STRATEGY, LEADERSHIP AND

CULTURE OF INNOVATION

RESOLVING THE STRATEGIC TENSION IN PHARMACEUTICAL

INDUSTRY

TOM JOSE
MERCK
3090674
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Contents
INTRODUCTION............................................................................................. 2
NATURE OF STRATEGY...................................................................................3
STRATEGISING............................................................................................ 3
MISSIONING AND VISIONING......................................................................3
CONTENT....................................................................................................... 5
BUSINESS LEVEL..........................................................................................5
CORPERATE LEVEL.......................................................................................7
PROCESS........................................................................................................ 8
FORMATION............................................................................................... 8
CHANGE.................................................................................................... 10
CONTEXT..................................................................................................... 10
INDUSTRY CONTEXT..................................................................................11
ORGANISATIONAL CONTEXT.....................................................................13
CONCLUSION............................................................................................... 13
ASSESSMENT............................................................................................ 13
ACTIONS................................................................................................... 14
REFERENCES.................................................................................................14

TABLE OF FIGURES
FIGURE 2.1………………………………………………………………………………….5
FIGURE 2.2………………………………………………………………………………….6
FIGURE 2.3………………………………………………………………………………….8
FIGURE 3.1………………………………………………………………………………….9
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INTRODUCTION
Merck is an American pharmaceutical company having its headquarters in Rahway, new
jersey. It is named as Merck because it was a family name in German. The company does
all its business in its name called as the sharp and Dohme outside the United States and
Canada. The core of the Merck pharma was mainly R and D. The company has undergone
many strategic collaborations within the span of these years so that they can improve
their sales and make profit. The company has many strategic plans on how to resolve their
tension so that a healthy working can be maintained within the industry.
Merck is having one of the most class lab and its materials. It is most famous for its
technologies, services that help to solve the various problems. They are continuously
trying to make the research and the biotech more efficient. They are dedicated in
providing the most comfortable costumer experience not only to the consumers but also
to the stakeholders with in the business level

Merck has a vision of improving the wellness of the people as well as the animals
around the globe. The main core strategy of the Merck is to become the single largest
driver in the pharmaceutical sector for long term short term as well as the
shareholders.
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SECTION 1- NATURE OF STRATEGY

STRATERGISING-TRADE OFF
LOGIC AND INTUITION
Solving of tension using formerly accepted principles and laws is
logic but Intuition refers to resolve problems using understanding
and experience gained as it is mostly related to mind.
Drug and safety monitoring board put a notification on
september24,2004 about the risk of use of drug vioxx which was
used as a painkiller for arthritis. Due to the high cardiovascular
risk Dr. Kim along with Merck research experts finally made a
crucial decision to withdraw the drug from the market and a war
room was created with the help of 25 Merck official to discuss
about this issue. On september30,2004 CEO Raymond Gillmartin
announced that Merck is voluntarily withdrawing its drug
vioxx .During withdrawal almost 2 million people were
administrating the drug and had 100 million prescriptions. (Anon,
n.d.)
COGNITIVE ABILITY
It is the mental ability for critical thinking, resolving problems,
reasoning capacity and crucial planning. The Merck has formed
worldwide business strategy team for developing and assisting to
the management committee. to ensure the execution and follow
up of business strategy. (Beer, n.d.)
COGNITIVE MAP
It is the mental representation about how experience,
interconnection, Pedagogy, education contributes in the world
working.
APPROACH TO STABLISE THE DRUG PRICE
Merck mainly concerns differentiating pricing strategy as per the
government policy. Based on the cox inhibitor medication vioxx
withdrawal (due to heart attack and stroke) caused 60% price fall.
(Collis and Smith, n.d.)
COGNITIVE ACTIVITIES
MERCK MERGING WITH SCHERING-PLOUGH
Cognitive activities are mainly focussing or understanding of new
information. Merck mainly focussed on the internal R and D
powerhouse but after merging with SP enhancers made them
recognize that only internal R and D will not work as new ideas
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are been created inside and outside the varying industry.(Anon,

n.d.)

