Competitor Analysis and Strategic Interpretation for Merck Group

This report offers a detailed analysis of Merck Group's competitive landscape, focusing on its financial performance, strategic positioning, and market share compared to key competitors like Thermo Fisher Scientific, Lonza Group, and BD Biosciences. The report employs various analytical tools such as SWOT analysis and ratio analysis to evaluate Merck's strengths, weaknesses, opportunities, and threats, as well as its profitability, liquidity, solvency, and investment ratios. It examines the company's main areas of work, including products and services, finance, logistics, international management, and quality control. The analysis provides insights into Merck's strategic approach, including marketing strategies, and identifies key issues involved in the project, such as financial performance evaluation. The report concludes with an assessment of Merck's overall competitive position and provides recommendations for strategic improvements.

Company Report

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................4
Main areas of work......................................................................................................................4
Marketing and Strategy analysis..................................................................................................8
Reasons for the project..............................................................................................................11
Identify and describe the project issues involved......................................................................11
Primary research........................................................................................................................16
Comparative evaluation or assessment......................................................................................17
CONCLUSION..............................................................................................................................20
REFERENCES..............................................................................................................................22
TABLE OF FIGURES
Figure 1: Gross and net profit margin evaluation..........................................................................11
Figure 2: Current and quick ratio evaluation.................................................................................12
Figure 3: Debt-equity ratio analysis..............................................................................................13
Figure 4: Investment ratio evaluation............................................................................................14

Title: Competitor Intelligence Analysis and Strategic Interpretation
INTRODUCTION
In the recent times, business units are placing high level of emphasis on the adoption of
competent and strategic framework that helps in gaining a competitive edge over others.
Attainment of a leading position in the market and capturing high number of shares is one of the
motives undertaken by each business organisation. For this project report, Merck Group has been
selected which is a leading multinational chemical, pharmaceutical and life sciences company,
headquartered in Darmstadt, Germany. This business unit is operating in around 70 different
countries and has employed nearly 50000 number of personnel. Thermo Fisher Scientific, Lonza
group, BD Biosciences and Irvine Scientific are recognised as some of the main competitors of
Merck Group. This study will shed light on the extent, to which, Merck’s business aspects is
considered to be sound over its rival firms in the field of HR, marketing, finance, logistics,
international management etc. Further, this report will also provide a deeper insight about the
extent to which the financial position of Merck is comparable to its competitors.
Main areas of work
For the purpose of this investigation, several type of products or services, offered by each
of the below mentioned business units has been taken into consideration and are as follow-
Areas
Particula
rs
Merck Thermo
Fisher
Scientific
Lonza Group BD
Biosciences
Irvine
Scientific
Products
or
services
 Liquid
crystals
 Life
 Analyt
ical
instru
 Bio
researc
 US
made
glass
 Indust
rial
cell

science
&
performa
nce
chemical
s ‘
 Over-
the-
counter
medicine
s
 Small
molecule
s
 Biophar
maceutic
als
(About
Merck,
2018)
ments
 Equip
ment
 Reage
nts and
consu
mables
 Softwa
re and
service
s for
researc
h
 Manuf
acturin
g
 Analys
is
 Discov
ery
&diag
nostics
h
 Pharm
a &
biotec
h
 Water
treatm
ent
 Cons
umer
care
 Agro
ingredi
ents
(Lonza
group,
2018)
 Coatin
g and
compo
sites
 Custo
m
manuf
acturin
g of
chemic
al and
related
produc
ts
syrin
ges
 Hypo
dermi
c
needl
es
Mainly
company
and its
products
are
divided
into two
parts
such as
BD
medical
& life
sciences.
cultur
e
 Cytog
enetic
s
 Cell
therap
y
 Classi
c
media
 Assis
ted
repro
ductiv
e
techn
ology
(
Irvine
Scien
tific,
2018)

