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Analysis of Omnicare By: Ashley Pait

Analysis of Omnicare By: Ashley Pait. Overview of Omnicare Pest Analysis industry Analysis. Snapshot of Omnicare. Established in 1981 in Covington, KY Part of the drugs wholesale industry and pharmaceutical industry Provides pharmaceutical care for seniors

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Analysis of Omnicare By: Ashley Pait

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  1. Analysis of Omnicare By: Ashley Pait

  2. Overview of OmnicarePest Analysisindustry Analysis

  3. Snapshot of Omnicare • Established in 1981 in Covington, KY • Part of the drugs wholesale industry and pharmaceutical industry • Provides pharmaceutical care for seniors • Serves more than 1.4 million residents of… • Skilled nursing • Assisted living • Other healthcare facilities • Omnicare serves Canada, the District of Columbia, and 47 states in the U.S.

  4. Snapshot of Omnicare Continued 13,700 employees January 2011- Mr. John G. Figueroa was named the new CEO of Omnicare February 17, 2011- Omnicare declared a quarterly cash dividend of 3.25 cents per share Omnicare is a Fortune 500 company

  5. Omnicare’s Products & Services

  6. Omnicare’s PEST Analysis

  7. Omnicare’s PEST Analysis

  8. Who Are Omnicare’s…

  9. Industry Analysis/Porter’s Five Forces

  10. Nature of Threat of New Entrants

  11. Nature of Threat of Substitutes

  12. Nature of Supplier Power

  13. Nature of Buyer Power

  14. Nature of Intensity of Rivalry

  15. Suggestions to Address Key Forces Key Force= High Intensity of Rivalry • The pharmaceutical industry is a tough and competitive industry due to… • Technological advancements • Tighter regulations • Investor confidence • Drug patents • The industry needs to continue to differentiate and create technological advancements to be a very strong industry

  16. Possibility of a Blue Ocean Strategy Omnicare has 3 out of 5 of the major Blue Ocean Strategy Components Omnicare could easily use a true Blue Ocean Strategy in the pharmaceutical industry

  17. Omnicare’s Current Strategy • Omnicare currently has the following characteristics, which are found in a Blue Ocean Strategy:

  18. Conclusions of pest and industry analysis • Technological opportunities and threats are most important for Omnicare • The drug wholesale industry has a… • Low… • Threat of new entrants • Threat of substitutes • Supplier power • Buyer power • High… • Intensity of rivalry • Omnicare could easily use a true Blue Ocean Strategy in the pharmaceutical industry

  19. Competitor AnalysisMarket Analysis

  20. Identification of Key Competitors

  21. Evaluation of Competitors

  22. Evaluation of Competitors

  23. Strategy Business Groups in the drug Wholesale Industry

  24. Evaluation of Competitors

  25. How Competitors Compete

  26. Omnicare’s Competitive Positioning • Omnicare uses a differentiation strategy to compete • Omnicare has many diverse services • Omnicare is the only provider of any kind to offer a full range of systems to operate a long-term care facility • Omnicare has specialty pharmacy and compounding operations, enabling Omnicare to distribute drugs that require special handling • Omnicare also uses a cost leadership strategy to compete • Omnicare provides its clients with opportunities to improve the quality of care for the residents they serve while reducing overall healthcare costs

  27. Omnicare’s Competitive Positioning

  28. PharMerica’s growth

  29. Market Growth Opportunity Pharmaceutical market share by drug type • Growth opportunity: • Specialty distribution will play an increasing role as newer biotechnology drugs, typically requiring refrigeration and special administration, come to market • RxCrossroads, an Omnicare company, provides solutions enhancing pharmaceutical and biotechnology manufacturers' product success. Other, 19% ConventionalDrugs, 72%

  30. Size of Drug Wholesale Market In 2010 the United States’ drug wholesale industry totaled $602 billion, which was up 7% from the previous year

  31. Key Trends In Drug Wholesale Market • Structural changes • The majority of companies generate high returns • Excess cash for further rapid growth is available and used for mergers and acquisitions • Emphasis on research and development • Future growth

  32. Future GrowthIn Drug Wholesale Market • The baby boomers will soon reach age 65 which will increase the number of people who need long term care services. Number of individuals needing long term care Year

