The 10th Largest Pharmaceutical Company In The World Commerce Essay

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We were founded by Eli Lilly in 1876, and are now the 10th largest pharmaceutical company in the world. We have steadfastly remained independent, but not isolated. Across the globe, Lilly has developed productive alliances and partnerships that advance our capacity to develop innovative medicines at lower costs. Lilly is consistently ranked as one of the best companies in the world to work for, and generations of Lilly employees have sustained a culture that values excellence, integrity, and respect for people.

In 1934 the company opened its first overseas office in London, shortly followed by its first overseas manufacturing site at Basingstoke. Since those early beginnings the UK has continued to play a key role in the company's development, contributing to manufacturing and R&D efforts, as well as to sales. In 1963 Lilly acquired the Speke factory from the Distillers Company and by the 1970s the Speke facility had become a significant bulk manufacturing facility. Today it is a major supplier of active ingredients for both animal and human health products.

 Also in the 1960s, Lilly acquired Erl Wood Manor in Windlesham, Surrey, the company's first Research & Development site outside the U.S. Over the past four decades Erl Wood has played a major role in Lilly's R&D effort, particularly in the field of neuroscience research. A team of scientists at Erl Wood discovered Olanzapine (Zyprexa), one of the world's leading atypical antipsychotics and a major revenue generator for the company.

 Today, Erl Wood continues to play a leading role in neuroscience research and scientists are currently working on therapies for neurodegenerative disorders, cognitive diseases and more recently sleep disorders.

 Lilly's operations in the UK remain important, spanning manufacturing, R&D, corporate functions and a dynamic UK sales and marketing organisation. The UK affiliate continues to innovate and is currently playing a leading role in transforming the business to meet the challenges of tomorrow.

 Our Responsibilities

The pharmaceutical industry in the UK faces many challenges today, not the least of which is the challenge of building and maintaining the public's trust.

That's why the Lilly promise to provide "Answers That Matter" is about more than medicine. It's also a promise that:

We will strive for the highest standards in all areas of our business;

We will be transparent about how we operate, and;

We will use our resources to strengthen communities, address important health challenges and improve outcomes for individual patients.

Our long-established core values guide us in all that we do:

Respect for people, which includes our concern for the interests of all people worldwide who touch-or are touched by-our company: healthcare providers, patients, employees, shareholders, partners, suppliers and communities;

Integrity that embraces the very highest standards of honesty and ethical behaviour;

Excellence that is reflected in our continuous search for new ways to improve the performance of our business to become the best at what we do.

Change Management

Change management is the study of why organizations must change how the change affects how to respond to environmental changes. All agents of change plays a major role in the successful implementation of change management.

Routines associated with effective change management are:

1. Create an explicit strategy for managing change at the highest level and deliver this shared vision, and the rest of the organization.

2. Communication is the key to effectively implement successfully.

3. Managers often resist the idea of participation in an early decision involvement. There are two significant advantages to allow participation to happen as soon as possible in the process of change. Without this, even if you try to negotiate or to tell people not to develop a sense of "ownership" of the project or commitment.

4. Create a climate of openness to express concern and worry and the use of positive ideas and knowledge they have within the organization.

5. With the change of the main programs is especially important to set clear objectives so that people can object.

6. Successful organizational change depends on listening to a lot more training as an investment in the development not only specific skills but also in creating a different kind of organization.

Types of Organizational Change:

There are many ways to classify organizational change, understanding the nature of the change in the organization intends to take is important in determining the most appropriate strategy.

The following are some types of organizational changes:

1) Incremental Change

The gradual change may be an important and very significant, but is progressive and repetitive. Incremental changes may stop employee resistance.

2) Transformational Change

Transformational change usually helps an organization regain strategic alignment with its environment. If an organization loses touch with its shifting marketplace, more fundamental transformational change may be needed for survival.

3) Strategic Change

Strategic change directions, with big long-term problems and organizational scale. The company's ability to identify and understand the competitive forces in the game and how they evolve over time, competition for a company to mobilize and manage resources for the selected response to competition over time.

Lilly purchased PCS Health Systems; and rhone-poulenc rorer, Pfizer and Bristol- myers squibb all partnered with caremark international. This trend, in turn, has created a needed for more sophisticated tools such as data ware-houses, groupware and networks for managing and sharing information. Lilly acquisitions of PCS Health systems Inc. of scotts-dale, Ariz; bought the company a patient database of 55 million names. We aim to have 100 million by the end of decade says Tom Trainer, CIO of the $5.7 billion Indianapolis based company.

Acquiring PCS also gave lilly a critical foothold in another emerging high-tech of the health-care business nerworking. Because the deal landed it a 29 percent indirect equity stake in Integrated Medical Systems Inc.Lilly gained access to a nerwork that recently connects more than 20,000 doctors' offices and 100 hospitals.

Organizational Change within 5-10 years.


