Strategic Analysis for Pfizer Incorporated
Industry Analysis
Healthcare has been the concern of many great nations since ancient times. Plagues and illnesses have ravaged lands, causing great catastrophes and deaths. Famine and diseases have killed more people around the world than any war fought by any great empire or nation in history put together. Since these things tend to be more and more an important matter than anything else, the different countries started to take a better look at the situations concerning health. One of the movements that were advocated in the 1800’s was “Clean Living” movement. This was concerned with the control of alcohol and tobacco use and female’s reproductive health.
The industry of pharmaceutical products in the international context is in the verge of change. Constant failure of the product, expiries, and constant increase of competition has compelled many global pharmaceutical companies to cut of the cost of production but of course, kept the product at a certain degree of quality.
Healthcare achieved one of its greatest heights in the year 1849, as Pfizer Inc. was founded. Charles Pfizer and his cousin Charles Ehrhardt founded Pfizer in order to give the masses better and easier access to quality medicine and healthcare. They founded the company in a redbrick building in Brooklyn, New York. In the dawning of a new century, Pfizer pioneered the mass production of citric acid from sugar using the aid of mold fermentation. In the 1950’s, they continued funding on research intent on harboring further success for the company. And so they did. The year 2000 saw the merge of Pfizer to Warner-Lambert and Pharmacia to create a faster and more efficient pharmaceutical company.
In their company statement:
“Pfizer Inc, founded in 1849, is dedicated to better health and greater access to healthcare for people and their valued animals. Our purpose is helping people live longer, healthier, happier lives. Our route to that purpose is through discovering and developing breakthrough medicines; providing information on prevention, wellness, and treatment; consistent high-quality manufacturing of medicines, consumer products; and global leadership in corporate responsibility. Every day we help 38 million patients, employ more than 100,000 colleagues, utilize the skills of more than 12,000 medical researchers, and work in partnership with governments, individuals, and other payers for healthcare to treat and prevent illnesses—adding both years to life, and life to years.”
Pfizer is the leading pharmaceutical company in the world. It caters to human consumers, as well as animals. Pfizer has two main product lines:
(1) human and animal pharmaceuticals; and, (2) consumer products.
Pharmaceuticals (Around 81% estimated revenues as of 2001 against the 96% estimated revenues in 1996)
“* Human Pharmaceuticals (77% of revenue) include such products as: Lipitor (an anti-cholesterol drug representing 17% of total revenue); Norvasc (hypertension and angina, 11 %); Zoloft (anti-depression, 7%); Zithromax (antibiotic, 5%); Viagra (erectile dysfunction, 5%). These, and three other leading drugs, represent nearly three-quarters of revenues from human pharmaceuticals.
* Animal Pharmaceuticals (4% of revenue) includes anti-inflammatoties, anti-parasitics, vaccines, and anti-infectives for `companion animals’ and livestock.
Consumer products (19% vs. 4%) Pfizer’s consumer products include highly-recognized brands such as Listerine (mouthwash), Benadryl (antihistamine), Zantac (anti-heartburn), Rolaids (antacid), Benylin (cough products), Efferdent (denture cleanser), and Neosporin (antibiotic ointment).
The company also sells confectionery products like Halls, Dentyne, Trident, Certs, and Clorets.” ( 2002).
Pfizer products are mostly sold in the following areas: United States (61 %
of revenues); Europe (20%); Japan (7%); and, other countries (12%).(Canadian
Shareowner Magazine Inc., 2002).
Strategic Analysis
Competition, typically the most powerful external force, is increased by the advent of globalization. The number of companies and the number of countries where these companies operate and the way governments are dealing with the impacts of globalization is accelerating. The interaction of changes in government policy and business innovation has actually made globalization even faster. If a company does not become a global, it would simply be shut out of new markets. The reasons for the turmoil are numerous: a sputtering economy, increased global competition, the implementation of new technologies that displace jobs, the deregulation of certain industries, and the general consolidation of other industries, such as banking and health care. Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. The industry is likewise linked closely to the policies of governments, the earnings of banks. The industry’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear.
