Family Enterprise Management - Merck Pharmaceutical Problem

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ENSI509 - FAMILY ENTERPRISE MANAGEMENT

Balancing Family and

Business Needs at

GROUP MEMBER:

Robert, Sandy, Annie, Pat, Lisa

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Outline

1. Case introduction

2. Key dilemma

3. Alternative Options

4. Proposed solution

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Introduction

 Oldest pharmaceutical and chemical company in the world

 Founded in 1668

 Went through difficult times but now it operates in 54 countries with 168 companies and 53

production facilities.

 Main products:

Generic drugs

Ethicals

Consumer Health Care

Liquid Crystals

Pigments

Life Science and Analytics

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Market Position and Limitations

(2005)

Sales (€bn)

Net Margin

Rate of $1.25/1€

Merck

5.84 11%

Schering

5.04 12%

Bayer

25.92

5%

Novartis

25.76

20%

• Narrower product range than competitors

• Distribution network is not strong enough in the U.S. Market

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Financial Position

Sales = 5.84 €bn

Balance Cash = 1.3 €bn

Public

Others

2%

Debt level = 0.945 €bn

Shareholder loans = 0.27 €bn Not in the best rating position

Possible transaction amount: €1.5bn - €2bn

Rate of $1.25/1€

 Investors