Business Policy

Business PolicyBristol-Myers Squibb vs SanofiSubmitted By:Niharika Deo (11)Laxmi Deshpande (12)Manisha Tripathy (55)

Bristol-Myers SquibbAn American pharmaceutical company, headquartered in New York CityManufactures prescription pharmaceuticals for cancer, HIV/AIDS, cardiovascular disease, diabetes, hepatitis, rheumatoid arthritis and psychiatric disordersMission is to "discover, develop and deliver innovative medicines that help patients prevail over serious diseases.Company was formed in 1989, following the merger of its predecessors Bristol-Myers and the Squibb CorporationThe companys 4 core businesses are: Specialty medicines, Cardiovascular and Metabolic drugs, Mature Pharmaceutical brands and the Health Care Group

HistorySquibb was founded in 1858 byEdward Robinson SquibbinBrooklyn, New YorkBristol-Myers was founded in 1887 byWilliam McLaren BristolandJohn Ripley MyersinClinton, New YorkBristol and Myers changed the name from Clinton to Bristol, Myers Company (a hyphen would replace the comma after Myers death in 1899, when the company became a corporation)Bristol-Myers first nationally recognized product, termed a poor mans spa by chief chemist J. Leroy Webber, was a laxative mineral salt that, when dissolved in water, reproduced the taste and effects of the natural mineral waters of BohemiaIn 1924, companys gross profits topped $1 million and its products were sold in 26 countriesShares held by John Myers heirs became available for sale, triggering a series of moves that, by 1929, turned Bristol-Myers into a publicly held company on the New York Stock Exchange.

Major Milestones1938 - Post war depression prompted Bristol-Myers to jettison its pharmaceutical business and devote itself entirely to its specialties: Sal Hepatica and Ipana, its two big winners, and a dozen or so assorted toiletries, antiseptics and cough syrups1940 - Squibb obtained cultures of penicillium notatum from the United Kingdom and developed deep tank fermentation processes for the production of penicillin1943 - Bristol-Myers bought Cheplin Laboratoriesa Syracuse, New York, manufacturer of acidophilus milkand broke ground for a new penicillin plant, which became a key supplier of penicillin for the Allied armed forces during World War II1967 - Bristol-Myers acquiredMead Johnson & Company, a leader in science-based infant and childrens nutrition and Squibb delved into Cancer research1971 - Squibb established worldwide headquarters in Princeton, New Jersey

Milestones Contd..1986 - Bristol-Myers opened a state-of-the-art research complex in Wallingford, Connecticut, designed to house more than 800 scientists and support staff1989 - Bristol-Myers merged with Squibb, creating a global leader in the health care industry and worlds second-largest pharmaceutical enterprise1994 - The company completed its acquisition of Union Pharmacologique Scientifique Appliquee (UPSA), a leading manufacturer of pharmaceutical and consumer medicines, based in France1997 - The company opened a 433-acre research campus in Hopewell, New Jersey1999 - President Clinton awarded Bristol-Myers Squibb theNational Medal of Technology, the nation's highest recognition for technological achievement, "for extending and enhancing human life through innovative pharmaceutical research and development and for redefining the science of clinical study through groundbreaking and hugely complex clinical trials that are recognized models in the industry."

2000 - Bristol-Myers Squibb announced a new strategy that included a sharpened focus on medicines and an aggressive external development program; company sold its Clairol business as a part of this strategy2001 - Company announcedthe purchaseof DuPont Pharmaceuticals Company for $7.8 billion with the intention to further strengthen Bristol-Myers Squibbs medicines business2007 Company announced a new strategy to transform itself from a midcap pharmaceutical company to a next-generation BioPharma company focused on the discovery and development of innovative medicines to fight serious diseases; introduced theString of Pearlsapproach to complement and enhance its internal capabilities with a suite ofinnovative alliances, partnerships and acquisitionswith small and large companies2008 - Bristol-Myers Squibb acquired Adnexus Therapeutics, developer of a new class of biologics and sold its Medical Imaging business to the private equity firm Avista Capital Partners to focus on its core pharmaceutical pipeline

2008-2009 (Strategic Inflection Point)Bristol-Myers Squibb announced in April 2008 its plan to sell approximately 10-20 percent of Mead Johnson Nutrition Company stock to the public through an IPO and to retain at least an 80 percent equity interest for the foreseeable futureThis announcement, in addition to the Medical Imaging and ConvaTec sales, was part of the BioPharma transformation to better focus Bristol-Myers Squibb on its biopharmaceutical businessEntered into an exclusive agreement with KAI Pharmaceuticals, Inc., a privately held biotechnology company, to globally develop and commercialize a therapy for cardiovascular diseasesPurchased Kosan Biosciences, a cancer therapeutics company based in California, for approximately $190 million. This acquisition enhanced the companys pipeline with compounds in two important classes of anticancer agentsEntered into an exclusive agreement with PDL BioPharma of Redwood City, California to develop and globally commercialize a therapy for multiple myelomaEntered into a global collaboration with Exelixis, a biotechnology company based in San Francisco, California, to develop and commercialize two novel therapies

