Celgene has several strengths that have played a role in making it a leader in the healthcare and pharmaceutical industry. The company focuses on developing drugs for cancers and inflammatory diseases which inherently requires research and development, strong finances, and patented products to give them a competitive advantage.
To be successful in the pharmaceutical industry, a company must be efficient with its research and development. Celgene has five facilities strategically placed in the United States and one in Europe, each dedicated to a unique sector of R&D.
Their headquarters in Summit, NJ focus on overall leadership, clinical pharmacology, and preclinical development (Celgene). The center- right here in San Diego is built for drug discovery, alliance development, epigenetics, and intracellular signaling (Celgene). Up north in San Francisco is the translational development epigenetic center for the drug IMiDs (Celgene). The immune-oncology center is located in Seattle, WA and the Cambridge, MA facility focuses on target identification and biology and chemistry research for inflammation and immunology conditions (Celgene).
Finally, Spain is home to translational research in Europe (Celgene). These facilities hold the labs and technology crucial to developing and improving life-saving drugs. It is important that each location is dedicated to a specialty or two so they can pinpoint their focus. Celgene actively looking for patients to participate in clinical trials is another important part of developing medications and finding new ways to prevent, detect, or treat a range of diseases (Celgene). Furthermore, one of their key goals that are carried out in these facilities is developing therapies that address the cause and source of the disease rather than just the symptoms (Celgene).
Combined, these things are a crucial base to build on for the rest of Celgenes business such as product manufacturing and customer satisfaction.
Finances are what a company revolves around and in many ways, proves to be another strength for Celgene. The current ratio can be used to determine liquidity which is the ability of a company to use its assets to pay off expenses (Normeyer). A ratio of 2.0 or above typically indicates that the assets are liquid enough for the business to continue operating, and in 2018, Celgene had a ratio of 2.2, which is a success. The efficiency of a company is in part measured by the return on assets (ROA) which determines the profit earned on all capital (Normeyer). Any ROA over 5% is typically considered good and in2018, Celgenes ROA was 12.3%. Finally, a businesss profit margin is important to see how much of a profit theyre making based on net earnings and net sales. According to a 2018 study by NYU Stern School of Business, the average net profit margin for drug companies, including pharmaceuticals and biotech, was about 12.5% to 14% (Slovak). In comparison, Celgene is performing phenomenally with a 26.5% profit margin, which is double the average. Because of their financial success, Celgene can focus on reasonably priced their products which is something they value. They believe transparency is critical and that medicines should be affordable to those who need them while supporting investment in the next generation of medical breakthroughs (Celgene).
In relation to finances, patents are included in a companys assets and Celgene has an impressive 48 patents protecting their drugs (Friedman). Their main products are aimed at treating multiple myeloma which is a type of cancer that forms in a white blood cell whose purpose is to fight infections (Mayo Clinic). Celgenes primary drug for this is Revlimid (which has 27 patents alone) in addition to Thalomid and Pomalyst. Their other products, Otezla, Abraxane, Inrebic, Istodax, Vidaza treat arthritis and other types of cancer including breast, lung, bone marrow, lymphoma cancers (Celgene). Patents are so important for a companys success because they guarantee that for the time the patent is in effect, only the original creators can sell the product. Celgenes high number of patents relates back to their strengths in research and development facilities.
Weaknesses are the areas where Celgene can improve upon. They limit the ability of the firm to build a sustainable competitive advantage. Weaknesses come from a lack or absence of key resources and capabilities including few products.
Depending on a few products is a concern and considered one of Celgene’s weaknesses as they are highly dependent on their main product, Revlimid. This drug treats cancer, multiple myeloma, and makes up around 63% of their total revenue (Martin). This is a weakness because when the Revlimid patent expires and other companies create a generic brand, Celgene will lose a large amount of profit.
Low profitability can lead to a shortage of funds for investing in new projects. Although Celgenes financial statement is stable when looked at in its entirety, they still have financial weaknesses. The current asset ratio for 2017 and 2018 respectively is 5.0 and 2.2 meaning liquid asset ratios decreased and it is lower than the industry average (Martin). This suggests that the company should use the cash more efficiently than it is doing presently. This could also mean that Celgene may have liquidity problems in the future that could lead to certain circumstances where there is not enough cash flow, leading to unnecessary and unplanned borrowing. The debt-to-equity ratio is typically used to determine a companys financial strength (Nordmeyer). A ratio between 1.5 and 2.0 is considered an acceptable range, but Celgenes 2018 ratio was 4.8, implying less financial stability and higher debt.
Opportunities refer to appropriate external factors that give Celgene a competitive advantage. The development of technology provides an opportunity for Celgene to adjust different prices for the same product in the new market that will allow them to maintain its sincere customers with great service (Department, Strategic Management). Recently, there has been an increase in the number of internet users around the world. That provides more opportunities for Celgene Corporations to expand their online presence by utilizing the internet commercial to track new members. Because of technology and internet development, there has been a new growth in sales of the e-commerce industry, which means people are now purchasing their needs online more than any time before. Celgene can earn additional revenue by opening online stores and making sales through these.
Consequently, with more cash in the bank, Celgene can invest in new technologies as well as new product segments, so easy access to loans offer a great opportunity for Celgene to expand. Additionally, fixed free cash flow offers opportunities to invest in approaching product segments which should open an opportunity for Celgene in other product categories (Gabrie). Moreover, to make Celgene successful, they should be able to predict market trends better than others, provide resources to develop products and services to leverage those trends, and counter competitors (Accounting, Finance &.MBA SWOT).
In fact, the taxation policy can significantly impact Celgene by creating a new opportunity to increase its profitability. The diminishing boundaries and rising global correlation allow Celgene to get into international markets, then target their geographically dispersed customer base and increase profitability so a reduction in the interest rates makes fundraising and financing at a lower cost easier to attain. The low inflation rate brings more constancy in the market and makes credit at lower interest rates to the customers of Celgene possible. Clearly, Celgene should use technological advances as a way to distribute products, and dial in their competitors vulnerabilities. Finally, Celgene has an opportunity in increased employee retention by leveraging new training opportunities.
Celgene has many potential threats to its success. First, Celgene is part of the pharmaceutical industry, which has many competitors. These competitors pose a threat to Celgenes potential success because they can create new innovative drugs or products that will outperform those of Celgene. These competing companies also take business away from Celgene, so most of the time if another pharmaceutical company is prospering, it will have a negative effect on Celgene.
In regards to competitors, Celgene is also at risk of their drugs being copied. In the United States, companies are allowed to protect their inventions by using a patent. A patent protects an invention by making it illegal for other companies to make, or sell the same or similar product. However, this can be a threat because patents only last 20 years. After the 20 year time frame, the invention becomes common knowledge and other companies can make and sell similar drugs for a reduced price. This would take away large amounts of business for Celgene.
Another potential threat to Celgene is the inconsistency of new products. Celgene creates drugs that take a lot of research and time to perfect. It is a potential threat because Celgene could go long periods of time without creating a new drug that appeals to consumers. This means that Celgenes profits and popularity will grow in bursts each time it creates a new product. However, unlike most other industries, it is very unpredictable how often they will be able to come out with a popular drug.
Another threat to Celgenes success is that there are many government regulations and rules regarding drugs. Drugs must pass many tests and get approved by the FDA before being sold to the public. It is difficult for pharmaceutical companies to create new drugs that not only work but also pass all the tests that they must go through in order to be approved by the FDA.
3. Contribution Statement