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CHAPTER 01

INTRODUCTION

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1.1

INTRODUCTION

A strategy is a plan of action designed to achieve a specific goal or series of goals


within an organizational framework. Strategic management is the process of building
capabilities that allow a firm to create value for customers, shareholders, and society
while operating in competitive markets. Strategy entails: specifying the organization's
mission, vision, and objectives; developing policies and plans to execute the vision;
and allocating resources to implement those policies and plans. Strategy is largely
about using internal assets to create a value-added proposition. This helps to capture
opportunities in the competitive environment while avoiding threats. Experts in the
field of strategy define the potential components of strategy and the different forms
strategy can take.

Strategies exist at several levels in any organization - ranging from the overall
business (or group of businesses) through to individuals working in it.

Corporate Strategy - is concerned with the overall purpose and scope of the business
to meet stakeholder expectations. This is a crucial level since it is heavily influenced
by investors in the business and acts to guide strategic decision-making throughout the
business. Corporate strategy is often stated explicitly in a "mission statement".

Business Unit Strategy - is concerned more with how a business competes


successfully in a particular market. It concerns strategic decisions about choice of
products, meeting needs of customers, gaining advantage over competitors, exploiting
or creating new opportunities etc.

Functional Strategy - is concerned with how each part of the business is organized to
deliver the corporate and business-unit level strategic direction. Operational strategy
therefore focuses on issues of resources, processes, people etc.

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1.2

OBJECTIVES OF THE STUDY

My broad objective is to know the pharmaceutical companies different strategies at


different level of their business. How the companies applied in their business. Then I
have tried to compare among the strategies that the companies have undertaken to
succeed in the business.

1.3

METHODOLOGY OF THE STUDY

The prime source for the term paper content is the annual report of the respective
companies. Then I search the internet to find more contents related to this topic. I also
took the help of our two authorized book for the course which are Strategic
Management: An Integrated Approach by Charles W. L. Hill & Gareth R. Jones and
Strategic Management: Concept & Cases by Arther A. Thompson Jr. & A.J
Strickland.

1.4

LIMITATION OF THE STUDY

One of the main limitations of this term paper is that the only source available for
collecting data is the annual report of the respective companies and their websites.
There was not enough time available for fixing a meeting with the company
representatives.

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CHAPTER 02
AN ANALYSIS OF
PHARMACEUTICAL
INDUSTRIES

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2.1

PHARMACEUTICAL INDUSTRY

Pharmaceutical industry is the industry which develops, produces, and markets drugs
or pharmaceuticals licensed for use as medications. Pharmaceutical companies are
allowed to deal in generic or brand medications and medical devices. They are subject
to a variety of laws and regulations regarding the patenting, testing and ensuring
safety and efficacy and marketing of drugs. The pharmaceutical industry is
responsible for the development, production and marketing of medications. Thus, its
immense importance as a global sector is evident. The total level of pharmaceutical
revenue worldwide had reached nearly one trillion U.S. dollars. North America is
responsible for the largest portion, generating more than 40 percent of these revenues.
This is mostly due to the leading role of the U.S. pharmaceutical industry. But as in
many other industries, the Chinese pharmaceutical sector shows the highest growth
rates worldwide.
Pharmaceutical Industry has grown in Bangladesh in the last two decades at a
considerable rate. The sector consistently creates job opportunities for qualified
people. In Bangladesh Pharmaceutical sector is one of the most developed hi tech
sector which is contributing in the country's economy. The professional knowledge,
thoughts and innovative ideas of the pharmacists working in this sector are the key
factors for these developments. Due to recent development of this sector we are
exporting medicines to global market including European market. This sector is also
providing 95% of the total medicine requirement of the local market. Leading
Pharmaceutical Companies are expanding their business with the aim to expand
export market.
For preparing this term paper I have chosen GlaxoSmithKline & Novartis from
the foreign market while Incepta Pharmaceuticals Limited and The ACME
Laboratories Limited from the local market. I have tried to analyze their different
strategies followed by them and finally tried to compare among the strategies followed
by those companies.

