Internal_and_External_Analysis

Internal and external analysis TASK 1: Select any organisation (e.g. Retailer, Manufacturer, or Voluntary Organisation) near to where you live, and complete a detailed profile of it. Introduction and Mission Statement Wexport ltd, a subsidiary of LEO Pharma. LEO is a Danish based pharmaceutical company. It was founded in 1908 by two pharmacists August Kongsted and Anton Antons. LEO is a global organisation with over 3,600 employees within critical care and dermatology. The company headquarters are located in Denmark with a present in 54 countries and products are sold in more than 100 countries. Wexport is an active pharmaceutical ingredient manufacture. It has been in production in Cork still 1991 producing Tinzaparin. Tinzaparin is used in the treatment of deep vein thrombosis (DVT) and in the prevention of blood clotting. The branded product name is innohep, it is a low molecular weight heparin. The LEO mission statement reads[1], ‘LEO Pharma is committed to the research, development and marketing of safe and effective prescription medicines, thereby supporting the LEO Foundation's contributions to medical science, chemistry and pharmacy.’ The statement meets the three main criteria for a mission statement 1. Uplift staff, and inspire employees to work towards a common goal; 2. Generate pride 3. Communicate a message to customers The LEO vision is to be the best global company in critical care and Dermatology. To achieve this, LEO has established a clear vision and goal. LEO is a committed company, both to the people that work in LEO and the patients that they serve. It is a company where they research and bring new innovative medicines to the market place that will make a substantiate contribution to society. The continuation of the foundation ensures this. Analysis of Products [2] The main product is innohep. This product is used for anticoagulation treatment i.e. critical care. The main treatment is for thrombosis(see figure 1) i.e. to stop blood clots development in the deep veins of legs due to inherited risk factors, such as genetic disposition, or acquired conditions, such as major surgery. Innohep is highly effective in this treatment. Heparin-based products are an essential part of critical care and are administered as a preventative measure to patients in high-risk groups, and in doses four times greater to treat patients who are diagnosed with blood clots. Figure 1: Appearance of blood clots (thrombosis), a blood clot (thrombus or embolus) [pic] Innohep is manufactured from the active ingredient produced in Wexport i.e. low molecular weight heparin or Tinzaparin. The supply chain is quite extended. With the main purification taking place in Wexport in Cork with financial and IT support based in Dublin (figure 2). The Active is shipped to France and Denmark for final filling (figure 3). The final product is administered as a syringe (figure 4). Figure 2: Supply chain and active manufacture[3] [pic] Figure 3: active filling [pic] Figure 4: Final formulation[4] [pic] The LEO Pharma marketing strategy is to develop and defend the global position of innohep as the leading brand for treatment of DVT and PE of all patient groups – e.g. in pregnant, elderly, obese, paediatric and cancer patients in both the hospital and out-patient settings. The overall positioning of innohep is based on the unique dosage and clinical results obtained in the treatment of DVT and PE. All LMWH brands are considered “effective”. However there are differences in the perceived clinical efficacy between brands. The LEO strategy is to utilise the available clinical documentation in special patient groups, particularly elderly patients with renal impairment and pregnant patients to position innohep as the “safest” LMWH, i.e. reduced bleeding risk compared to the main competitor. The clearance of LMWH from the body is considered to be primarily via renal excretion. Therefore use of LMWH must be carefully considered in patients with renal impairment, e.g. elderly patients. The anticoagulant activity of some LMWH accumulates in patients with impaired renal function. Innohep is the exception to this as the product does not show the same accumulation in patients with impaired renal function. It is thought that this difference is due to the higher average molecular weight and lower AXa/AIIa Activity Ratio of innohep compared to its main competitors. The higher the average molecular weight and narrower the molecular weight distribution (MWD) within the regulated range the more effective and reproducible will be the performance in this regard. The molecular weight distribution of the finished product is entirely controlled by the manufacturing process of the Tinzaparin Sodium active pharmaceutical ingredient produced at Wexport Ltd. Management and staff The total headcount is 48 full time employees. This is spread between a number of different departments. A breakdown of the number is given in figure 5 Figure 5: Wexport employee |Administration |2 | |Production |16 | |Development |7 | |Technical services |5 | |Quality |18 | |Total |48 | Nearly three quarters of the staff have third level qualifications. Profile of its Competitors and Suppliers The leading