A competitive and complex make-up would thoroughly describe the structure of the pharmaceutical industry of today. Many companies are coming out of nowhere and are competing with some of the world’s oldest and most trusted pharmaceutical companies. The demand for high quality medicine never lessens. And so, competition is always an item. Industries strive hard to make medicine which is much more effective and cost-efficient than the rest. But how can one address and meet the demands of people? With the use of marketing strategies. A marketing strategy, as we can clearly understand, is a way of using all the resources you have in order to gain a better marketing opportunity. Though, a person may have limited financial, or whatever resources that he has limited supply of, he can still be able to pull off a great advantage in the marketing world through good marketing strategy. A great marketing strategy is the foundation of a great marketing plan. And just what is a marketing plan? It is an overall plan on how the producer is going to tackle the different components of selling his product. A marketing plan often entails the help of a great marketing strategy. For example, “Use a low cost product to attract consumers. Once our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer’s interaction with the low-cost product or service.” (2007)
Pfizer Inc. is in the verge of the 21st century, with it, a myriad of competition that is also out to please the clients with effective products but for less. Though Pfizer has outlasted more than a century of competition and major blows to its production, it may still be of great importance to assess the environment into which Pfizer is currently included.
There are more than a hundred pharmaceutical companies in the United States alone, and over 42 large international pharmaceutical companies. Pfizer is one of the largest pharmaceutical companies in the world and has extended its reach to more than a hundred countries around the globe. It was a good move for Pfizer to establish international ties with many countries since it may strengthen their stronghold, not only in that country but globally as well, increasing its edge against other pharmaceutical giants.
Also, establishing stronghold in other countries could potentially mean new breed of clients. Also, this could help in their move to create better and higher quality medicines.
Furthermore, this can help establish and strengthen economic and international ties. By becoming a bridge between two countries, one can help bring understanding between the two and eventually establish ties that may be beneficial to both countries.
Moreover, one may be able to find more potential business partners in exporting to other countries. One may find a business partner that is willing to cater to and audience of Pfizer’s pharmaceutical products from another country.
According to their statement, citizenship defines their part in the international communities; therefore, it also defines their conduct, so as to help make the world better. In this statement, one can conclude that being part of an international community, for Pfizer, may help not only bring in profit but also help the world in Pfizer’s own pace and way.
Environmental influences, such as diseases and illnesses form the need for pharmaceutical companies like Pfizer. Having such needs may help in strengthening the company. The constant demand for products that the company produces may increase their production rate, also their potential income. As mentioned in the theory of Supply and Demand, there is a relationship between the increase or decrease for a product and the increase and decrease for the supply of the certain good. It also includes the part played by the price.
Other environmental influences, such as competition, may fuel the company’s desire to create more and better products that could well determine their location and standing in the global market. Increase in the number of competitors for the same line of products may mean that there would be divided and unequal attention among the audience and consumers. Therefore, the company must either strive hard to create better and more effective and efficient products, or to lessen the value of each product to capture the consumer’s attention or to do both.
Environmental Scanning
Environmental scanning is a method in the area of management wherein different management teams take into consideration environmental factors that may give them better competitive edge than other companies. There are generally three ways to conduct environmental scanning; we shall employ the factors used in scanning the Macroenvironment.
Competitor Analysis
For this area in environmental scanning, we shall evaluate the four (4) potential and currents competitors of Pfizer incorporated.
Ø Bristol-Myers Squibb- a pharmaceutical company based in the United States. It produces prescription drugs, over-the-counter (OTC) drugs and products that involve therapeutic aspects. It is also the mother company of Mead-Johnson, a company that specializes in the manufacture of baby formulas and other infant and mother care products. Its healthcare revenue on 2004 (USD Millions) summed up to 47,348; its healthcare R&D in 2004 (USD millions) summed up to 5,203; its Net income/ loss in 2004 (USD millions) summed up to 8,509 while the number of its employees sum to 109,900. It ranks only second to Pfizer Inc. in this survey.