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2.2

GlaxoSmithKline

GlaxoSmithKline (GSK) is a worlds leading research-based pharmaceutical


company, along with in the area of Health care with a powerful combination of skills
and resources that provides a platform for delivering strong growth in todays rapidly
changing healthcare environment. GlaxoSmithKline A subsidiary of GlaxoSmithKline
(GSK) is one of the worlds largest research based pharmaceutical and healthcare
companies GSK, continues to be committed to improving the quality of human life by
enabling people to do more, feel better and live longer.
Henry Wellcome and Silas Burroughs founded Glaxo in 1880. Glaxo established
medicine research centre around the world. In the Thirties, GSK introduced improved
technology to the business. The business grew and new ventures were bought in UK.
Glaxo Wellcome and SmithKline Beecham announced their intention to merge on 17
January 2000. The merger was completed in December that year, forming
GlaxoSmithKline (GSK). Companies were competing for the same raw materials,
both were involved in large-scale marketing of medicine produce and both used
similar distribution channels. Between them, they had operations in over 76 countries.

2.2.1

FUNCTIONAL LEVEL STRATEGY

GSK lays down its strategies with the intention of being the Indisputable leader in the
pharmaceutical sector. Indisputable in the sense of quality of the product, price,
selling and distribution network, more precisely in every sphere of its activities.

GSK have been creating a more balanced business and product portfolio, capable of
delivering sustainable sales growth. This is centered on our three business areas of
Pharmaceuticals, Vaccines and Consumer Healthcare.

GSK have changed their R&D organization so that it is better able to sustain a
pipeline of products that offer valuable improvements in treatment for patients and

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healthcare providers. This is underpinned by a focus on improving productivity and


rates of return in R&D.

As their business continues to change shape, we are transforming how we operate so


that we can reduce complexity and become more efficient. This frees up resources to
reinvest elsewhere in the business.

Being a responsible business is central to their strategy, and how we deliver success is
just as important as what we achieve. Ensuring our values are embedded in our culture
and decision-making helps they better meet the expectations of society.

2.2.2

BUSINESS LEVEL STRATEGY

GSKs business goal is to be a world leader in pharmaceutical industry. In order to


achieve this, the company seeks to improve its R&D pipeline, using a focused drug
portfolio strategy and selective in-licensing agreements for the external contracting of
R&D. The company links R&D closely to commercial operations to maximize the
value of its R&D portfolio.
GlaxoSmithKline (GSK) is one of the worlds largest research-based pharmaceutical
companies that that discovers, develops, manufactures and markets human health
products. It is an innovative company that produces branded products only, which it
has developed itself.

The company has two main divisions, pharmaceuticals and consumer healthcare. The
pharmaceuticals division is the largest part of GSKs businesses and can be divided
into prescription drugs and vaccines. This report deals with the pharmaceuticals
division only. The headquarters of GSK are located in the UK, with additional
operational headquarters in the USA. The company operates in some 160 national
markets, the major ones being the USA, Japan, France, Germany, the UK and Italy.
GSK conducts R&D at more than 20 sites and employs 15,000 employees in R&D.
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The company has a leading position in genetics and in new drug discovery
technologies. The manufacture and supply system of GSK operates as a single global
network.

2.2.3

CORPORATE LEVEL STRATEGY

GlaxoSmithKline marketing strategy is directly linked to its corporate strategy. The


following points illustrate GlaxoSmithKline official strategic priorities as mentioned
in company website and corresponding points in marketing strategy of the company:
Growing diversified global businesses: In other words, GlaxoSmithKline product
differentiation and market expansion plays an integral role within the corporate
strategy.

This

specific

corporate

strategy

finds

its

echo

within

GlaxoSmithKline strategic marketing through positioning the company as the largest


drug manufacturer with the widest ranges of products in emerging markets such as
China, Turkey and India.
Delivering more valuable product of: This strategy can interpret as an effective
combination of quality and price for GlaxoSmithKline products. This strategy has
been linked to GlaxoSmithKline marketing strategy through communicating the
massage

about

effective

combination

of

quality

and

price

for

GlaxoSmithKline products with the use of various marketing communication channels


in an integrated manner.
Simplifying the companys operational model: To be constantly aiming for high
level of efficiency in various organizational processes. GlaxoSmithKlines reliance on
digital marketing for a range of products such as Oral Care due to the high level of
efficiency of this marketing platform highlights the link between the companys
strategic marketing and corporate strategy.

