Amgen Team 2: Joshua Zamarron, James Stariha Elizabeth Allen, Michael Johnson
Transcription
Amgen Team 2: Joshua Zamarron, James Stariha Elizabeth Allen, Michael Johnson
Amgen Team 2: Joshua Zamarron, James Stariha Elizabeth Allen, Michael Johnson Michael Mullin Industry Analysis Strong growth rate Barriers to Enter Competition Threat of Substitutes Power of Buyers Growth/Profit Potential Growth Rate Estimated market value in 2016 is $453 Billion Government Initiatives Increased Research and Development funding Countries becoming major markets China, India, Europe Mergers and Acquisition Amgen and Immunex Barriers to Enter Likelihood is weak Majority startups are spin offs Based on innovative products of processes resulting from discoveries in academic research Long start up periods with little profit High fixed costs Not enough funding (research and development) Government Regulations Competition More than 1,000 Biotech companies in North America Top 1% of these companies making majority of revenue Competition for patents Good for Industry Buyer Power Ranges from Healthcare providers to farmers and growers Amgen Healthcare providers Hospitals Specialized products don’t allow for much buyer power Growth/Profit Potential Market Value $453 Billion Environmental Threat and Opportunity Profile (ETOP) An environmental threat and opportunity profile is a description of the structure of external factors. Multiple Reasons for an ETOP 1. It helps the organization to identify opportunities and threats 2. Consolidates and strengthens an organization’s position 3. Provides strategists information on which sectors have a favorable impact on the organization 4. The organization gains knowledge of its standing with respect to its environment 5. Helps formulate strategies. Steps in an ETOP 1. Identify major Environmental factors such as: economic, political, social, technological, competitive, geographical, etc. 2. Environmental factors are then sub-divided into subsectors of each factor. 3. These factors are then analyzed to determine major weaknesses and strengths in each of the subsectors. 4. The impact of each factor is then accessed as being either favorable, unfavorable, or neutral. Economic Factors Economic factors affect the purchasing power of potential customers and the firm’s cost of capital. These factors include: business cycle, inflationary trends, consumption, employment, investment, monetary, and fiscal policies. Exp: The most recent fiscal policy event that has happened, is that buried within the Fiscal Cliff Section 632, is a clause that delays Medicare price restraints on a class of drugs including Sensipar. This provision leads to Amgen having two more years to sell Sensipar without governmental controls. The delay of Medicare price restraints has a positive effect on Amgen. Political Factors Political factors are how and to what degree government intervenes in the economy. Political factors include: political power, ideologies, interest groups, social stability, legislation, and regulation. Exp: One of the most recent and controversial legislations passed was the United States health care reform. Amgen expects a drastic increase of competition in future years due to this legislation. The legislation allows the approval of biosimilars, generic biotech drugs, to take significantly shorter time Social Factors Social factors impact an organization due to the social, cultural, demographic, and environmental profiles in the industry. Social factors include: age distribution, geographic distribution, income distribution, mobility, education, family values, and business attitudes. Amgen strives to encourage a high-performing environment where team members embrace the talents and backgrounds of each other as well as nourish innovative thinking, and achieve their full ability and potential that leads to Amgen’s success. Technological Factors Technological factors impact how an organization or company operates in relation to equipment used in the company’s environment. Technological Factors include: rate of technological change, future raw material availability, raw material cost, technological developments, and product life cycle. CEO Robert Bradway announced during a lecture at MIT that he believes the company is “on the cusp of a major change in how we manufacture proteins.” Geographical Factors Geographical Factors are important to the overall analysis of a company. Geographical factors include: plant/warehouse location, relocation of facilities, headquarters, and foreign markets. Although the United States markets contribute to more than 75% of Amgen’s Annual revenues, Amgen has been working to increase its reach in international and foreign markets. The company has extended its products to high-growth regions such as Japan, China, Russia, and Africa. Amgen SWOT Analysis Strengths Weaknesses •Expertise in R&D of protein therapeutics helped Amgen build strong product portfolio •Neulasta, Neupogen and Enbrel driving Amgen’s top-line growth •Strong IPR position enabling Amgen to offset biosimilar •Restructuring initiatives driving significant profit growth during a period of declining sales •Declining sales of Aranesp and Epogen •Discontinuation of late stage clinical trials •Relatively low levels of technology diversification increasing dependency on therapeutic proteins Opportunity Threats Expanding Prolia franchise could drive top-line growth, and reduce Amgen’s dependency on protein therapeutics Acquisitions could strengthen Amgen’s pipeline Focus on the emerging economies providing growth opportunities Collaboration with Watson could help Amgen enter oncology biosimilars market •Affymax’s Omontys likely to affect Aranesp and Epogen sales •Cost containment measures may affect Amgen’s sales growth Strengths Expertise in R&D Top of industry Breakthroughs in PEGylation and Glycosylation techniques increased drug effectiveness Directly responsible for development of next strength Neulasta, Neupogen, and Enbrel driving top-line growth Developed from PEGylation and Glycosylation techniques (from 3-4 hrs to 15-80 hrs) Amgen’s top three products contributing to over 55% of revenues Neulasta/Neupogen- $5.2 billion in sales 2011 Strengths Strong IPR position enabling Amgen to offset biosimilar competition Highly innovative industry and protecting proprietary property is essential Strong R&D means nothing if it is not protected Successfully defended property