MERCK GLOBAL PHARMACEUTICAL

INTRODUCTON:
Merck & Co. is a corporation that provides global health care and new health solutions through its
biologic therapies, prescription drugs, vaccines, and animal health products. Two operating segments,
the Pharmaceutical and Animal Health sectors, both of which are reportable segments, make up the
Company's operations, which are mostly controlled on a products basis. Due to intense competition,
organizational upheaval, and changes to the company's senior management team, including the
departure of renowned CEO Roy Vangelis, the corporation was compelled to modify its fundamental
approach.

The growth of the corporation's revenues and profitability significantly slowed during this time, and the
stock prices of the company plummeted. The business had to modify its approach to developing,
implementing, evaluating, and controlling its strategies.

THE PHARMACEUTICAL SEGMENT:

It includes pharmaceutical and vaccination items for human health. Pharmaceuticals for human health
are normally sold with a prescription and include both therapeutic and preventive medications for the
treatment of human illnesses. The company primarily offers these pharmaceuticals for human health to
hospitals, government organizations, managed healthcare organizations like health maintenance
organizations, pharmacy benefit managers, and other organizations. Preventive pediatric, adolescent,
and adult immunizations are included in the category of human health vaccine products. The company
mainly sells these vaccinations for human health to doctors, wholesalers, physician distributors, and
governmental organizations.

THE ANIMAL HEALTH SEGMENT:

For the prevention, treatment, and control of disease in all significant livestock and companion
animal species, the Animal Health segment discovers, develops, manufactures, and markets a
broad range of veterinary pharmaceutical and vaccine products, as well as health management
solutions and services. The company also provides a wide range of products for identification,
traceability, and monitoring that are all connected to the internet. The business sells its goods
to wholesalers, livestock producers, and vets.
Apart from company’s background its important to so its external analysis which can be done
through PESTEL analysis. It is a notion found in marketing concepts. Companies utilize this idea
as a tool to monitor the environment in which they operate or to plan the launch of a new
initiative or product. Political, Economic, Social, and Technological is referred to as PEST. These
four external elements are evaluated in regard to your company's position using this study. It is
done to be aware of risks, opportunities, influences, and limitations.
One of their main strategies for developing sustainable global health systems is impact
investing. Through impact investing, they may allocate money in ways that could lead to better
access to healthcare for underprivileged populations as well as financial rewards and business
opportunities all while expanding a sustainable global health ecosystem and luring new
investors and partners. Physical infrastructure, financial inclusion, digital and diagnostic
solutions, pharmaceutical and vaccine R&D, and emergency response are five complimentary
dimensions of a sustainable and resilient global health ecosystem that they want to address in
their impact investing portfolio. Their Office of Social Business Innovation oversees impact
investing under the direction of the Impact Investing Committee. The Impact Investing
Committee, which was founded in 2019, is a cross-functional group of senior corporate leaders
that evaluates and approves new investments in accordance with established principles and
procedures and keeps track of the impact portfolio's financial and social returns. Their portfolio
currently consists of commitments worth $46 million, and by the end of 2022, they hope to
have $50 million invested.

SWOT ANALYSIS
SWOT analysis of Merck looks at the brand's opportunities, threats, opportunities, and
weaknesses. The internal variables of the Merck SWOT Analysis are strengths and weaknesses,
while the exterior factors are opportunities and threats. SWOT Analysis is a tried-and-true
management paradigm that allows a company like Merck to compare its operations and
performance against those of its rivals. One of the top names in the pharmaceutical and
healthcare industries is Merck.
STRENGTHS
The key elements of Merck's business that provide it a competitive edge in the market are
considered its strengths. The strength of a brand can be attributed to a variety of things, such as
its financial standing, skilled personnel, distinctiveness of its products, and intangible assets like
brand value. The Merck strengths in the SWOT analysis are listed below:

 A well-known brand in the pharmaceutical sector

 Vast selection of pharmaceutical products
 Offers medical assistance to US citizens in need.
 Excellent research and inventions
 Is present in Latin America, Asia, Africa, Europe, and Africa.
 Has a substantial workforce of more than 40,000 workers
 Strong brand recognition and customer loyalty
 Highly skilled labor
WEAKNESSES
A brand's shortcomings are specific areas of its business that can be improved to strengthen its
position. Some flaws can be described as qualities that the business lacks or in which the
competition excels. The Merck SWOT Analysis has the following weaknesses:

 The issue of fraudulent imitations harms businesses' brand reputation

 Hasn't been able to aggressively approach new nations, which represent enormous
potential markets, in terms of brand recall.