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2.3

NOVARTIS PHARMACEUTICALS

Novartis pharmaceutical is a global pharmaceutical company committed to making


medicines to treat some of the worlds most challenging diseases. Its goal is simple:
make sure that people facing disease and illness get the therapies they need, when they
need them. Novartis was created in 1996 through the merger of Ciba-Geigy and
Sandoz, two companies with a rich and diverse corporate history. Throughout the
years, Novartis and its predecessor companies have discovered and developed many
innovative products for patients and consumers worldwide. Their mission is to care
and cure. They want to discover, develop and successfully market innovative products
to prevent and cure diseases, to ease suffering and to enhance the quality of life.
Novartis has five business segments and is supported by its global research
organization, the Novartis Institutes for Biomedical Research (NIBR). These segments
are strategically aligned to bring innovative, high-quality and affordable medicines
and therapies to patients around the world.

2.3.1

FUNCTIONAL LEVEL STRATEGY

Novartis is uniquely positioned to take advantage of the fast-changing industry


environment and to fulfill its mission of caring and curing. As it enters their next
growth phase, they are accelerating the execution of their strategy of leading through
science-based innovation to deliver positive health outcomes for patients and payers.
Their strategic priorities are to extend their lead in innovation, accelerate growth and
drive productivity across our diversified portfolio in order to generate profits and
increase shareholder return. Committed to high performance with integrity, we are
engaged in an open and cooperative dialogue with all of our stakeholders.
Extending lead in innovation: Science-based innovation is at the heart of Novartis.
They follow a distinct research and clinical approach to build an industry-leading
pipeline of differentiated medicines and treatments with the goal of delivering realworld benefits to patients and healthcare providers.
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Accelerating growth: Novartis is pursuing long-term growth by maximizing product


launches and leveraging its robust portfolio. They are expanding in established and
emerging markets and adapting our commercial model to the rapidly changing
healthcare environment.
Driving productivity: Novartis is driving productivity by simplifying its processes,
accelerating cross-divisional collaboration, and improving global procurement and
supply chain management. They are using rigorous resource allocation to improve
cash management and profitability.

2.3.2

BUSINESS LEVEL STRATEGY

Novartis pharmaceuticals business strategy is a unique one. They are always ready to
fulfill the customer demands and they are able to please the customer group with
sensible prices. With these they try to achieve the distinctive competencies.
Novartis has been trying a very different strategy. Instead of targeting giant
populations, it targets rare diseases with a small, very similar population. That lets
scientists figure out the molecular pathway by which the disease works and how to
interrupt it.
Market Penetration: Novartis will grow markets by penetrating markets in which
similar products already exist, but their goal is to gain competitors customers and
their market share. They will also try to convince the current non-users of our
products to buy our products by using smart advertising and loyalty programs.
Market Coverage: The market coverage is differentiated in their case because they
offer different products for different target groups. However, all of thei products will
be available simultaneously in all of the selling points: Pharmacies, Supermarkets and
Hospital drugstores.

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2.3.3

CORPORATE LEVEL STRATEGY

Novartis itself created from merging two companies. Novartis strategy is based on
focused diversification. Their uniquely broad business portfolio focuses on sciencebased healthcare sectors that are growing, reward innovation and enhance the lives of
patients. Innovation is fundamental to our business. In 2012, we invested $9.1 billion
(USD) across our divisions in R&D and we plan to sustain our high level of
investment.
Novartis is consistently rated as having one of the industrys most respected
pharmaceutical development pipelines with 141 projects in pharmaceutical clinical
development.
The Swiss giant Novartis aims to transform itself from a pharmaceutical company to
become a broader-based health care company over the next five to ten years. To do
this it has been strengthening its core competence of science-based innovation while
focusing on five high-growth segments of healthcare: Pharmaceuticals, eye care,
generics, consumer health and vaccines and diagnostics.

