Post on 04-Jun-2018
transcript
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Bioscience Strategy
ALS 354
Dr. Jay Chok
Professor of Entrepreneurship and Strategy
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Introduction
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Jay and his family
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External
Choice of industry
Geographic location
(nation / region)
Period in history
Internal
Firms capabilities
Firms reputation / brand
Firms leadership /
culture
Examples of internal and external factors
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How to know that you have a
functioning strategy?
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Having a formula for being
above average consistently is
really hard!
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Having a formula for being above
average consistently is really hard!
Change in Forbes 100 List Over 70 Years
-80
-40
0
40
80
120
1917 1987
New FirmsOriginal
100
Firms
49 Failures
18 Survivors
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Why are successful,
enduring strategies rare?
Problem Other people are just as smart as you are.
The world changes, so no one formula lasts
forever. Implications
Formula is simple: Others will eventually
follow. Formula is complex: You may have just
gotten lucky. Luck wont save you when the
world changes.
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Why have a strategy course?
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Learn strategy to deal with challenges
presented by Life-science Industries
High degree of uncertainty in product development
Requires integration of various types of knowledge
Knowledge is tacit (i.e. hard to share)
Public policy environment
Regulatory environment
Is healthcare a product or a right?
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Course Goals
Develop the perspective of a general manager and
identify strategic issues commensurate with this
perspective.
Strengthen your ability to present your strategicarguments in a persuasive manner.
Develop diagnostic reasoning skills that will help
you determine appropriate courses of strategic
action.
Foster teamwork & professionalism
G l M
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General Management
Perspective
1. Pay attention to institutional changes in the
markets that matter to you
Rules of the game: formal rules, norms, best or
custom practices, and beliefs
E.g. Managed care & Waxman-Hatch change
how Big Pharma compete
E.g. AHS took advantage of off-shoring trends inUSA healthcare markets & EHR mandate
E.g. Teva took advantage of Waxman-Hatch to
compete in USA
G l M t
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General Management
Perspective
2.Balance between short-term & long-term
perspective
3.Often intertwined with balance between old
and new products or markets
E.g. Due to limited resources, AHS had to
decide how to balance betn
new service offerings in USA
adapting existing service offerings to sell in other
geographic markets
G l M t
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How should Teva balance old & new?
Corporate culture for blockbuster (new) differs from that
of generics (old)
If units are kept separate, why not spin off generic orinnovative?
With limited resources, how can Teva structure
innovative projects to take advantage of strategic
relationships? Israel academic scientists & marketing partner
General Management
Perspective
G l M t
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Should Teva focus mainly on generics or move
up the value chain?
Generics have reliable returns now but subject to
imitation in future
Blockbuster & biosimilars are more risky now but
may have bigger payoffs in future
Risk profits for multiple quarters or years butdont bet the farm
General Management
Perspective
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Diagnostic Reasoning Skills and the Case
Method
Diagnostic reasoning is the ability to quickly seerelationships between apparently unrelated pieces of
data, leaping to appropriate conclusions without a linear
approach.
The general manager needs business judgment, i.e.
wisdom
Too much data, not enough information.
Too little time.
This course is designed to help you past the beginner
stage of experiential learning through cases.
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How to prepare a case
Skim contents quickly
Quick reading (30 minutes)
Reflection (10 minutes)
What issues do you think may be relevant for
discussion? What information would you like to have to confirm
your hunches?
Review preparation questions (10 minutes)
Update your list of issues to investigate andinformation that you like to have.
[Sometimes relevant] Review any co-assigned or past text
excerpts, articles or lectures that you think might be
relevant. (20 minutes)
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How to prepare a case
Analysis (1 hour) Review case to uncover the answers to your questions and to
validate / invalidate your hunches / hypotheses.
Includes qualitative and quantitative analysis.
Prepare your findings for presentation (20 minutes)
Summarize your conclusions.
For each conclusion, document supporting information that could
be shared in a concise manner.
Talk over your findings with a peer or a group before class. (1015
minutes)
Total Time: 2.53 hours
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How to succeed in this course
Pursue right thinking more than right answers.
Come fully prepared for each class.
But dont stop there! Let your thinking evolve
during each class! Make connections across cases and sessions
whenever possible.
Be able to explain strategic frameworks &
concepts in your own words.
Seek help early when you dont understand the
material.
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Other
Review key items from syllabus (esp. code
of conduct)
Examples of unacceptable behavior:
Arriving late for class meetings or leaving early.
Inattention during class meetings.
Disrespectful comments or unprofessional
language.
Sakai
Minapsys
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10-minute break
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Industry Analyses
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IO View
Industrial-Organizational View
Structure-Conduct-Performance Paradigm
Industry Structure dictates firm Conduct whichdetermines firm Performance
Focuses on the industryas the primary driver
of strategy
Assumption: resources to implement strategiesare perfectly replicable
GOAL: Locate in most attractive industry
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Above Average
Returns(in Excess of the Competitive Level)
Avoid
Competition
Attractive Industry
Entry
Barriers
Low
RivalryPower over
customers &
suppliers
But rivalsresponse
could render
industry
unattractivefor entry
(Insights from
Game Theory
lecture &cases)
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Components of Industry Profitability and
Our Toolkit for Analysis
Industry
Profitability= Value Creation x Value Capture
Demand createdCost of Inputs
Ability toappropriate rewards
ConceptDefined
PIE Chart
(Potential Industry Earnings)
Porter Five-ForcesCorrespondingTool
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Value Capture Factors
Factors
Buyer Power
Supplier Power
Threat of entry
Rivalry amongst
incumbents
Industry output
Industry
Price
Level
Supplier
Mark-up
Buyers
Incumbents
Suppliers
Quantity
Price
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$
Porter 5-Forces Analysis
Rivalry amongIncumbents Buyer Power
Supplier Power
Substitutes
Threat ofEntrants
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Pharmaceutical Industry Exercise
Pick 3 out of 7 options for Big Pharma. Compare
and contrast the 3 options, evaluating the potential
pros and cons.
Be prepared to explain/defend your logic in the next class
Form small groups outside the classroom. Discuss your
arguments. Try to reach a consensus agreement on the
answer and the logic behind it.
Y b lik
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Yes, you are super-busy like
Superman but remember to
Be iClickers ready
Prepare Thursday cases
on Tuesday evening or
by Wednesday noon Finish Minapsys
questions by 5pm on
Wednesdays
Form self-study groups
(Encouraged)
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See you on Thursday