MISSIONG AND VISIONING (TRADE OFF)

TENSION ARISING BETWEEN RESPONSIBILITY AND PROFITABILTY

Merck recently reduced the price of various drugs in many countries with the help of patient
access program because the price of the drugs was very much higher in countries like Africa,
Latin America, Asia and middle east. In India due to these prices the low-income patients
can’t afford these drugs. As a result, Merck combined with many public sector organisations
like BHAL, ONGC, so that the alternate drug can be supplied at lower price to the low-
income patients.(Anon, n.d.)

THE MAIN VISION AND MISSION OF MERCK

The future plans are called vision and the goal to be achieved is called mission. Merck main
mission is developing, discovering and providing innovative services so that a high-quality
life can be attained in the world.
Merck main vision is to make changes in the life of people through their medicines,
vaccines, and animal drugs. They are mainly committed to serve the world by providing new
innovations and solutions.(Anon, n.d.)

MISSION -CORPORATE
Merck corporate mission is to provide people with most superior “services and products”.
They are completely improving and preserving the quality of human life. Most of our
actions must be measured with the help of success for achieving goals. Merck only wants or
excepts profit from the ones who are satisfied with their products and which shall help in
the betterment of the society and humanity.

VISION-STRATERGIC
Till 1994 Merck did not have many strategies of vision. To divide power and balance
the power between the supplier and buyer of pharmaceuticals it was very much
necessary.
The main priorities of the company were
1. Business process improvement than focussing on restructuring.
2. PACE process for improving product development
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3. Developing world business teams for the purpose of strategizing.

4. Organisational fitness
5. Concerns of employee
6. Remaining other concerns
7. Positive points
8. Challenges that have to be faced in future

SECTION2- CONTENT

BUSINESS LEVEL- TRADE OFF

Tension arising between resources and market

The main two components of strategy for a business are the outside in and inside out and
for resolving the tension between the market and the resources both these components
play a significant role.

BUSINESS
MODEL OF
MERCK

INTEGRATED
ABOVE PILL
RX DRUGS HEALTH CARE
SERVICES
COMPANY

FIG- MERCK BUSINESS MODEL FOR QUALITY IMPROVING AND LOWERING PRICE
At the first phase of the business Merck was a R and D power house but they cannot survive
in the market with the help of R and D only so they began to focus on innovative ideas so
that new innovative products can be implemented in the market. Innovations support the
total ecosystem and also the peripheral industries.
Merck adopted both the open as well as the closed innovations
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The two main elements of the business model were

(1) Open innovation- For open innovation the success rate was much higher when
compared to that of traditional research and development Approximately 1/6 of the
cost.
The most efficient workers with in the in company are chosen to bring new
innovative ideas for creation of pharmaceutical products.
The company will win if it achieves in bringing innovative drug to market.
Control of intellectual property so that other competitors fail to make profit
(2) closed innovation-Plethora of ideas have been created within and outside the
industry working with the efficient as well as smart people who are inside and
outside the industry. Intellectual property sharing and use of the intellectual
property to create profit from others.(Anon, n.d.)

VALUE CHAIN
It is all the efforts made within the company to add a value to the final product.

DRUG MANUFACTURING

DRUG SAFTEY AND TOXICOLOGY STUDY

CLINICAL TRIALS
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APPROVAL ---------------- MARKETING

PHASE 1

PHASE2 PHASE 3

OFFERINGS OF THE PRODUCT

Merck is making efforts to deliver wide range products to consumers according to their
needs. They try to make efforts for new innovative ideas so that they can be established in
the market and move according to the trend.company identifies the potentional benefits of
conducting clinical trial.(Beer, n.d.)
company recogonises that coducting research with the help of the stem cells can be a better
way for the treatment of the degenerative diseases.(Collis and Smith, n.d.)

CORPORATE LEVEL- TRADE OFF

TENSION RESOLVING THROUGH SYNERGY AND RESPONSIVENESS

The main corporate strategy of merck has key concept like

 Science and technology as a main tool

 Growth moblisation
 Ambition for sustainability
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Merging-When merck worked with other companies and began to work as a single
organisation it began to expand its market across the world but still this strategy has a
disadvantage of loosing jobs .