LMW Heparin competitor is Clexane. Clexane however carries a warning indicating that it should not be used in the elderly patient population. This product is produced by Sanofi Aventis as Enoxaparin. This product represents nearly 50% of the total market with large sales volumes in the states. The annual sales figure is estimated at $3.1bn[5] Analysis of Business and Financial Performance Based on figures for European and Canadian market low molecular weight Heparin is valued at €1,199M and is growing at a compound growth rate of 7.6%. The LEO Pharma LMW Heparin, innohep currently holds a market share of 10.2%. No LMW Heparin is currently indicated for use in elderly patients with impaired renal function. With this additional indication it forecast that innohep sales growth rate will increase to 15%. The total sales for Wexport are not available however the sales figures for LEO are included in figure 6. The sales show steady growth, however in 2009 a number of acquisitions were make which in turn affected the profitability. LEO Pharma acquired the Australian-American biotech company Peplin, Inc., and repurchased the company’s distribution rights in the US from its former partner Warner Chilcott, Inc. The acquisition and the repurchase, cost was approx. 750 million. This impacted the results for 2009 with total depreciation, and write-downs of 298 million euro,(note all figures are converted from Danish Kroner). 2009 had continued growth in net turnover of 7%, but with an expected pre-tax loss of 2 million euro as a result of the substantial investments outline above. With equity of 2537 million euro and a large net capital of reserve, LEO maintains its financial freedom to take action and expand even in years of global financial crisis. Innohep for treating blood coagulation disorders is the main product within critical care. Innohep is the most important contributor to the development in sales in the critical care segment, with an increase of 5% in 2009,[6] Figure 6: LEO sales figures [7] [pic] TASK 2 Discuss the positive and negatives of the organisational ‘type’ described in Task 1. LEO Pharma is owned in full by the LEO Foundation and is totally independent of outside capital. The LEO Foundation is an independent, private institution whose aim is to ensure the continuance of the LEO Pharma group of companies.  Typically Pharma companies would be limited companies with shareholders and publicly quoted shares. The major different between a being owned by a foundation means that shareholders do not need to be consulted as there are no shareholders. The major advantage of this is it allows LEO to make fast decisions. This means that the company can move on great ideas and ensure that everyone at LEO Pharma feel their voices are heard throughout the company. This different can be summarised as follows, Profit driven organisation redistrubute the profits back to the empolyees, owner (if privately held) and or the shareholders. In contrast foundations do not have owners. They have controlling members or boards that control the company. Any surplus is reinvested in the company to ensure its survial and in the case of Leo-pharma to address its missions statement. ‘LEO Pharma is committed to the research, development and marketing of safe and effective prescription medicines, thereby supporting the LEO Foundation's contributions to medical science, chemistry and pharmacy.’ i.e. continued investment in research, development and marketing to support the foundation. The same performance measurments and metrics are used for the foundation as for a limited company. This means that finical results and investment are all published. The company has a media presents and is answerable regarding the efficay of their drug. This is to ensure full transquncy to society in everything that the Leo foundation does. This ensures an effective board of director that control the foundation. Advantages: Fast to change Not answerable to shareholders Disadvantages: At the mercy of board of directors Directors can be slow to change Closer examination in media TASK 3 Complete an Organisation Chart for the organisation used in Task 1 Note in the interest of brevity the organisation chart for Wexport and direct supports are only shown. [pic] TASK 4: Describe the relationship between the various departments. There are four main departments in Wexport. They are Technical services Production Quality Development Each department interacts with each other in order to delivery API in a timely, lean, and safe manner. Each department meets each daily to ensure the smooth running of the plant. Each department has one manager/leader that reports to the plant manager. The plant manager in turn controls the other supply chain function and report to the API vice president. The Vice president report to the CEO of the company. The operation strategy is controlled by the plant manager. With SMART goals established at the start of the year. Both the corporate and business Strategy is controlled at the CEO and board level. The organisational structure is very flat and based on team performance. The Wexport function is relativity small allowing better communication and faster tackling of problems. Figure 7: Wexport