numerous times including 10 claims of infringement on 4 of Amgen’s EPO patents that led to a permanent injunction against Swiss big Pharma Roche from ever selling its products in the US Weaknesses Declining sales of Aranesp and Epogen Concerns raised about safety of the drugs FDA issued black boxed warnings of increased chance of death and other cardiovascular disease In 2006 sales reached 10 billion Discontinuation of late stage clinical trials Two trials in phase III failed due to statistics that they had no real effects Extremely expensive Did not look good having back to back failures Weaknesses Relatively low levels of product diversification 3 most successful products are all protein therapeutics55% of revenues Other companies pulling ahead in promising medicine of protein anti-bodies, small molecule, and limited MAB’s drugs Therapeutic anti-body market is estimated to be the fastest growing market through 2015 IPR could limit future growth in markets (same that protected their PEGylation and Glycosylation from others) Opportunity Expanding Prolia Franchise could drive top-line growth In 2012 FDA released new indicator for Prolia as a treatment to increase bone mass in men Showed significant increases in safety and efficacy (%5.7 vs %.9) Been in the US markets for sometime with sales hovering at $88 million, first quarter after new indicator sales went up to $120 million Huge new market for Amgen (12 million conflicted) Relieve pressure off of Therapeutic protein revenues Acquisitions could strengthen Amgen’s pipelines Recently acquired two firms Micromet and KAI pharmaceuticals Acquired not only pipelines but the proprietary technology of the companies Including multi promising drugs in phase I and phase II of research, one is BiTE anti-body technologies If they pan out would significantly increase their product diversity Opportunity Focus on emerging economies providing growth opportunity Over past 4 years have expanded from 35 countries to 50 Including Brazil and Turkey Brazil top ten Pharmaceuticals market in the world and by 2015 it is estimated to be fifth With more plans to increase to 75 countries by 2015 (helps with diversity) Threats Affymax’s Omontys likely to affect Aranesp and Epogen sales FDA approved their Peginesatide injection Likely to outperform Amgen’s and only need injections once a month vs. 3 times a week Combined with the safety concerns already raised future does not look good Cost containment measures may affect Amgen’s sales growth Amgen relies heavily on reimbursements from government aid programs and private third party payers Health care reform huge threat to those revenues Already seen a %2 percent reduction in government payouts for all Medicare services, and several more already put forth Matching S&W with O&T •Relatively low levels of product diversification •Acquired multiple firms with proprietary technologies and promising new products •Expertise in R&D •Entering emerging economies •Strong IPR •Expanding Prolia franchise •Declining Aranesp and Epogen sales •Failure of late stage clinical trials •Cost containment measures Competitive Factors Competitive forces at work in the industry and their strength Companies in the strongest/weakest competitive position Keys to competitive success Amgen’s Top Competitors Johnson & Johnson Novartis AG Teva Pharmaceutical Industries Limited Amgen’s Financial Analysis Net income, sales, and operating expenses Current ratio is 3.8 Asset turnover ratio is 0.32 Debt-to-equity ratio for 2012 is 1.85 Net profit margin is 0.25 Return on equity is 0.22 Return on assets is 0.08 Market Share Managerial Factors The Scientific Method Teams Diversity Technical Factors Manufacturing Facilities Collaboration Senior Management Robert A. Bradway: Chairman and Chief Executive Officer Madhavan Balachandran: Executive Vice President, Operations Victoria H. Blatter: Senior Vice President, U.S. Government Affairs Suzanne Blaug: Senior Vice President, Global Marketing and Commercial Development Senior Management Cont. Paul R. Eisenberg: Senior Vice President, Global Regulatory Affairs and Safety Sean E. Harper: Executive Vice President, Research and Development Rolf K. Hoffmann: Senior Vice President, U.S. Commercial Operations Anthony C. Hooper: Executive Vice President, Global Commercial Operations Senior Management Cont. Raymond C. Jordan: Senior Vice President, Corporate Affairs Diana L. McKenzie: Senior Vice President and Chief Information Officer Brian M. McNamee: Senior Vice President, Human Resources Joshua J. Ofman: Senior Vice President, Global Value and Access Cynthia M. Patton: Senior Vice President and Chief Compliance Officer Senior Management Cont. Jonathan M. Peacock: Executive Vice President and Chief Financial Officer David J. Scott: Senior Vice President, General Counsel and Secretary Michael Severino: Senior Vice President, Global Development and Corporate Chief Medical Officer Board of Directors David Baltimore: President Emeritus and Robert Andrews Millikan Professor of Biology, California Institute of Technology Frank J. Biondi, Jr.: Senior Managing Director, WaterView Advisors LLC Robert A. Bradway: Chairman and Chief Executive Officer, Amgen Inc. François de Carbonnel: Former Chairman of the Board and Director, Thomson S.A. and Director of Corporations Board of Directors Vance D. Coffman (Lead Independent Director): Retired Chairman of the Board and CEO, Lockheed Martin Corporation Robert A. Eckert: Former CEO and Chairman of the Board, Mattel, Inc Rebecca M. Henderson, Ph.D: John and Natty McArthur University Professor, Harvard University Frank C. Herringer: Chairman and Retired CEO, Transamerica Corporation Board of Directors Tyler Jacks: David H. Koch Professor of Biology, Massachusetts Institute of Technology and director of the David H. Koch Institute for Integrative Cancer Research Gilbert S. Omenn: Professor of Internal Medicine, Human Genetics & Public Health and Director of the Center for Computational Medicine and Bioinformatics, University of Michigan, and former CEO, University of Michigan Health System Judith C. Pelham: President Emeritus, Trinity Health Board of Directors Adm. J. Paul Reason, USN (Retired): Former Vice Chairman and President, Metro Machine Corporation Leonard D. Schaeffer: Senior Advisor, TPG Capital Ronald D. Sugar: Chairman Emeritus, Northrop Grumman Corporation Assessment Importance of Culture Compatibility with Strategic Change