In case of aquistation If merck purchased another organisation then their will be a

management change and there is a high chance of loosing jobs for many workers . The
reason for this is to cut the cost as well as to increase the revenues.

public trust from the costumers is important . merck always try to hold hands to gain the
trust of the consumers

corporate bodies of the merck

shareholders

super visory board of

board partners

EXECUTIVE
BOARD OF ANNUAL
GENERAL
PARTNERS
MERCK GENERAL
MEETINGS

FIG- BODIES OF MERCK

Share holders or stake holders- long term intrest for the stake holders are provided.
Additional benefits as well as compensation are also provided to the stake holderes.
Excecutive members manage the business procedures according to the laws of certain
specific regions. They provide the day to day updates to the super visory board.
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Supervisory board – it has a total of 16 members and it does the job of monitering .They are
responsible in manageing the annual financial statements.
Board of partners -supervising the central exceutive board for the management of the
company. It also consist of two other committee called personal committee and financial
committee
Annual general meetings are generallly conducted yearly it is conducted in a virtual way in
which their proxy attend the meetings it is for the annual finincial statement.(Beer, n.d.)

SECTION 3- PROCESS

FORMATION- TRADE OFF

TENSION ARISING BETWEEN EMERGENCE AND DELIBRATENESS
The main tension is that is it necessary to plan for the future or solve problems as problems
are approching gradually.
Planing – proper planing from a long time has kept merck to be one amongest the most
famous brands in the pharmaceutical sector . planing for the coming days can help to
manage the various risk. They mainly concentrated on the planing approach when
comapred to that of the in incremenation approach.
The different planing strategy adopted by the merck is done with the help of a board called
strategic planing board.
This board consist of four standing committee which are fully concentrated in the company
Strategic planing . all the board of directors have to be informed about the company
strategic plans so that they can help in theproper management and for developing crucial
plans.
The board conduct meetings and put many agendas on internal as well as the external
development overall the year.
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FIGURE -PLANING CYCLE OF MERCK

SUMMER
THE SENIOR MANAGEMENT SETS TIME TO REVIEW THE LONG PLANING STRATEGY THE
STRATEGY INCLUDES THE RESEARCH AND CLINICAL DEVELOPMENT GLOBAL MARKETING
AND SALES, MANUFACTURING CAPABLITY, DIGITAL STRATEGY
FALL
SENIOUR MANGAMENT REVIEW THE CONCLUSION AT ONE OR MORE MEETINGS WHICH
ARE CONDUCTED AT THE FALL

WINTER
DECSION MAKING BASED ON THE FUNDING MAINLY FOCUSSED ON THE ANNUAL FUNDING

FUTURE RISK ASSESMENT

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Observing the risk is a main factor so the merck mainly focous to manage the risk through
the help of enterprise risk management
Management is done with the help of acessing ,identifying .
manage the risk with the help of the ERM process
DIFFERENT COMMITTEE ROLES ON RISK MANAGEMENT
AUDIT COMMITTEE- To ensure the proper working of the ERM process and ensure that it is
working properly
MANAGEMENT AND COMPENSATIONAL COMMITTEE- to find the relationship between risk
and rewards.
GOVERNANCE COMMITTEE- Assist the board in the ESG matters and strategy.
RESEARCH COMMITTEE- Overall view of direction effectivness strategy and development
programs.

CHANGE – TRADE OFF

RESOLVING THE TENSION ARISING BETWEEN THE REVOLUTION AND EVOLUTION

Merck has been revolving and transforming R AND D
Merck has clinical relevence in every stage of their thinking
For example
They made the matching of the creativity with mechanical or biological lead idea creation in
the virtual digital stage. They have shown it as a real example while collabrating with a
company called iktos were the use of the artificial intelligence was done for identifing the
novel components.
The in house balancing of innovations in collabration by drawing on correct expertise.
Merck is proud to announce that it is a very crucial member of the project called as the
MELLODDY which aims in improving artificial intelligence and it is the fewer among the top
ten pharma manufactures to take a initiative on innovative medicines.

With the help of drive efficency and effectiveness by harsening the genitic information. This
process increses the success of the preclinical trails.
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Focuss on the disease condition and the disease areas without the distruction of
flexibility,advancing and serenserendipity “out of strategy” projects. The company spin-off
many companies and the out-licensing of M6495 for treatment of osteoarthritis M9831
investigated for the purpose gene editing given to third -people are some of the examples of
the approaches of Merck which is trying to build a value for the consumers and also to
recognise the skill and creativity of the scientist which are involved in the discovery of new
innovative drugs.

