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Introduction
In this assignment analyses of pharmaceutical industry and Agilent Technologies are going to be described.
The aim of the work is to reveal profitability of company, barriers to enter new market, its strengths and weaknesses. With the help of SWOT analyses make strategic recommendations, what should the company do with its problems.
1.7 Prognosis for the future growth
The pharmaceutical industry showed high sales growth rates in the recent past, and a number of factors suggest that this trend will continue in the future.
First, due to numerous advancements in science and technology, including those in the health care industry, life expectancy in the developed countries has been steadily growing. As the result, growing proportion of elderly people promises further growth of demand for healthcare products.
Although developing countries at the moment have a small portion of world pharmaceutical sales, these countries also have a significant potential for the pharmaceutical industry in the future. Fast growing economies in Asia, South America and Central & Eastern Europe suggest an increasing solvency of population and make these markets more and more attractive for “Big Pharma” companies. Further reforms of legislation systems in the countries of these regions, especially regarding patent protection issues, will inevitably result in growing pharmaceutical sales.
While the pharmaceutical industry in regions likeLatin America, Europe and Japan is growing at a steady rate which is more are less equal to that of the overall industry, the developing regions like China and India are recording corresponding growth in doublefigures. Industry analysts predictthat the pharmaceutical marketwould reach $1.1 trillion by 2015 with the average growthrate of around 7 percent.United States is still the largest pharmaceuticals market in the world with a market size of around $300 billion and it ise xpected to reach $370 to $390 billion by 2015. The developing countries like China, India andBrazil still need to go a long wayto reach the level of operations of the developed countries. As the developing countriesare growing at the rate of 15 to 16 percent, there is a huge scope for the development of generic drugs there.
Figure 1.7.1. Growth rate prediction
From the figure above you can see that experts forecast means constant stable growth for the industry.
Agilent Technologies or AT is an American multinational corporation incorporated in New York and headquartered in Santa Clara, California, United States. Agilent Technologies (AT), incorporated in 1999, is a diversified technology company. Agilent Technologies produces scientific instruments, semiconductors, optical networking devices and electronic test equipment for telecom and wireless R&D and production. It serves customers in more than 100 countries. So it is proven leader all over the world.
Many of Agilent's predecessor product lines were developed by Hewlett-Packard, the American computing company founded in 1939. In 1999, the product lines not directly connected with computers, storage, and imaging were grouped into a separate company (Agilent), the stock of which was offered to the public in an initial public offering. The Agilent IPO may have been the largest in the history of Silicon Valley at the time.
Figure 2.1.1. Agilent Technologies organizational structure
The company was created in 1999 was an $8 billion company with about 47,000 employees, manufacturing scientific instruments, semiconductors, optical networking devices, and electronic test equipment for telecom and wireless R&D and production.
In 2011, AT has achieved the No. 82 most innovative company rating and 28th place in Forbe’s “the most sustainable companies in the world” rating.
One of the main spheres of AT activity is Research & Development. Company has its own Research Laboratory and spends a lot of money on scientific research. The purpose of Agilent Research Laboratories is to power the growth of Agilent Technologies through breakthrough science and technology. At the cross-roads of the organization, the labs are able to identify and enable synergies across Agilent’s businesses to create competitive differentiation and compelling customer value.
Mission statement: “Our mission is to help turn our customers' dreams of human advancement into reality. We are making those dreams real today at Agilent by helping to build a sustainable future”.
Vision – “We Bring Good Things to life”
The AT strategy is carried out by next steps:
Market Leadership
Agilent holds many product and market leadership positions, including being first worldwide in overall test and measurement products, as well as in gas chromatographs and liquid chromatography/mass spectrometry. Agilent is also a leading test and measurement equipment supplier to the telecommunications industry.
Culture
Agilent continues to support the values that made Dave Packard and Bill Hewlett's company a success: dedication to innovation; trust, respect and teamwork; and uncompromising integrity. Added to these are speed, focus and accountability to meet customer needs and create a culture of performance that draws on the full range of people's skills and aspirations.
