Businessmodel of Allergan

Customer Segments

Allergan has a mass market business model, with no significant differentiation between customer groups. The company targets its offerings at all consumers who seek pharmaceutical products.

Value Proposition

Allergan offers five primary value propositions: accessibility, innovation, performance, risk reduction, and brand/status.

The company creates accessibility by providing a wide variety of options. Its products treat conditions in a broad range of categories, namely the central nervous system, ophthalmology, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular, and anti-infective.

The company embraces innovation as part of its culture. It utilizes an “Open Science“ model in its research and development operations. A significant portion of its pipeline is sourced by partnering with academic institutions, biotechnology firms, and other pharmaceutical companies worldwide. This collaboration enables it to come with more cutting-edge solutions than it would otherwise.

The company has demonstrated strong performance through tangible results. Its 2016 R&D pipeline resulted in over 20 major pharmaceutical and device submissions and over 25 major pharma and device approvals. Also, it currently has over 70 programs in development across its seven therapeutic categories (identified above).

The company has reduced risks by maintaining high safety and security standards. It ensures compliance by constantly assessing and monitoring the output of existing quality systems and the application of evolving industry regulations and guidelines. For example, its auditing program confirms ongoing adherence to Good Manufacturing Practice (GMP) standards – a regulatory guideline designed to ensure that finished products have the identity, quality, strength, and purity they are required to have. The program also ensures appropriate employee training and resource utilization. Allergan performs thorough safety monitoring and evaluations throughout the product lifecycle and identifies risks/benefits for consumers. Those who experience adverse events or have product complaints are encouraged to call a phone hotline to report them.

The company has established a powerful brand due to its success. It has commercial operations in 100 countries, with top five market share positions in almost 20 international markets. It has over 16,000 employees globally. Lastly, it produces a number of top, well-known brands, including Botox, Restasis, Latisse, Namenda, Linzess, Bystolic, Juveder, LoLoesterin,Teflaro, and Dalvance.

Channels

Allergan’s main channels are drug wholesalers, retailers and distributors (including national retail drug and food store chains), hospitals, clinics, mail order retailers, government agencies, and

managed healthcare providers such as health maintenance organizations and other institutions. It also distributes products through independent pharmacies, alternate care providers (hospitals, nursing homes and mail order pharmacies), physicians’ offices, and buying groups. The company promotes its offering through its social media pages, advertising, and participation in conferences.

Customer Relationships

Allergan’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. The company’s website provides prescribing and labeling information for distributors of its products. That said, there is a personal assistance component in the form of phone and e-mail support.

Key Activities

Allergan’s business model entails designing, developing, manufacturing, and commercializing pharmaceuticals, over-the-counter medicines, and biologic products for its customers.

Key Partners

Allergan’s key partners are the suppliers that provide it with the raw materials (e.g., active and inactive pharmaceutical ingredients) it needs to make its products. It receives a large percentage of these materials from foreign suppliers. It seeks partners that will actively take part in its business, and help improve its processes by increasing efficiency and suggesting ways to decrease costs.

Beyond suppliers, its major partners include the distributors of its products (wholesalers, retailers, healthcare facilities, etc.) and its research partners (academica, biotech and pharma firms, etc.)

Key Resources

Allergan’s main resources are its human resources, who include the scientists and engineers that design, develop, and manufacture its products. Its important physical resources are its manufacturing facilities located worldwide. Lastly, it places a high priority on its intellectual property, with its highly-recognized trademarks and brands important to its business.

Cost Structure

Allergan has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is sales/marketing expenses, a fixed cost. Other major drivers are cost of sales, a variable expense, and administration, a fixed cost.

Revenue Streams

Allergan has two revenue streams: revenues it generates from sales of its products to its customers and revenues it generates from licensing fees.