Henry Hou's Profile
Procurement quality control issues should not be hard to fix. What GNC did poorly was more of the crisis PR compared with other retailers. (Bodybuilding.com also carried USPlab products but was not so badly impacted).
I think GNC’s issues more stemmed from its business model, e.g. the reliance on brick and mortar shops. One thing that makes a brick-and-mortar shop more appealing to a online shop is the trialability of its products. You are able to touch and try, and probably learn some tips from shopping assistants about the products, before purchase. Unfortunately, in GNC’s case, there is not much trainability involving supplements, as supplement facts and educating materials can be easily posted online and more professional than many SAs. Meanwhile, this business model also limits its profitability therefore ability to compete with online shops.
It is time for GNC to adapt to e-commerce. This is probably its last chance.
Thanks Gome for the introduction on Celgene’s business model.
I think one common practice among leading biopharmaceutical companies is specialization, be it Celgene, Biogen or Regeneron. As you mentioned, such specialization will make it easier to maintain the leading position in technology and minimize salesforce investment. Meanwhile, the dominance in certain field can also improve the companies’ pricing power, in this case, Gilead’s Sovaldi has been a good example.
My only concern about this strategy is how they are prepared for potential impacts on revenue from competing new drugs in the future, since the chunk of which are from narrow markets.