2008-2009 (Strategic Inflection Point)Major restructuring involves focusing on the pharmaceutical business and biologic products, along with productivity initiatives and cost-cutting and streamlining business operations through a multi-year program of on-going layoffsIn August 2009, BMS acquired thebiotechnologyfirmMedarexas part of the company's "String of Pearls" strategy of alliances, partnerships and acquisitionsIn September, Bristol-Myers Squibb acquiredAmira Pharmaceuticals, a small-molecule pharmaceutical company focused on the discovery and early development of new drugs to treat inflammatory and fibrotic diseasesIn November 2009, Bristol-Myers Squibb announced that it was "splitting off" Mead Johnson Nutrition by offering BMY shareholders the opportunity to exchange their stock for shares in Mead Johnson; this move was expected to further sharpen the company's focus on biopharmaceuticalsReduced subsidies for health-care to retirees and plans to freeze their pension plan at the end of 2009 as a cost-cutting measureCompany acquired ZymoGenetics, securing an existing product as well as pipeline assets in hepatitis C, cancer and other therapeutic areas

Current StatusIts one of the Fortune 500 companies with a market capitalization of US$87 billion and stock appreciation of 61.4% by 2013Ranked as the best drug company of 2013 by Forbes Magazine and operates in 37 countries as of now, including BRIC nationsCurrently positioned as a BioPharma leader focused on helping to address the unmet medical needs of patients with serious diseasesRestructuring of existing industry boundaries; Blue Ocean Strategy employed by the company involves combining the reach and resources of a major pharma company with the entrepreneurial spirit and agility of a successful biotech companyFocus is on customers needs, giving maximum priority to accelerating pipeline development, delivering sales growth and continuing to manage costsIn 2014, BMS sold its global diabetes business to AstraZeneca and announced acquisition ofiPierian as part of its current strategy

Threats to Sustainable Advantage Health Care Group of BMSImitation - Actual and potential competitors continuously try copy the superior position in Pharma industry by either copying the product portfolio or the business processes. BMS tries to combat the imitation by applying a unique model of acquisitions and collaborations, where it constantly renovates its existing processes with newly infused culture or expands the product pipeline to stay ahead of imitators. Another step taken in this direction is acquisition of DuPont, one of its biggest competitor in Health Care GroupSubstitution There are several actions by competitors that undermine the firms competitive advantage without copying it like obtaining the rights to produce the generic and less expensive versions of a patented drug. Again, the company fights the threat of substitution by closely working with local health care professionals and understanding the varying consumer needs to come up with the apt solution for it. This unique R&D process is facilitated through collaboration with some of the countrys foremost medical experts and academic researchers, whose deep knowledge, expertise and insight help create a unique sustainable advantage

Hold Up - Diversion of the scarcity value to other players in the value net. Hence the company has come up with the Strings of Pearl strategy that focuses on strategic acquisitions and collaborations with scientific and commercial partners. This way they continue to leverage their collaborative work style in allianceson innovative medicines that address high unmet medical needs as well as reduce hold up at various integrative levels that would have risen in the absence of this strategy.Slack - Dissipation of the scarcity value by complacency and related factors leads to huge endogenous sunk costs. The various productivity transformation initiatives have been taken by the company in this regard.Divestment of Medical Imaging BusinessReduction in the company owned stakes in ConvaTec and Mead Johnson businesses (Health Care Group)Reduction in the number of brands in the company's mature products portfolio by 60%Consolidation of its global manufacturing facilities to eliminate possible complexitiesOutsourcing , where appropriate, processes & services

Tests for Horizontal ScopeBetter Off Test Company has made many divestments in the recent times in the Health Care Group in order to focus on its core businesses of specialty drugs while maximizing the value for its shareholders. Several mature product brands have also been reducedBest Alternative Test The company has adopted the acquisition and collaborative strategy as its best alternative for horizontal scope. The string of new technologies, alliances and acquisitions including novel and first-in-class small molecules and biologic compounds in clinical development has strengthened the pipeline, extended relationships with existing partners and has enhanced the ability to help future patients prevail over serious diseases.Good Parent Test - As a next-generation BioPharma company, Bristol-Myers Squibb seeks to reallocate resources to enable additional strategic acquisitions. These alliances add to the company's innovative capabilities, portfolio and pipeline to amplify the company's ongoing focus on growth areas, such as specialty medicines and biologics.Best Parent Test All the strategic acquisitions made by BMS gets chosen through a careful set of processes which form an integral part of its Strings of Pearl strategy where in the company works with third parties to improve and enhancethe existing abilities in order to add greater value to both the parties

Corporate Strategy of Bristol-Myers SquibbThe major strategic imperatives are:Driving the companys performanceRaising the earnings baseSustaining growthString of Pearls StrategyThe company is complementing and enhancing their internal capabilities with a suite of innovative alliances, partnerships and acquisitions with small and large companies. Each String of Pearls transaction is targeted to fit with the companys strategic focus on specific disease areas, and builds upon an existing strength within our organization or creates a new area of medical or technical expertise. The ultimate goal is to offer patients new treatment options in areas of serious disease with significant unmet medical needs. Today, more than 40 percent of their pipeline and 50 percent of their revenue come from alliances with other companies.