2.4

INCEPTA PHARMACEUTICALS LIMITED

Incepta Pharmaceuticals Ltd. is a leading pharmaceutical company in Bangladesh


established in the year 1999. The company has a very big manufacturing facility
located at Savar, 35 kilometer away from the center of the capital city Dhaka. The
company produces various types of dosage forms which include tablets, capsules, oral
liquids, ampoules, dry powder vials, powder for suspension, nasal sprays, eye drops,
creams, ointments, lotions, gels, prefilled syringes, liquid filled hard gelatin capsules,
lyophilized injections etc. Since its inception, Incepta has been launching new and
innovative products in order to fulfill unmet demand of the medical community. The
focus has always been to bring new, more technologically advanced molecules and
innovative dosage forms to this company.
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The companys vision is to become a research based global pharmaceutical company


in addition to being a highly efficient generic manufacturer. It would also like to
discover and develop innovative, value-added products that improve the quality of life
of people around the world and significantly contribute towards the growth of
Bangladesh.

2.4.1

FUNCTIONAL LEVEL STRATEGY

Incepta Limited is committed about maintaining salaries and benefits that are fair to
all employees and competitive in the local market place. The management monitors
changes in the economy and salary market to ensure that the overall compensation
package is sufficient to attract, recruit and retain high quality staff within the financial
capabilities of Incepta Limited.
Incepta has taken the following strategy for reduce the production cost. These are:
Sourcing better quality of raw material at the lower cost
Take initiative to enhancing productivity
Take initiative to minimize production process losses
Take initiative to minimize wastage of finished product
Incepta has taken the following strategy to reduce the distribution cost. These are
Develop smart distribution system
Give training to distribution assistant to be more efficient.
Update sales territory periodically.
Use of fuel efficient vehicle to reduce the distribution cost.
Take initiative to reduce the inventory cost.

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2.4.2

BUSINESS LEVEL STRATEGY

Incepta follows the integrated cost leadership/differentiation strategy. Because


Incepta makes the various types of strategy for its each and every department. The
departments are as follows:
Human Resources Department
Finance & Accounts Department
Information Technology department
Marketing Strategy department
Production department
Supply Chain management department
Administration department
Quality Assurance department
Research and development department
Engineering department
Technical services department
Quality Control department

Incepta practice the following strategy to support the other department for smooth
operation. These are
Implement new technology instead of legacy system
Take initiative cost reduction program to reduce the IT cost

Incepta practice the following strategy to increase the sales in terms of taka and
product quantity. These are
Take initiative to develop loyal customer
Product diversification to enhance product basket.
Give training to enhance selling and communication skill

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2.4.3

CORPORATE LEVEL STRATEGY

A complete and integrated Marketing, Sales and Distribution network is required to


make the information on products and services available to the customer. To achieve
the purpose and mission, they affirm their values of integrity, respect for people,
innovation, performance and leadership. All the skilled and professional personnel are
set at their very appropriate responsible positions. Sales team comprising highly
professional science graduate and post-graduate people are involved in the timely and
smooth promotion of our products for the benefits of our doctors, people as well as the
whole nation.

Incepta has its own large distribution network having 20 depots all over the country.
They make the products available in every single drug store of the country. The depots
are located in Dhaka, Chittagong, Rajshahi, Khulna, Sylhet, Barisal, Comilla,
Noakhali, Mymensingh, Magura, Bogra, Narayangonj, Rangpur, Dinajpur, Tangail,
Jessor, Moulovibazar, Cox's Bazar and Feni.

