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AN INTRODUCTION TO PFIZER 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 illnessesadding both years to life, and life to years. Pfizer is a research-based global pharmaceutical company. Pfizer discovers, develops, manufacturers and markets leading prescription medicines for humans and animals, as well as many of the worlds best-known over-the-counter medicines and consumer healthcare products. Pfizer operates through five distinct divisions 1. Pfizer Global Research Development PGRD PGRD is dedicated to drug discovery and to the development of medicines ready for the market. 2. Pfizer Global Manufacturing PGM PGM is the manufacturing and largest division of Pfizer Inc. PGM supports our global manufacturing and distribution of Pfizer products. 3. Pfizer Global Pharmaceuticals PGP PGP markets a wide range of prescription-only medicines and consists of all the commercial departments responsible for supporting the business. 4. Pfizer Animal Health PAH PAH provides some of the most innovative and successful medicines for companion animals and livestock. 5. Pfizer Consumer Health Products Company PCH PCH is responsible for the sales and marketing of all consumer healthcare products, over-the-counter medicines, and other health related and personal care products. Pfizer engages in international business both through their subsidiaries and distributors. The companys headquarters are located in New York, US. HISTORY 1849 – 1899 In 1849 cousins Charles Pfizer and Charles Erhardt founded Charles Pfizer Company in a red brick building in Brooklyn, NY. 1900 1950 The new century brought prosperity to Pfizer. The pioneering of the mass production of citric acid from sugar through mold fermentation fueled growth for years. 1951 1999 The second half of the 1900s saw intense research and great successes for Pfizer. 2000 After successfully merging with Warner-Lambert and Pharmacia to create the worlds fastest-growing major pharmaceutical company, Pfizer continues its mission to become the worlds most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live. HYPERLINK http// 2001 In June 2001, Hank McKinnell announces a new mission for Pfizerto become the worlds most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live. In July, he announces a commitment to fund the building of a regional treatment and training center on the campus of Makerere University in Kampala, Uganda as part of the Academic Alliance for AIDS Care and Prevention. Pfizer launches HYPERLINK http// Geodon (ziprasidone hydrochloride), a new antipsychotic for the treatment of schizophrenia. 2003 Pfizer Inc and Pharmacia Corporation combine operations, bringing together two of the worlds fastest-growing and most innovative companies Pfizer launches HYPERLINK http// Relpax (eletriptan HBr), a medication developed specifically for the treatment of migraines. 2004 HYPERLINK http// Caduet (amlodipine besylate and atorvastatin calcium), the first single pill that treats both high blood pressure and high cholesterol, is launched. 2005 Pfizer launches HYPERLINK http// Lyrica (pregabalin), the first treatment approved by the U.S. Food and Drug Administration to treat two distinct forms of neuropathic pain associated with diabetic peripheral neuropathy (DPN), postherpetic neuralgia (PHN) and adjunctive treatment of partial onset seizures in adults with epilepsy. INCLUDEPICTURE http//×1.gif MERGEFORMATINET INCLUDEPICTURE http//×1.gif MERGEFORMATINET 2006Pfizers roster of outstanding drugs grows with the launch of HYPERLINK http// Sutent (sunitinib malate), a new, oral, multikinase inhibitor to treat patients with metastatic renal cell carcinoma (mRCC), or advanced kidney cancer, and gastrointestinal stromal tumor (GIST) after disease progression on, or intolerance to, imatinib mesylate. Pfizer launches HYPERLINK http// Eraxis (anidulafungin), a new medicine to treat certain infections caused by Candida, a yeast-like fungus that can cause serious infections in hospitalized patients or patients with compromised immune systems. HYPERLINK http// Exubera (insulin human rDNA origin) Inhalation Powder, the first diabetes treatment for adults with type 1 and type 2 diabetes that can be inhaled, is launched by Pfizer. HYPERLINK http// Chantix (varenicline), a prescription medicine to help adults stop smoking, is launched by Pfizer. COMPANY PROFILE CEO (Pfizer Inc., New York, USA)Henry A. McKinnell, Ph. D. Country Manager Pakistan Iqbal Bengali Head Officein Pakistan 12 – Dockyard Road, West Wharf, Khi. Manufacturing Facilities in Pakistan Karachi and Islamabad. Subsidiaries of Pfizer Inc., USAPfizer Laboratories Limited, Pakistan Parke, Davis Company Limited Pharmacia Pakistan Limited Website Address HYPERLINK http// http// Key Pfizer HYPERLINK http// Pharmaceutical Products HYPERLINK http// Aromasin HYPERLINK http// Caduet HYPERLINK http// Camptosar HYPERLINK http// Celebrex HYPERLINK http// Chantix HYPERLINK http// Detrol/Detrol HYPERLINK http// Exubera HYPERLINK http// Genotropin HYPERLINK http// Lipitor HYPERLINK http// Lyrica HYPERLINK http// Norvasc HYPERLINK http// Relpax HYPERLINK http// Revatio HYPERLINK http// Spiriva HYPERLINK http// Sutent HYPERLINK http// Vfend HYPERLINK http// Viagra HYPERLINK http// Xalatan/Xalacom HYPERLINK http// Zmax HYPERLINK http// Zoloft HYPERLINK http// Zyrtec HYPERLINK http// Zyvox INCLUDEPICTURE http//×1.gif MERGEFORMATINET Key Pfizer Consumer HYPERLINK http// Health Care ProductsBenadrylCortizoneDesitinListerine LubridermRolaidsSudafedVisine