Corporate Strategy Adding ValueAs part of its corporate strategy (String of Pearls), BMS has completed 11 pearl transactions encompassing key disease areas like cancer, cardiovascular disease, immunology, neuroscience, rheumatoid arthritis and virology. These transactions are listed below.Adnexus Therapeutics acquisitionKAI PharmaceuticalsKosan BiosciencesPDL BioPharmaExelixisZymoGenetics collaborationNissan Chemical Industries and Teijin PharmaMedarex Inc. acquisitionAlder BioPharmaceuticalsAllerganZymoGenetics acquisition

Picking out the Pearls Corporate Strategy adding value to SBUsA streamlined and flexible approach to business, including the processes underlying Selective Integration working with third parties to improve and enhance the abilitiesPeer to Peer alliances partnering with larger companies by extension of commercial capabilities or acquisition of smaller companies to expand product portfolioModernized and reorganized the manner in which the relationships with third parties are identified, contacted, secured and managedAnother key element adding value to the SBUs is the cultural change driven by the Strings of Pearls strategy where the company is becoming more agile, entrepreneurial and accountable; as the company acquires biotech companies, technology and expertise, this culture is infused ever more deeply throughout the organization.

Bristol-Myers Squibb Dynamic View

The company will continue to invest in key growth products, including specialty and biologic medicines, and cardiovascular and metabolic drugs.

Dynamic View Specialty DrugsThe Specialty Drugs business contains following elements:-- an innovative portfolio of new products targeted at serious unmet medical needs, or significant clinical advancement over existing therapies; -- a Selectively Integrated Business Model, which complements internal capabilities with external innovation, streamlines manufacturing, creates a targeted approach to geographies and customers, utilizes strategic partnerships with suppliers and competitors, and focuses on innovative sales and marketing practices; -- Strong Continuous Improvement capabilities, simplified processes, enhanced efficiency and effectiveness and aligned infrastructure to support growth.

These capabilities have helped the company carve out a strategy to selectively integrate with small and large companies to expand existing product pipeline, cater to larger consumer segments, expand in 37 countries and increase the productivity by 40%.

BMS - Corporate Advantage and Blue Ocean StrategyIts one of the oldest and most established US Pharma companyThus it has the advantage of scale and scope economies, large market share, renowned brand name and customer loyaltyThese advantages help the company charge premium pricing for its specialty drugs with large number of takers coupled with low cost base resulting in higher revenue generationBMS has also implemented a transformational strategy in the field of pharmaceuticals by pairing the scale and resources of a mid-sized pharmaceutical company with the entrepreneurial spirit and innovative focus of a biotech startupThis has redefined the boundaries of the industry and hence a Blue Ocean Strategy in general across all its business units

CSR/CSI initiatives for Shared Value CreationBMS is steadfast in its commitment to economic, social and environmental sustainability. The various initiatives taken in this regard are:Reducing Health Disparities - The Bristol-Myers Squibb Foundation helps build bridges to health for underserved populationsSustaining Our World - Foster sustainability through environmental, social and economic progressPaying For Your Medication Assist eligible patients who have financial hardships and in need of access to the special medicinesBuilding Our Communities Supporting communities in locales where there are operational business units through grants and givings, local development, disaster relief, improving science education, etc.Through the Bristol-Myers Fundnow the Bristol-Myers Squibb Foundationestablished in 1955, the company has invested in a broad range of programs that reflect their values and serve the needs of society. The mission of this foundation is to promote health equity and improve the health outcomes of populations disproportionately affected by serious diseases and health conditions.

Strategic Challenges Corporate LevelMajor challenges includeEnhancing efficiencyImproving Cost BaseIncreasing productivityCombating competition in a cost effective waySimplifying geographic footprintImplementing a more efficient go-to-market modelBristol-Myers Squibb should take following initiatives to deal with these challenges:Reducing the number of manufacturing facilities and partnering with third parties to work in close collaboration for outsourced manufacturing facilitiesReducing the total head count in the company to eliminate redundant positions and job responsibility overlaps in order to control slacksReallocate resources to enable additional strategic acquisitions, as well as pursue partnerships and other collaborative arrangementsSimplification and standardization of companys general and administrative operations

Strategic Challenges Business LevelMajor challenges includeMaintain the current competitive positionHold the market shares across various business portfoliosEnhance the Specialty and Biological drugs businessConstant innovation in products and processesInitiatives to combat these challenges are:Eliminating complex processes that can be outsourced or accomplished through strategic alliances with other companiesRationalizing the company's mature brands portfolio Divesting company owned stakes in Health Care Group to unfreeze/unlock financial resources to focus on businesses that provide distinctive competencyVertical integration to reduce the overall cost base and increase profitabilityExpand in various country markets to exploit strategic sourcing and manufacturing advantages associated with themShorter time-to-market by placing R&D facilities closer to the markets