Close relationships between pharmaceutical comapnay salespeople and doctors ensured powerful brand- name. Rising cost were not an issue because drug companies simply passed on the increases to the consumer in high prices, which company sponored insurance plans paid for without linking. The process of discovering new drugs was so complex and mysterious that when a compound was invented, it was unlikely that a competitor would quickly challenge the patent.


Assuming that consumers go along with it, pharmaceutical companies will sell information about disease outcomes and costs, as well as drugs, to HMOs and PBMs. Brand-name prescription drugs will be marketed directly to the consumer via TV ads, the Internet and telemarketing. With pressure to hold down price hikes, drugs companies will allow their return on equity to fall. And research firms, government, hospitals and patient- advocacy groups will work together to develop more cost effective heath-care programs.

Triggers of Change

Internal Change

Drivers of change in a rational organization may be the continuing search for efficiency. Otherwise, they could result from:

One outcome of the review of the relationship of external benchmarking exercises

• there is tension, especially at higher levels in the organization

• If an employee - conflict management in the organization is pervasive, systemic approach to emphasize the importance of relationships with key internal subsystems, namely:






It follows that change in response to internal triggers might adjust to the sub systems.

External Triggers:

Change is often necessary due to the external environment. It is clear that a number of external factors that organizations must reconcile with. These include participation in a global market, a wider recognition of environmental issues, awareness of health and demographic changes.

The PESTEL Framework:

PESTEL part is a network design that allows managers a tool of analysis that identifies the various macro-environmental factors that influence business strategies. It also includes an assessment of various environmental factors affecting business performance now or in the future.

Political Factor: Because of Working in the global market lilly is effected by the politics and rules of the countries,as well as European enforcing governing rules.The government law for employment encourages retailers to provide work for a variant people accordind to the age, sex,status and also disabeled.following this law lilly have a competitive edge as it produce loyal employees.

Government Stability

Tax Policy

Trade restriction and tariff

Employment laws

Economic Factors:

Economic factors affect the purchasing power of potential customers and firm's cost of capital. Due to recession unemployment level increase in the united kingdom over 28.93, which effect the consumer consumption and profit margin.

Economic growth

Intrest rate

Inflation rate

Exchange rate

Social factors

Social factors include the demographic and cultural aspect of macroenviornment.

Health consciousness

Population growth rate

Age distribution

Careers attitudes

Emphasis on safety

Technological Factors:

Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions

Some technological factors are:

R&D activity



Rate of technological change

Enviornmental Factors:

Environmental protection laws

Waste disposal

Energy consumption

Legal factors:

Competition law

Health safety

Product safety

Investors invest their investment for long term profit, they prefer that country where political stability sustains, tax policy should attract the investors and employment rules and regulations are helpful for the investors. Economic condition also have high concerned for the investors, interest rates and inflation rates should be low and GDP is in good position, so that investors have believe to earn high profit. All the marketing campaigns and products should be according to the culture of that country which is acceptable there. Technology advancement is also one of the important factors to attract the investors, if a country advance in technology has high chances of investments. Environmental and legal laws should be followed by the organizations.

SWOT Analysis:

SWOT is an acronym for strengths, weaknesses, opportunities and threats. Occasionally, you can also find a WOTS "to the analysis or SWOT analysis. The technique is credited to Albert Humphrey, who led a research project at Stanford University in 1960 and 1970 using data from major companies involved in the process of long-term planning.

The SWOT analysis is a planning tool used to understand the positive aspects, opportunities and threats involved in a project or work. It 's a goal of the company or project and identifying the internal and external factors that are favorable or negative, to achieve this goal. SWOT is often used as part of a strategic planning or business, but can be useful for understanding the organization or situation and decision-making for all types of situations.


The strengths of the pharmaceutical industry's SWOT analysis document the internal industry components that are providing value, quality goods and services and overall excellence. The internal industry components can include physical resources, human capital or features the industry can control. For example, the pharmaceutical industry's strengths could include low operating overhead, firm fiscal management, low staff turnover, high return on investment (ROI), state-of-the-art laboratory equipment and an experienced research staff.

Eli Lilly and Company (Lilly) is a pharmaceutical company, which is principally engaged in the design, development, manufacture, and selling of pharmaceutical products by utilizing up-to-date technological tools.

It also conducts research to discover products to treat disease in animals.

The company owns over 127 subsidiaries operating throughout the world.

Due to large number of market share, high growth in the market and different portfolio lilly have edge on their competitors.


Internal factors within an organisation's control that detract from the organisation's ability to attain the desired goal. The weaknesses of the pharmaceutical industry's SWOT analysis document the internal industry components that are not providing significant added value or are in need of improvement. The internal industry components can include physical resources, human capital or features the industry can control. For example, the pharmaceutical industry's weaknesses could include high-risk business modeling, disengaged Board of Directors, dated medical equipment, poor branding, low staff morale or diseconomies of scale.