INCLUDEPICTURE http//×1.gif MERGEFORMATINET Key Pfizer Animal Health ProductsClavamox/SynuloxEquimaxNaxcel/Excenel CORPORATE PHILOSOPHY At Pfizer, the importance of creating an inclusive environment where diversity of background, thought and experience is practiced and valued. Our policies reflect that philosophy by mandating equal treatment for all employees globally without regard to sexual orientation, gender identity or gender expression. So too does our recognition of same-sex domestic partners for benefits ranging from medical coverage to adoption assistance as well as our thriving LGBT networking groups, which are involved with many charitable and educational activities both within Pfizer and in their local communities. Pfizers score of 100 for the Human Rights Campaign Corporate Equality Index for the second consecutive year reflects our active commitment to attracting, developing and retaining the most talented workforce available. VISION STATEMENT PFIZER MISSION STATEMENT PHARMACEUTICAL INDUSTRY IN PAKISTAN The pharmaceutical industry of Pakistan comprises of over 400 manufacturing units including 31 multinationals, besides 10,000 retail chemists, 6,000 drug wholesaler/distributors and about 1,500 importers. Total sales of Pharmaceutical products, both locally manufactured and imported, in a year (from march 03 to march 04) was reported Rs. 60 billion, out of which 55 sales ( Rs.33 billion) comes from multi national companies while remaining is distributed among local pharmaceutical companies of Pakistan. 2.1 INDUSTRY HISTORY The foundation of the pharmaceutical industry of Pakistan was formally laid in 1950 with the establishment of local subsidiaries of foreign firms and formulation of imported raw material based medicines by local entrepreneurs. By 1980, 170 pharmaceutical companies were set up in the country of which 150 were local companies and 20 were multinational firms. The industry was able to attract considerable investments as more firms and local entrepreneurs entered the industry due to its high profitability and prospects for growth. 2.1.1 INDUSTRY STRUCTURE2 The pharmaceutical industry of Pakistan is a highly fragmented industry. The Multinational companies in Pakistan hold 55 of the share in the market while the local manufacturers hold the rest, the table below shows the top 15 pharmaceutical companies in Pakistan, along with their annual sale and market share. COMPANYS MARKET SHARES S.NO COMPANY SALES (DEC 04-05) MARKET SHARE RS. 1. GSK7,987,750,135 13.20 2. Abbott2,904,640,250 4.80 3. Aventis2,699,991,179 4.46 4. Novartis2,268,555,782 3.75 5. Pfizer Upjohn1,861,564,832 3.08 6. Merck Marker1,834,187,026 3.03 7. Wyeth1,442,285,909 2.38 8. Roche1,356,600,371 2.24 10. Bristol Myers1,250,593,2042.07 11. Parke Davis1,180,453,2901.95 12. Merck Sharp Dohme1,143,787,1971.89 13. Nestle1,062,838,4191.76 14. AGP988,883,6181.63 15. Knoll975,283,7111.61 16. Searle957,283,7111.5817.Others29,364,541,86848.89Total60,536,968,907100 MACROENVIRONMENT ANALYSIS AND INDUSTRY ATTRACTIVENESS 3.1 Analysis of the Industry Using Michael Porters Five Competitive Forces 3.1.1 THREAT OF NEW ENTRANTS Entry in Pharmaceutical industry of International standard require high level of market understanding and technological know how it needs all in one skill, knowledge and abilities of the employees and advanced manufacturing and laboratory system which needs a large sum of investment but in Pakistan the situation is quite different because of Governments inclination towards National pharmaceutical industry and corruption in providing licenses to them. 3.1.2 BUYERS The prices of medicines are fixed and it is an emergency good people are bound to buy them for their cure from disease or prevention so there is no bargaining power of buyers in pharmaceutical industry. 3.1.3 SUPPLIERS Pharmaceutical industry has various suppliers of raw materials and packaging. Glass industry is one of the major suppliers of the pharmaceutical industry agriculture sector is also required for supply of the plants to get some extracts from them, biochemical industry other packaging materials like aluminum, paper, and plastics. 3.1.3 SUBSTITUTES There are substitutes available in form of herbal and homeopathic medicines and various house hold cures. 3.1.5 EXISTING COMPETITORS The competitors in pharmaceutical industry are all those who have extensive knowledge about there products and are manufacturing high quality medicines. In terms of generic medicines industries face a tough competition. 3.1.1 THREAT OF NEW ENTRANTS CRITICAL FACTORSYES ()NO (-)1) Do large firms have a cost or performance advantage in your segment of the industry Low Moderate High There is high threat of new entrant because of governments favorable policy for the local pharmaceutical firm. Most of the new companies do not even have the valid license they can easily get it through bribery or there influences. 3.1.2 BARGAINING POWER OF BUYERS CRITICAL FACTORSYES ()NO (-)1) Are there a large number of buyers relative to the number of firms in the business Due to a lot of similar brands with little or no difference, buyers have acquired the power to buy the cheaper one and to reject the expensive one. But this power is simply not effective in brands with high differentiation. There is a low bargaining power of buyers because the prices are controlled by government regulatory authorities and also change due to currency rates and inflation rates. Medicines are life savers which the customers are bound to buy for their wellbeing. 