OPPORTUNITIES
Any brand has the potential to improve in certain areas in order to grow its customer base.
Opportunities for a brand can include geographic expansion, product enhancements, improved
communication, etc. The opportunities in Merck's SWOT analysis are as follows:

 Widespread medical innovation, encompassing enterprises and technologies across the

health care industry
 Investigate the health requirements of developing and underdeveloped nations
 Use resources and its core business knowledge to develop sustainable solutions in
nations all over the world.
THREATS
Any firm may face risks in the form of elements that could harm its operations. Threats can
come from a variety of sources, including increased rival activity, shifting governmental
priorities, alternative goods or services, etc. The following are the threats identified in Merck's
SWOT analysis:

 Increasing technological obsolescence

 Intergroup rivalry
 The rapidity of change
 Globalization- Growing globalization has provided Merck with numerous opportunities
to grow its operations across more nations, enter new markets, utilize new technology,
conduct cutting-edge trials with other country members, and improve the company.
 Exchange rate- All multinational corporations, including Merck, are impacted by the
ongoing fluctuations in the exchange rate in the global market. The exchange rate
presents a challenge because it supplies goods globally but uses local suppliers.
Additionally, some foreign trade restrictions call for consent, which lengthens and
delays the transaction
 Political Uncertainties - Political changes within the nation have a significant impact on
major industries, and if the government's policies are unfavorable, it will have a negative
 impact on the expansion of the business. As a result, Merck must deal with political
uncertainties inside the nation.
Although the SWOT analysis is frequently employed as a tool for strategic planning, it does have
some drawbacks.
An organization's capabilities or other characteristics sometimes serve as both strengths and
weaknesses at the same time. One of the main drawbacks of SWOT analysis is this. For
instance, altering environmental restrictions can be both a threat and an opportunity for a
business, allowing it to compete on an even playing field or to gain an advantage over rivals if it
can produce products more quickly.
SWOT does not explain how to gain a competitive advantage; hence it cannot be considered a
goal in and of itself. The matrix just serves as a jumping off point for a discussion of potential
implementation methods for suggested ideas. It offered a window for evaluation but no
execution strategy based on Merck's strategic competitiveness. SWOT analysis analyses the
current situation with little regard for the future. It's possible that no single matrix can fully
capture the dynamics of a competitive environment as conditions, capabilities, threats, and
strategies evolve. SWOT analysis could cause the company to focus too much on one internal or
external issue when forming strategy. The main internal and external components have
interactions that SWOT does not reveal but which may be significant when developing plans.

PESTEL ANALYSIS
The senior management planners were able to put together a thorough study of the external
environment as a result of their examination of the political, economic, social, technological,
and legal forces. These aid in understanding how Merck's management developed plans to
resurrect the business. PESTEL analysis include political, economic, sociological, technological,
legal and environmental.

POLITICAL FACTORS
These variables show how and how much a government interferes with the economy. Politics
affects the kinds of laws that, in turn, affect business spending or tariffs on medicines and
services at MERCK. Political influences could be helpful or restricting. Political stability, trade
limitations, patent laws, tax policies, labor laws, environmental laws, and areas governing price
control were all examples of specific political factors. After Bill Clinton was elected president of
the United States in 1992, pharmaceutical companies came under political criticism, which
made the effect of political forces on the pharmaceutical business clear in the early 1990s. An
examination of the entire American healthcare system that Clinton ordered resulted in a new
federal system of regulation of healthcare, including price controls on prescription medications.
This was due to their non-profit margins and their suspected role in the skyrocketing expense of
healthcare in the United States.

ECONOMIC FACTORS
These variables include the rate of inflation, interest rates, currency rates, and economic
growth. These elements significantly influenced how MERCK conducted business and made
decisions. The pharmaceutical industry was one of the most prosperous in the previous time
period and enjoyed huge earnings. With no corporation owning more than 5% to 6% of industry
sales, the market was very fragmented. This demonstrates how fiercely competitive the market
is. These compelled businesses to cut expenses, especially those related to research and
development. Strategic alliances, mergers, and acquisitions grew more frequently as players
sought to gain scale and scope advantages. There are now more than 121 coalitions. The largest
pharmaceutical benefit manager, Medco Containment Services, was purchased by Merck.
SOCIAL FACTORS
In addition to cultural features, social variables also take into account age distribution, career
attitudes, health consciousness, and emphasis on safety. Social trends have an impact on a
company's operations and the demand for its products. An ageing population, for instance, can
indicate a smaller and less willing workforce (thus increasing the cost of labor).
In addition, businesses may alter their management tactics to reflect these social trends (such
as recruiting older workers). The social structure as well as demographic fluctuations have an
impact on the character of the sector. The expansion of managed care organizations (MCO)
increased pressure to bring down drug costs by increasing the variety of medications available
to patients in a given therapeutic category.
TECHNOLOGICAL FACTORS
Among these are elements related to technology, such as R&D activities, automation,
technology incentives, and the pace of technological advancement. They can establish entry
barriers, the minimum effective production level, and have an impact on outsourcing choices.
Additionally, changes in technology can have an impact on prices, quality, and innovation.
Science-based advancements known as technology considerations affect how competitively
positioned an organization is. Keeping up with new technology reduces the likelihood of
becoming obsolete and encourages creativity.
Technology developments may have a variety of effects on the transformation plan. According
to Develop Vision and Strategy (n.d.), new technology can alter consumer demand for a
product, make outdated manufacturing procedures obsolete, reduce costs to undercut rivals,
produce new products, among a variety of other options. According to MERCK, senior
management at the time had a generic strategy that was not operational and appeared to be
unclear about the future role of research. Research was not adequately financed, promoted, or
focused. This was the company's historical competitive advantage, hence it needed to be
revived for competitive advantage.

