4/1/2021 Merck’s Crisis

Management in the
era of covid-19
Scenario case study

Presented to Victorian Institution of Technology

To

Prof. Dimitra Kalomallos

Ghazi, Maya
MBA5005 -MANAGING HUMAN CAPITAL

pg. 0
Contents
Introduction.................................................................................................................................................2
About MERCK SHARP & DOHME.................................................................................................................2
The Economic shock due to COVID-19.........................................................................................................2
The question addressed in this report.........................................................................................................4
MSD facing COVID-19..................................................................................................................................5
Crisis management strategy........................................................................................................................8
Strategic plan based on crisis management..............................................................................................11
The Role of Merck’s Performance Management in this pandemic............................................................13
Conclusion:................................................................................................................................................17
References.................................................................................................................................................19

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Introduction

Our lives are but a set of interlinked series of various causes and effects.

All the industries and worldwide operations are connected on a certain level. The degree of those
impacts varies from one domain to another. It can affect the finance of the company, the human
resources, the capital, and ultimately disturb the strategy of that organization.

Since the beginning of 2020, the world has witnessed a major economical hit as a result of the COVID-19
pandemic, which impacted the worldwide trades, industries, and human population drastically to be the
reason behind the birth of digitalization and Artificial intelligence innovation.

In this scenario case study, I will shed light on the impact of covid-19 on the pharmaceutical industry. In
specific an American multinational pharmaceutical organization known as ‘’MERCK SHARP & DOHME’’
(MSD).

We, Will, focus on three main objectives:

1. How this company handled this economic shock due to COVID-19.

2. The importance of performance management in MSD in such a period.
3. The future crisis management plan for MSD.

About MERCK SHARP & DOHME

MSD or Merck Sharp and Dohme is an American organization established by George Merck in 1980.
(Merck, 2020)

This organization has been creating life-saving pharmaceutical drugs for the world's toughest daunting
illnesses for the past 125 years in fulfillment of their goal to heal and improve quality of life.

MSD also collaborates with most health providers to initiate initiatives, services for the benefit of public
health. (Merck, 2020)

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The Economic shock due to COVID-19

In March 2020, It’s no doubt that COVID-19 has shocked the industry and changed the way people
operate and live. This virus has entered our lives out of sudden, infected millions of people, and resulted
in the death of more than a hundred thousand, as a consequence of quarantine and governmental
measures to break the virus transfer, the economy has witnessed a state of deep sleep with a 5.2%
reduction in the global Gross Domestic Product in 2020. This GDP value is the deepest decline the
economy has ever faced (WorldBank, 2020)

The Damage and transformation due to this virus have not only resulted in a short-term effect, but it will
have a long-term impact as well.

The following is the PESTLE analysis for the COVID-19 pandemic. ‘’PESTLE is a tool used to for the
assessment of external sources affecting the organization on the following levels:

1. Political (P)
2. Economic (E)
3. Socioeconomic (S)
4. Technological (T)
5. Legal (L)
6. Environmental (E)

This tool can assess the impacts, risks, and potentiality in each domain, which later can be used to set
the strategy and aid the decision-making process in an organization.’’ (CIDP, 2020)

Governments are being closely examined and criticized by their people due to the regulations me
against covid-19
Political The trading sector is under attack, due to the restriction in the trading, a lot of countries are ques
the concept of supply chain.

The performance of the market has declined significantly, resulting in the decrease in financial tra
Economic thus economic crisis.
Decrease in the number of workers due to illness and death.

Created panic and fear among the communities.

people became very racist against the Chinese community, especially that COVID-19 is of Chinese
Social Travel cessation due to the pandemic
Working from home become the new norm.
Increase depression and anxiety cases in the world.

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New discoveries and innovative techniques in virology treatments by pharma industry.
TechnologicaL Digitalization in all domains, from schools to coffee shops to big industries and organisations.
 Legal Rules and Regulations impsoed on all the world to restrict the spread of the virus.
Disturbance in the legal process and introduction of the digitlaization techniques.

Environmenta With the decrease in human work-flow and air pollution, the ozone layer is 80% restored to norm
l the environment have refreshed from the worldwide pollutants.

Figure 1 PESTLE analysis for COVID-19 impact on the world 2020 (Bush, 2020)

The question addressed in this report

1. How was MSD affected by COVID-19?

2. What was the crisis management strategy done to overcome the said impact?
3. How did performance management play a role in supporting crisis management?

MSD facing COVID-19

Merck Sharp & Dohme like any pharmaceutical company were affected directly and indirectly by the
COVID-19 pandemic.

