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Novartis AG (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

Novartis AG

Novartis is a Switzerland-based holding company engaged in the research, development, manufacture and marketing of branded drugs, generic pharmaceutical products, preventive vaccines, diagnostic tools and consumer health products. The company operates in more than 140 countries across the globe. It is headquartered in Basel, Switzerland and employs 96,717 people.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • Diversified business model comprising core Rx pharmaceuticals unit supported by generics, vaccines, consumer healthcare and ophthalmology offerings
  • Established reputation for developing first/best in class Rx pharmaceutical products that erect high barriers to entry for would be competitors (i.e. Glivec)
  • Broad product portfolio with lower ‘blockbuster dependency’ than many rivals
  • Strong roll-out of new product launches over past few years, which has supported reputation for successfully targeting niche disease areas

Weaknesses

  • Failure of Galvus to position Novartis in diabetes market

External

Opportunities

  • Revenue growth opportunity attached to Sandoz (generics) and vaccine elements of business will dilute patent expiry risk inherent to Rx portfolio
  • Potential to establish/enhance Sandoz unit as leading global biosimilars manufacturer
  • Strong late stage R&D pipeline that should expand Novartis’s therapeutic focus (notable movement into multiple sclerosis and respiratory markets)

Threats

  • Patent expiry for Diovan/Co-Diovan franchise in 2011/12. Longer term risk of patent expiry for Glivec (in 2015)
  • Considerable risk of late stage pipeline attrition, heightened by these products accounting for significant proportion of 2013 forecast sales
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