Free «Hoffmann-La Roche» Essay Sample
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Introduction and goals.
Hoffman-La Roche was established 1986. Since its establishment, it has successfully managed to innovate many healthcare products. Most medical historians know this company due to its production of Redoxon, which is synthetic vitamin C. For more than a century from now, Hoffmann-La Roche Ltd has been a leader in the discovery, development, manufacturing and marketing of modern healthcare solutions. Hoffmann-La Roche is one of the world’s top research & development healthcare groups in the domains of pharmaceuticals and diagnostics. In view of the the world’s leading biotechnology company and an trend-setter of quality products and services for the early detection, prevention, diagnosis and treatment of diseases, the Hoffmann-La Roche Ltd offers a wide variety of fronts to improve people’s health and lifestyle (Miller, Vandome & McBrewster, 2010). Hoffmann-La Roche Ltd is the world leader in in-vitro diagnostics and drugs for tumor and transplantation field, a market leader in virology and active in other core treatment fields like autoimmune diseases, inflammation, metabolic syndromes and ailments of the central nervous system.
Roche is continuously developing as the company espouse various challenges created by new innovations and technologies and discoveries and by a shifting business environment. Hoffmann-La Roche’s history is one of modernism and progress – in a nutshell, of innovation. Moreover, these are the very things that is one of the basis of its success. The revenues of this company in the financial year ended 2010 were about $ 49,495.3 million. This represented a 3.2 percent decrease compared to the financial year that ended 2009 (Books, 2011). On July 26 2012, this company released its half year results. The group sales of this company increased to 22.4 Swiss francs. Its earnings per share also increased by 8 % to stand at 6.94 Swiss francs. However its net income reduced by 14 percent. Financial analysts attributed this decrease to be caused by the fact that this company is spending many funds in its research and development programs. This is because it wants to become a global leader in the production of innovative diagnostic products. Roche earns significant revenues compared to other pharmaceutical companies in the Canadian market. Currently, it operates in countries such as Brazil, India, Germany, United Kingdom, Canada and the United States (Raibow, 1997).
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This company introduced new breast cancer treatments in 2012. One of the treatments that it introduced is known as Perjata that will be used in the treatment of breast cancer. In addition, it also relased a drug known as Zelboraf and Erivedge that will be used in the treatment of skin cancer. Since this company introduces many new innovative medicinal products, it shows that it needs to create a sustainable marketing plan that will help in boosting its sales (Ritcher, 2012; Bowman & Gatignon, 2010). Roche has also started restructuring measures that aim at increasing its long term proitabilty so that it is able to reduce its decreases in net income. It shows that this company also needs a good marketing plan that is consistent with its goals of restructuring its operations.
Hoffman-La Roche aims at sustaining its long term profitability. This will help to ensure that it is able to innovate new products that match the needs of all the consumers. In addition, this company also needs to reduce the level of competition that it faces from other global pharmaceutical companies. If it is able to reduce this competition, it will be able to increase its market share (Wenderoth, 2009). In order to achieve this aim, Roche should adopt the following objectives.
- To develop strong diagnostics and pharmaceutical portofolio so that the growth of this company increases by 9 percent before the financial year ended 2016.
- To innovate new medicinal products especially in the field of cancer research so that Roche decreases the global cancer prevalence rate
- To strengthen the use of social media as a tool for marketing all the products that it sells to the public
- To increase its revenues by 40 percent and its operating profits by 50 percent.
The marketing plan seeks to show the strategy that Hoffmann-La Roche should adopt in order to ensure that it becomes a global leader in the supply of pharmaceuticals and diagnostic products. By adopting this strategy, Roche will be able to improve its profitability therefore getting enough funds for conducting its research and development projects (Kemmer & Boden, 2012).
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Hoffmann-La Roche’s Marketing Mix
It is significant to observe that, Hoffmann-La Roche fully recognizes the diverse requirements of its clients globally. As such, the company has been capable sustain a high number of clients at the same time being able to acquire new clients in spite of the fact the strong competitions and stricter business settings. The company has avoided mass marketing strategies and realized the target marketing strategies that has been quite successful so far.
