The neurology division faces several leadership, external, and internal challenges. Externally, regulations are increasing while cultural preferences and technology are changing rapidly. Competitors pursue generic drugs and acquisitions aggressively. Internally, R&D investment and profit margins are relatively low. To address these, the strategy proposes increasing pre-launch marketing, conducting more drug trials, improving current drugs, growing promoted brands, and continuing an aggressive yet balanced acquisition strategy that also increases investment in R&D.

1. Situation Analysis, Neurology Division
Leadership Issues, External Conditions, Internal Strengths & Weaknesses, Strategy
Presented by Team Mongol Horde
October 26, 2011

2. I. Leadership Issues
✤ Culture inspired from GSK makes a good foundation.
Future leaders and employees will built further upon it so make it Valeant’s own.
✤ Mr. O’Leary’s strategic path goes forward.
Mr. Pearson will add his own ideas, concurrent with current economy.
✤ Despite experienced team, funds were not allocated properly to R&D.
✤ Leaders dependent on current drugs, not having contingency plan for expiring patents.

3. II. External Conditions
A. General Environment - Act Fast!
Demographic Trends:
✤ People live longer.
Need drugs for long-term, comfortable management of diseases.
✤ Number of disorders and dieases fluctuates - large market.
Must track those trends and adjust as needed.
Political and Economical Trends:
✤ Number of rules & regulations from FDA, government & insurance companies.
Requires deep understanding of policies.
✤ Follow all requirements strictly.
Could compromise the future of a drug.
✤ Base strategies around these regulations to establish competitive advantage.
Sociocultural and Technological Trends:
✤ Cultural attitudes are changing worldwide
Preferences switch to alternative medicines & surgery.
✤ Technological advancements are growing rapidly
Key to increasing speed and efficiency to get drug to market.

4. A. General Environment - con’t.
Global and Physical Trends:
✤ Globalization - The world is shrinking
Outsourcing: Capitalize on labor and skills of other countries.
✤ Market products worldwide, as can the competition.
✤ Tariffs, trades and regulations affect costs or product.
Sociocultural and Technology:
✤ Cultural attitudes are changing worldwide
Preferences switch to alternative medicines & surgery.
✤ Technological advancements are growing rapidly
Conclusion:
Many factors out of Valeant's direct control
How (and how quickly) they respond means everything.

5. B. Industry
Environment

6. C. Competitor Environment
- Stiff competition in a condensed market!
Strategic Intent:
✤ Firm's motivation to leverage its resources & capital to reach its vision..
Pharmacy companies aim to be the first to create a product that will change
the face of the medical industry.
✤ Market is condensed and controlled only by top 50 companies.
These few companies drive the market & prices
Current Competitor Strategy:
✤ Meaningful information about competition's strategy helps predict behavior.
Examples:
• Teva Pharmaceutical Industries
-Controls 60% of the worldwide revenue
-Banks on producing generic versions as soon as patents expire
• GSK
-Combines drugs to treat multiple problems
✤ Examining strategies gives useful information to get a leg up.
-Target weaknesses and areas not focused on
-Gives ideas to mimic similar behavior

7. C. Competitor Environment - con’t.
External Strengths and Weaknesses:
✤ Must evaluate competitor’s resources as well as your own.
✤ Valeant possesses a number of strengths
• Strong and experienced management team
• Top neurological drugs on the market with no competition
✤ Valeant also has weaknessess
• Competition from generic drugs that they cannot and have
not been able to compete with.
• External constraints (ie: regulations, outsourcing) that drive up
price of products.
Conclusion:
Must respond quickly to challenges and highlight strengths.

8. III. Internal Strengths &
Weaknesses
Strengths:
✤ Strong, experienced leadership team, even after the passing of Mr. O’Leary.
Acquisitions have also acquired talent, many from GSK.
✤ Financial efficiency and good health.
Restructure debt, decrease operating expenses
Improved global network and buying power
✤ Outsourcing secondary functions lowers costs, aid production time
✤ Product line is strong
Diversified, some unique to Valeant with no competition
✤ Marketing through educational programs, national funding, and consumer aid
✤ Acquisitions strategy works well
Quick product development and release
Overcome barriers to entry
Reduce competition
✤ Salesforce overhauled to extend reach and offer follow-ups
Weaknesses:
✤ R&D reinvestment as a % of sales is too low
✤ Low profit margins on products
✤ Each product has its own set of problems

9. IV. Strategy
A. Product Strategy
✤ Continue drug alliances for licensing and adjunctive treatments.
✤ Increase pre-launch awareness and provide transparent supportive data.
Tasmar plays catch-up; future products (i.e. Retigabine) will learn and benefit.
✤ More research and drug trials.
Diastase Acudial will become attractive to users and pull in more revenue.
✤ Keep eye on current environment and competitors’ activity.
Migranol acquired through acquisition; acquire similar products that have no
competitors.
✤ Improve formulas that call for new patents and increase profit margins for current
products.
Mestinon has generic competition; watch for and prevent brand
competition from entering market.
B. Marketing Strategy
✤ Grow promoted brands with more product awareness campaigns.
✤ Each product should have its own salesforce.
✤ More pre-launch awareness.

10. C. Acquisitions Strategy
✤ Continue aggressive growth strategy of companies and products.
✤ Balance - more funds to R&D, even through patent acquisitions.
✤ Keep operating costs low.
Rationalize manufacturing network by restructuring or selling plants.
✤ Look for additional opportunities for product growth.
✤ Increase long-term shareholder value.
IV. Recommendations