COMPETITION
Every company has external competitors who carry out comparable tasks in their own fields of
expertise. These individuals are viewed as competitive producers of goods or services and are
therefore competitors. These rivals support the industry as a whole by offering high-quality
products and services at reasonable pricing. From a market standpoint, competition is
beneficial since it gives consumers options and allows businesses the chance to carve out a
niche. In MERCK, they list a number of tactics to use while formulating a strategy. One of them
is identifying and then taking advantage of your rivals' weaknesses. As an example, hundreds of
pharmaceutical companies battled in more than 20 distinct therapeutic categories. Competitors
are purchased as a strategic man oeuvre to increase market share. No single company had
more than a 5%–6% share of sales in the fragmented market. Some of the top competitors of
Merck & Co. are listed below
 Pfizer
 Johnson & Johnson
 Eli Lilly
 GSK
 Sanofi

INTERNAL ANALYSIS
Their internal methods for risk assessment and mitigation now include the conclusions from the
PSCI joint study. They have also created a technique for assessing certificates and problematic
materials. They have also mapped their supply chain to determine which of our suppliers are
based in nations with a reputation for high risk. They consult this data to determine the proper
level of due diligence. Employees and contractors can get information about their Sustainable
Sourcing programs on an internal website that is updated by GSMG. Employees, competitors in
the sector, and suppliers have received countless training sessions that they planned and
delivered. Their centralized learning system is used to assign the majority of their internal
classes.
The internal policies that govern the CME programs we support or sponsor are in line with the
regulations and standards to which the program must adhere. These standards and regulations
include, among other things, financial disclosure, independence, and transparency reporting.
Additionally, a specialized internal unit has been created to build the necessary skills, expedite
innovation, and gather lessons from varied national contexts. With this strategy, they have
accelerated the creation of novel patient access models and solutions to increase the
population that is reachable globally.
An internal advisory board for our corporate foundation, an internal impact investing council,
an internal economic inclusion, workforce development, and health equity council, as well as
external expert advisory committees for the Donation Program and Merck for Mothers, provide
guidance and approval for their investments. To make sure they can use and apply data on
social determinants of health to support the development and implementation of successful
solutions and partnerships, as well as track key metrics that help them better understand the
impact of their actions/investments, they are investing in strengthening internal data
capabilities. By creating training materials, policies, guidelines, tools, and a new health equity
learning network, they are making sure that their staff have access to the most recent
information and knowledge.
They have implemented internal rules and practices aimed at decreasing energy use at
their sites and minimizing GHG generation across the Company as part of their priority to
reduce our demand for energy. By taking these actions, they are not only lowering our GHG
emissions but also lowering their operating expenses and lessening the effects on their business
that are anticipated to result from upcoming climate change regulations.
STRATEGIC ANALYSIS
Their goal is to employ the power of cutting-edge science to save and enhance lives all across
the world. It forms the basis of their company's comprehensive strategy framework. The
strategy framework, which incorporates their dedication to ESG, establishes our development
and course against the backdrop of a continuously evolving health care ecosystem.
The strategy plan for Merck includes a commitment to conduct business ethically so that
people and communities can have a safe, long-lasting future. They allocate resources to
advance the four long-standing ESG focus areas that are most important to their Company and
create value for their stakeholders, building on our legacy of stewardship and in accordance
with their ESG materiality assessment: Access to Health, Employees, Environmental
Sustainability, and Ethics & Values. To support and advance their purpose through our ESG
approach, they continue to strategically embed activities in each of these areas across their
business operations.
Their key focus is to:

 Invest in, expand, and speed up the delivery of our pipeline's game-changing
products.
 Prove their worth to our stakeholders and increase access to treatments for
unmet medical requirements.
 Drive digital and data-enabled innovation, growth, and productivity.
 Invest in the development, prosperity, and well-being of their workforce.
FINANCIAL ACCEPTIBLITY
Merck's current ratio as of today and throughout time from 2010 to 2022. The ability of an
organization to meet short-term obligations is gauged by the current ratio, a liquidity ratio. For
the three months ending June 30, 2022, Merck's current ratio was 1.39. Gross margin for Merck
now and throughout the last ten years. As of June 30, 2022, Merck's current gross profit margin
is 72%. It is the highest compared to the last four five years. The debt or equity ratio, which is
determined by dividing a company's long-term debt by stockholder equity, is a gauge of its
financial leverage. For the three months ending June 30, 2022, Merck's debt to equity ratio was
0.66. A ratio that demonstrates how frequently a company's inventory is sold and replaced over
time is known as an inventory turnover ratio. For the three months ending June 30, 2022,
Merck's inventory turnover ratio was 0.76.
As we've seen, Merck & Co. is one of the most well-known and prosperous pharmaceutical
companies in the world, and it has a lot of potential for growth in the future. Due to its
excellent degree of client pleasure, the business has a foundation of devoted customers. To
seize opportunities and lessen dangers, it has to improve its research and development division.