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Given Imaging

Team 2

Gracie
Madison
Laura
SWOT Analysis
Given has revolutionized the medical industry and created a technological paradigm shift with
their innovative PillCam and its expanded product portfolio by improving the process of
endoscopy procedures. Despite the company’s inability to create consumer awareness about their
products and its reliance on third party distributors, it has developed innovative technology that
has become a less expensive option for a procedure that many avoid due to its discomfort and
risks. PillCam COLON, Given’s newer product, has not yet been approved in the U.S. or Japan,
but has great potential for success and a major strength in gaining a competitive advantage.
However, following the introduction of Olympus’ camera pill, the “Endo Capsule” in 2005, a
format war ensued. In response to this growing competition, Given will need to focus on the
consumer’s value of differentiation within its product portfolio.

We anticipate that there will be great potential for Given’s PillCam COLON because according
to the World Cancer Research Fund International, Colorectal Cancer is the third most common
cancer in the word with nearly 1.4 million new cases diagnosed in 2012. Japan, being one of the
countries that has yet to approve the PillCam, is among the top 20 countries with the highest
occurrence of Colorectal Cancer (World Cancer Research Fund International).

Although Given has the opportunity for great success with PillCam COLON, the threat of
physicians not adopting the method poses a risk to gaining sales similarly to PillCam SB,
however, the threat is much less significant. On March 23, 2010, Congress passed the health care
reform legislation, which included approximately 160 provisions that will meaningfully improve
the health care system for cancer patients. Many of those provisions will give greater access to
colorectal cancer screening by requiring no out of pocket costs and are exempt from deductibles
(American Cancer Society). Given's PillCam is already the least expensive option on the market
for this type of procedure, and is also the least uncomfortable alternative. After analyzing the
company and researching the market potential, we realized Given has the ability to take
advantage of the opportunity regarding the need for endoscopy procedures.

Problem Statement
Given Imaging faces three major problems in its attempt to gain market share in the colonoscopy
market. We use the dominant design strategy tool to assess the things Given will need. Each one
is discussed in turn.

Availability of Complementary Goods


Given has been successful in developing complementary goods. In addition to the PillCam, to
expand its offerings, Given obtained a complementary product that measured Gastrointestinal
pH, they also developed the PillCam COLON, and have produced other endoscopy applications.
We feel Given has been working backwards, which could be the cause that has held them from
creating a winning standard. They have pursued building complementary goods without
establishing a large user base.

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An Installed User Base
Despite success of PillCam and being able to provide complementary goods, Given has not
established many users within the market. A larger user base would enable Given to supply even
more complementary goods which would strengthen the value of its technology. Without the
necessary user base, there is no incentive to help advance value of the technology.

Technological Utility
Given has superior technology with PillCam and its dominant design that provides users a
convenient, simple, and functional method for a relatively pain free endoscopy procedure. The
lack of promotion and awareness of their products inhibits the increase of value to its technology.
Given has been unsuccessful in correctly fulfilling the market need with its innovative product.
The value of its technology would rise if more consumers were familiar with the benefits of the
products, which would lead to an increase in demand.

Selected Course of Action


We recommend Given form an alliance with Olympus. Given was the first to offer the PillCam
to market, thus they are a first-mover in this industry. Being a first-mover has the advantage of
time to market for capturing market share and growth. However, this can also be a disadvantage,
as it often requires large investments to develop the market. While Given is very successful and
has shown revenue growth year over year, its current sales are now less significant than its
competitors. Given reported $181 million in revenue and $14 million in profits in 2012 while its
most significant competitor, Olympus, reported $10.3 billion in revenue. There is a risk that
Given could invest heavily into building the market as a first-mover, but still not be able to
generate large increases in revenue based on resistance from doctors and competitive pressure.
This would be a difficult situation should it occur, as the return on investment could be negative.
Meanwhile, much larger competitors, including Olympus, could also capitalize on the efforts of
Given building the market, and then make much larger sales and marketing investments and take
a majority of the market share.

A better strategy would be to align and partner with Olympus versus competing directly with
them. On one hand, Olympus would gain value in Given’s PillCam technology, as it represents
90% of the capsule endoscope market. This would also benefit Olympus from potentially losing
revenue in the traditional colon endoscope market, if the PillCam COLON were to become
widely adopted as an alternative. Given would also benefit from partnering with Olympus, which
would help to validate the PillCam COLON technology for doctors who have come to rely on
Olympus. This could remove barriers to entry by leveraging Olympus’ established relationships
with physicians. Partnering with Olympus would likely reduce Given’s profit advantage and
allow Olympus to also profit from sales of the PillCam. However, the resulting increase in
demand would be substantial and overall profits would increase as well. The colon screening
market is a multi-billion-dollar market. If through the partnership, Given was able to capture
20% of the colon screening market, it would represent the potential to double or even triple their
current revenues (20% of approximately 3 billion market equals $600 million).

In developing an alliance with Olympus, Given will also be able to jointly develop a superior
product. This potential product development will create high barriers to imitation, improvement

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to the overall quality, and provide a significant competitive advantage in their technology. Not
only will this help the product, but it will help capture the entire endoscopic market. Currently,
Olympus possesses 73% of the endoscope and 10% of capsule endoscope market. Given has
90% of the capsule endoscope market, with no overlap in the endoscope market. Together they
represent the entire capsule endoscope market, and with Olympus’ investment capabilities,
Given could mitigate the competition risk, if not eliminate it altogether.

