Pfizer Case Study

1. Abstract

In August 2005, Canada advised users of the erectile dysfunction drugs Viagra, Cialis, and Levitra to seek “immediate medical attention” if they experience sudden vision loss or other vision problems when taking these drugs. A month earlier, the US Food and Drug Administration approved new labeling to warn men about possible blindness from Pfizer Inc.’s Viagra.

Pfizar has come long way since its humble beginnings in 1849 when two cousins, Charles Pfizer and Charles Erhardt, started Charles Pfizer & Company in Brooklyn, New York. In 2000, the company merges with Warner-Lambert and became a member of the UN Global Compact, an international network that promotes good corporate citizenship. In 2003, Pfizer acquired Pharmacia Corporation that propelled it to new heights in the path to seek growth and to lead product innovation.

Pfizer operates in 3 main segments: human health, consumer healthcare and animal health. The human health segment, also known as its Pharmaceutical division, is Pfizer’s core business. The consumer healthcare segment, among others, includes over-the-counter self-medication from oral care and upper respiratory health to tobacco dependence. Pfizer’s animal health division offers medicines for livestock and pets. The company also manufactures empty gelatin capsules and engages in producing contract and bulk pharmaceutical/chemical, which classifies under “Corporate/Other” business. This business segment is the smallest of all, with less than 2% of total sales.

In 2004, of the $52,526 million in total sales, $22,977 million (43.8%) was generated outside the US. Also, Pfizer’s overseas sales represented faster growth opportunities. Total stockholder’s equity more than tripled in 2004 to $68,187 million. However, Pfizer’s long term debt situation is not good. Pfizer’s stock has been losing value over the past five years, and most recently, its stock price was below S&P index.

Pfizer faces high competition in all its business segments. Its three direct competitors are: Bayer AG, Merck & Co., and Novartis AG. First, Bayer AG, a German company, offers pharmaceuticals, diagnostics, and healthcare products; agricultural products, and polymers. Merck & Co, also a US company, engages in the discovery, development, manufacture, and marketing of a range of products to improve human and animal health. Lastly, Novartis AG, a Swiss company, engages in the research, development, manufacture, and marketing of pharmaceutical products worldwide.

The rapid growth of managed care organizations (MCOs) in the US has altered marketing and competitive dynamics in the industry. Consolidation taking place in the healthcare industry increases the purchasing power of MCOs and tends to shift bargaining power in their favor.

Generic drugs pose a major competitive challenge to US pharmaceutical firms. Further, Pfizer experiences a rapid loss of sales as soon as patents expire. The FDA also exempts generic pharmaceutical manufacturers from the rigorous and time-consuming clinical trials.

While Pfizer makes significant investment in R&D, delays caused by regulations, the unsuccessful completion of clinical trials, litigations and more reduce the potential recovery of and return on such investments. What is the best strategy for Pfizer to maintain its strong financial position and limit the threat of generic drugs?

1. Vision and Mission Statement

Vision

We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live.

**(source: http://www.pfizer.co.uk/template5.asp?pageid=29)

• Pfizer’s vision is clear and it states the company’s general purpose. Further, the company’s vision also states the it shows importance to its clients, colleagues, investors, and communities. It is very evident that Pfizer vision is apparent and  a good cornerstone of the whole organization.

Mission

We dedicate ourselves to humanity's quest for longer, healthier, happier lives through innovation in pharmaceutical, consumer, and animal health products. To achieve this purpose and mission, Pfizer affirm the values of Integrity, Leadership, Innovation, Performance, Teamwork, Customer Focus, Respect for People and Community.

**(source: http://wiki.answers.com/Q/What_is_Pfizer_mission_statement#ixzz1LvyIRrme)

• Pfizer’s mission indicates the following components: product, self-concept, customers, philosophy, concern for employees and concern for public image.  However, the company’s mission does not indicate its market, technology,  and concern for survival, growth and profitability.

1. External Audit

Opportunities

1. Rapid growth of Managed Care Organizations (MCO)
2. Increase in the purchasing power of MCOs.
3. Acquisitions and in-licensing/co-development opportunities
4. Expansion into biologics market
5. Funding available to facilitate product/company
6. Marketing agreements with the leading companies
7. Medicaid requires pharmacist to offer generic brands instead of brand-name drugs.

Threats

1. Unpredictable currency fluctuations.
2. Threat on litigation and product recalls.
3. Threat on potential civil and criminal sanctions.
4. Increasing number of direct competitors in the human health business.
5. Adverse negative side-effects of products.
6. Increasing number of competition from generic drugs.
7. Foreign assets subjected to political risk.
8. Threat of expropriation and terrorism.
9. Expiration of patents leads to loss of sales.

1. Competitive Profile Matrix