2022]

AstraZeneca PLC. n.d. AstraZeneca Annual Report & Form 20-F Information 2021. [online] Available at: https://www.astrazeneca.com/content/dam/az/Investor_Relations/annual-report-2021/pdf/AstraZeneca_AR_2021.pdf [Accessed on: 6^th December, 2022]

Sundgren, M. and Styhre, A., 2004. Intuition and pharmaceutical research: the case of AstraZeneca. European Journal of Innovation Management.

Vats, G., 2014., Brand Equity in Pharmaceutical Industry: An Empirical Study. International Journal of Business Management. 1(1). Pp. 17-22

Hoq, M.R., Ahsan, M.A. and Tabassum, T.A., 2013. A study on SWOT analysis of pharmaceutical industry: The Bangladesh context. Global Disclosure of Economics and Business, 2(2), pp.200-208.

Lidstone, J. and MacLennan, J., 2017. Marketing planning for the pharmaceutical industry. Routledge.

Paulus, R. 2020. Digital SWOT Analysis - Pharma/Life Sciences. [online] Available at: https://www.linkedin.com/pulse/digital-swot-analysis-pharmalife-sciences-robby-paulus/ [Accessed on: 6^th December, 2022]

Dispas, A., Sacre, P.Y., Ziemons, E. and Hubert, P., 2022. Emerging analytical techniques for pharmaceutical quality control: Where are we in 2022?. Journal of Pharmaceutical and Biomedical Analysis, p.115071.

Holland, S. and Bátiz-Lazo, B., 2004. The global pharmaceutical industry. General Economics and Teaching, 405002, pp.1-24.

Tukdeo, R., Kalilombe, E., Onyeugbo, O.C., Okafor, F. and Ebeleghe, R., 2016. The global pharmaceutical industry.

Hamza, A., Cook, R. and Hadzic, V., 2013. The Global Pharmaceutical Industry.

Belkhir, L. and Elmeligi, A., 2019. Carbon footprint of the global pharmaceutical industry and relative impact of its major players. Journal of Cleaner Production, 214, pp.185-194.

AstraZeneca Management Strategies Case Study