Figure 2 Covid-19 and its impact on pharmaceutical industry (Nayyereh Ayati, 2020)

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 For the short term, the indirect impact of this pandemic includes demand fluctuations, law
amendments, alteration in the research system, and then moving toward a more digital way of
communication and introduction of the medication.

Moreover, the market growth was suddenly flat to numb and the interruptions in the approval process
have happened have transferred the company closer to produce its independent supply chain in each
country, taking into consideration that the consumption trend of the medications will witness marvelous
changes as the long-term impact of coronavirus.

All of this has resulted in a major drop in their sales during the first semester of 2020, yet they have
proven to be capable of surviving and adapting to the change very quickly.

Because these factors have pushed Merck to change the way they work despite the scientific and health
sector dilemma, MSD is well known for how they care about the safety and health of the people.

It is in their vision and mission

Figure 3 Mission of Merck & co. (Merck, 2020)

Before going into details about the crisis management of Merck to the pandemic, it is important to
mention the resilience and the responsibility of the company in addition to their innovative minds
behind rushing to enhance the virology departments and produce an antiviral vaccine to save peoples
lives and proving their motto ‘’inventing for life’’, they were among the first pharmaceutical industry to
invest and dedicate their objectives as being a leading company in the production of anti-viral and anti-
microbial medicines.

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The attached figure 3 demonstrated the early stages of the production of the vaccine and how the
process is going to date.

Figure 4 Merck COVID-19 Research Efforts: timeline (Merck, 2020)

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Despite the negative impacts that have occurred on MSD, they are facing this pandemic with a positive
spirit and their new objectives were as follows: (Merck, 2020)

1. Priority goes for the patients

Helping the people who cannot afford medication and making sure everyone gets a chance to be
treated and cured by having their internal assistant program.
2. Hunting several options by collaborations
Collaborations with different labs to help create the corona vaccine effectively and efficiently.
3. Lifting-up the company
Changing the norm of competition and collab with other pharmaceuticals to stand in the face of
COVID-19.
4. Donating to the public
Due to the need for medical staff in the world today, MSD has initiated a volunteer program
where their employees of medical background will support the community while being paid by
Merck.

Crisis management strategy

In crisis management, it is crucial to know the cause of the problem and then dissect the problem then
tackle propose a plan with a timeline for each problem.

Merck Sharp and Dohme use the following steps in crisis management:

1. Define the crisis scenario

2. Divide the crisis into categories
3. Clarify the potential impacts of the crisis
4. Activation plan
5. Mention the name of the crisis management team

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 The following table will demonstrate the major impacts faced by MSD and the reason behind this impact

Duration Crisis scenario Crisis category Potential impacts of the crisis:

Short term Medicine deficiency Financial crisis Increase in demand for antihistamine and allergy
due to increased products from MSD, in addition to the antibiotics and
demand for diabetes products to cover the demand of patients
hospitalized patients as per the new guidelines.
Public panic to situation and rush to overstock
medications
Drug’s stock deficiency due to over purchase and
decrease in the supply chain due to the lockdown of
countries.
Digitalization and Technological Introducing the digital way of communication
telemedicine crisis internally and with customers and vendors, as part of
approach safety measures
Despite the digital approach still, 77% of doctors and
healthcare professionals preferred the face to face
meeting of the medical representatives than video
calls and WhatsApp.
Long-term Delays in regulations logistic Registration in the clinical trial was postponed by 9%
and legal approvals misdeeds The enrolment of the people in clinical trials was 36%
for drugs not related of the required number.
to coronavirus

Establish its supply A decrease in stock, due to lockdown, all the supply
chain to tackle the chain was stopped.
interruption in the
trade process

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After clearly mentioning defining the major impacts of Corona on MSD, it's important to set an
activation plan, that includes the notification list and crisis management team.

The table below will represent all the mentioned points:

Crisis Activation plan Crisis team

Category management
Financial For the increase in demand, make sure of the availability of the Country manager
new batch. And prioritize distribution of the medication to high Strategic manager
demand areas Commercial
Limit the number of buyers to the one-month stock maximum. manager

Technological Buying a specific digital application to be used internally like IT manager

teams Digital manager
Initiating another digital way of communication through another Financial manager
application like Veeva engage that will have more privacy
Logistic Creating their own local supply chain stores instead of relying on Key account
trade and the legalizations needed. management
Regulatory affairs
manager
Country manager

To sum up the Crisis management plan, it is important to set the strategy based on each
scenario with a timeline as you will see down below:

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 Strategic plan based on crisis management

