QuintilesIMS Expansion Strategy in Turkey's Healthcare Market

Introduction

Turkey is a country that offers universal healthcare to its citizens. It is a great place for companies offering services in the healthcare industry to explore and expand. However, there are certain risks that must be identified in order to determine whether a company should invest and open locations there. One such risk is competition. QuintilesIMS is a recently merged company that specializes in data-driven solutions as well as outsourcing services, and seeks to grow its reach internationally. Competitors may seek to provide similar services and push it out of potential roles. For QuintilesIMS to succeed, it must understand Turkey and what it can offer to potential clients.

Turkey is a country that is politically unstable, with decreased regulations concerning the approval process and clinical trials. However, the government is actively seeking investors for their healthcare sector, owing to increased mortality rates and a lack of supportive infrastructure. QuintilesIMS may offer the solutions they need along with investment revenue (Onder, 2016).

This essay examines how QuintilesIMS fares against its competitors along with the strategy the company may need to adopt. A combined strategy approach could prove beneficial, along with the provision of remote services. Data-driven companies are the future of healthcare, and QuintilesIMS could be the best choice for Turkey's healthcare sector.

QuintilesIMS Holdings Inc. is an American multinational company serving both clinical research and health information technologies. Recognized as a Fortune 500 business and the world's largest provider of commercial outsourcing services and biopharmaceutical development, it maintains a network of over fifty thousand employees conducting business in an estimated one hundred countries (QuintilesIMS, 2017). Its revenue as of 2014 stood at $4.2 billion, and its headquarters are in Durham, North Carolina. In addition to being the largest outsourcing provider, it is also the largest contract research organization, focusing mainly on Phase II–IV clinical trials related to analytical and laboratory services.

Company Background and Local Competition

The company's history began in 1982 with founder Dennis Gillings, who incorporated Quintiles Transnational and built it into what it is today. In 1990 the company established Quintiles Ireland and Quintiles Pacific Inc. The following year it established Quintiles GmbH in Germany, with Atlanta, Georgia serving as the base for Quintiles Laboratories Ltd. For $747.5 million, the company purchased Innovex Ltd. of Britain in 1996, and the year after completed a successful secondary stock offering and went public. The company acquired its current name through a merger with IMS Health valued at $17.6 billion, which took effect in October 2016.

As a result of the merger, headquarters are now located not only in Durham but also in Danbury, Connecticut. The megamerger may lead to a potential sale of non-core businesses — including the contract sales business — in a deal estimated at approximately $1 billion. The merger, a growing trend within this segment of industry, may be an attempt to bulk up market share and differentiate. Although the company is dedicated to data and marketing through the IMS Health portion, CEO Aro Bousbib has expressed a desire to identify additional cost savings.

Bell Holding is a local Turkish company with over 75 years in business. Founded in 1940 as a soap producer, the company grew to encompass nine companies and became a multinational business exporting a variety of goods worldwide. In 1955 it began producing aluminum slugs and tubes, and in 1990 it founded INTERKAP, which produces injection-molded plastic caps. A year later it began producing plastic bottles through the founding of STAMPA. In 2007 it partnered with Quintiles Inc. to found INNOVEX, entering the field of commercial services and outsourcing, and also partnered with the English firm REED Global to found REED Consulting. Additional factories were opened in 2012 and 2013. The company's headquarters are in Istanbul, Turkey, and its stated values emphasize honesty and integrity (BellHolding, 2017).

Although Bell Holding has partnered with Quintiles in the past, that partnership predates the merger. Given the multiple changes both companies have undergone in the last decade, they may become competitors should QuintilesIMS move ahead with doing business in Turkey. Bell Holding largely focuses on manufacturing, particularly plastic bottles; however, because of the increasing need for cost savings following the merger, QuintilesIMS may begin attracting customers looking for outsourcing services, creating competitive tension with Bell Holding.