Ø GlaxoSmithKline- a pharmaceutical company based in the United Kingdom, second to Pfizer, which specializes in many products. This may include the following: anti-infectives, central nervous system (CNS), and respiratory, gastro-intestinal/metabolic, oncology and vaccines products. It is a research based company which is the product of constant change and mergers. Its healthcare revenue on 2004 (USD Millions) summed up to 37,318; its healthcare R&D in 2004 (USD millions) summed up to 5,204; its Net income/ loss in 2004 (USD millions) summed up to 7,886 while the number of its employees sum to 100,619.
Ø Sanofi-Aventis- a company based in France which specializes in the field of cardiovascular, thrombosis, oncology, diabetes, central nervous system, internal medicine and vaccines (with its subsidiary Sanofi-Pasteur). It also produces prescription and OTC products. It is a product from the merger between Sanofi-Synthélabo and Aventis in 2004. Its healthcare revenue on 2004 (USD Millions) summed up to 31,615; its healthcare R&D in 2004 (USD millions) summed up to 4, 927; its Net income/ loss in 2004 (USD millions) summed up to 6,526 while the number of its employees sum to 96, 439.
Ø Novartis- a pharmaceutical company based in Switzerland. It produces products such as dietary fiber supplements, Benefiber and the antifungal preparation Lamisil. It was a product of a merger between Ciba-Geigy and Sandoz Laboratories, both with a long history in their itineraries. Its healthcare revenue on 2004 (USD Millions) summed up to 28,247; its healthcare R&D in 2004 (USD millions) summed up to 4.207; its Net income/ loss in 2004 (USD millions) summed up to 5,767 while the number of its employees sum to 81,392. (2007).
According to, there are six ways to react to an issue. These are:
Ø opposition strategy – try to influence the environmental forces so as to negate their impact – this is only successful where you have some control over the environmental variable in question
Ø adaptation strategy – adapt your marketing plan to the new environmental conditions
Ø offensive strategy – try to turn the new influence into an advantage – quick response can give you a competitive advantage
Ø redeployment strategy – redeploy your assets into another industry
Ø contingency strategies – determine a broad range of possible reactions – find substitutes
Ø passive strategy – no response – study the situation further (2007).
In the above competitor profiling, we can conclude that Pfizer has an edge over all these competitors since it ranks first in this survey and remains to be first.
Consumer Analysis
In marketing, there needs to be effective lines of communication
between both the company and its customers. Pfizer does this by listening to what customers need and what they think about their products/services, this is done via several different methods, such as postal questionnaires and on line surveys, the information obtained enables Pfizer to knowing what the customers want. It then communicates to the customer through advertising, sales promotions etc, aiming at a specific target market, giving consumers the information on buying their products.
But sometimes there can be a problem with making sure effective
communication takes place, for example other consumer’s opinions, and critics and reviewers etc. Companies must also be aware that any impartial advice given to customers by the media or other agencies can support or damage its own marketing communications.
Many types of analysis falls into this category, all employ the use of surveys. Since time and the audience is a luxury that we do not have, we shall move on to the next aspect of environmental scanning which are product innovations.
Product innovations
Pfizer’s newest products are very well received by the needing masses. An example of which is the product Spiriva. Spiriva is a product which treats chronic obstructive pulmonary disease. It is inhaled once a day.
PEST Analysis
The pharmaceutical industry must always be on the move, always on the edge and always first in creating innovations and products that help extend the life of mankind. The industry faces a need for accelerated investment, in order to deploy the new technologies, for pressing geo-political, economic, environmental and societal reasons.
Political. Observers will see a continuing progression in the ruinous steps which have forced the industry into a socio-politico-economic corner. Whether this is related to flat demand or to the industry’s creation of an ever-wider range of products that many buyers seem to care little about, there is a problem. The industry is likewise linked closely to the policies of governments, the earnings of banks. Little wonder then that so many emerging countries are keen to develop a sector that deals with the regulation of pharmaceutical products or that there is such a political pressure to protect it in the developed countries. The world’s pharmaceutical industry is currently dominated by little more than a handful of firms, each wielding colossal financial, emotional and political power. The industry’s approach to dealing with political institutions has not always been brilliant. It tends to be good on technical issues, although it has not always fully presented the longer-term options, in order to make the choices and their implications clear.