11st March 2020 the beginning of the crisis

1-2 weeks 1-2 months 1-2 Quarters 1-2 years Back to normal
* Increased demand for * Supply drainage Lockdown and Restocking and Regular growth
drugs. * Demand exceeds the Quarantine restoring growth as
* Sales increased capacity much as possible
drastically

Scenario one lockdown and quarantine

1-2 weeks 1-2 months 1-2 Quarters 1-2 years Back to normal
* decrease face to face *introduction of the *Lockdown still *lockdown resolved *Sales growth
visits of medical digital Veeva engage a present and life is back to back to normal.
representatives to the tool to connect with *Government normal with a hybrid
field which affected the the healthcare rules and laws model. *new ways of
business professionals available against anyone *supply chain working
* loss of a lot of through video calls who disobey the restored
healthcare providers and emails and e- lockdown *restocking of
that used to produce detailing. *supply chain is hospitals and stores
business due to illness * conducting of digital affected
and death meetings to guide the
*restriction of some doctors in such
mild patients to go to difficult times
the hospital which * working from home
affected the over the
counter medications in
MSD

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 Scenario two company regulations towards the employees

1-2 weeks 1-2 months 1-2 Quarters 1-2 years Back to normal
* travel restrictions * training on safety *Lockdown still *60% of employees *100%
* providing of safety kit * internal programs present are back to the field employees back
for each member of for supporting the * allowing low-risk visits and office to the filed visits
MSD new technology employees around and offices with
*restriction to team * conducting digital 30% to go back to still some
meetings, and office meetings internally the filed with strict objectives of
time * still working from measures and maintaining the
*working from home home maintain the hybrid hybrid approach
100% approach of model
telecommunications

Scenario three moves and measures to be taken in such situations

1-2 weeks 1-2 months 1-2 Quarters 1-2 years Back to normal
* contacting suppliers * Check for emergency * covering high- *supply chain *Develop a
to check production availability to supply risk accounts and problem resolved, more
stock the demand most valuable lockdown is over independent
* provide a forecasted * Work with the legal customers to and an overstocking supply chain to
sheet for possible department to ensure ensure continuity from medications prevent such a
medications needed the importing and of the business was a plan to problem
*divide the workforce exporting process of prevent any *choose where
*create a crisis the medications problem in the to invest wisely
management team * contacting future in case of
customers and agree another forecasted
on a quantified plan lockdown.
based on need

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 Scenario four legal and technological facilities available

1-2 weeks 1-2 months 1-2 Quarters 1-2 years Back to normal
* new way of * IT introduced Veeva *detailed business *10% increase in *operating with
communication was engage with the help of plan asked from sales and profit. less human
needed marketing managers every employee to * letting go of 20% resources but
* Employees will be and they conducted give inputs about of human resources much more
relying on WhatsApp detailed training on the situation and in the company effective and
and phone calls how to approach and how to mitigate the * overstocking of efficient with
*government legal introduce this new risk hospitals due to the the introduction
process was stopped concept * on the company previous period and of digital
*delay in any * problems with level deep financial as a preventative framework
approval process releasing and getting analysis to see how measure for a *legalization
approvals for stock financially strong future lockdown and paper
*60% decrease in sales MSD is to cover the *Agile framework agreement was
after stock depletion loss in sales without introduction done on due
going for drastic dates.
measures. And still
being able to apply
all the scenarios
mentioned above

All the above wasn’t possible without proper performance management that was done by the
human resources management system, and that’s lead us to the third question in this report.

The Role of Merck’s Performance Management in this pandemic

Merck’s Performance management system is driving business success through training its
employees to figure out how to support the business to help its patients. The main objective is
to enhance the capacity of their workforce to drive growth, recreate the operating methods to

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maintain a competitive advantage with the quality of employees. This is done by developing the
capabilities and knowledge to build up new talents, increase efficiency, and reduce uncertainty
via appropriate ongoing educational pieces of training. This involves the enhancement of
managerial qualities and creating future leaders through continuous practical pieces of training
and webinars.

The trick to achieving the following is by creating a culture of understanding, that fosters
diversity and inclusion, with highly engaged workers who feel like they belong to a family rather
than an organization.

Strategic human resources management always tries to apply the newest and advanced
learnings, technicalities, and ideas in the developmental process.

Moreover, to be complaint while enforcing all the performance plan is crucial, such
enforcement rules involve checking that the photographic permits and consent papers are done
before any publications; guaranteeing that sites and destinations align with organization safety,
compliance regulations; and monitoring trips, schedules, and participation of members
worldwide.