3.1.3 THREAT OF SUBSTITUTES CRITICAL FACTORSYES ()NO (-)1) Substitutes have performance limitations that do not completely off set their lower price. Or, their performance is not justified by their higher price There are a lot of generic products emerging in the industry lowering the overall profitability of the industry. Availability of the herbal and homeopathic medicines increases competition and the threat of substitutes. Increased competition for Viagra as its high cost encourages use of cheaper alternative treatments. Generic products are in rise, as people tend to spend lesser amount on allopathic medications because of slow economy. There is a moderate to strong threat of substitutes because of availability of the herbal and homeopathic medicines and customers illiteracy rate. They get the cure from these medicines along with this there has been a failure towards the governments end to washout fake and smuggled medicines from the market. 3.1.4 BARGAINING POWER OF SUPPLIERS Low Moderate Strong There is moderate to low bargaining power of the suppliers because pharmaceutical industry have specialized suppliers and those suppliers are also dependent on the pharmaceutical industries for the well being of their business. The raw material which is supplied to the pharmaceutical companies like chemicals, glass, plastic etc also has regulated prices which are affected by the government policies and economical changes. YES ()NO (-)1) My inputs (materials, labor, supplies, services, etc) are standard rather than unique or differentiated MNCs are using their superior technology and research and development skills to introduce new products tailor made for specific target market needs, On the other hand, national companies are offering low prices and trying to outclass MNCs in a price war. The rivalry is not only among national and multinational companies, National companies are against each other on battle field of cost management to offer lowest possible cost, same as MNCs are striving to outclass each other through advanced products based upon research and technology. 3.1.6 OVERALL INDUSTRY RATINGS FAVOURABLE MODERATE UNFAVOURABLEThreat Of New Entrants 4 1 7Bargaining Power Of Buyers 6_ 4Threat Of Substitutes 3_1Bargaining Power Of Supplier 4 1 2Intensity Of Rivalry Among Competitors 4 3 2TOTAL21516 3.2 PEST ANALYSIS The factors that affect any industry are 1. POLITICAL FACTORS The government designed policies and laws for the operational functions of the pharmaceutical industry tax and trade laws etc. 2. ECONOMIC FACTORS The ups and downs in the market prices, currency rates, currency exchange rates are the factors that influence the pharmaceutical industry. 3. SOCIAL FACTORS Peoples awareness about the importance of medicines there trend to get a cure for there diseases. 4. TECHNOLOGICAL FACTORS The manufacturing and operational systems through which medicines are manufactured and processed. Technology in modern organizations is the know-how, the Equipment, the experience, the knowledge and skills that are required for better production and better service. Growth in RD activities is an important factor affecting the industry. 3.2.1 POLITICAL FACTORS Following political factors are affecting the pharmaceutical industry Multilateral laws All the pharmaceutical industries have to comply with the rules that are formulated by WHO and Intellectual Property Rights (TRIPS). Along with that there is strong government influence in pricing strategy of the industry. Political disturbance Local pharmaceutical industry also suffers because of the political disturbances in the country like strikes in both public and private sectors. Legal factors Ministry of healths strong regulations about the pharmaceutical industry for launching new medicine and changing the prices for the specific medicine has affected the profit margin of the industry. Easy issuance of license to sell drugs to the local companies has increased the price competition in the industry there are 370 national pharmaceutical units while 30 MNCs. Import Duty Import duty on the raw material for the medicine is quite high (35) which increase the cost of manufacturing the medicine and strict regulation about the price increase inversely affect the profitability of the industry. Most of the import takes place from UK, Switzerland India. Pricing policies In Pakistan, government decides the price for pharmaceutical products, since the past 4 years government has not allowed increasing the prices of pharma products. This creates problem with profitability of products and keeps back companies to profit from their new innovative products Strict government control over pricing has made many medicines uneconomical, with the result that they either become available only on the black market at inflated prices, or disappear completely. In this environment, manufacturers, both local and foreign-owned, have proved unable to generate the profits needed for capital investment. This is not helped by a regulatory system best described as rudimentary. There is virtually no public drug reimbursement or IP protection patent law was officially tightened in December 2000, although the effectiveness of this has been questioned. In 2002, further changes were made, making Pakistans IP laws even weaker Prices of medicines are officially controlled, although the government lacks the capacity to enforce its policies in this area. Some price rises have been allowed since 2000, but the current government shows little sign of enacting any serious reform of the pharmaceutical sector, preferring to allege profiteering on the part of the pharmaceutical industry. Import Law An import law allowing Indian-made drugs to enter the market was signed in June 2005, although after several months, not one permit has so far been issued. 