In the aspect of Pfizer Inc., it has dealt with political factors rather brilliantly. It continues to provide very satisfactory benefits and wages for its 115,000 employees. Pfizer continues to cater to the needs of their employees and their families. They provide benefits and fitting wages and overtime.
Also, Pfizer continues to recognize its responsibility to the government. As of 2004, Pfizer paid 2,665 (million) as tax.
Economic. . For much of the developed world, and increasingly for the developing world, the pharmaceutical industry is a pillar industry, a flag of economic progress. Without the existence of the pharmaceutical industry, it would be quite impossible to aid the existence of other sectors. One must remember that the aspect covered by the pharmaceutical industry is something not to be toyed with. It includes the wellbeing of all, thus, no other sector would continue to exist if this sector is annihilated from the whole of the economic world. The pharmaceutical industry has been a core industry, a unique economic phenomenon, which has dominated not only the twentieth century, but also the centuries even before modern civilization began. However, the industry now suffers from a series of structural schisms and has become riddled with contradictions and economic discontinuities. For the capital markets and the finance sector, it has lost a lot of its significance, as a result of ever declining profits and stagnant sales. The proliferation of products means that it has become hopelessly wasteful of economic resources. While all these and more sound like a very gloomy assessment of such a vast economic phenomenon, the industry is not in the end despondent. A different future is possible for the industry, a highly desirable one.
As for Pfizer Inc., Its investment in different countries can trigger different outcomes for it. The economy usually depends on stability of the economy itself and currency stability. But if the country chosen by Pfizer to host its production has minimal salary demanding workforce, it would be a great choice.
Social. The world’s pharmaceutical industry affects the society as a whole. It employs millions of people directly, tens of millions indirectly. Its products have transformed society, bringing undreamed-of levels of healing and continuous renewal of wellbeing, changing the ways people live and work. The social value of the elevated sense of health and cure that this industry brings involves the value of the people being able to live a healthier lifestyle and that those on the brink of illnesses or even death can be nursed back to health, among many others. For most of its existence the pharmaceutical industry has been a model of social discipline and control and it is not just that the pharmaceutical sector offers a ‘pillar’ of something else. There are, on the other hand, particular social issues to address in many developing countries, often those that are the result of an undertone of religious faith. The pharmaceutical has the role to play in helping develop the impairment of such countries and it can be achieved at an acceptable social cost of the country is prepared to learn the necessary lessons from those who have traveled this route before it, and to make the necessary investments.
In the context of Pfizer, the world is in continuous need of quality medicines and healthcare products. Though the world contains varied audiences, it is impossible that none would like to live longer or healthier. No matter what concept or religion they believe, a community in need will always seek out the help of medicine.
Technological. The pharmaceutical industry works on a scale so awesome and has an influence so vast that it is often difficult to see. The level and diversity of technologies that it must deploy are increasing, which imposes both new investment burdens and new uncertainties and risks. Roughly a million new products are created around the world each week – they are easily the most complex products of their kind to be mass-produced in such volumes. The industry uses manufacturing technology that is the cutting edge of science. But still, the potential for developing coordination skills, intellectual capabilities and emotional sensitivities through electronic technologies remain far from fully exploited. There are numerous additional near-term technological opportunities to adapt the automobile to changing energy availability. The possibilities suggest that pharmaceutical industry is unexpectedly robust and provides a powerful defence against energy starvation even if the real price of energy climbs steadily during the next couple of decades.
Pfizer is always on the edge; always on the verge of creating new products with the intent to help the debilitating sickness that mankind succumbs to everyday. Due to the advent of new technology, it will be easier to create quality products which would aid the continuous search for immunity to diseases, even immortality. The aid of technology has brought new hope to people around the world who are down with sickness and disease.
SWOT Analysis
STRENGTHS
Ø Number one, largest pharmaceutical company in the world- Due to the fact that it is the largest and one of the most successful brands in the world, this contributes greatly to its income and revenues.