MSD has won more than 8 awards for its innovative techniques in developing its employees,

The attached table will show the latest published performance data by MSD

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Figure 5 MSD performance Data (Merck, 2019)

Figure 6 MSD performance data continue (Merck, 2019)

During Covid-19 the Human Resources system have done the following to motivate its
employees during these difficult times as follows:

1. Modified the incentive scheme and granted everyone 100% achievements on the sales
for the first two-quarters of the pandemic from January 2020 to June 2020
2. Decreased the work KPIs and did not force anyone to go back to the field or the office
unless on volunteer bases for low-risk employees, and all meetings were stopped for
their safety.
3. Proper training on new digital video call technique.

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 4. Full support from all supporting functions in case of infection
5. Supporting the families with flu vaccines and a safety kit along with gifts on occasions
and greeting cards.
6. Provided tools and Harvard resources for extra free courses taken by employees as they
work from home.
7. Initiated a lot of programs to empower the workers during difficult times
Such as (Merck, 2019)
I. Mentorship program part of the succession plan to mirror a person from your desired
promotion
II. Ready to lead the program to prepare a succession plan
III. Women network, to empower females in the workplace
IV. Next-generation network, to bridge the gap between different generations in the
company
V. General management program to accelerate the learning process and developments
of key talents
After all, the reason behind the success of a strategy is the proper people
management, and there is no doubt that MSD deserves the golden awards of
excellence when it comes to managing its employees. (Merck, 2019)

Conclusion:

Last but not the least, the coronavirus scenario has revealed to the world the
importance of backup plans and proper crisis management for the drug industry.
It has proven that in one day all that was build can be shattered without proper
management of the people, finance, and capital resources, aligning on critical
situational analysis and risk mitigation on every aspect that might affect the business.

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 MSD is a great example of a strong company that has mastered the science of
business, supply chain, world trade, and managing human capital in an agile
framework to overcome hardship such as the coronavirus pandemic.
While other companies started executing redundancy to their workers, Merck held
on to its employees and used them as a strength in the volunteering phase, collecting
data and feedback, investing and believing in science and research to start innovative
antivirus for COVID-19.
Hoping by the end of 2021, the vaccine will be available.
In the end, managing a crisis in any organization requires deep research and
evaluation of the risks and proper detailed performance management to create an
army that will stand and overcome that issue.

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References
Bush, T., 2020. PEST Analysis of Coronavirus: Pandemic’s 9 Impacts to World - PESTLE ANALYSIS. [Online]
Available at: https://pestleanalysis.com/coronavirus-pest-analysis/amp/#Government_scrutiny
[Accessed 4 1 2021].

CIDP, 2020. PESTLE analysis. [Online]

Available at: https://www.cipd.co.uk/knowledge/strategy/organisational-development/pestle-analysis-
factsheet#:~:text=A%20PESTLE%20analysis%20is%20a,an%20organisation%20from%20the%20outside.
[Accessed 3 1 2021].

Merck, 2019. Merck Learning & Development. [Online]

Available at: https://www.msdresponsibility.com/employees/learning-development/
[Accessed 3 1 2021].

Merck, 2020. Merck’s SARS-CoV-2/COVID-19 Research Efforts: Timeline. [Online]

Available at:
https://www.merck.com/wp-content/uploads/sites/5/2020/10/MRK_Timeline_COVID_D08_VF.pdf
[Accessed 4 1 2021].

Merck, 2020. Merck-About our company. [Online]

Available at: https://www.merck.com/company-overview/
[Accessed 3 1 2021].

Merck, 2020. MSD- Our Company - Our History. [Online]

Available at: https://www.msd.com/company-overview/history/#:~:text=Founding-,Merck
%20%26%20Co.%2C%20Inc.,of%20the%20U.S.%20and%20Canada.
[Accessed 3 1 2021].

Merck, 2020. Research & products > COVID-19. [Online]

Available at: https://www.merck.com/research-and-products/covid-19/
[Accessed 4 1 2021].

Nayyereh Ayati, P. S. &. S. N., 2020. Short and long term impacts of COVID-19 on the pharmaceutical
sector -springer link. [Online]
Available at: https://link.springer.com/article/10.1007/s40199-020-00358-5
[Accessed 4 1 2021].

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WorldBank, T., 2020. The Global Economic Outlook During the COVID-19 Pandemic: A Changed World -
The World Bank. [Online]
Available at: https://www.worldbank.org/en/news/feature/2020/06/08/the-global-economic-outlook-
during-the-covid-19-pandemic-a-changed-world
[Accessed 3 1 2021].

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