Lily NZ Case Study: Strategies for Competitive Advantage and Growth

This case study examines Lily, a pharmaceutical affiliate in New Zealand, and its strategic response to a changing market landscape characterized by the establishment of a single pharmaceutical purchasing agency (Pharmac) focused on cost containment, increased generic competition, and patent losses. The analysis highlights the need for Lily to regain its competitive advantage by developing unique selling points, such as value-added product features, and leveraging its resources through a healthcare-related CSR campaign to enhance brand image and customer loyalty. The study suggests conducting thorough research and development to identify cost-effective product innovations and exploring partnerships with generic suppliers to manage costs. It also emphasizes the importance of market and consumer research to inform the CSR strategy and promote it effectively through media channels, ultimately aiming to improve brand awareness and financial performance.

Running head: CASE STUDY OF LILY
CASE STUDY OF LILY
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CASE STUDY OF LILY
The decision of the New Zealand government to establish a single agency named
‘‘Pharmac’’ for purchasing pharmaceuticals has changed the landscape of the pharmaceutical
industry. The objective of this agency is cost containment through reference pricing system.
As a result, the pharmaceutical industry has been on a decline in terms of market revenue
over the past few years. This has also affected Lily, a pharmaceutical affiliate operating in
New Zealand. The threat of new entrants have been high in the market, with niche generic
traders entering the market in association with preferred generic suppliers for generic
products. This meant that these new and small entrants have posed a big competitive threat to
an established pharmaceutical affiliate like Lily, at a lower cost. It has led lily to lower its
prices for both new and existing products, and has changed the nature of customer
relationships. They have also lost their patent that has had a huge impact on their sales. This
requires Lily to come up with a strategy to gain its competitive and innovative advantage in
the market back.
Since the market has turned into a virtual perfectly competitive market, the company
requires selling a unique selling point to gain back its high market share. This can include
strategies like selling a base product at the same price as that of the competitors, but with a
unique value added to it. For example, if product X is in high demand in the market, the
company should be selling product X at the same price, but with a unique additional product
value like ‘‘the tablet that does not taste bitter’’, or ‘‘the tablet X that does not have side
effects’’. This uniqueness would draw customers to the company due to the additional value
for their money. Furthermore, Lily is a big company with many resources. Therefore, they
can consider promoting a CSR campaign related to healthcare. Resources are its strength and

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almost no company would be able to do this promotion, which would give Lily an enhanced
brand image, which is critical for drawing and retaining customers.
There are numerous ways to apply the recommended plans. The company can
undertake a thorough research and development program to identify which areas of a product
can be developed and innovated at insignificant costs. They can also make deals with generic
suppliers to get materials at low costs, in order to make up for the extra costs for RND.
Campaigning for the CSR activity requires a nation-wide campaigning through media. This
could be expensive but considering that no other pharmaceutical company would be able to
undertake such a campaign, brand awareness and image would automatically make up for the
costs and benefit the affiliate financially in the long run. To identify which aspect of
healthcare on which the CSR activity should base on, market and consumer research should
be done. Accordingly, the organization should formulate the CSR and promote it through
media

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