Strategy Implementation
We have developed a functional level strategic plan which will lead Given to superior efficiency,
quality, innovation, and customer responsiveness. We expect the resulting positioning strategy to
lead to company success and a dramatic increase to profit margin.

Currently, the industry’s technical standard is the endoscope. However, it remains an inferior
product to Given’s PillCam in capability and ease of use. Ideally, the partnership between Given
and Olympus will result in the development of a superior product, which would combine all the
capabilities of the PillCam and the Endo Capsule. Given and Olympus should work toward
establishing this new product as the industry standard through lobbying for regulatory approval
and securing adoption by influential groups. Establishing this improved product as a direct
standard would exponentially increase demand which would lead to an increase in production.
Such increases to manufacturing would allow Given to take advantage of economies of scale and
the resulting lower costs.

Manufacturing
Installing Kanbans, leveling production flow, and assessing takt time will all be necessary to
increase production flow by eliminating various wastes. Standardizing products will create
consistency of workflow and increase takt time in large volume production. Given may then
capitalize on the economies of scale gained from increasing production. In addition, Given
should plan to initiate a 5S program to increase organizational safety and lean standards.
Focusing on Total Quality Management while accurately enforcing Six Sigma tolerance limits
will lead to quality increases. The medical industry in which Given operates, has little room for
product defects, making quality production essential to business success.

Distribution
Using the funds provided by the alliance with Olympus, Given should reduce the power of its
third-party distributors by conducting the majority of logistics functions in-house. Given should
invest in a new central warehouse to which products would be shipped after being manufactured.
Within the warehouse, Given should implement a Warehouse Management System integrated
with its currently utilized Enterprise Resource Planning to streamline inventory management and
packaging. This process will increase initial fixed costs but reduce the variable costs associated
with logistics through consolidation. In addition to improving logistics coordination through
consolidation, Given must strengthen various international shipping contracts with primary
suppliers, decrease the bullwhip effect throughout the supply chain, and increase its logistics
personnel to coordinate new facility functions. Timely deliveries, prioritizing overseas
shipments, and increasing in-stock probability are all fundamental in creating a robust
distribution plan upon initiating an alliance with Olympus.

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Marketing
Given should offer free training for physicians and staff in facilities that use its products. They
should continue offering seminars to educate physicians, to generate interest in adoption.
Additionally, the company should develop an advertising campaign that speaks directly to
potential patients who would inform their doctor of their desire to use the PillCam or other
products. Becoming familiar with using the PillCam through provided training will produce the
learning effect for physicians through repetition, and motivating patients to specifically request
Given’s products would increase adoption rates.

Recommendation
Given was a first mover in this industry and therefore has felt the effects of not being the first to
reap the financial benefit due to increased costs associated with acceptance in the marketplace.
Partnering with Olympus would increase the availability of resources needed to create a culture
of acceptance in the marketplace and cause Given’s PillCam products to become the dominant
design. Additional resources available through an alliance with Olympus, will likely increase
revenue and decrease costs over time. An initial increase in costs for manufacturing would
position Given to produce the quantity of products that would be demanded after acceptance in
the market. It would also afford Given the opportunity to continue to focus on providing a
quality product and respond to consumer feedback.

One obstacle to implementation is negotiating a fair and mutually beneficial alliance with
Olympus. Olympus may require more control or resources than Given desires to offer which
would derail the alliance. On the other side, there is the potential that a successful alliance could
provide Olympus with greater ability to take more of the market share. This would leave Given
with a lower benefit overall.

Comprehensively, an alliance would reduce the pressure from competition with Olympus. This
would also reduce the burden on Given for being a first mover in the industry. The adoption of
the PillCam in the marketplace would be beneficial not only to Given but also to the consumer
due to lower costs and reduced discomfort. Given’s alliance with Olympus would be beneficial
across the industry.

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Table 1: Strengths, Weaknesses, Opportunities, and Threats for Given Imaging

SWOT Analysis
Strengths Weaknesses
● Effectiveness and patient comfort ● Does not possess many resources.
● Enabled the production of a smaller device ● Revenues still come from PillCam despite
with low power requirements acquired new products
● Tremendous advantages over alternatives ● PillCam COLON not yet approved in Japan
and no competition until 2005 or U.S.
● Agreement with Fujinon to distribute ● Very reliant on third party distributors to
PillCam in various countries market product
● High volume manufacturing ● Not enough promotion for customers to be
● Low advertising costs and free press aware of product existence
● Bigger potential for PillCam COLON
● Less expensive option than traditional
Endoscopy

Opportunities Threats
● Existing technologies had significant ● Difficult to get doctors to adopt the product
limitations ● Training already in place for traditional
● ~19 mil suffer from small intestine disorders endoscopy techniques
in the U.S. ● New competitors
● Endoscopes uncomfortable for patients ● Switching costs
● More “physician events” ● Vendors
● Possibility to enter in Alliance and cooperate ● Sole suppliers for some inputs
with competitor ● Format war with Endo Capsule
● Ability to set technological standard
● Positive network effects for the demand of
PillCam COLON

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Works Cited
American Cancer Society. Cancer Facts & Figures. 2011. 21 July 2017.

Hill, Charles W. L., Gareth R. Jones and Melissa A. Schilling. Strrategic Management: Theory.
11. Cengage Learning, 2015.

World Cancer Research Fund International. Colorectal Cancer Statistics. 2012. 21 July 2017.