manufacturing and supply chain [pic] According to Mintzberg and his Theory on Organizational Forms[8]each organization can consist of a maximum of six basic parts: Strategic Apex , Middle Line, Operating Core, Technostructure , Support Staff , Ideology. This theory can be applied to the manufacturing scheme in figure 7 as follows (figure 8) Figure 8: Wexport manufacturing and supply chain [pic] Mintzberg [9] model describes six organizational configurations. Standardization of work processes best describes the Pharma environment. In this model work is coordinated by specific processes. People carry out interrelated tasks with support from other departments. To allow for control of these departments within the organisation they are split by functional structure. The overall authority flows down from the CEO. TASK 5: Construct a PEST Analysis for the organisation |Political |Economic | |Government willing to invest through IDA and other grant systems in|Cost of labour high | |research. | | | |Lots of recruitment potential available | |Government unstable | | | |Demand in some countries strong but not have the ability to pay | |The contribution to local councils prohibitive for new builds | | | |With economic downturn difficult to increase product price. | |Investment in infrastructure reducing | | | |Cost of building and construction low | |Company tax system favourable | | |Social (Business Environment) |Technological | |Cost of raw material increasing. |The product is old and purification methods need to be updated. | | | | |Increased competition from China and low cost base. |Cost of change barriers. | | | | |Aging population with longer life span will require more critical |Competition from generic manufactures. | |care | | | |Greater emphasis on testing and characterisation of product. | |New markets available | | | |New impurities | |Cost of transport high | | TASK 6: Explain in more detail each point that you identified in your PEST Analysis. Political 1) The Government is willing to invest through IDA and Enterprise Ireland in the research based economy. Wexport is ideally positioned to available of these grants. Investment from bodies such as IDA would benefit the country through new jobs and wealth generation. It would also benefit the company by getting a better return on investment. 2) The Government is unstable this could lead to civil unrest or a double recession. This would have a negative effect on future investment in the country and company as it would be seen as an unsafe environment to do business. 3) The contribution to local councils for building is very prohibitive to the addition of new builds. The contribution is based on the square footage therefore the larger the investment the greater the penalty to pay to local government for the same services. 4) Investment in infrastructure by the government is reducing and could lead to higher transport costs, again making a negative argument for further investment. 5) Company tax system is favourable however a change of government policy could erode this advantage. A new government could increase the minimum wages having a negative effect on the cost of doing business. Economic 1) The cost of labour high and doing business in Ireland is still too high. This is taken into consideration for future investment. 2) With the recent recession there is a large talent pool available for recruitment. A highly educated young workforce makes Ireland a favourable place for investment 3) With many countries nearly bankrupt the ability for some government to pay for critical care is stretched. A case in point is Greece. This leads to further civil unrest and a valuable lesson to other governments. 4) With economic downturn it is difficult to increase product price, thereby putting further strain on unit cost. 5) The current cost of building and construction is low, making building expansion and investment very attractive. Social (Business Environment) 1) The availability and cost of the raw material increasing. New area’s for sourcing must be investigated. A new countries must be investigated and new types of sourcing should be examined. 2) Increased competition from China and low cost base needs to be considered as over half the raw material for production of heparin are located there. 3) Aging population with longer life span will require more critical care and new indications for heparin and heparin type products should be examined. 4) New markets and countries should be examined. By developing new markets a greater market share can be obtained. 5) The cost of transport for the raw and finished products gives an additional cost to standard cost. More technical development is required. Technological 1) The product is old and purification methods need to be updated with more advance levels of control and automation. 2) Heparin is a biological product and the regulatory costs associated with this are huge. The cost of change barriers should be examined and streamlined if possible. New approaches should be examined. 3) With the high value of the finished product there is competition from generic manufactures. Wexport has to maintain it cost based and raw material sourcing. By being the leaders in technical field will bring better control of the product and process. 