The decisions of society while resting in the hands of management. This has led to divisions between staff and management. (management Stephen p.robbin -11th edition)


External attractive factors that represent the reason for an organisation to exist and develop. What opportunities exist in the environment the opportunities of the pharmaceutical industry's SWOT analysis document the external industry components that provide a chance for the industry (or factions of the industry) to grow in some capacity or gain a competitive edge. The external industry components should be environmental factors or aspects outside the industry's control, yet reflective of the business marketplace. For example, the pharmaceutical industry's opportunities could include recently published research, an increase in health-conscious consumers, increased demand for pharmaceutical products, changes in Food and Drug Administration standards or decreases in employee health care costs. Due to the strong brand name,strong base,and very strong network they can be a market leader.


External factors beyond the control of the organization that could put the mission of the organization or operation at risk. The organization can benefit by having contingency plans to cope if they occur. Classified according to severity and probability of occurrence.

The threats of the pharmaceutical industry's SWOT analysis document the external industry components that could create an opportunity for the industry (or factions of the industry) to decline, atrophy or lose some competitive edge. The external industry components should be environmental factors or aspects outside the industry's control, yet reflective of the business marketplace. For example, the pharmaceutical industry's threats could include increased government regulation, a declining economy, increasing research and development (R&D) costs or a decrease in the global population.

Change in the government rules and regulation i.e imposes heavily taxes will effect the pharmaceutical business.

High investment on research and development but decrease in the population is also a rare threat for lilly .


Porter 5 Forces tool is a simple but powerful tool to understand the power of the company's position. This is useful because it helps to understand both the strength of the current competitive position and the position of power who want to emigrate.

With a clear idea of where the power, you can enjoy a position of strength, improve a situation of weakness and take steps to avoid error. This makes it an important part of your planning team.

Five Forces analysis assumes that these five important forces that determine the competitiveness of the company's power situation. These include:

1. Supplier Power: This evaluates how easy it is for suppliers to raise prices. This is justified by the number of suppliers of each key input, the uniqueness of your product or service, power and control over you, the cost of switching from one to another, and so on. Fewer options with the provider you have, the more you need assistance providers, the most powerful of its suppliers.

number of suppliers

size of suppliers

uniqueness of service

your ability to substitute

cost of charging

Pharamceutical industry is vast industry, there are numerous supplier of the material but llily has to keep an idea in mind while selecting the supplier and its switching cost.

2. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this controls the number of buyers, the importance of the cost of business of each purchaser to change their products and services that someone else, and so on. If you are dealing with a few buyers are often able to dictate terms to you.

Number of customers

Size of each order

Differences between competitors

Price sensitivity

Ability to substitute

Cost of charging

Buyer has choices to buy the product from any company there are different products available in the market regarding to prescription.

3. Competitive rivalry: The number and capacity of your competitors. If you have many competitors are important and they offer attractive products and services so you will probably have little power in this situation, suppliers and buyers will go elsewhere if they do not receive much of you. On the other hand, if nobody else does what you do, you can often enormous strength.

Number of competitors

Quality differences

Other differences

Switching costs

Customer loyalty

Cost of leaving market

As in any industry, competition is based on the price. If a company can do something like another, and for a lower price, while the former have a quality service is of great importance when real-time traffic companies that are able concerned. Those to keep the latest, fastest technologies are likely to remain in need of such a customers. Because tremendous customer growth, the market is still far from saturated. This is an attraction for companies increasingly willing to enter the market.

4. Threat Alternative: It is influenced by the ability for your customers to find another way to do what you do. If substitution is easy and substitution is viable because it weakens the power.

Substitute performance

Cost of charge

Companies see an opportunity that can benefit. They can provide similar services, sometimes at a reduced price. Lilly offer the services that are more convenient for some customers and reduce the threats.

5. Threat New Entry: Power is also affected people's ability to enter the market. If it costs a bit 'of money or time to write on the market and compete effectively, there are some economies of scale in place, or if you have little protection from key technologies, and new competitors can quickly enter the market and undermine the position. If you have a barrier strong and durable, it is possible to maintain a favorable and fair to take advantage of it.

Time and cost of entry

Cost advantages

Barriers to entry


As in other areas of medicine also affects the economic crisis. Lilly is a leading pharmaceutical company in the UK. Lilly is a leading pharmaceutical company specializing in the treatment of diseases such as depression, schizophrenia, diabetes, infections, osteoporosis, for example. Evista, a newly developed drug, Eli Lilly is a pharmaceutical estrogen replacement therapy for prevention of postmenopausal osteoporosis was also a lower incidence of breast cancer in women. This drug approved by FDA is expected to bomb, and potential revenue has 1 billion dollars a year in business.

In recent years fundamental changes have occurred in the pharmaceutical industry including the promotion of generic medicines in the forms, the exclusive list of prescription drugs only for therapeutic special qualifications; to negotiate reduced rates for health insurers, and minimize the number of drugs to get in shape. Therefore, according to market developments Lilly needs to review its strategy and strategy change based on market demand.


According to the demand of the market lilly has to change its strategy.

They have to make their strong brand name.

They have to go for more spending on research and development.

Lilly has to go for more market share and should improved its communication with customers through electronic and print media.

They should create the economies of scale and should improved the morale of employees in order to get the effective results.