Areas
served
Worldwide Worldwide Worldwide Worldwide Worldwide
Finance
(Net
income
generate
for 2016
in
millions)
3920 2021 301 976 -
Logistics
and
operation
managem
ent
It is using a
proactive
approach with
an objective of
getting engaged
with value chain
partners. This in
turn ensures the
development of
project and
processes that
results into high
sustainability.
However, due to
deficit internal
data set, Merck
is facing
difficulty in
reducing the
level of storage,
lead times and
other logistics
TFS has
attained a
leading
position in the
category of
supplier which
provides
clinical supply
chain
management
services to the
patients at a
global level.
Effective
supply chain
management.
BD has
introduced
and
undertaken
several
programs for
effectual
supply chain
relations,
management
and
improvement
.
Focuses on
using
standard
guidelines
for logistics
at a global
level.

costs.
Internatio
nal
managem
ent
Merck lays high
level of
emphasis on
coordinating
long-term
thinking of
establishing
family with a
dynamic attitude
expected by the
international
market. This in
turn ensures an
effectual
management of
operations at a
worldwide level.
It focuses on
setting
strategic and
operational
business
direction for
the portfolio.
From the
perspective of
international
management,
Global
Citizenship
Management
Group has
created by
Lonza. This
group is
committed
towards both
operations and
practices that
prevents
harming
people and
damage to the
environment.
For
management
of global
operations,
firm lays
focus on
circulating
specific
guidelines
which in
turn,
facilitates
standardisati
on.
To attain
success in
international
market
segment,
company
lays more
focus on
differentiatio
n, cost
reduction and
the aspect of
quality, etc.
Quality Reliable quality
of products and
services offered
is considered to
be a major
aspect of Merck
Group or Co.
For maintaining
quality, a valid
DIN integrated
For the
purpose of
quality
management,
ISO standards
are followed
by TFS such
as 9001,13485
etc.
To ensure an
effective
quality aspect,
company
complies with
both national
and
international
standards
such as ISO
Under BD,
Calibrite
beads
provide a
comprehensi
ve system to
set up
instrument
and assess
sensitivity
For an
effectual
management
of quality,
robust raw
material
program is
followed
within Irvine
scientific.

management
system EN ISO
9001, 14001,
50001, OHSAS
18001 and GxP
standards are
followed
(Manufacturing
in a responsible
manner, 2018).
as well as
other
regulations
like GMP,
PIC, HACCP,
FSSC etc.
pertaining to
immune
fluorescence
applications.
This in turn
ensures high
level of
consistency
in finished
goods.
Marketing and Strategy analysis
SWOT analysis tool has been employed that provides information about both internal and
external environmental aspects.
Particular
s
Merck Thermo Fisher
Scientific
Lonza
Group
BD
Biosciences
Irvine
Scientific
(IS)
Strengths Strong brand
name, huge
product portfolio,
excellent R&D
and innovation,
high customer
loyalty and brand
visibility is
recognised as the
main strengths
(Merck SWOT
Analysis, USP &
Competitors,
In the context of
TFS, broad
portfolio, trained
employees and
sound financial
position is
considered as its
main aspects that
help in gaining a
competitive edge
in the
marketplace.
Strengths
of Lonza
Group
include
skilled
personnel,
high
quality
chemical
products
and
services.
Internal
evaluation
presents that
global
operations,
diverse product
portfolio, social
commitment,
strong brand
image and
diversity of
operations are
the positive
High
level of
innovatio
n, wide
portfolio
and
strong
brand
image.

2018). aspects of BD
(Becton
Dickinson
SWOT
Analysis, USP
& Competitors,
2018).
Weaknesse
s
 Fake or
imitation’
s
influence
organisati
onal
brand
image
 Facing
difficulty
in
entering
into
emerging
economie
s in terms
of brand
recall.
 Limited
brand
recall over
other
players
who are
operating
globally
 High level
of
dependen
cy on
pharma
and
biotechnol
ogy
institutes
(Thermo
Fisher
Scientific
SWOT
Analysis,
USP &
Competit
Low level
of brand
recognitio
n at
internatio
nal level
Now, BD is
generating
higher margin
or revenue
from outside
US market.
Low market
capitalisation
and recall are
the main
weaknesses of
BD.
Deficit
existence
of stock
exchange