  33. product & Service types In Drug Wholesale Market • Medications and drug distribution services • Infusion therapy • Pharmaceutical care guidelines • Pharmaceutical consulting • Clinical programs • Clinical trials management • Data analysis and submission

  34. Who is the target market in the drug Wholesale Industry? Drug wholesale industry

  35. Market Segmentation Approaches

  36. Social Media In Drug Wholesale Market • How can companies improve their services by listening to online blogs? • If you have an insight about what your customers want through the blog, companies can serve the customers. • What are the risks associated with using social media in the drug wholesale industry? • The industry has to figure out what tools actually work for certain kinds of communications. • We have to decide whether to passively or actively monitor social-media activity. • Omnicare introduced “Omniview” in 2001 • A web-based customer site that provides access to • pharmacy information • extensive array of on-line resources • As of 2010 there were 9 drug wholesale companies with blogs

  37. Conclusions of Competitor and Market Analysis • Omnicare’s main competitors • PharMerica (Publicly Traded) • Option Care (Privately Held) • Covenant Care (Privately Held) • Competitors compete with... • Trust • Experienced companies with loyal customers • Focus on low cost • Key trends for the drug wholesale market • Structural changes • Future growth • Emphasis on research and development • Market segmentation includes… • Industry segmentation by products • Industry segmentation by distribution

  38. Internal AnalysisSWOT AnalysisGeneric StrategyGrand Strategy

  39. Omnicare’s Current Business Model • Omnicare currently operates as a service-driven company

  40. Omnicare’s Future Business Model • Omnicare wants to transitionas a operations-driven company by taking the following steps:

  41. Omnicare’s Performance Over Past 5 Years Numbers in thousands 2005-2006: 22.4% increase in sales Sales peaked in 2006 2006-2007: 4.12% decease in sales 2007-2008: 1.73% increase in sales 2008-2009: 0.64% decrease in sales There was a 0.14% overall increase in profit from 2007 to 2009

  42. Little Change in Distribution of Sales

  43. Omnicare’s Key Assets • Cash • Accounts receivable • Unbilled receivables • Inventories • Goodwill • Properties and equipment • Identifiable intangible assets • Rabbi trust assets for settlement of pension obligations

  44. Omnicare’s SWOT Analysis

  45. BCG Matrix Stars Question Marks HIGH MARKET SHARE: Omnicare holds 80% of the market share HIGH MARKET GROWTH RATE LOW MARKET GROWTH: There is little opportunity for growth in the market in the U.S. LOW Cash Cows Dogs HIGH LOW RELATIVE MARKET SHARE

  46. Overview of Omnicare’s… • Generic strategy • Overall cost leadership • Grand strategy • Organic development • Strategic clock • Low cost • High perceived service benefits

  47. Omnicare’s Generic Strategy LOW COST COMPETITIVE ADVANTAGE: Omnicare competes by reducing client’s overall healthcare costs. Competitive Advantage Low Cost Higher Cost Overall Cost Leadership Differentiation Broad Competitive Scope BROAD COMPETITIVE SCOPE: Omnicare focuses on a broad spectrum of services in the drug wholesale industry. Differentiation Focus Cost Focus Narrow

  48. Omnicare’s Grand Strategy • Transition to an operations-driven company • A focus on organic development • Enhance the customer experience • Align customer retention with incentive programs • Reposition leading technology offering • Invest in new technologies closer to the customer • Improve selling effectiveness • Re-engage sales consulting group • Improve coordination of selling process • Revamped incentive programs

  49. Omnicare’s Strategy Clock High Differentiation LOW PRICE: Omnicare focuses on low cost overall and differentiation HIGH PERCIEVED SERVICE BENEFITS: Omnicare does have competitors but their service benefits stand out to competitors with 80% of the market share! Focused Differentiation Hybrid Perceived Service Benefits Low Price No Frills Strategies Destined for Failure Low High Price

  50. Omnicare in International Markets • Omnicare Clinical Research (OCR) • A division of Omnicare • A contract research organization specializing in Phase I to Phase IV trials for bio-pharma and medical device companies • OCR opened two offices in China in 2001 • Offices in Shanghai and Beijing • Why China? • Phase I trials can be conducted in China for around 1/15th of the equivalent cost in a Western country • Phase II studies cost 1/20th of the price in the west • Omnicare also have other offices located in the Asia Pacific including… • Australia • India • Japan

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