Hoffmann-La Roche produces pharmaceutical products that are intended to satisfy the consumer requirements. With distinct merchandise traded all over the world and with a remarkable customer dedication, it is clear that the products traded by the Hoffmann-La Roche is of high quality. As a result of market research, the Hoffmann-La Roche has come up with high profile products for human beings and animals, with the main objectives of satisfying many customers all over the market segments (Lamb & Hair, 2011). As a result of the diverse products, the company has been able to realize its mission of offering health solutions all over the world.
For example Avastin is known as the primary product of Hoffmann-La Roche , a major antibody-based therapeutics. It is an anti-VEGF antibody which is the first antiangiogenic to create survival advantages in cancers for example advanced colorectal, breast, lung and kidney cancer (Esapicom Business Intelligence, 2010). This product resulted in huge sales of and has demonstrated the high potential of the highly specific Biotherapeutics, both for the remarkable results they have in patients and the financial increase it brought for company.
Roche should do several things in order to improve Avastin. Research conducted by RIBBON-2 trials revealed that this drug does not increase the survival rates in patients with advanced breast cancer (Simonds, 2009; Ribatti, 2009). If Roche conducts more studies on how it can improve this product, it will be able to increase its sales. This will improve its overall profitability and revenues ensuring that it attains its target profits.
Hoffmann-La Roche clearly points out in its mission statement that it aimed to offer products to all segments of people globally. The company utlilizes the intermediaries for example the distributors and retailers rather than distributing its products directly (Shire, 2010). To improve distribution network in industrialized countries, Hoffmann-La Roche utilizes a lot of promotional strategies for example social networking, Cooperate Social Responsibility etc to communicate effectively with the existing and new clients. More distributional ways have been created in the third world countries as a result of their high economic growth rate.
Roche should try seeking assistance from logistics companies so that it is able to market its products. This is because its market base has been increasing and this calls for additional distribution networks to satisfy its increasing consumer demands. It should also consider outsourcing some of its distribution networks to increase its efficiency in distribution. This will help it achieve the goal of increasing its overall profitability (Mullner, 2005).
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Price is considered as one of the most flexible element that can be modified in a marketing mix. Hoffmann-La Roche Ltd products differs in prices conditional on their objectives. The company has noted that price is a key factor and it may hinder the accessibility of healthcare to millions of peoples’ all over the world, especially for many people living below the poverty line. Consequently, Hoffmann-La Roche has espoused generic medicines and pricing models, which aimed to increase the accessibility of its products. The company employed both competition and psychological strategies of pricing which makes the clients recognize that the company products are fairly low cost than those of the competitors (Chaganti, 2009; Grice 2008; Shah, 2012).
The cost of medicines and diagnostics at the present is considered as one of the many obstacles to the treatment in the world’s poorest countries. Roche is dedicated to improve accessibility to HIV healthcare all over the world through the development of healthcare solutions that are continuous and have a long-term impacts, especially on the lives of people in poor countries (Maclennan, 2004; Itkar, 2008). Hoffmann-La Roche is a founding member of the Accelerating Access Initiative, which aims to provide sustainable accessibility to HIV care and treatment in poor countries.
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As a result of AmpliCare program, Hoffmann-La Roche offers its diagnosis of HIV and MTB tests at considerably reduced prices to raise accessibility to these tools that facilitate more efficient utilization of her resources. Hoffmann-La Roche provides the protease inhibitor Invirase at no-profit prices to the poor countries and all over the USA. This encompasses more than 60 countries, which inhabit 64% of all people affected with HIV/AIDS. These are the lowest prices at which the medicine can effectively be sold on the long term and do not invoke R&D costs, marketing costs, distribution costs or company overheads (Schaper, 2012; Center for Disease Control and Prevention, 2011).