ors,
2018).
Opportunit
ies
By initiating
ventures in
under-developed
and poor
countries, Merck
can attain huge
success. Along
with this, by
creating and
offering
sustainable
solutions in
countries all over
the globe, the
firm can get a
desired level of
outcome or
success in terms
of its set
objectives.
Company can
attain goals by
entering in
emerging
economies,
focusing on long
term growth
investment such
as strategic
acquisition, etc.
Needs to
focus on
emerging
economie
s.
 Having
opportu
nity of
explorin
g US
market
 Pricing
power
and
increasi
ng
partners
hip as
well as
merger
may be
served
as an
opportu
nity for
BD.
Through
innovativ
e
business
practices,
firm can
create its
distinct
identity.
Threats  Inclining
obsolesce
of
technolog
y
 Competiti
on from
peer
Company is
facing threats
from changing
healthcare related
legislation and
governmental
regulations.
Further, currency
Facing
high level
of threat
from rival
units.
Competition
joining forces
and
governmental
interventions is
considered as a
threat for BD.
Licensing
and
competiti
on
imposes
a threat
in front
of IS.

companie
s
fluctuations can
also serve as a
threat for TFS.
Reasons for the project
Case situation presents that Sigma Aldrich was acquired by Merck with the motive of
exploring business operations and functions. Further, case scenario also depicts that 3 primary
global players with regional unit are making efforts for the attainment of high market share and
growth in emerging market. From the assessment, it has been identified that market pertaining to
cell culture media is growing at a very high pace. The rationale behind impressive growth rate
has inclined in the number of biotech units, products, return on investment, technological
advancement etc. Thus, the main objective behind the present study is to analyse the strategic
position held by the competitors of Merck in its marketplace, under the category of technical
performance. Besides this, another main reason behind carrying out this evaluation is to assess its
pricing strategies and media cell lines. All such evaluation or analysis will assist Merck in setting
or formulating competent strategies that aid in organisational growth and success. Moreover,
company can build distinct image only when it does something different from its rival firm.
Identify and describe the involved issues in the project
Financial performance evaluation of Merck in against to the competitors assessed is as follows:
From this assessment, it has been identified that ratio analysis is one of the most effectual
techniques which in turn, assists in summarising and evaluating financial reports of the firm. By
doing ratio analysis, Merck and its concerned stakeholders can evaluate their financial position
over the competitors. Ratio analysis of Merck and its competitors for the year 2016 is as follows:
Profitability analysis
Particulars Merck Thermo Fisher
Scientific
Lonza Group BD Biosciences
GP ratio 65.1% 45.8% 33.9% 48%
NP ratio 9.85% (Merck & 11.06% 7.28% 7.82%

Co. financials,
2018)
Merck Thermo
Fisher
Scientific
Lonza Group BD
Biosciences
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
GP ratio
NP ratio
Figure 1: Gross and net profit margin evaluation
Interpretation: Graphical presentation exhibits that GP margin generated by Merck in the
accounting year 2016 accounted for 65.10% respectively. Trend of GP margin has presented that
Merck has exerted an effectual control on its direct expenses in 2016 as compared to its rival
firm. Moreover, GP margin of other firms falls within the range of 33% to 50% significantly. On
the other side, in 2016, NP margin of Merck and Thermo Fisher Scientific implied for 9.85% and
11.06% respectively. Considering GP margin outcome, it can be said that Merck failed to control
its operating and indirect expenses. Thus, profitability aspect of Merck was moderate in
comparison to its contenders. Thus, Merck is required to undertake budgetary control tool which
in turn, helps in exerting control on its expenditure and enhances the margin to a great extent.
Liquidity analysis
Particulars Merck Thermo Fisher
Scientific
Lonza Group BD Biosciences

