Abstract:
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The case is about the turnaround of US-based global
healthcare company Schering-Plough Corporation (SP). SP developed and
manufactured pharmaceuticals for three customer segments – prescription
pharmaceuticals, animal health, and consumer healthcare. The company ran into
problems in 2002 as the patent of its blockbuster drug Claritin expired leading
to drop in sales and fall in revenues. Sales of other alternative drugs
manufactured by the company were not up to expectations. Moreover SP was dogged
by issues such as quality control problems at some of its manufacturing
facilities, intense competition, demoralized work force and regulatory problems.
With the deteriorating financial position, analysts opined that the company
would be a target of a takeover.
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At this juncture Fred Hassan (Hassan), widely known as the turnaround specialist in the pharmaceutical industry, assumed the responsibilities of CEO of the company in 2003.
The case discusses the various strategies adopted by Hassan in turning round SP. According to analysts, Hassan employed a methodical, eye-on-the-long-term approach in order to revive SP. His first priority was to restore the organizational health of the company. Hassan planned to cut costs and increase productivity so that the company's revenue did not rely on a single blockbuster drug. To restructure SP, Hassan designed a six-to-eight year strategic plan, called the
'Action Agenda' whose objective was to stabilize, repair, turn around, build the base and break even. After implementing the transformational plan put forth by Hassan, the company's revenue grew and it started recording profits from the fiscal year 2005 onwards. In November 2009, in a deal orchestrated by Hassan, SP was merged with one of the leading pharmaceutical companies, Merck & Co.
Issues:
» Analyze the problems faced by SP
» Evaluate the strategies adopted by Hassan in turning around SP
» Examine the changes brought in by Hassan at SP.
» Understand the issues and challenges in turning around a company.
Contents:
Keywords:
Turnaround, Turnaround strategy, Turnaround plan, Restructuring, Organizational health, Reorganization, Strategic insights, R&D, New Product Development, Customer-Centered Product Flow, Leadership, Leader Behaviors, Action Agenda, Decision making, Merger, Reverse merger, Integration planning, Schering-Plough, Merck
Turnaround of Schering-Plough Corporation
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