Hoffmann-La Roche also supplies Invirase at considerably reduced prices in countries as outlined by the World Bank for the poor countries of the world, where HIV/AIDS is a continuous source of problem. Overall, 87% of people affected with HIV/AIDS inhabit in countries qualified for reduced-priced Hoffmann-La Roche HIV medicines. The company analyzes our no-profit prices for HIV medicines on the annual basis and adjust them when necessary to make sure they remain no-profit (United States Food and Drug Administration, 2011). Valcyte, another medicine for AIDS- is also available at reduced prices for NGO-led AIDS treatment programs in the poor countries. As a result of Hoffmann-La Roche no profit approach the company is able to offer prices related or below those of standard medicines.
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As well, Hoffmann-La Roche success in producing benzodiazepine tranquilizers, on the other hand, was no protection from the fluctuations of the routines operations of a large international company. Hoffmann-La Roche's pricing policy was criticized when the British Monopolies Commission found that the company was paying the parent company the sums of US$925 a kilogram for Librium and US$2,300 a kilogram for Valium (Center for Disease Control and Prevention, 2012). In Italy, where there are no drug patents, the costs per kilogram were US$22.50 and US$50 respectively. Founded on these results, the Monopolies Commission asked the company to decrease its prices 50-60% in Britain and to repay excess profit calculated as US$30 million.
As such, the company requiested the House of Lords to annul the government's order. Adolf Jann, head of Hoffmann-La Roche in view of Caflisch's death in 1965, strongly supported the company's pricing policies. The company was earlier for its refusal to reveal financial data, it now put its financial cards on the table, publishing full-page newspaper ads supporting its prices on the basis of its customarily high costs for R&D. Statistics regarding company sales and profits were made publicly revealed for the first time. In 1973, US$500 million of the US$1.2 billion volume at Hoffmann-La Roche was shown as the sale of Valium and Librium (Hoffman-La Roche, 2012).
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Amongst growing set of clients which were alarmed regarding the rising costs of drugs, the company's claims were usually disregarded, and various European countries started investigations independently. In 1980, following years of litigation, Hoffmann-La Roche had surfaced from the controversy almost unharmed, having agreed to comply afterward to a system of voluntary price controls.
Since Hoffmann-La Roche operates globally, their promotional marketing strategies differs conditional on the external environment for example economy, culture, natural resources, demographic composition, political outlines and technological growth (Lattanzi, Rappuoli, 2005). All over the the world, the company contributed in different promotional activities particularly in educating children from poor backgrounds in various Asian and African countries. The company also takes part in CSR activities. Through these CSR activities for example improved safety, security and healthcare in addition to environment, Hoffmann-La Roche is able to promote its products to the clients, consequently raising the market share all over the world (Hoffmann-La Roche Ltd, 2012).
Roche should consider adopting new promotional media in order to increase its sales. One of the promotional media that it should consider is using social media marketing. Most consumers are adopting the trend of using social media as a form of communication (Hoffmann, 2008). This shows that if Roche uses social media advertising, it will be able to reach a wide target market. In addition, social media advertising is cheaper and this will help Roche to reduce its operating costs. Roche should also design more television advertisements (Groucutt, Leadley & Forsyth, 2004). Such advertisements will help the company reach a wide customer base. It should also consider increasing its internet adverstisements.