Current ratio 1.78 1.44 1.27 1.45
Quick ratio 1.24 0.87 0.65 0.80 (Becton
Dickinson and
Co, 2018)
Merck Thermo
Fisher
Scientific
Lonza Group BD
Biosciences
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
Current ratio
Quick ratio
Figure 2: Current and quick ratio evaluation
Interpretation: The results of ratio analysis shows that the current ratio of Merck (1.78:1)
was near to the ideal ratio of 2:1. In contrast to which, the current ratio of other competitor firms
namely, Thermo Fisher Scientific (1.44), Lonza group (1.27) and BD (1.45) was lower as
compared to both Merck and the ideal standards of current ratio. Thus, on referring to this
outcome, it can be mentioned that Merck was highly capable in meeting the obligations over its
rivals. In addition to this, the graph depicted above presents that all concerned units that are
taken into consideration for the purpose of investigation have maintained an ideal quick ratio of
5:1. However, quick ratio that was maintained by Merck in 2016 is considered to be higher to
focus on investing the money in other profitable business opportunities. This in turn enables the
firm to generate high margin and improve its overall financial position.
Solvency ratio evaluation
Particulars Merck Thermo Fisher Lonza Group BD Biosciences

Scientific
Debt-equity ratio 0.61 0.71 (Thermo
Fisher Scientific
Co, 2018)
0.67 1.38
Merck Thermo
Fisher
Scientific
Lonza Group BD
Biosciences
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Debt-equity ratio
Debt-equity ratio
Figure 3: Debt-equity ratio analysis
Interpretation: From ratio analysis, it has been found that debt-equity position of Merck,
Thermo Fisher and Lonza group was in line with the ideal ratio of 0.5:1. In comparison to other
firms that are considered for the purpose of evaluation, it can be said that the solvency position
of BD was not good in the financial year of 2016. Moreover, outcome of the ratio has presented
that BD has fulfilled more of its financial needs through debt instruments rather than equities
which in turn imposes fixed monetary burden in terms of interest payment. Hence, by taking the
overall evaluation in account, it can be stated that the financial structure developed and
maintained by Merck is good.
Investment ratio analysis
Particulars Merck Thermo Fisher
Scientific (TFS)
Lonza Group BD Biosciences

Dividend per
share
1.85 0.60 0.25 2.64
Earnings per
share
1.41 5.09 0.53 (Lonza
Group, 2018)
4.49
Merck Thermo
Fisher
Scientific
(TFS)
Lonza Group BD
Biosciences
0
1
2
3
4
5
6
Dividend per share
Earnings per share
Figure 4: Investment ratio evaluation
Interpretation: Investment ratio evaluation presents that in 2016, high DPS (dividend per
share) of 2.64 was offered by BD to its shareholders. Thereafter, Merck has provided high return
to its investors in the form of dividend. On the other side, in comparison to earnings, dividend
offered by TFS and Lonza group was lower. Further, portion of earnings allocated by Merck to
each outstanding share of common stock was lower as compared to Thermo Fisher and BD.
On the basis of overall evaluation, it can be depicted that liquidity and solvency position
of Merck Co ltd was good over its rivalry units. However, firm needs to undertake significant
action or measures to enhance the outcome of profitability and investment ratios. For the
attainment of high margin, business unit needs to focus on employing modern budgeting and
budgetary control tools. Along with this, Merck should focus on developing a strategic policy
framework that contributes in the success of the firm from both financial and non-financial
perspectives.

Primary research
Sound policies and innovation is highly required for building and sustaining competitive
edge over others. Hence, for the fulfilment of such objective, survey has been conducted to get
suitable information about pricing, performance, delivery, customer/service experience, etc.
Hence, with the motive of obtaining appropriate information, some specific questions have been
asked from 20 company officials about pricing, performance lead and customer experience led.
Theme 1: Competitive pricing strategy is suitable that helps in gaining competitive edge over
others.
Particulars Responses Response in %
High 3 15%
Moderate 5 25%
Competitive 12 60%
Total 20 100%
Interpretation: Outcome of survey shows that 60% company officials lays focus on the
adoption of competitive pricing strategy. The rationale behind this, under pharmaceutical sector
is the comparison of price by the customers with the quality of offerings. Besides this, success of
pharmaceutical sector is highly dependent on the research activity, for which it requires more
fund. Thus, by setting competitive prices, firms operating in pharmaceutical sector can generate
enough funds that enable them to meet their undertaken goals and objectives.
Theme 2: From the following factor which one is highly required to enhance organisational
performance?
Particulars Responses Response in %
Skilled personnel 7 35%
R&D activity 8 40%
Cost control 5 25%
Total 20 100%