4) With the contamination of the heparin supply in China greater emphasis on testing and characterisation of product is now required. This has the bonus effect of helping to keep generics out and they may lack technical know how. 5) With additional analysis there is a risk of discovering new impurities. Better characterisation of the finished product is required and high technical knowledge to fully understand any new impurities. TASK 7: Construct a SWOT Analysis for the organisation |Strengths |Weaknesses | |Product has a long history of use |regulatory environment prohibitive to advancement | | | | |Have many years of experience, well optimised process |limited raw material supply | | | | |Product well characterised and tolerated |Old product | | | | |Very flat management structure |In the papers for the wrong reason | | | | |critical care product |High cost low volume | |Opportunities |Threats | | |Cost of raw material increasing. | |Aging population with longer life span will require more critical | | |care |Competition from generic manufactures. | | | | |New markets available |Greater emphasis on testing and characterisation of product. | | | | |New indications |Increased competition from China and low cost base. | | | | |New technologies |Potential for contamination | | | | |Research grants available | | | | | TASK 8: Explain in more detail each point that you identified in your SWOT Analysis. Strengths 1) Product has a long history of use and has shown no toxic effects, has high safety and efficacy. It is well tolerated by people and known to be a very safe product. 2) The product has been manufactured for many years and therefore there is a high degree of knowledge, both technical and quality relating to it. 3) Product well characterised and tolerated by people. 4) Very flat management structure giving a dynamic workforce where changes can be implemented and problems can be discovery quickly. 5) The product is used for critical care therefore if needed has to be taken, there are not any other alternatives that have the same efficacy and safety. Weaknesses 1) The product is classed as a biological. The process defines the product. Any change must be considered by regulatory. This environment is prohibitive to advancement and very costly to do so. 2) As heparin is sourced from porcine mucosa there is a limited raw material supply. The supply must therefore be sourced inter-country and from as far away as China. 3) The product and the technology used for its production is old. Further optimisation of these processes is difficult as due to the regulatory environment. 4) There has been a number of incidents of heparin adulteration in the last number of years. The first was with dioxin and the second was over sulphated condroitin sulphate which resulted in the deaths of 500 people. The current global reputation of heparin has been damaged 5) The collection and processing of heparin is long and complicated with a normal duration of nearly 6 months from collection to market. Opportunities 1) Aging population with longer life span will require more critical care in the future. Critical care products have to be taken as the alternative is usually death. The demand will increase with this larger population 2) New markets available in the developing countries as heparin is still largely a first world drug. 3) New indications for cancer and labour would open up new markets. A number of research papers have indicated this.[10] 4) New technologies for isolation and processing could improve unit cost. More investment in research and development is required. 5) Research grants available for new processes and basic research. This money could be used for increased employment and research equipment and buildings. Threats 1) Cost of raw material increasing as limited supply. This produces a sellers market and fierce competition for raw materials. 2) There is strong competition from generic manufactures for both the raw material and market share. This put increase strain on scoring and unit cost. 3) Greater emphasis on testing and characterisation of product can give new impurities that have to be characterised. This can have severe consequence when new impurities are discovered and need to be characterised and explained. 4) Increased competition from China and other low cost bases. Have to be competitive on price. 5) Potential for contamination in the supply chain. One such example was OSCS which resulted in a large number of deaths.[11] ----------------------- [1] http://www.leo.ie/C1256B9C004FF847/adbdi/578EA81526763F4BC1257647004D127E'OpenDocument [2]http://www.leo.ie/C1256B9C004FF847/adbdi/578EA81526763F4BC1257647004D127E'OpenDocument [3] stock photo’s from Leo [4] Leo stock photo’s of innohep products [5] http://en.wikipedia.org/wiki/Enoxaparin_sodium [6] http://www.leo-pharma.com/Home/About-us/Media/News/2010-mar-24--LEO-Pharma-financial-2009-statement.aspx [7] http://www.leo-pharma.com/Home/About-us/Facts-about-LEO-Pharma.aspx [8] http://en.wikipedia.org/wiki/Henry_Mintzberg [9] http://en.wikipedia.org/wiki/Henry_Mintzberg [10] http://www.meds.com/conrad/ash/kakkar.html [11] http://en.wikipedia.org/wiki/Heparin