SECTION4- CONTEXT

INDUSTRIAL CONTEXT- DILEMMA

TENSION ARISING BETWEEN COMPLIANCE AND CHOICE

Dilemma was used to resolve this tension in the merck
The compliance deals with the main topics for the prevention of anti corruption,
compliance of the health care, controling frauds , anti social money laundering . to cover
these compilance the company adopted certain group wide policy.a compliance officer was
put for the regulation of the compliance with in the industry
The company compilance policy consisted of many elements like
 Process than involves efficent solution oriented systems
 Mointering and contoling
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 Case investigation and management

 Upto date improvement
 Target focussed training
 Enabling policies
The company used this approches to ensure the compliance by using different methods like
1) Data privacy report
2) Transperency reporting requirments in health sector
3) Reporting various violations
4) Group and data privacy integrated thoghter
5) Setting up of certain guildliness and standard
6) New business unit development guildliness were set up
7) Human rights and standards for the labour was set up
8) High security in the data protection
9) Seting compilance training- learning,training based on the code of conduct
10) Internal audit compilance
11) Speak up line was set up against any type of potential violations
12) Risk analysis using corrupution perception index
13) Excat security and data privacy using PCDA principle
14) Making stake holders enggaged
15) Efforts for integrity- medium and small sized company

DIMENSION
Merck has collabrated with various company through out . The most recent collabration
took place recently with astra zenica for the drug called lynparza as a result their was a huge
profit attained from this process but the collabration cost almost 8.5 billion us dollars . now
merck is the 5th largest pharmaceutical company in the world.
PATH
The main aim of the merck is to bringing innovative ideas to already existing medicines or
many new drugs that catch the eyes of the consumer. They are continuously trying to
become the pharmaceutical company with a sustainable growth.
DRIVERS
(1) LIFE SCIENCE SECTOR- High organic growth of at least 21.3percent
(2) ONCOLOGY AND FERTLITY DRUGS- Increase by a 8.5 percent
(3) SEMI CONDUCTERS SOLUTION – GROWTH IN ELECTRONIC APPLIANCES- increase by
7.7 percent

ORGANISATIONAL CONTEXT - PUZZLE

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TENSION ARISING BETWEEN CHAOS AND CONTROL

Leadership is very crucial aspect in -the merck. Every sugessions and opinions are valuable
but the final descion are made by the the company head. In the year of 2017 anke shenkel
was appointed as the risk assement head.
The route of success only comes when you are ready to risk the money
This attitude of business within the workers and head made the company at one of the top
largest in the world.
Leadership
Merck Kagan’s new CEO of the Merck shakes hands with the United States for the one of the
most promising drugs. This decision help to boost up the total sales.
This meeting had a total impact in the us and the sales of the drugs increased in the us
market as well as the other markets around the globe.

CONCLUSION
Merck is one of the biggest pharmaceuticals present in the world formed on
1891.Today the company gained many achievements due to proper strategic
planning and proper organisation. There are also some tensions arising in the
company due to various pressures inside as well as outside the company.

Merck had done a proper balance for the strategizing tension that has raised
between the logic and intuition. they have gained a better trust from the consumers
for providing better quality drugs as they all are satisfied with the overall products.

Usage of Parallel processing was done for resolving many tensions that comes
between resources and the market. The company has always tried to focus on two
components rather than letting one downwards . navigation method was used in the
corporate strategy to resolve the tension arising due to the synergy and
responsiveness in an organization.
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RECOMMENDATIONS

For last few years Merck is putting its best to become the top largest company in the
world by adopting certain strategy.

 Proper maintaining for attaining more popularity many social issues have been
covered by various company
More concentration on products for the paediatric can bring good sales to company.
 The company can more focus on the pregnancy drugs and kits
 The company should conduct more public awareness program
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7848cba0af30655f94098521717d9cb48375.Pdf. Available at:

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(Accessed: 21 March 2022b).

Bardy, R. (2018) ‘Human Centered Management: A Systemic Interrelation2’. p. 23.

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About Us | Merck Canada. Available at: https://www.merck.ca/en/aboutus/ (Accessed: 22

May 2022a).

Beer, P.M. ‘Merck & Co., Inc.: Corporate Strategy, Organization and Culture (A)’. Corporate
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