Agilent's major product lines include:
Test and measurement business unit produces electronic devides such as oscilloscopes, logic analyzers, signal generators, spectrum analyzers, vector network analyzers, atomic force microscopes (AFM), automated optical inspection, automated X-ray inspection (5DX), in-circuit test, and electronic design automation (EDA) software (EEsof)
Life science and chemical analysis business unit products are DNA microarrays, liquid and gas chromatographs, mass spectrometers, nuclear magnetic resonance, molecular and atomic spectroscopy products, remanufactured test equipment with discounts ranging from 20% to 50%.
In addition to measuring hardware, Agilent has generated and offers comprehensive chemical databases. In January 2009 it announced the availability of a pesticide database covering 1600 compounds, with accurate mass information for each. It also announced the proximate release of similar databases for toxicology and drugs of abuse.
Company provides customers with varios kinds on of software products, such as: SoftwareAgilent EEsof EDA Design Software ,Agilent VEE ,Instrument Software ,Calibration & Adjustment Software ,IO Libraries Suite ,Agilent License Manager ,Command Expert ,MATLAB Software.
Fig. 2.5.1 Summary of financial results [9]
In the table above you can see the overall results of Agilent Tech. financial performance.
Agilent’s total orders in 2011 were $6,769 million, an increase of 18 percent when compared to 2010. The increase in orders in the year ended October 31, 2011 compared with the prior year was due to a strong performance in new products and service and support businesses.
Agilent’s net revenue of $6,615 million increased 22 percent when compared to 2010. Also within electronic measurement, the communications test businesses improved strongly in the year ended October 31, 2011 when compared to the prior year with wireless manufacturing reporting good revenue growth in the year.
Net income was $1,012 million in 2011 compared to net income of $684 million in 2010 and a net loss of $31 million in 2009. In 2011, 2010 and 2009 company generated operating cash flows of $1,260 million, $718 million and $408 million, respectively. As of October 31, 2011 and 2010 company had cash and cash equivalents balances of $3,527 million and $2,649 million, respectively.
On October 31, 2011, company’s unfilled orders for the life sciences business were approximately $430 million, as compared to approximately $350 million at October 31, 2010. On October 31, 2011, company’s unfilled orders for the chemical analysis business were approximately $320 million, as compared to approximately $250 million at October 31, 2010. On October 31, 2011, company’s unfilled orders for the electronic measurement business were approximately $810 million, as compared to $830 million at October 31, 2010.
Figure 2.5.2. Geographical and segment income distribution
On the graph above you can see the geographical distribution of revenue per segments of company. The highest revenue rate is in Americas and the lowest – in Europe.
For every company, qualified employees are their biggest asset. Agilent Technologies is not an exception. Our people drive the growth of our businesses and strengthen our leadership position in the marketplace. While people number about 20,500—quality is always a more important measure than quantity. The global nature of our team highlights the ongoing need to hire and retain superior talent, knowledgeable in our various markets. Our managers’ main goals are providing the best working conditions and respect for the employees.
Agilent Technologies gives their employees lots of benefits, such as healthcare programs, dental insurance, staff trainings. Trainings are the essential part of every company development. In 2011, Agilent spent more than US$19 million on employee training. AT takes a thorough approach to providing skills and value to employees. Labor relations policies and employment practices ensure an environment grounded in fairness and respect. Agilent Technologies was proven to be one of the best places for work, by receiving the award in 2009.
In 2008-2011 Agilent Technologies performed staff restructuring and reduced employee number from 30000 to 20500 – because of the unstable economic condition and global economic crisis.
Agilent Technologies has three main competitors:
Figure 2.7.1. Competition analysis
In the table above we can see comparing the revenue, net income and gross margin and other financial statements of Agilent Tech., Danaher Corp., Teradyne Inc. and Thermo Fischer Scientific. Inc. As you can see AT has the third place in the most statements (revenue, net income, market capitalization), which proves that Danaher Corp is the biggest company in life-science sphere. Due to the high entry barriers of this industry, companies tend to merge – so, Agilent Technologies should beware of industry consolidation and big companies merging.
