Global strategy

The opportunity seems clear to endure the market of Biosimilars. But there is always a threat possessed in an industry so big and volatile. The threat of competition, by means of new entrants or substitute products. But this provides an incentive to innovate and that’s one place Mylan has an upper hand. Being in the industry for 57 years, the experience, goodwill and connection they have acquired, would even place an established business in a tough place to compete. let’s consider few different scenarios: Firstly, a price war. Certainly, if the competition in the industry pushes to an intense level, profits of an organization would take a hit. But it would not affect Mylan, as it has the ability to spread risk, due to its global presence. Secondly, in terms of Bargaining power, putting business first, they certainly earn a big profit margin on the products they manufacture. A study was done when the controversy of EpiPen took place, in which an engineer worked out the cost of producing one set of EpiPen, which came out to be $20 dollars, for which Mylan was charging $600. Thinking what went wrong, would be the execution. It is often seen that the best way to limit the bargaining power of a buyer, would be to encourage rapid innovation.[footnoteRef:5] Further analyzing the situation, what is evident is the company’s divergence from its core value, form stating optimism and practicing pessimism. This could possess a threat for the firm, as their goals and action don’t match, as on one hand they speak of being hopeful and striving to provide global access to medicines and on the other charged 500% times the price of a product. The rise of this issue would have to be blamed on the government. The law does not have any code for pricing skimming. Therefore, a legislation providing a price ceiling for all the Pharmaceutical companies would be essential and Mylan Is not the only company charged for price gouging. [5: Reuters. (2017, August 18). Mylan Settles With Feds For $465 Million Over EpiPen Controversy.]

Taking a dig at the political point of view for Mylan’s business, the Europe market where a large sum of its revenue comes from is plausible to take a hit due to Brexit, as tariffs are likely to increase, and the instability of the market could cost Mylan millions of dollars. Threat are like collateral, being in such a diverse market leads to several different takes on legal matters. Every country has different sets of legal procedures for any business in the food or drug industry and they provide the major barriers to entry.[footnoteRef:6] As a way to tackle these, the opportunity it provides is to collaborate with local businesses or acquire them, to get a prefect understanding of the market and ensure an easy flow. Moreover, an opportunity to further diversify Mylan product line would appear with the expiring patent of Lipitor drug, which could be used to treat high cholesterol and reduce the risk of angina, heart attack, and blood vessels problems. [6: Ppconnwpadmin. (2016, July 04). Brexit and its implications for pharma.]

Mylan has made 11 acquisitions so far and have also acquired 3 divisions of different pharmaceuticals company, one of them being of Pfizer (Appendix 2). All incurring a lot of debt, as a result acquiring firms is not recommended, if such further motions are passed, the credit line which is positive could turn to turn negative, which would incur a high debt and would eventually become leverage for them. What is required by the firm is to reduce its financial leverage and keep it under a 3x to 4x range, as recommended by Moody’s. Furthermore, the report suggests that the fallback of Mylan in the long run would be its “debt funded acquisitions and aggressive capital allocation regarding share buy backs and M&A”[footnoteRef:7], which is likely to be recovered considering no further loses or settlement be made until the next 12 to 18 months. [7: Moody's assigns Prime-3 rating to Mylan Inc.'s new CP program. (2018, July 31).]

For a firm this huge, prioritizing becomes a major issue. In my opinion, Mylan should focus on two things, primarily building stronger relation in developing countries creating most demand and developing biosimilars and other cures. The importance being, a) expansion into other countries for a big firm could not be a big deal, but to sustain it could be, as the firm doesn’t know the business environment, b) developing new products as mentioned above would create new market opportunities and the market of biosimilars is an untouched market, which would give Mylan a first mover advantage too.

Adding on, staying in their current proximity and not expanding to more countries would halt the news of Mylan being a tax dodger. Certainly, there are no limit to theories rising to criticize Pharmaceutical companies. As per Los Angeles times “Mylan is one of the leading exploiters of the technique known as inversion, in which a U.S. company cuts its tax bill by acquiring a foreign firm and moving its tax domicile to the acquired company's homeland.”[footnoteRef:8] It is not illegal as of yet, to execute this strategical move, it’s a loophole and significantly a big on. But a loophole soon to vanish. Trump administration has announced to come up with a policy which will tax any firm having overseas income 15% corporate tax, no matter where its operations be carried out across the world. This will probably affect the company and seeing what Mylan earns the taxed amount could be a lot for them. [8: Hiltzik, M. (2016, August 23). Another reason to hate Mylan, which jacked up the price of life-saving EpiPens: It's a tax dodger. ]

A way to dodge this code would be to shift its headquarters or have a second headquarter. A potential option as the company has a history of changing its headquarters. First founded in 1961, the company was located in West Virginia. In one year, they moved to New Jersey and back to Princeton, West Virginia in 1963 and relocated to different suburbs in Pittsburgh, Pennsylvania. The have stayed in Pittsburgh but did change the suburb in 2004. In 2012 they redesigned their corporate headquarters in order to fit in more staff to support their growth and stayed in Pittsburgh due to its resources and large worker base and provides easy access for them as well has great commuter arteries.

US being its home market, most of its profits come from overseas. It received its 68% revenue in 2017 from its market outside of United States, 34% of which came from Europe. Although its majority still stays in United States, of having a 48% of its profit share. Furthermore, United States offers great opportunities but with the threat of huge competition as discuss earlier. But analyzing its current location, the corporate headquarters is at a prime location in terms of workforce as well as commute options. The fact of the company being global doesn’t bring along the factor of having a second headquarter because in every major country where Mylan makes its revenue has a company who Mylan has acquired or are working in partnership with. Great strategical approach as the cost of building a new base and marketing the brand is saved and used in for other purposes.

To conclude, I feel that the technological advancement and the upcoming fourth industrial revolution would bring a lot of changes in every possible industry. The advantage that establish companies have is to forecast and be prepared for such changes and adapt to them, or else the industry would stay but the company won’t.

Appendix 1

Appendix 2