3.2.2 ECONOMIC FACTORS A cost increase of 90 for pharmaceutical industry has arisen over the last five years generated by three factors – an inflation of 76, a devaluation of Pakistani currency by 85 in relation to the U.S. Dollar, and an introduction of duties of 10 beginning June 1996. Insufficient price increases which do not compensate for the cost increases for Controlled medicines, the price increase was only 21 in the last five years for Decontrolled medicines, and the price increase was only 29 in the last five years. 3.2.3 SOCIAL FACTORS Low human development Like homeopathic, and hakimi products, due to the fact that more than half of the population of Pakistan is poor and uneducated and they often resort to cheaper medicines used by their fore fathers. Viagra Registration One opportunity that company seeks is the registration of Viagra in Pakistan. Pakistani government has banned Viagra in Pakistan due to some ethical and religious reasons but Pfizer claims that except for in Pakistan Viagra is being sold in all Muslim countries including Saudi Arab. According to a WHO report, there are 25 spurious/counterfeit/substandard drugs in the under developed countries. About 10 on the whole world markets, including the developed countries have such medicines. Self Medication Low literacy rate cause self medication or going to the chemist for reference instead of doctor to save the cost. 3.2.4 TECHNOLOGICAL FACTORS Pharmaceutical Products for incurable diseases By using its financial and human resources of Research and Development, Pfizer can make great contribution to the world by creating pharmaceutical products for AIDS, HIV and Cancer. Research and Innovation Rapid technological advancement and the development of the new methods to cure diseases have affected the industry. New medicines for fatal diseases are the growing sector of the industry like Cancer drugs, Hepatitis drugs and vaccines, AIDS drugs, diabetes medicines etc. Emerging Diseases Now pharmaceutical industry after the coming of viruses like bird flu, anthrax, Dengue Virus is involved in extensive RD to find the cure or vaccines for these diseases. MICRO-ENVIRONMENTAL ANALYSIS 4.1 INDUSTRY ANALYSIS From the internal analysis, we get the strengths and weaknesses of the company. Which are derived from the following four components Value chain Core Competencies Strategic Costs Financial Trends 4.1.2 VALUE CHAIN ANALYSIS SUPPLIERS OF RAW MATERIALS SUPPLIERS FOR CHEMICALS PFIZER purchases its raw materials from regional supplier that is selected by the head office after inspection and testing their chemicals according to their quality standards and also approved by the FDA. Presently for Asia china is the major supplier. SUPPLIERS FOR PACKAGING PFIZER purchases its packaging material from the local manufacturers of the company in which its operating. OPERATIONS Operational activities are done at the plant located at 12 Dockyard Road, West Wharf, Karachi in Pakistan. DISTRIBUTORS PFIZER uses four major channels for the distribution of their products drug wholesalers, retail pharmacists, hospitals, and doctors. The distributors are hired by PFIZER. PFIZER distributors have structured route plans for distributing all its products. No expenses are shared by the company. Trade Margin The trade margin is set for this industry, 10 for distributors and 15 of retailers. However there are trade promotions deals to keep them happy and also incentives provided by PFIZER to retailers on good performance. SALES AND MARKETING PFIZER has a well trained sales and marketing staff who personally visit the doctors and tell them about the effectiveness of their medicines they also go to the chemists for the same purpose. RETAIL PHARMACISTS Drugs can only be sold through authorized chemists. Retailers have to get registration approved by the government to sell drugs. The main focus of companies like PFIZER is to convince doctors through their sales team to prescribe their drugs. This sales team is on the companys payroll and especially trained. The distributors sales force is responsible for distributing medicines to chemists, retailer-cum-chemists and hospital pharmacies. 4.1.2 CORE COMPETENCY A core competency is a well-performed internal activity that is central (not peripheral or incidental) to a companys competitiveness and profitability. Often, a core competency results from collaboration among different parts of an organization. The core competency of PFIZER is their research and development department. Research Development With a 2006 estimated Pfizer budget of 7.8 billion in research development (RD), Pfizer boasts the industrys largest pharmaceutical R D organization Pfizer Global Research and Development. Pfizers search for new treatments spans hundreds of research projects across 18 therapeutic areas – more than any other company. Pfizers scientists, clinicians, technicians, and other professionals employ state-of-the-art tools ranging from robotic high-throughput screening (a method pioneered by Pfizer) to sophisticated genomic studies, to deliver a steady stream of innovative new products that enhance human and animal health. Painkiller medicine, antibiotics and cardiovascular. Pfizer has largest share in antibiotics Animal Health product Skilled, Technical, Innovative and diversified staff because Pfizer has 4 companies under one name Pfizer, Pharmacia, Upjohn and Parke Davis. Links with more than 250 partners in academia and industry strengthen its position on the cutting edge of science and biotechnology by providing access to novel RD tools and to key data on emerging trends. A half century ago, despite daunting odds and great risk, Pfizer pioneered the mass production of penicillin, ushering in the modern pharmaceutical era. Now, more than 12,500 Pfizer scientists at our research facilities around the world continue the quest for new medicines with the same pioneering spirit. 