Pfizer-Strategic Management Case Study

Company Description
As a top company in the Pharmaceuticals industry Pfizer specialize in helping people improve
their health by discovering and developing medicines.

Pfizer Slogan
The advertising slogan, or business slogan most associated with Pfizer, is:

"Pfizer Quality."

Pfizer Mission Statement and/or Vision Statement

Mission Statements and Vision Statements are written for customers and employees of
corporations. A Mission Statement can be defined as a sentence or short paragraph written by a
company or business which reflects its core purpose, identity, values and principle business aims.
The definition for a Vision Statement is a sentence or short paragraph providing a broad,
aspirational image of the future.

Pfizer Mission Statement:

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

Pfizer Vision

At Pfizer, we're inspired by a single goal: your health. That's why we're dedicated to developing
new, safe medicines to prevent and treat the world's most serious diseases. And why we are
making them available to the people who need them most. We believe that from progress comes
hope and the promise of a healthier world.

Note:

 Pfizer is a Top Fortune 500 Company

 Pfizer SWOT Analysis:

Strengths

 Strong sales and marketing infrastructure

 Revived blockbuster credentials in recent years - Lyrica, Sutent and Chantix/Champix
 Strong R&D departments
 R&D innovation with a broad therapeutic coverage
 Marketing strength in major geographical and therapeutic areas
 Existing Patent protection for a number of years on key products

Weaknesses

 Drought in blockbuster launches between

 1999 and 2004 (masked by M&A activity)
 Entrenchment in low growth therapy area
 markets such as CV and CNS
 Very limited penetration of biologics market
 Discontinuation of products in the latter stages of development
 Co-marketing agreements can limit Pfizer's global presence

Threats

 Restructuring strategy designed to cut costs and create a leaner company

 Funding available to facilitate product/company
 Acquisitions and in-licensing/co- development opportunities
 Biologic market expansion
 Decreasing development time through favorable R&D collaborations and internal efforts
 Emergence of integrated global markets and globalisation for new products
 Co-marketing agreements with companies wishing to capitalize on Pfizer's marketing Strengths,
providing Pfizer with strong products and therefore revenue growth

Oppurtunities

 Considerable exposure to generic competition, focal point of which is Lipitor, due to lose patent
exclusivity in 2011
 Further large scale M&A activity could further decline Pfizer's profitability
 Increased competition for core products like Viagra as its high cost encourages use of cheaper
alternative treatments
 An increase in the number of safety issues surrounding Viagra
 Competition from products similar to Pfizer's in R&D that reach the market close to or before
Pfizer's products
 The new economic potential of emergent China, India and competition in diverse regional
markets.
Pfizers Position in the Global Pharmaceutical industry:

Global Pharmaceutical Industry

Industry: Pharmaceuticals
Rank Company 500 Revenues ($
rank millions)
1 Johnson & Johnson 112 53,324.0
2 Pfizer 115 52,415.0
3 GlaxoSmithKline 147 42,730.6
4 Novartis 168 37,020.0
5 Sanofi-Aventis 169 36,998.4
6 Roche Group 188 34,702.8
7 AstraZeneca 252 26,475.0
8 Merck 308 22,636.0
9 Abbott Laboratories 312 22,476.3
10 Wyeth 346 20,350.7
11 Bristol-Myers Squibb 406 17,914.0
12 Eli Lilly 481 15,691.0

Pfizer’s New Growth Strategy

The growth strategies include optimizing the company's patent-protected portfolio; generating
revenue from established products; accelerating growth in emerging markets; focusing on
continuous improvement and innovation; and investing in complementary businesses.
   
Throughout this year and the next, the company anticipates a number of medicines progressing
from Phase II to Phase III, including a total of 15 to 20 Phase III starts by the end of 2009 in
disease areas ranging from cancer, to diabetes, to pain. The company plans to increase Phase III
programs by 50 to 75% to 24 –28; with 15-20 regulatory submissions between 2010 and 2012.
   
Pfizer's R&D has focused its resources on "high-value" disease areas including: oncology, pain,
diabetes/obesity, immunology/inflammation, schizophrenia and Alzheimer’s disease. The
company is accelerating clinical development on 20 programs in disease areas such as arthritis,
cancer, pain and diabetes and is ending work on 24 programs in order to reinvest in these high-
value areas. In 2007, Pfizer supplemented its internal R&D efforts with seven clinical candidates,
including four biologics in prioritized disease areas. The company has expanded its early stage
product investment strategy, including the establishment of the Biotherapeutics and
Bioinnovation Center (BBC) based in CA. Pfizer currently has 26 biologics in 8 therapeutic
areas.
   
With respect to opportunities for global growth, Pfizer highlighted new commercial models that
take advantage of its existing medicines and its global R&D, manufacturing, sales and
marketing. The company will continue to focus on delivering revenue from patent-protected
medicines, seven of which are market leaders in their disease areas. Revenues from certain in-
line medicines including Geodon, Xalatan, Zyvox, and Vfend are growing at double-digit rates,
and revenues from new medicines Chantix, Lyrica and Sutent more than doubled to $3.3 billion
in 2007, versus $1.5 billion in 2006.
   
The company is establishing a new business unit focused on oncology, which will allow the
company to expedite launches of oncology agents, and to focus research efforts on cancers
common in Asia, including liver, esophagus and nasopharynx.
   
Pfizer also announced plans to capture greater revenue in emerging markets in Latin America,
Eastern Europe and Asia. For example in Asia, the company plans to expand operations in China
from 110 cities to more than 650 cities, growing established products and launching new
products.
   