2.5

THE ACME LABORATORIES LIMITED

The ACME laboratories limited is the famous pharmaceutical company in Bangladesh


and it has been continuously in the 2nd position among all national and multinational
companies. Since its inception in 1954, has been working relentlessly with a vision to
ensure Health, Vigor and Happiness for all and is on a perpetual quest for excellence.
ACMEs quality slogan is "Perpetual Quest for Excellence". The ACME Laboratories
Ltd. is committed to maintain state-of-the-art manufacturing facilities for ensuring
best quality products to the customers. The Company is devoted to increase sales
growth, increase productivity, increase profit margin, improve company image &
customer satisfaction and ensure continual improvement. ACME continuously seeks
to expand its production facilities, add employees, and increase its sales and marketing
efforts. According to the latest statistics, ACME is one of the leading pharmaceutical
companies out of more than 300 registered pharmaceutical companies in the country.
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ACME has also endeavored to strengthen its network of international marketing


operations to export its products abroad. Over the years, the efforts made by the
competent staff coupled with customer confidence has fuelled our growth, prompting
ACME to overcome hindrances and progress towards its ultimate goal i.e., attaining
success which indeed is what literally ACME stands for. We are optimistic about our
perpetual growth and success.

2.5.1

FUNCTIONAL LEVEL STRATEGY

The functional departments take the responsibility to implement and achieve their
objectives.

Each department helps to formulate strategy for the business. The

functional department knows the areas to be developed and achieve the company
objectives. The company has diversified business and is responsible for formulating
and implementing the strategy for each business. Coordination and consistency among
the various functional and process strategies are helping the company to achieve its
objectives.
Pursuing ways to realize economies of scale:
Moves to achieve continuous reduction of total cycle time in production
process. Square is implementing flexible manufacturing systems and doing
batch processing to minimize costs.
Finding ways to enrich human capital and develop fully efficient and
productive workforce by necessary training and good recruitment process
Continuous involvement in introducing newer molecules to market and new
distribution systems to meet the needs of the future.
Moves to empower all Square employees in a participative, cooperative and
creative workplace. Any new idea of product marketing and sales is instantly
rewarded.

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2.5.2

BUSINESS LEVEL STRATEGY

The ACME laboratories Limiteds strategic managers current business strategy is


mostly to peruse ways to increase product line and breadth, focus on specific market
segment, strengthen distinctive competency by achieving superior quality and increase
geographic coverage.
The operating strategy of the company is to implement the actions effectively &
efficiently. They are:
Moves to implement JIT inventory management system. This will
reduce s fixed overhead cost.
Finding more sources of quality raw materials inputs. is also looking at
the local suppliers for this purpose.
Developing and inventory stocking strategy to a limited extent to meet
any unanticipated demand.
Instituting proper warehouse staffing strategy by proving proper training
and support system so that any order can be fulfilled accurately within
shortest period of time.

2.5.3

CORPORATE LEVEL STRATEGY

The ACME laboratories have an unique strategy to maintain the corporate works.
These are:
Making the moves to establish positions in different businesses and achieve
related or unrelated diversification.
Pursuing ways to capture valuable cross-business strategic fits and turn them
into competitive advantage.
To take the initiative and act accordingly to boost overall performance of the
company.
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Venture new business to utilize resources and reduce risk.


Establishing investment priorities and steering corporate resources into the
most attractive business units.
Achieve business objectives through quality and customer acceptance by
providing quality & effective drugs
Providing uncompromising quality strategy all over the business units to
achieve and maintain corporate key beliefs and goals and to comply with
regulatory requirements and have ethical practices.

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CHAPTER 03
COMPARISON
&
CONCLUSION

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3.1

COMPARISION

Strategic planning involves making decisions and taking actions that help organization
to achieve goals. Strategic management involves setting the overall goals, values and
direction of the organization. Ideally, planning and management align to move an
organization forward. Comparing and contrasting an organizations strategic plan with
a management strategy can improve resourcefulness and efficiency that leads to
successfully achieving organizational goals.

Here I have already analyzed the different strategies taken by the selected company
which lies in the pharmaceuticals industry. Now I am going to compare among them
in a systematic manner:

Functional Level Comparison:


GSK have been creating a more balanced business and product portfolio, capable of
delivering sustainable sales growth. GSK have changed their R&D organization so
that it is better able to sustain a pipeline of products that offer valuable improvements
in treatment for patients and healthcare providers. As their business continues to
change shape, we are transforming how we operate so that we can reduce complexity
and become more efficient.

