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An abstract of the thesis of Amit Rangnekar, Research Scholar, NMIMS, Mumbai, for the degree of Doctor of Philosophy (Management Studies), presented October 9, 2007


OF CONSOLIDATION IN THE GLOBAL PHARMACEUTICAL INDUSTRY” Key words : Pharmaceuticals, Strategy, Strate gic

Key words: Pharmaceuticals, Strategy, Strategic Responsiveness, Big Pharma, Consolidation, Survivors

The global pharmaceutical industry has evolved into a highly profitable and innovative industry, driven by a strong and productive R&D. Historically, the novelty and necessity of drugs commanded a premium price, which the industry had been adept at protecting through aggressive marketing, physician proximity and favourable policy.

Driven by a need for scale, scope, synergy and survival, the industry transformed from fragmentation to consolidation, through mergers, acquisitions, alliances, divestments, and organic growth. This led to the formation of Big Pharma, a prescription oligopoly of the top 10 firms, which dominates major- functional, strategic and operational areas, accounting for 48% of the global pharmaceutical market (GPM).

But consolidation eroded key strengths, stifled innovation and growth, and led to the extinction of proud pharmaceutical lineages. Drug discovery dilemmas and regulatory complexities emerged as key dynamics affecting Big Pharma performance. Amid this turbulent environment, 6 companies survived and thrived, largely, due to their strategic responsiveness, or their ability to respond to change.

An industry specific, Pharmaceutical Strategic Responsiveness (PSR) framework, was developed and applied, to compare strategic responsiveness across the GPM categories, under conditions of consolidation. The results indicate a strategic similarity within the

survivors and between the survivors and the stayers, due to similarities in the scale and scope of operations. However, lesser strategic similarity was observed with the fringers and the followers, due to differences in their scale and scope of operations.

But, survivors differ in the intensity of execution of these strategies from others, as they follow a strategy mix, than rely only on a particular strategy. The survivors have shown high strategic adaptability and developed competencies in all strategies within the mix, which they employ as the situation demands. Such competencies help the survivors adapt better to changing dynamics, and survive in a consolidated, highly competitive, and highly regulated but lucrative GPM.

highly competitive, and highly regulated but lucrative GPM. Chapter 1 outlines the need to study the

Chapter 1 outlines the need to study the strategic responsiveness of the six survivors of Big Pharma under conditions of consolidation in the GPM. Chapter 2 provides a conceptual background of the GPM, Big Pharma, and the categories. Chapter 3 identifies research gaps, by reviewing relevant literature on strategic management, consolidation, and on dynamics and strategies within the GPM. Chapter 4 outlines the research design, using structured questionnaire and in-depth interviews, to identify and compare the preferred strategies. Chapter 5 analyses primary and secondary data to establish similarities and differences in strategic responsiveness within the survivors, and across other categories. Chapter 6 highlights the strategic adaptability of the survivors and contributes to the extant literature by developing and testing the PSR framework, an integrated and dynamic model specific to the pharmaceutical industry.

Overall, the survivors do not put all their eggs in one basket; thus use a balanced combination of strategies, and yet manage to build a golden egg every time. As soon as the environment changes again, they use one of the many strategic responsiveness competencies built over the years, to create another golden egg. This helps spread their risks and ensures that they survive and thrive.