Sophie Wilkinson Bayer Pharmaceuticals Case Study

Structure of presentation Overview of Bayer and lean in the pharmaceutical industry Challenges faced in lean implementation Why Bayer are facing these challenges SWOT analysis Recommendations and expected benefits 2

Overview of the Bayer and the pharmaceutical industry Lean manufacturing in pharmaceutical industry: –High volume manufacturing –Low variability –Quality Bayer: –Global chemical and pharmaceutical holding company –Annual revenue over $43 billion (USD) 3

Master title style 4 (Topforeignstocks.com, 2013)

Current challenges in lean implementation 1.Functional organisational structure and resistance to change 2. FDA regulation resulting in delayed implementation of change 5 (Shanley, 2007)

Why are Bayer facing these challenges? 6 Beliefs Assumptions Attitudes Norms Values Organisation Vision Strategy Practices (Davis, 2013)

SWOT Analysis 7 Internal strengths: Diversified supply chain and long term supply agreements Internal weaknesses: Price fixing allegations tarnished brand image External opportunities: New high potential drugs (Xarelto and Stivarga) External threats: Low cost substitutes (Mbaskool.com, 2014)

Recommendations and expected benefits Concentrate on developing a strong lean culture and growing lean leaders Take Lundbeck as an example of how to motivate middle management Lean acceleration: intensive training for all leaders from all levels Won Danish Supply Chain award (Simplier Consulting, 2010)

Any questions? 9

SWOT Analysis (detailed) 10 Internal Strengths Comprehensive portfolio of chemical, material science, healthcare and agriculture products Dominant in paediatric vitamins and dietary supplements with 25% value share Diversified supply chain and long term supply agreements that minimize production process risk Strong brand presence in industry and strong financials Internal Weaknesses Price fixing allegations tarnished brand image Patent infringements and lawsuits External Opportunities High potential drugs such as Xarelto and Stivarga Joint ventures and acquisitions will increase market presence External Threats Patents running out and low cost substitutes Weak global economy and problems in pharmaceutical industry can hamper growth Revenue growth may be negatively impacted by regulatory controls on drug prices chemicals/7825-bayer-group.html