4.1.3 STRATEGIC COST MANAGEMENT PROCESSES Strategic costs are found through Activity based Costing, which entails defining expense categories based on the specific activities being performed and then assigning costs to the appropriate activity responsible for creating the cost. The Strategic costs of Pfizer include the following costs Operational Cost (packaging and warehousing) Raw Material Cost 4.1.4 FINANCIAL TRENDS The trends of the financial ratios tell about the strength or weakness of the company in the particular area which the ratio is reflecting. 4.2 STRENGTHS AND WEAKNESSES STRENGTHS A strong product portfolio Pfizer has established itself as a global provider of innovative healthcare solutions, and rather than focusing on a small number of specialist therapeutic areas, Pfizer has, instead, concentrated on product innovation in any attractive therapy area, and its current portfolio and RD pipeline reflect this. It has strengths in a number of therapeutic areas, and its size and strong market presence is sufficient to support this diversity. Pfizer has seven blockbuster drugs, each with revenues exceeding 1B each year. Topping the list is Lipitor, a cholesterol reduction drug (Sales of 6.3B per year). The list continues Norvasc, a calcium channel blocker for treatment of hypertension and angina (3.7B) Zoloft for treating depression and panic attacks (2.4B) Neurontin for epilepsy and neuropathic pain (1.7B) Viagra (1.6B) Zithromax, an oral and injectable liquid azalide antibiotic (1.5B) and Diflucan, also an injectable and oral broad-spectrum antifungal medication (1.1B). Research Development With a 2006 estimated Pfizer budget of 7.8 billion in research development (RD), Pfizer boasts the industrys largest pharmaceutical R D organization Pfizer Global Research and Development. Pfizers search for new treatments spans hundreds of research projects across 11 therapeutic areas – more than any other company. Medicines library includes approximately 2 million compounds, and our pipeline holds more than 160 projects in development and over 300 projects in discovery research in 11 therapeutic areas. Strong Marketing Pfizer has a global marketing strength, which has made it a very attractive marketing partner for, smaller or less experienced companies. The companys recognized marketing strength will mean that opportunities for promising products are likely to be discussed with Pfizer, giving it access to an array of promising compounds for sale on the international market. Pfizers strong marketing and sales operations have enabled the company to become the partner of choice for the marketing innovative products developed by others. Pfizer has been extremely skilled in creating alliances with other pharmaceutical companies via co-promotion agreements. Through co-promotion and licensing agreements, Pfizer promotes and markets such highly promising products as Celebrex, Bextra, Aricept, and so on with alliance partners Mergers , Acquisitions and Collaborations One of the strengths of Pfizer is its ability and strategy of mergers, collaborations and acquisitions. The recent and most important such act was acquisition of Pharmacia On July 15, 2002. Pfizer with Pharmacia moved from fourth to first in Europe from third to first in Japan and from fifth to first in Latin America in pharmaceutical sales. Before the acquisition by Pfizer, Pharmacia merged with Upjohn. Pfizer had also acquired Parke Davis, making Pfizer the biggest Pharmaceutical Company in world. Other alliances include a partnership with IBM and Microsoft to create Amicore, an independent company that is developing practice management systems and a chronic disease management program developed with the State of Floridas Agency for Health Care Administration. Worlds largest Animal Health company Pfizers animal health units market is one of the largest selling and broadest product lines in its field. Social Responsive Pfizers tradition of Philanthropic activities in making every community a better place to work and live like wise Helping the tsunami orphans, Teaching about vaccine preventable diseases and Women and children in health education program etc. Worlds largest selling medicine, Lipitor Lipitor totaled Full-year sales of 12.2 billion reflected 12-percent growth over 2004. Lipitor totaled 3.4 billion in the fourth quarter, reflecting growth of 3 percent over the previous years quarter, a difficult comparison in light of Lipitors 23-percent revenue growth in the fourth quarter of 2004, exacerbated by four fewer business days in the 2005 quarter. Full-year sales of 12.2 billion reflected 12-percent growth over 2004. Competent sales force Pfizer has a competent and strong workforce reaching the customers needs. Majority of the sales revenue is generated by the efforts of the sales force. WEAKNESSES Decreasing market share After 