Turnaround of Schering-Plough Corporation
Case Code: BSTR365
Case Length: 28 Pages
Pub Date: 2010
Teaching Note: Not Available
Organization: Schering-Plough Corporation
Countries: USA, Global
Themes: Restructuring, Turnaround, Turnaround Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
The case is about the turnaround of US-based global healthcare company Schering-Plough Corporation (SP). SP developed and manufactured pharmaceuticals for three customer segments – prescription pharmaceuticals, animal health, and consumer healthcare. The company ran into problems in 2002 as the patent of its blockbuster drug Claritin expired leading to drop in sales and fall in revenues. Sales of other alternative drugs manufactured by the company were not up to expectations. Moreover SP was dogged by issues such as quality control problems at some of its manufacturing facilities, intense competition, demoralized work force and regulatory problems. With the deteriorating financial position, analysts opined that the company would be a target of a takeover.
At this juncture Fred Hassan (Hassan), widely known as the turnaround specialist in the pharmaceutical industry, assumed the responsibilities of CEO of the company in 2003.
The case discusses the various strategies adopted by Hassan in turning round SP. According to analysts, Hassan employed a methodical, eye-on-the-long-term approach in order to revive SP. His first priority was to restore the organizational health of the company. Hassan planned to cut costs and increase productivity so that the company's revenue did not rely on a single blockbuster drug. To restructure SP, Hassan designed a six-to-eight year strategic plan, called the 'Action Agenda' whose objective was to stabilize, repair, turn around, build the base and break even. After implementing the transformational plan put forth by Hassan, the company's revenue grew and it started recording profits from the fiscal year 2005 onwards. In November 2009, in a deal orchestrated by Hassan, SP was merged with one of the leading pharmaceutical companies, Merck & Co.
The case is structured to achieve the following teaching objectives
- Analyze the problems faced by SP
- Evaluate the strategies adopted by Hassan in turning around SP
- Examine the changes brought in by Hassan at SP
- Understand the issues and challenges in turning around a company
Problems at SP
Turning Around SP
More Challenges to Overcome
Merger with Merck
Turnaround, Turnaround strategy, Turnaround plan, Restructuring, Organizational health, Reorganization, Strategic insights, R&D, New Product Development, Customer-Centered Product Flow, Leadership, Leader Behaviors, Action Agenda, Decision making, Merger, Reverse merger, Integration planning, Schering-Plough, Merck
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