Allergan SWOT and PESTLE Analysis

Opportunities

1. Integrating recently acquired businesses to enhance profitability: Recently in 2016 Allergan has acquired Tobira Therapeutics Inc., Vitae Pharmaceuticals Inc., ForSight VISION Inc. The companies if integrated properly regarding culture, alignment of vision, business practices could result into hefty profits for Allergan as the acquisitions are done keeping in mind the business strategy of acquiring the companies which are complementing the business of the company.

2. Improving control over suppliers as well customers: The company currently is not holding a position of power in front of their suppliers as well as buyers because, in both suppliers and buyers case, small number of big players are controlling the markets. The company’s expansion in new international markets brings them the opportunity to find new potential suppliers as well as the buyers which can help the company acquire greater power during negotiations.

3. Timely development and launches of new products ahead of competitors: Pharmaceutical Industry is a highly competitive industry, and a first mover advantage can prove to be immensely beneficial to company’s revenue. Robust R&D strategy provides the company an opportunity to develop and launch new products ahead of competitors. Effective marketing of the product and the brand symbolizing technological innovations will improve the sales of the company’s products.

The unpublished sections of the entire SWOT analysis is available in the 'Complete Report' on purchase.

Political

1. Adverse effects of regulations enforced by European Union: EU has imposed regulations where every API imported must comply with the manufacturing standards as regulated by EU. Allergan is a global company where the manufacturers of the API can be in a country where such regulations are not imposed so they may not comply with the EU regulations to some extent or at all. The company additionally can face severe delay and financial expenditure if it wishes to certify the supplier with the standards as set by the EU.

2. Reimbursement and Pricing of company’s product under scrutiny during Trump’s administration: Under President Donald Trump’s administration significant changes are taking place in policies of reimbursement of healthcare products and services covered under the plans that were authorized by the ACA. Increased scrutiny on pricing and reimbursement policies under the present government brings unpredictability.

3. Healthcare Reforms: The demand of the products of Allergan depends largely on the extent and coverage of reimbursement paid by the third-party payers. But recently these third-party payers are challenging the pricing of healthcare products. Also, various reforms in healthcare, development of organizations like the HMOs and the MCOs, government insurers bring unpredictability in determining the future coverage and reimbursement of the products of the company which can adversely affect the price and demand of the company’s products.

Economic

1. Challenging and tighter credit conditions: The cost and availability of credit to the partners, manufacturers, suppliers, third-party distributors can decrease due to illiquid credit markets and wider credit spreads. This can adversely affect their capability to buy raw materials and inventory which can further disrupt the operations of the company. Global efforts towards containment of health care costs put additional pressure on pricing and market access.

2. Foreign currency fluctuations: The company has its operations in numerous countries outside US. It has constantly entered into acquisitions, hedging, licensing and borrowing in non-US countries which bring currency exchange rates under consideration. Appreciation of non-US currency against US Dollar can increase the company’s cost of operations in such countries.

Social

1. Social Contract: From September 2016, Allergan has entered into a social contract with the patients which says that the company will limit its price increase only once a year. Also, the price rise will be in single digit percentage which means that after rebates and discounts, price rise will be in low to medium range. In 2016 average price increase for US products was 4.8%.

The unpublished sections of the entire PESTLE / PESTEL analysis is available in the 'Complete Report' on purchase.