2003, Pfizer is facing a decline in the market share of pharmaceutical industry. No internal supplier network Pfizer rely on the imports from limited suppliers, which are China, India, and Germany. This increases the import duties and thus the cost of the output. COMPANY AND COMPETITOR ANALYSIS 5.1 KEY SUCCESS FACTORS After analyzing the Pharmaceutical industry (issues) and the comparative analysis we believe that the main factors which contribute to the success are Marketing Product Quality Research and Development skills New geographical regions Financial Position Distribution network Market Share Mergers and acquisitions Price competitiveness 5.2 COMPETITIVE PROFILE MATRIX CPM PFIZER GSK ABBOTT CRITICAL SUCCESS FACTORS WEIGHT RATING SCORE RATING SCORE RATING SCORE Marketing 0.05 3 0.15 4 0.20 4 0.20 Product Quality 0.15 4 0.6 4 0.6 4 0.6 RD Skills 0.1 4 0.60 4 0.60 3 0.45 New Geographical Regions 0.05 3 0.15 3 0.10 2 0.10 Financial Position 0.10 2 0.4 4 0.3 3 0.4 Distribution Network 0.10 3 0.4 3 0.3 3 0.3 Market Share 0.1 2 0.52 4 0.39 3 0.26 Mergers Acquisitions 0.075 2 0.15 3 0.225 3 0.225 Price Competitiveness 0.075 3 0.225 3 0.225 3 0.225 TOTAL 1.0 2.89 3.25 2.95 Note The ratings values are as follows 1 major weakness, 2 minor weakness, 3 minor strength, 4 major strength. Interpretation of CPM According to the competitive profile matrix as per pharmaceutical industry in Pakistan, the evaluation of key success factors led the MNCs in order that GSK as being the leader in Pakistan lies with 3.25 and Abbott with 2.95, while Pfizer is lagging behind with a 2.89. According to the market share GSK has the 7 and Abbott ahs 3.4 , while Pfizer has only the 3.09 v from a 15 population of Pakistan using pharmaceuticals. Working with the above-mentioned success factors, as the competitors are working, Pfizer should also consider doing some good practices. Such as GSK and Abbot recently installed a MIS system in order to cover their suppliers, byres, distributors, and retailers more in a systematic way. Therefore they should also work hard to achieve strength in the industry success factors. STRATEGIC ANALYSIS 6.1 CURRENT GENERIC POSITIONS AND STRATEGY Of all the generic strategies, PFIZER is currently using BROAD DIFFERENTIATION STRATEGY. Pfizer is practicing Broad differentiation strategy because With differentiation in the various divisions, Pfizer caters its customers by providing products for animal health, consumer health care, and personal care. Medicines which Pfizer manufactures serve larger segments of the society. For example Pfizer is conducting a research in 11 therapeutic segments, making medicines for cholesterol patients like Lipitor and concentrating to maintain the worlds largest animal health segment. Pfizer remains dedicated to serve people by making heavy investments in Research Development and producing and innovating new products for various diseases better than rivals. TYPES OF FEATUREBROAD DIFFERENTIATION STRATEGY PFIZERS POLICIESStrategic targetA broad cross section of marketPFIZER international is physically present in 180 countriesBasis of competitive advantageAn ability to offer buyers something different from competitorPFIZER only pharmaceutical company which deals in animal health care and keeps on innovating and producing new medicines, as a research-based pharmaceutical companyProduct lineMany product variations, wide selection, emphasis on differentiating featuresWith a 2006 estimated Pfizer budget of 7.8 billion in research development (RD), Pfizer boasts the industrys largest pharmaceutical R D organization Pfizer Global Research and Development. Pfizers search for new treatments spans hundreds of research projects across 11 therapeutic areas – more than any other company. Medicines library includes approximately 2 million compounds, and our pipeline holds more than 160 projects in development and over 300 projects in discovery research in 11 therapeutic areas. Marketing emphasis Build in whatever features buyers are wiling to pay for.One of the main Pfizers corporate philosophies is the role of diversity which in company means that to be aware of the contribution that can be made by everyone with whom they make business including customers and stakeholders. 6.2 PORTFOLIO ANALYSIS 6.2.1 The BCG Matrix SBUsRelative market share in Total market size 000Consumer Health care0.672881Animal health0.54332Pharma products0.59154 For constructing the BCG matrix, five Strategic Business Units of PFIZER have been considered as follows Interpretation of BCG Matrix According to the results of Boston Consulting Group (BCG) Matrix, Pharmaceutical Segment, the Star of Pfizer businesses lies in the 2nd quadrant of the matrix that represents organization best long-run opportunities for growth and profitability. And because it is the segment with high relative market share and a high industry growth rate it should receive substantial investment to maintain and strengthen the dominant position. Appropriate Strategies include Forward, Backward, and Horizontal Integration Market Penetration Market Development Product Development and Joint Ventures. Consumer Health Care Segment is in the 1st quadrant of Pfizers BCG Matrix i.e. it has a relatively low market share but yet compete in a high growth industry. Therefore the cash Needs of this segment are high while cash generation is low. This business is called Question Mark because Pfizer must decide whether to strengthen it by pursuing an intensive strategy (Market Penetration, Market Development, or Product