Ø Popularity of its products- Since the products are popular, we can conclude that this may be one of the reasons that contribute to its spot among the pharmaceutical giants of the world.
Ø Reputation of quality
WEAKNESSES
Ø Due to being the largest pharmaceutical company in the world, it may have too many branches and many of which may not be as supervised as others.
Ø It may sacrifice the quality of its products due to the high demand. It may resort to cost-cutting and therefore, may lose the initial quality of its popular products.
OPPORTUNITIES
Ø To merge or take over potentially profitable companies in small countries.
Ø Establish a stronghold in as many countries as possible.
Ø Outnumber competitor’s production and invest more on media advertisement.
THREATS
Ø Competitors. Having many competitors for a certain product may lessen the chances of having better reception for that product.
Ø Unstable economy. An investment to a country with an unstable economy may lessen the chance of a good stronghold in that country.
As of the moment, the company has a wide range of products, from OTC drugs to prescription drugs. Since it caters to a variety of audiences around the world, it has ensured for itself a place as the top pharmaceutical company.
Company Profit
As of 2006, the company’s Net income has been , 337 (million). The amount can be located in the company’s financial statement review for the year 2006. In the financial statement:
“Performance-based contracts are with managed care customers, including health maintenance organizations and pharmacy benefit managers, who receive rebates based on the achievement of contracted performance terms for products. Rebates are product specific and, therefore, for any given year are impacted by the mix
of products sold. Chargebacks (primarily reimbursements to wholesalers for honoring contracted prices to third parties) reduced revenues by .4 billion in 2006 and .3 billion in both 2005 and 2004. In addition, chargebacks were impacted by the launch of certain generic products in 2006, 2005 and 2004 by our Greenstone subsidiary.”
According to the historical Revenue Profile, the increase of revenue for Pfizer has been about 17% on average per year. In the study conducted, the revenues for Pfizer shot up to 26%, but on te initial 9 months of 2001, revenues only amounted to 9%. But estimated revenues for 2001 were about 32 billion dollars, about 8% more than the year 2000.
In my opinion, the aspect of the income of the company should be greatly highlighted since it deals much with how the company would look like after a long time. The revenues of the company should be taken into consideration since this will form a part in the development of the company.
In the next five years, this aspect of the company, hopefully, should be on the verge of continuous increase. According to the previous financial statements of the company, the trend of the income should continually increase, except maybe for a few minor, uncontrollable setbacks. The company’s income should continually be monitored and if in any case the rates should go down. If the case is such, the management should look into the matter right away and should identify the key factors that made the trend fluctuate.
In the case of Pfizer, in five years time, the company income should continue to rise. And they should also be able to overcome setbacks.
Stakeholders
“Stakeholders are people or groups who affect, or are affected by, Pfizer’s business activities. Our relationship with them is at the heart of our citizenship because they define what it means for Pfizer to create value. They are the ones who will determine when Pfizer fulfills its mission to become the world’s most valued company to stakeholders.” ( 2007).
According to Pfizer, citizenship defines their part in the economic world. The company strives to create better services to its customer and its stakeholders. Stakeholders include the following: Our stakeholders include:
• Patients
• Health Care Professionals
• Caregivers
• Governments
• Regulatory Agencies
• Employees and Retirees
• Investors
• Business Partners
• Suppliers
• Academic Institutions
• Multilateral Organizations
• Non-Governmental Organizations
• Media
The company continues to strive to create products that meet the demands of the different stakeholders. Their definition of good corporate citizenship includes listening to, understanding, and responding to the stakeholders about matters with regards to Pfizer’s policies and operations.
According to Pfizer, they would create more value services to their stakeholders with long-term relationship in mind.
Ø First, we will be more intentional about coordinating across Pfizer’s business units to share the learnings from our many local and global partnerships.
Ø Second, we will reach out to more stakeholder groups and be ready to listen with an open ear and open mind.
Ø Third, we will seek partners who are willing to break out of the view that health care access is a “zero-sum” game, where some win while many lose. (2007).