The threat of new entrants for Agilent Technologies is relatively small due to the very high entry barriers in the pharmaceutical industry, because Many of the top firms have "significant manufacturing capabilities that are hard to replicate". Also, they have extensive patents that guarantee the protection of their products while they defend their brands with large marketing budgets. Since any emerging pharmaceutical company can expect a sharp retaliation from the established competitors in the pharmaceutical industry, the overall threat of entry into the global marketplace is relatively low in comparison to other international industries.
The largest factors that influence the success of many pharmaceutical companies are capital requirements and financial resources, regulatory policies, and research and development. All three of these factors can influence one another and a lapse in one area can be disastrous for the future of the company.
The threat of new entrants in all aspects of AT is low due to the repeating trends of the market requirements that AT employs. People already have a solid relationship with the brand name AT, and it would be very expensive for a new company to try and compete with it. It would require a great deal of capital in advertising to get a new companies brand name out to the public.
Agilent Technologies has business unit which name is Life Science Department. This department provides application-focused solutions that include instruments, software, consumables and services that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. Approximate number of employees is 4,600 people as of October 31, 2011 in company’s life sciences business.
Agilent Tech. is one of key players in life science sphere, providing high-quality measurement equipment for pharmaceutical companies. The key product categories for the life sciences business include: liquid chromatography, mass spectrometry, microarrays, polymerase chain reaction (PCR) instrumentation, bioreagents, lab automation and robotics, electrophoresis, software and informatics, nuclear magnetic resonance (NMR) and magnetic resonance imaging (MRI) systems, and related consumables and services.
Figure 3.2.1. Life Science Department financial results
From the table above, you can estimate overall financial performance of Life Science Division of Agilent Technologies. Life sciences orders in 2011 increased 23 percent compared to 2010. Order results were led by strength in the LC-MS, automation, informatics, genomics, consumables, and services portfolios. We saw solid performance in key products, such as the 1200 Infinity LC Series, LC/Triple Quadrupole (QQQ) system, SureSelect Complete, and OpenLAB software suite. Geographically, excluding the impact of acquisitions and the Hycor divestiture, orders grew 7 percent in the Americas, 15 percent in Europe, 4 percent in Japan, and 21 percent in other Asia Pacific during 2011 when compared to 2010. Outstanding performance of LC-MS instrument systems in China contributed to Asia Pacific regional growth.
Life sciences net revenue in 2011 increased 21 percent compared to 2010. In addition, foreign currency movements for 2011 had a favorable impact of 3 percentage points compared to 2010. Revenue growth was led by the LC, LC-MS, automation, genomics, and services portfolios, along with Research Products including NMR and MRI. The automation business continues to scale globally through increased market penetration and new product introductions, while SureSelect Complete remains a key performer for the genomics business. Geographically, excluding the impact of acquisitions and the Hycor divestiture, revenues grew 11 percent in the Americas, 7 percent in Europe, 16 percent in Japan, and 23 percent in other Asia Pacific during 2011 when compared to 2010. Growth in the Americas was helped by an expanded sales channel selling a broader portfolio of products to our customers, while China growth remains strong.
Income from operations in 2011 increased by $16 million or 7 percent on a revenue increase of $313 million, a 5 percent year-over-year operating margin incremental. Income from operations in 2010 increased by $47 million or 27 percent compared to 2009 on a revenue increase of $260 million, an 18 percent year-over-year operating margin incremental.
Strengths
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Weaknesses
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Opportunities
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Threats
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Results of SWOT analyses make it possible to conclude:
In this work the analysis of pharmaceutical industry and Agilent Technologies company was made. The work includes 5 main parts.
In the first part of my work I have analyzed the industry. Its buyers, suppliers, competitors, and substitute products. In closing, the Many of the products that the pharmaceutical industry manufactures save patients' lives or provide them with relief from chronic pain or other non-fatal conditions.It s no wonder that so many people invest so much time, energy and money into this industry.