Development) or to sell it. STRATEGY IMPLEMENTATION Implementing and executing strategy entails converting the organizations strategic plans into action and then into results. The managements task is to convert the strategic plan into action and get on with what needs to be done to achieve the vision and targeted objectives and all the employees are participants. Implementing strategy is far more difficult then formulating it. 7.1 Components of Implementing and Executing Strategy The principal strategy-implementing tasks for the Pfizer Inc are listed below Building a Capable Organization A capable organization efficiently manages its human resources, build core competencies, and create competitive advantages that are hard for the competitors to imitate. After the merger of four pharmaceutical companies Pfizers human resource base became much more complex which created a sense of uncertainty resulting in a large number of retrenchments. The aim of HR department is to promote a work force and environment that is diverse in culture, beliefs, and background and academic qualifications. One of the major issues, which HR is facing, is to create a harmonized culture to ease the effects of the massive merger. In order to provide the employees with a secure and comfortable environment the company started PFIZER which includes workshops, training of employees, seminars, and teaching a synchronized new values system. PFIZER believes in continuous training of their employees, and its training program consists following activities On Job Training. Overseas Training. External Workshop and Seminars. In-house training Center (for following departments) The HR also runs organization developmental programs, which cover organization restructuring, reorganizing career management and talent tribute programs. Building core competencies, resource strengths and organizational capabilities that rivals cant match is a sound foundation for sustaining competitive advantage. Over the years PFIZER has proved itself in developing core competencies in the areas of RD, state-of-the-art plants and equipments and ownership of valuable patents, which places it at an extremely advantageous position. Linking Budgets to Strategy Pfizers strategy entails consolidating and expanding the market share. It achieves these objectives through efficient management of its value chain activities by setting aside appropriate budget. The method for setting the promotional budget is a mix of percentage of sales method and management judgment. One of the core areas of value chain activity of any pharmaceutical company is RD which delivers new ways of managing old problems and anticipates future issues. . Pfizers RD is mainly performed in its headquarters at UK where the requirements for each of its offices across the world are considered. It is recommended that the company may establish its RD department in each of its overseas offices or at least in different regions like Asia-Pacific to better understand the local medical developments and then come out with effective remedial medicines. Establishing Strategy Supportive Policies PFIZER has instituted policy guidelines/Standard Operating Procedures (SOPs) for every department and there is an audit team which check its working. The audit team is both local as well as from its headquarters. The local management guides its employees in every value chain activity. Instituting Best Practices and Continuous Improvement Although PFIZER has an excellent RD network which continuously works to bring the innovative products, the company has yet to discover more and more innovative products as the threats of new diseases emerge such as we mentioned earlier bird flu and anthrax . The company believes in innovation and total quality management (TQM). The concept of TQM is extended to all activities of value chain. The companys operational excellence focuses on value creation. These initiatives are based on five components Common Processes Performance of management and benchmarking Knowledge Management Education Lean Sigma Installing Support Systems PFIZER possesses excellent integrated support system, which has become a basis for its competitive advantage. All the departments including production, RD, finance, HR, customer service truly integrate to add value in the company service. For he company like PFIZER it should have regional headquarters which have a control over all the regional operating activities then they should also have links with each other and then ultimately to its headquarters. Designing Strategy-Supportive Reward Systems PFIZER provides competitive compensation packages based on qualification and experience and market related forces. PFIZER also known as the leading salary payer in the pharmaceutical sector. They also provide stock options to their senior management along with providing them with the following rewards and benefits. Thus monetary as well as no monetary incentives give a boost to employees morale resulting in enhanced efficiency PFIZER should continue with its policy. Building a Strategy-Supportive Corporate Culture It is already incorporated in PFIZER culture in form of commitment to diversity in which company takes care of all the stakeholders who are part of the business. Exerting Strategic Leadership PFIZER is led by a team of highly professionals capable of bringing about strategic direction to the company. During the last three years PFIZER has recorded impressive financial growth and its market share has also increased tremendously. The management believes in the technique of managing by walking around (MBWA) by making frequent visits to company offices across the country and production sites. Now PFIZER should also give autonomy to its regional operating units to freely experiment on the regional diseases by establishing an RD department locally. Because the inhabitants of the regions will be more concerned about the health of there people and they will be more aware of the problems faced in their society. 