Quest Diagnostics is another Fortune 500 company with international reach, which may pose challenges for QuintilesIMS as it looks to open more laboratories and locations across the globe. However, QuintilesIMS appears well positioned to compete in health information technologies, reporting revenues of $1.9 billion during the first quarter of 2017 from research and development solutions (Henderson, 2017).

The competitive advantages of the new QuintilesIMS are considerable. The first is its ability to generate real commercial value. QuintilesIMS provides customers with consulting services and commercial outsourcing through highly specialized experts who help manage increasingly complex situations. Through clinical development solutions, it helps companies design and execute trials to provide understanding of patient outcomes. It also facilitates product launches by connecting the right products with the right patients (QuintilesIMS, 2017).

Strengths and Weaknesses

The company offers brand strategies designed to optimize product positioning, including demonstrating value to stakeholders through pricing and market access. QuintilesIMS provides due diligence throughout a product's lifecycle, performing precise evaluations of opportunities and assets — a capability it demonstrated through assessments in late 2016 and increased reported revenue in early 2017. It understands the need for comprehensive cost analysis and commercial opportunity assessment.

In addition to assessment and leadership capabilities, QuintilesIMS innovates with technology. It orchestrates success through an assortment of cloud-based technology solutions, which it believes accelerate business model transformation and competitive differentiation. Thanks to these innovations, the company assists in the creation of thousands of real-world studies, clinical trials, and commercial engagements annually, while helping companies and private clients maintain compliance and safety.

The company's weaknesses stem primarily from its megamerger. Although the merger appears profitable, the company must adhere to a new organizational structure and new leadership. CEO Aro Bousbib is positioned to remove aspects of the company deemed unprofitable. The current trend may lead to the removal of certain established services: "Citing people familiar with the matter, the report said that the potential sale falls in line with the company looking to divest some non-core businesses post-merger and that a number of private equity firms are interested in the pickup" (Henderson, 2017).

Selling off certain parts of the company may appear profitable in the short term but could be detrimental in the long run. IMS Health, for instance, became an independent NYSE-listed company in 1998 and extended advisory and consulting services in 2002 through acquiring U.K.-based Cambridge Pharma Consultancy. The direction of the new QuintilesIMS may therefore shift toward consultancy and advisory services — a departure from Quintiles' original focus. As noted in the mergers literature, "After the future of the Enron Corporation was discovered to be disastrous, the potential business liquidity and equity they had acquired within other businesses were forced into serious economic and financial conflict" (Reeves, 2012, p. 20). Companies pursuing mergers must take into consideration the risks of divesting parts of the business and the costs that could accrue should specific processes change.

Quest Diagnostics also serves customers in the healthcare industry, relying mainly on technology to enable growth through innovation. As more clinics and hospitals invest in electronic healthcare systems, Quest may generate increased profit as demand for technology-driven services rises — particularly in countries with lower technology integration, such as Turkey. Furthermore, beyond laboratory services, Quest Diagnostics supports clinical trials, a key area for QuintilesIMS as well. By offering state-of-the-art health information technologies, it can compete directly in Turkey by providing solutions QuintilesIMS may not yet have available (Quest Diagnostics, 2017). Quest Diagnostics has also not undergone any recent mergers, lending it stability and organizational consistency.

Although the healthcare industry represents approximately ten percent of global GDP according to the World Bank, Quest Diagnostics operates medical laboratories and brings in a relatively modest share — again roughly ten percent — within the sector (Frost & Sullivan, 2017). By specializing in a single area, it may easily lose its competitive advantage, particularly if a company like QuintilesIMS offers outsourcing services. As one source notes, "Outsourcing is the long-term contracting of a company's business processes to an outside service provider" (Gloor, 2012, p. 46). If hospitals and clinics seek to reduce costs, they may favor a company like QuintilesIMS that offers outsourcing over the more specialized and potentially more expensive Quest Diagnostics. This represents a key weakness for Quest Diagnostics that QuintilesIMS can exploit should it choose to invest in Turkey.