Since the topic is much concerned with the relevance of effective governance to the company’s behavior and performance, it is very wise to include the stakeholder theory in it. Stakeholder Theory is relevant to the topic since it deals mostly with the interest of the shareholders of the company, also including with it the interest of people who are part of the system. Since it helps in directing the company, it is possible that it also helps in giving out positive effects to the company’s welfare. It brings with itself the morality clause, therefore controlling and putting into perspective the behavior of every the organizations included in the system. Also, effective corporate governance is mostly concerned with the efficiency of the firms that are part of the institution.
The Future for the Pharmaceutical Industry
The pharmaceutical industry has been depended upon by other industrial sectors to provide them with means with which to optimize their investment capital because of the transfer of its technology, which basically means that the manufacturing and materials handling processes that revolve around mass medicine and product production will be, in the future, far removed from their original use through consulting engineering firms that undertake to design and equip factories. The tendency for pharmaceutical companies, then, will be to focus on competition that would become more rigorous, giving special attention to profit-gaining activities and concentrating also on arranging for financial, marketing and industrial cooperation among pharmaceutical companies.
The growing pressures of the global economy could result in the profound consolidation of car manufacturer giants. To that end, perhaps the rest of the world should hold its breath in the anticipation of what might transpire in this industry where innovation is first and foremost, the competitive edge.
The pharmaceutical companies should strive to create betters products which seek to continually inspire the need to live for others. Profit should not be the basis for making medicinal and healthcare products, but the health and wellbeing of individuals in need.
In today’s business world, the value and importance of customers is not something that should be set aside by companies. Marketing plans that includes forecasting and budgeting and strategic planning would be incomplete without paying much consideration to the customers. Customers will always be a part of the agenda in any marketing plan of any company. Because of the implications for profitability and growth, customer retention is potentially one of the most powerful weapons that companies can employ in their fight to gain a strategic advantage and survive in today’s ever increasing competitive environment (1998).
The company can strategically implement the enumerated short-term and long-term plans through specific goals and objectives. By identifying all the possible problems arising in the company, an entrepreneur can think of some solutions and in turn boost the morale of their employees to regain their trust for the company, and therefore, maintain the company’s good reputation. An employee’s motivation serves as the key when it comes to his or her performance in a certain business firm or company.
The Future for Pfizer Inc.
The following assessment has been done by the Canadian Shareholder’s Magazine on 2002.
Demographics. Future growth in the demand for Pfizer’s drugs is expected to come from the `demographic bubble’ of aging baby boomers who increasingly require drug treatments.
Patents. As with all drug companies, competition from generic drug manufacturers is a major consideration when patents* expire.
Pipeline. Future growth is also expected to come from Pfizer’s new-product research and development (“R&D”). With an estimated R&D investment of .8 billion in 2001 (15% of revenue) the company expects to continue developing new drugs such as:
1) Geodon (an anti-psychotic drug for treating schizophrenia) to compete with Eli Lilly’s Zyprexa – Geodon has a lower incidence of side effects (in particular, a lower incidence of weight gain); and,
(2) Spiriva which is used to treat chronic obstructive pulmonary disease and which is expected to generate about billion in annual sales after its launch in 2002.
Core Standards. Also, recently announced new guidelines for managing cholesterol levels are expected to potentially double the market for cholesterolreducing drugs.
New Applications. Pfizer also expects to increase sales through product management (e.g. developing new applications for existing drugs). ( 2002).
Though as was mentioned by Pfizer, they should continue to create strong bonds with their consumers. The basis for making quality medicine should be for the greater good, not for greater profit.
“Enterprises are recognizing that stronger and more-enduring customer relationships are critical to long-term profits. Most marketing organizations are at least conceptually well-situated to drive customer centricity, via a more-strategic approach that is focused on delivering value around customers and customer segments. To be effective, however, the marketing function must evolve from focusing on products and transactions into placing more emphasis on customers and relationships that are aligned with enterprise goals and strategies. However, most marketing organizations face several critical challenges: “
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