On the other hand Novartis has introduced science based innovation to deliver positive
health outcomes for patients and payers. Their strategic priorities are to extend their
lead in innovation, accelerate growth and drive productivity across our diversified
portfolio in order to generate profits and increase shareholder return. Committed to
high performance with integrity, we are engaged in an open and cooperative dialogue
with all of our stakeholders.

Incepta Limited is committed about maintaining salaries and benefits that are fair to
all employees and competitive in the local market place. Incepta has taken some

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unique strategy for reduce the production cost. Incepta has taken some strategy to
reduce the distribution cost.

The ACME laboratories limited have functional departments to take the responsibility
to implement and achieve their objectives.

Each department helps to formulate

strategy for the business. The functional department knows the areas to be developed
and achieve the company objectives. The company has diversified business and is
responsible for formulating and implementing the strategy for each business.
Coordination and consistency among the various functional and process strategies are
helping the company to achieve its objectives.

Business Level comparison:


GSKs business goal is to be a world leader in pharmaceutical industry.
GlaxoSmithKline (GSK) is one of the worlds largest research-based pharmaceutical
companies that that discovers, develops, manufactures and markets human health
products. The pharmaceuticals division is the largest part of GSKs businesses and can
be divided into prescription drugs and vaccines. The manufacture and supply system
of GSK operates as a single global network.

On the other hand Novartis are always ready to fulfill the customer demands and they
are able to please the customer group with sensible prices. With these they try to
achieve the distinctive competencies. Instead of targeting giant populations, it targets
rare diseases with a small, very similar population.
Incepta follows the integrated cost leadership/differentiation strategy. Because
Incepta makes the various types of strategy for its each and every department. Incepta
practice some unique strategy to support the other department for smooth operation.
The ACME laboratories operating strategy of the company is to implement the
actions effectively & efficiently. Moves to implement JIT inventory management
system. This will reduce s fixed overhead cost. Finding more sources of quality raw
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materials inputs.

is also looking at the local suppliers for this purpose. Developing

and inventory stocking strategy to a limited extent to meet any unanticipated demand.
Instituting proper warehouse staffing strategy by proving proper training and support
system so that any order can be fulfilled accurately within shortest period of time.

Corporate level comparison:


GlaxoSmithKline marketing strategy is directly linked to its corporate strategy.
Growing diversified global businesses, Delivering more products of value and
Simplifying the companys operational model are main aim from their corporate level.

Novartis itself created from merging two companies. Novartis strategy is based on
focused diversification. Their uniquely broad business portfolio focuses on sciencebased healthcare sectors that are growing, reward innovation and enhance the lives of
patients. Innovation is fundamental to our business.

Incepta has its own large distribution network having 20 depots all over the country.
They make the products available in every single drug store of the country. Sales team
comprising highly professional science graduate and post-graduate people are
involved in the timely and smooth promotion of our products for the benefits of our
doctors, people as well as the whole nation.

In ACME, making the moves to establish positions in different businesses and achieve
related or unrelated diversification. Pursuing ways to capture valuable cross-business
strategic fits and turn them into competitive advantage. Venture new business to
utilize resources and reduce risk. Establishing investment priorities and steering
corporate resources into the most attractive business units.

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3.2

CONCLUSION

Apart from their own business, in our daily life pharmaceutical companies have a
huge effect. In any kind of diseases we need medicines, and these are companies
which supply those medicines.
All the four companies form the pharmaceutical industry that I have chosen are very
top class companies and they are the market leaders in considering the others. It is not
easy to compare among the strategies that those companies have undertaken as all the
four are successful in their own field.

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REFERENCES
www.gsk.com
http://www.novartis.com/
http://www.inceptapharma.com/
http://acmeglobal.com/acme_laboratories.htm
Annual Report Of GlaxoSmithKline
Annual Report Of Novartis
Annual Report Of ACME Laboratories
Annual Report Of Incepta Pharmaceuticals
Strategic Management : An Integrated Approach by Gareth R. jones & Charles
W. L. Hill
Strategic Management : Concept & Cases by Thompson

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