Turnaround of Schering-Plough Corporation
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Case Code: BSTR365 Case Length: 28 Pages Period: 2001-2009 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.400 Organization: Schering-Plough Corporation Industry: Pharmaceuticals Countries: USA, Global Themes: Restructuring, Turnaround, Turnaround Strategy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Problems at SP
The troubles for SP began in 2001 as its blockbuster drug Claritin was set to expire at the end of 2002. In the US alone, Claritin served a market of 45 million people and contributed more than half of the company's US$ 9.8 billion in sales in 2001...
Turning Around SP
As SP was dogged by problems such as slumping sales, demoralized work force, government investigations related to manufacturing violations as well as legal and regulatory challenges, experts suggested that the company was in need of a change in leadership...
More Challenges to Overcome
In January 2008, Vytorin, co-marketed by Merck and SP, came in for scrutiny when a clinical trial of the drug called Enhance study proved that Vytorin did not lower the risk of a heart attack more effectively than Zocor, a cholesterol drug known as a statin...
Results
According to experts, after Hassan took charge at SP, the company witnessed a remarkable recovery in its performance. In 2005, the revenue and operating profit of SP increased in all its three divisions - prescription drugs, consumer and animal health and that year the company reported its first profit in three years which was about US$ 269 million (Refer to Exhibit IV for the stock price chart of SP)...
Merger with Merck
After turning around the company successfully, Hassan wanted to develop a strong pipeline of drugs in order to capture a major share in the pharmaceutical market. To cover up SP's late-stage drug pipeline gap, the company planned to acquire a smaller pharmaceutical company....
Outlook
In September 2009, Merck filed papers with regulators in the European Union seeking approval of its planned acquisition of SP. In November 2009, the deal was approved by shareholders from the companies, the US federal government and regulatory authorities in the European Union....
Exhibits
Exhibit I: Timeline of Schering-Plough Corporation
Exhibit II: Products of Schering-Plough Corporation
Exhibit III: Profile of Fred Hassan
Exhibit IV: Stock price chart of Schering-Plough Corporation
Exhibit V: Income Statement of Schering-Plough Corporation
Exhibit VI: Schering-Plough Corporation- Balance Sheet (2003-2008)
Exhibit VII: Net Sales of Schering-Plough Corporation
Exhibit VIII: Top Ten Pharmaceutical Companies after Mergers
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