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Marketing Environment Analysis – Stakeholder Analysis
The micro marketing environment of Hoffmann-La Roche comprises of dynamics forces that are part of the organization's marketing process, however are external to the company. This micro marketing environment Hoffmann-La Roche are complex; nevertheless, Hoffmann-La Roche has control over how it functions in such environment (Brown, 2006). A viable marketing helps the company to manage and add up this complexity. Hence, Hoffmann-La Roche analyzes and monitors closely some aspects of the microenvironment as to adapt to fast growing business environment and to stay competitive. They are:
Customers are vital to the development and sustainability of the business. With the aim of growth it must take into account the customers needs and then fulfill those requirements both successfully and effectively (Paley, 2006; Stevens, 2006; Hoskisson & Hitt & Ireland, 2008) . Roche’s marketing plan seeks to attract and maintain loyal consumers through products that fulfil their requirements and with outstanding customer service. Hoffmann-La Roche Ltd have a growing set of clients globally. The company has many customers in developed and developing companies (Buttle, 2012; Flesher & Bensoussan, 2007; Sheth, 2011). Its plans to allocate 30 million doses of Fluvirin vaccine to US clients for the 2011-2012 season with sufficient supplies to ensure that customer demand is fulfilled. From 2001, Hoffmann-La Roche Ltd has been collaborating with various organizations. This has enabled 500 million treatments for adults and children, to over 60 countries that are malaria-endemic. This has helped to reduce death rates from malaria, particularly for infants and children. This has significantly helped to realize public heath landmarks through these relationships mostly in developing countries. Moreover, Roche low prices attract people, as it generates a lot of enthusiasm and heavy word-of-mouth promotion strategy of its products, thus allowing a chain to avoid traditional pricey media promotion (Herbst, Prager, Hermann et al 2005).
Roche’s competitors have the same case as other firms when it amounts to outsourcing and meeting the requirement of the consumers. Generally, these competitors make it hard for Roche to relate with consumer groups, as by definition they are usually following the same sets of consumers as Hoffmann-La Roche (Little & Marandi; Dahlen, Lange & Smith, 2010). Consequently, a study of the competitive situation is vital for Roche, particular risks of competition, as it gives companies new shapes of business. Roche’s accomplishments have come from its capability to reduce costs in every possible way. Its main challenges are: Siemens Healthcare, LifeScan, Inc., Ortho-Clinical Diagnostics Inc. and ARKRAY, Inc. etc. The mainstream of these challengers generally applies similar strategies as Hoffmann-La Roche with the aim of sustaining in the stiff challenging market, however others continue to spend more on research and development as to remain updated and innovative, which are more effective when comes to cure (Pickton & Masterson, 2010; Brink & Berndt, 2009).
Marketing Budget & Implementation
Hoffmann-La Roche’s customised marketing options aims to improve accessibility to its products in emerging markets. The company strives for a stable Research &Development budget that strive for efficiency and sustainable cash flow Hoffmann-La Roche at present give revise it its strategy, which continues to be motivated on medical innovation and constant growth. By means of its leadership in personalised healthcare, Hoffmann-La Roche is distinctively placed to create therapies that promote the existing standards of healthcare and improve people’s lives. Modern marketing strategies in developed and emerging markets provide further growth prospects. Roche intends to keep its R&D budget stable by implementing continued productivity improvements and rigorous portfolio prioritisation.“Roche’s strategy is based on developing differentiated medicines and diagnostics in areas of high unmet need that bring true medical benefit to patients,” said Severin Schwan, CEO of Roche. “More than 60% of our pharmaceutical pipeline projects are coupled with the development of companion diagnostics in order to make treatments more effective. The recent launches of our cancer medicines Perjeta and Zelboraf are examples of the concept of personalised healthcare becoming reality.”
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Roche is working to improve patient access in developed countries, as well as in emerging markets, where increasing income levels and the development of public healthcare are driving the demand to prescribe and administer highly innovative medicines. Roche’s broad portfolio allows for flexible commercial schemes and value-based pricing. In emerging markets, access programmes implemented over the last few years have helped significantly increase the number of people who can be treated with Roche medicines.
Roche Diagnostics continues to improve testing efficiency at labs around the world through its unique and complete menu offering that includes high-value assays and enhanced platforms. Roche is leading the discovery of new biomarkers supported by clinical evidence, in collaboration with Roche Pharma and also third parties (Shepherd, Pereira, Ciuleanu et al 2005). By successfully tailoring its strategy to local conditions in different emerging markets, Roche Diagnostics has been expanding its commercial reach, continuing its double-digit sales growth and its leadership in these vibrant markets.
The overall goal for the market implementation plan is to increase revenues by percent and operating profits by percent. This is in an attempt of incrasing its group sales to 52, 428,000 million Swiss francs. The overall company growth including its asset base was to increase by 9 percent. By implementing this plan, Roche will successfully achieve this goal.