8. STRATEGY EVALUATION The most important element of Pfizers management control process is evaluation. Evaluation of the sales force is an action undertaken to verify the success of selling program that is comparing planned and actual results, identifying reasons for variations and making appropriate changes in the sales goals and strategies. After the execution of any program by the company, it demands immediate feedback. This feedback assists the managers to evaluate the performance of the employees. Through evaluation the managers are assured whether the program is designed and implemented properly or not. A successful management control program promises the company a competent and able workforce. It spots individuals who are ready for promotion, salary increases or assignment to new territories and responsibilities, keeps sales job descriptions current and on target, provides evidence about salespersons, which should be eliminated. Top sales executives design the evaluation plan at PFIZER because they have the most sales experience they know the company, its products, and markets in the greatest detail. PFIZER believes that the program is only effective if the knowledge and the improvements meet the criterion. The evaluation process at PFIZER also includes a follow-up and as soon as the program shows positive results it indicates that the evaluation was done in an adequate manner. RECOMMENDATONS The best strategies will be Mergers And Acquisitions with the local companies to strengthen the regional trade and product development by producing more innovative and differentiated products. PFIZER should not change its strategy and should stick to the broader differentiation but at the same time it should work to maintain its position. It should grab the opportunity of the regional trade this will help it to be present physically in the regions and it will also minimize the threat of the economic instability of the countries because then it will work more under the umbrella of international trade system like WTO and TRIPS. T Deliver more new medicines more quickly to patients, Drive our advantages in size, reach, and productivity, Build the performance potential of each colleague and Shape a positive environment for better healthcare. Product Development, Forward Integration, Backward Integration, Horizontal Integration. These strategies can very well go with PFIZER for more better results and improvement. They can go for any of these or either having a combination of these strategies. Product Development They can go for the new varieties in the skin care products as per the growing industry in cosmetics etc. For Forward Integration, they can go for forward integration through a good handshake (merger and alliances) with any local company (e.g. Bosch, Rosh, Hilton) to improve their distribution and market share in the local industry. Backward Integration Horizontal Integration, like wise these two strategies Pfizer can have alliances with other domestic pharmaceuticals of Pakistan in order to build a strong position and to retain its market share, they can also for the companies which are having strong financial positions, internal suppliers plus technology factor so that they can cover their weakness as done with the PAK DAVIZ in 2004. Bibliography HYPERLINK http// t _blank http// HYPERLINK http// http// HYPERLINK http// HYPERLINK http// HYPERLINK http// http// Corporate citizenship report Pfizer 2005-2006 Main campus Pfizer Inc at Doc Yard Source International Medical Statistics. 2 International Medical Statistics PAGE BUSINESS POLICY PAGE 3 TO BE BEYOND NUMBER 1 BY WORKING TOGETHER WITH OTHERS, WE CAN DO MORE GOOD FOR MORE PEOPLE THAN ANY OTHER COMPANY ON THE PLANET. WE WILL BECOME THE WORLDS MOST VALUED COMPANY TO PATIENTS, CUSTOMERS, COLLEAGUES, INVESTORS, BUSINESS PARTNERS AND THE COMMUNITIES WHERE WE WORK AND LIVE Moderate Potential Entrants High Low Buyers High Substitutes Industry Competitors ( Rivalry Among Existing Firms Suppliers High Product Research Development Human Resource Management Raw material from China, India Germany Final Consumer Distributors Sales Marketing Retail pharmacists General Administration Operations Differentiation Low Cost Market Target Narrow Buyer Broad Range of Segment Buyers Best-cost provider strategy Overall Low-cost Provider Strategy Differentiation Strategy Focused Differentiation Strategy Focused Low-cost Strategy EMBED MS_ClipArt_Gallery.5 Market Growth Industry Sales (In s) Question Mark Star Dog Cash Cow HIGH 1.0 LOW 0.0 MEDIUM 0.5 Relative Market Share The strategy implementers action agenda What to do now vs. later What requires much time and personal attention What can be delegated to others Build a capable organization Link budgets to strategy Create strategy-support policies Institute best practices and commitment to continuous improvements Install support systems Design strategy-supportive reward systems Build a strategy-supportive corporate culture Exert strategic leadership -EtN0A,
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