The company recently formed an Established Products Business Unit, with the goal of achieving
double-digit growth in the global market for established medicines. The company expects to do
this through product enhancements and reformulations, pursuing new indications, and
intensifying late-stage lifecycle plans. The newly formed unit will execute growth strategies
tailored to the needs of markets such as China, India, Brazil and Russia, branded traditional
markets such as Japan, Western Europe and South Korea, and intellectual-property-driven
markets such as the U.S. and Canada.  
   
“By pursuing growth strategies in the right geographies, with the right products and business
models, we will drive change, seize opportunities and create value for customers,” said Ian Read,
president of Worldwide Pharmaceutical Operations. “We are meaningfully diversifying our risk,
which will be a significant advantage to us as we compete in this fast-changing marketplace.”
   
The company's FY08 guidance includes revenues ranging from $47 to $49 billion and adjusted
R&D expenses ranging from $7.3 to $7.6 billion. The company is creating a lower, more flexible
cost base to align with revenues by taking on certain cost management initiatives, such as
increasing outsourced manufacturing and further reducing its global real estate footprint.
   

Pfizer's strategy is good medicine

To get to the top, you sometimes have to follow more than one path.

Pfizer Inc. has deftly followed several paths to the pinnacle of the world's pharmaceutical
market: acquiring leading competitors, developing blockbuster products, taking advantage of
favorable regulations (often after lobbying for them). Packaging has been an indispensable part
of Pfizer's journey. That's why Food & Drug Packaging has named Pfizer its 2003 Drug
Packager of the Year.

Pfizer now markets eight of the world's top 25 medicines, including impotence medication
Viagra, cholesterol reducer Lipitor (the world's best-selling medicine), antidepressant Zoloft and
pain medication Celebrex. More than a dozen Pfizer medications are at the top of their respective
therapeutic categories.

Pfizer also has a huge chunk of the over-the-counter (OTC) market, including popular allergy
medications Benadryl and Sudafed, as well as a substantial business in veterinary medicine.

Rx and OTC

Like most pharmaceutical companies, Pfizer's business is divided between prescription products
and what it calls "consumer health care" products. The latter includes over-the-counter (OTC)
medications like Sudafed and items that are not normally thought of as medicine, such as
Listerine mouthwash.

As with any other products, beating the competition to market is a priority. But the time window
differs dramatically between OTC and prescription medication.

Getting ahead of competitors "means one thing for a pharmaceutical product, where the
development timeline tends to be in years, and another thing for a consumer health care product,
where the timeline tends to be in months," Hollander says.

Role of Acquisitions:

Acquisitions have played a vital role in Pfizer's rise to the top. The 2000 takeover of Warner-
Lambert Co. and last spring's purchase of Pharmacia Corp., for a combined $150 billion, brought
some heavy-duty moneymakers into the Pfizer stable. These include Warner-Lambert's
cholesterol-cutter Lipitor--the world's best-selling medicine--and Pharmacia's pain reducer
Celebrex.

Melding acquired companies into the existing operation always is a challenge, says Nat
Ricciardi, vice president for Pfizer Global Manufacturing.

"Obviously when you combine various large pharmaceutical companies you're going to have
differences in the way you operate from plant to plant, and you're going to have opportunities to
combine similar functions and facilities," Ricciardi says. "Our first order of business has been to
establish consistency across Pfizer Global Manufacturing and to identify opportunities for
synergies. This is a very deliberate process, by the way, that will take us several years to
complete."
Pfizer’s- India strategy:

Of the 70 emerging market countries that Pfizer Inc. operates in, India is one of its priority
markets

The decision by drug maker Pfizer Ltd to sell branded generic drugs in India is part of its
parent’s strategy to focus on emerging markets.

All big pharmaceutical firms—just like other big firms—are focusing on newer markets for
growth. Developed markets are large and important but have not been able to deliver. Of the 70
emerging market countries that Pfizer Inc. operates in, India is one of its priority markets.

Pfizer Inc.’s current thinking for emerging markets is driven by a new business model, which
talks about a strong local presence, faster responses, addressing the lower end of the market, and
developing medicines specifically for emerging markets. This is as opposed to developing
medicines for the US and EU and then seeding them in emerging markets. It will follow a
regional hub approach, rolling out successful products across the region. The strategy reads
similar to that of consumer firms such as Hindustan Unilever Ltd and Nestle India Ltd,
addressing local markets using local strategies.

Branded generics is a sound strategy for India. Multinational pharmaceutical firms have lagged
Indian companies in growth. In the year ended December, India’s pharmaceutical market grew
by around 10%, according to ORG IMS Research Pvt. Ltd. Indian companies grew by 12%,
more than twice the rate of their multinational rivals. Pfizer India did quite well, with sales
growing by 12%, after excluding sales from products sold to Johnson and Johnson.

Launching generic products is only one part of Pfizer Inc’s strategy. It will also pursue
acquisitions and alliances. Pfizer has entered into alliances with Aurobindo Pharma Ltd for
supply of around 60 generic drugs for sale in emerging markets. Pfizer India expects the Indian
pharmaceutical market to grow by 11-12% and reach $20 billion (Rs97,000 crore) by 2015. In
the current fiscal year to March, Pfizer has been growing faster than the market. Its entry into the
generics market will drive its growth rate further, as its generics product portfolio becomes
bigger and market penetration grows.

On the flip side, there will be some moderation in margins, as the domestic market for generic
products is very competitive. Profitability improvements would come from a higher share of
products that have patent protection. Pfizer India can rapidly grow share in the generics market,
if it wants to, to get the scale advantage. It has adequate firepower, with Rs540 crore cash in
hand as on November and no debt.