Eli Lilly and Company Blue Ocean Strategy Guide & Analysis| Assignment Help
Here’s a Blue Ocean Strategy analysis for Eli Lilly and Company, structured to identify uncontested market spaces and create new demand.
Part 1: Current State Assessment
Eli Lilly and Company, a global pharmaceutical leader, faces intense competition across its therapeutic areas. A Blue Ocean Strategy requires a thorough understanding of the current competitive landscape to identify opportunities for differentiation and value innovation. This analysis will focus on identifying areas where Lilly can move beyond incremental improvements and create entirely new market spaces.
Industry Analysis
The pharmaceutical industry is characterized by high R&D costs, stringent regulatory requirements, and intense competition from both established players and generic manufacturers.
- Competitive Landscape: Lilly competes across several major therapeutic areas, including diabetes, oncology, immunology, neuroscience, and cardiovascular diseases.
- Diabetes: Novo Nordisk (market share ~30% based on GLP-1 receptor agonists), Sanofi (market share ~15% based on insulin products), and Merck (market share ~8% based on DPP-4 inhibitors) are key competitors.
- Oncology: Roche (market share ~18% based on biologics), Novartis (market share ~15% based on targeted therapies), and Merck (market share ~12% based on immuno-oncology) are major players.
- Immunology: AbbVie (market share ~40% based on Humira biosimilars and other biologics), Johnson & Johnson (market share ~25% based on Stelara and other biologics), and Amgen (market share ~10% based on Enbrel and biosimilars) are significant competitors.
- Neuroscience: Biogen (market share ~20% based on multiple sclerosis therapies), Teva (market share ~15% based on generic drugs), and Pfizer (market share ~10% based on various neurological drugs) are key players.
- Market Segments: Lilly operates in prescription pharmaceuticals, with a growing focus on biologics and targeted therapies.
- Industry Standards & Limitations: The industry is constrained by lengthy drug development timelines (10-15 years), high failure rates in clinical trials (around 90%), and patent expirations that lead to generic erosion.
- Profitability & Growth: Overall industry profitability is high (average gross profit margin ~75%), but growth is slowing due to pricing pressures and increased competition. The biologics and specialty drug segments are experiencing higher growth rates (CAGR ~8-10%).
Strategic Canvas Creation
A strategic canvas visualizes how Lilly and its competitors perform across key competitive factors. This allows for a clear understanding of the current competitive space and identifies potential areas for differentiation.
- Key Competing Factors:
- Efficacy: Measured by clinical trial outcomes (e.g., reduction in HbA1c for diabetes drugs, overall survival for oncology drugs).
- Safety: Assessed by adverse event profiles and risk mitigation strategies.
- Administration: Route of administration (e.g., oral vs. injectable), frequency of dosing, and ease of use.
- Price: Cost per treatment course, reimbursement coverage, and patient assistance programs.
- Innovation: Novelty of mechanism of action, breakthrough therapy designations, and patent protection.
- Patient Support: Adherence programs, educational resources, and access to healthcare professionals.
- Strategic Canvas Plotting: (Example - Diabetes Business Unit)
- X-axis: Efficacy, Safety, Administration, Price, Innovation, Patient Support
- Y-axis: Offering Level (Low to High)
- Competitors: Novo Nordisk, Sanofi, Merck
- Lilly’s Value Curve: (Example - Diabetes Business Unit)
- Lilly’s current value curve likely mirrors competitors in efficacy and safety, but may differentiate in administration (e.g., novel delivery systems) and patient support (e.g., digital health solutions).
- Intense Competition: Competition is most intense in efficacy and price, where companies are constantly striving to achieve marginal improvements.
Draw your company’s current value curve
Eli Lilly’s value curve, when plotted against competitors, likely shows a strong emphasis on efficacy and innovation, particularly in its newer biologic and targeted therapies. However, it may also reveal areas where Lilly mirrors industry standards, such as in pricing strategies or patient support programs, where opportunities for differentiation exist. The curve would highlight where Lilly’s investments are concentrated and where it potentially lags behind competitors, providing a visual representation of its competitive positioning.
Voice of Customer Analysis
Understanding customer needs and pain points is crucial for identifying unmet needs and creating new value propositions.
- Current Customers (30+):
- Pain Points: High drug costs, complex administration regimens, side effects, lack of personalized treatment plans, limited access to specialists.
- Unmet Needs: More convenient dosing options, better management of side effects, improved adherence support, personalized treatment recommendations based on individual patient characteristics.
- Desired Improvements: Lower drug prices, simpler administration methods, more effective side effect management, personalized treatment plans, improved access to specialists and support services.
- Non-Customers (20+):
- Reasons for Non-Use: High drug costs, concerns about side effects, lack of perceived benefit, preference for alternative therapies, lack of insurance coverage.
- Unexplored Non-Customers: Individuals who are not currently diagnosed or treated for the condition, but may be at risk.
- Refusing Non-Customers: Individuals who have tried Lilly’s products but discontinued use due to dissatisfaction.
- Soon-to-be Non-Customers: Individuals who are considering switching to alternative therapies due to cost or side effects.
Part 2: Four Actions Framework
The Four Actions Framework challenges industry assumptions and identifies opportunities to create new value.
Eliminate
- Factors to Eliminate:
- Extensive Sales Force Detailing: Reduce reliance on traditional sales force detailing to physicians, which is costly and may not be the most effective way to reach all healthcare providers.
- Redundant Clinical Trials: Eliminate redundant clinical trials that do not provide significant new information or address unmet needs.
- Complex Packaging: Simplify packaging to reduce costs and improve patient convenience.
Reduce
- Factors to Reduce:
- Marketing Spend on Me-Too Drugs: Reduce marketing spend on drugs that offer only marginal improvements over existing therapies.
- Reliance on Blockbuster Model: Reduce reliance on the blockbuster model, which focuses on developing drugs for large patient populations, and instead focus on targeted therapies for smaller, more specific patient populations.
- Complexity of Clinical Trial Protocols: Streamline clinical trial protocols to reduce costs and accelerate drug development timelines.
Raise
- Factors to Raise:
- Personalized Medicine: Invest in personalized medicine approaches that tailor treatment to individual patient characteristics, such as genetic markers or biomarkers.
- Digital Health Solutions: Develop digital health solutions that improve patient adherence, monitor treatment outcomes, and provide personalized support.
- Patient Education and Support: Enhance patient education and support programs to improve treatment adherence and outcomes.
Create
- Factors to Create:
- Integrated Care Solutions: Develop integrated care solutions that combine pharmaceuticals with digital health tools, patient support services, and access to healthcare professionals.
- Predictive Analytics: Utilize predictive analytics to identify patients at risk for developing certain conditions and provide early intervention strategies.
- Value-Based Pricing Models: Implement value-based pricing models that tie drug prices to patient outcomes.
Part 3: ERRC Grid Development
The ERRC Grid summarizes the Four Actions Framework and provides a roadmap for creating new value.
| Factor | Eliminate | Reduce
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