Interpretation: Tabular presentation shows that R&D and skilled personnel are the main
requirement for the enhancement of organisational performance. Moreover, it is not possible for
the firm to conduct research without skilled and talented personnel. Along with this, research is
also highly required for finding innovative practices. Meanwhile, this in turn may result into cost
reduction. Referring all such aspects, 65% company officials support the above discussed factors
that leads to organisational growth and an enhanced performance.
Theme 3: According to you which aspects need to be undertaken for increasing customer
experience?
In survey, majority of the company officials stated that innovation and quality of the
products or services are the main aspects that improves customer’s experience. Moreover,
innovation is the key which helps in differentiating its product from the rival firm and enhance
both brand loyalty as well as financial performance. Further, in pharmaceutical sector, quality
plays a vital role in increasing the level of both customer satisfaction and loyalty.
Comparative evaluation or assessment
In order to attain the set aims and objectives of the project, pricing strategies and
technical performance of Merck is compared with other firms namely, TFS, Lonza, BD
Biosciences and Irvine Scientific.
Pricing
Comparative
evaluation
basis
Merck Thermo
Fisher
Scientific
(TFS)
Lonza
Group
BD
Biosciences
Irvine
Scientific
Product Chemical and
pharmaceutical
products
Laboratory
equipment
Chemical and
biotechnology
products or
services
Medical
equipment
Cell culture
media,
reagents
and medical
devices for
researchers

as well as
clinicians.
Pricing
strategy
Merck lays
emphasis on
product
donations and
adoption of
flexible and
differential
pricing.
Competitive Average Moderate Competitive
Regional
analysis
UK, US, Asia
Pacific, Japan,
Europe,
Middle, East
& Africa, and
few other
nations
(Merck
regional
analysis,
2018)
China,
Japan, South
Korea,
Taiwan,
India,
Southeast
Asia,
Australia
Germany,
China, USA,
UK, Asia
Pacific,
Africa and
Europe
North and
South
America,
Europe,
Middle East,
Africa and
Australia &
New Zealand
(BD
Biosciences,
2018)
Asia,
Australia,
Europe,
South
America,
Africa, and
the Middle
East (Irvine
Scientific
regional
analysis,
2018).
Use of social
media as a
marketing
strategy
On social sites,
Merck is
highlighting its
growth,
success and
description
about products
TFS uploads
images of
equipment’s
along with
the prices
and
discounts
which in turn
Lack of
presence on
social sites as
it focuses on
B2B strategy
Similar to
Lonza Group
Lack of
social
media
presence

helps in
attracting
more
customers.
Technical performance
 Merck: In the category of technical aspects, it can be depicted that Merck has attained a
leading position in healthcare, life science and performance materials. In Merck,
approximately 50000 personnel are making their best efforts in developing new
technologies which in turn improves the life of the patients (Merck technical
performance, 2018). Biopharmaceutical therapies that help in treating cancer or multiple
sclerosis, cutting edge system for scientific research and production, liquid crystals for
smart-phones and LCD television are the main examples of Merck’s effectual
technologies.
 Thermo Fisher Scientific (TFS): Technical performance of TFS is good and for
strengthening the same, it has acquired Life Technologies Corp.
 Lonza Group: From assessment, it has been identified that Lonza group is known for its
innovative practices, all over the globe. Further, Lonza group is the one which has been
recognised and worked on dependable facilities of global manufacturing. Along with the
process innovation, for proprietary technologies, regulatory experience and global
footprints, company is meeting outsourcing needs at any scale. Lonza has 11 contract
development and manufacturing sites at global level. It is one of the leading organisations
that offer preclinical risk assessment services.
 BD Biosciences: By doing evaluation, it has been assessed that technical performance of
BD is good. As, both installation and operational qualification certify that instruments are
performing as per the specification (Becton Dickinson technical performance, 2018).
Along with this, BD biosciences helps in checking new site, preparing the instruments
and re-installing as well as testing its operations at the new location. Along with this, BD
offers variety of upgraded options such as computer hardware or software which in turn,
makes improvement in instrument operation, laboratory workflow as well as productivity.