0

2018
Critical analysis of Pfizer limited

Debangan Das
Roll: 17006
8/31/2018
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PREFACE
In our first year we are taught certain subjects which are basic founding of our 2nd year papers. In
those papers we are mainly taught Strategic Management, Microeconomics and
Macroeconomics, Business Research Methodology and other basic courses on Marketing
Management, Human Resource Management and Financial Management.

Critical analysis of an Organization is a paper in which we apply all our basic concepts that we
have learnt in our previous year and by applying those ideas and concepts we analyse the
performance of an organization and link it to corporate level strategy and business level strategy.
The analysis of an organization is done by tools and techniques, analytical frameworks and these
help to understand and know the Vision and Mission of the organization, and the process of
management that is visible in the company, the growth prospects, the market size, the customer
profile, the competitive position and financial performance.

The above mentioned course can be learnt by observing of annual reports of Indian companies,
which will help us to measure the respective performance of an organization.

The reason for studying the course- CAO can be said in a few points.

1. Personal investment portfolio- If we study about a company we would know about its
financial status and hence we would get an idea whether we should invest our money in this
respective company and what amount of returns will we get back from our initial investment.
2. Analyst Job- Analyst Job is specific as we would have the required skills to analyse a
organization on certain predefined parameters.
3. Advisor- We can advise people related to any information of a selected company and tell
them whether this company would be beneficial for them and what all future prospects are
available for the company for its required growth.
4. Develop a appreciation for each and every company and our concept of criticizing a
company would be minimized as if a company is there then it must be having a customer base
and must be making profits and returns, so no company is good or bad all are there to sustain
their respective business.

Introduction and background of Pfizer India limited

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Company Background

Industry group Drugs & pharmaceuticals Entity type Public Ltd.

Main product / Drug formulations Incorporation
service year 1950
Ownership Private (Foreign) Size group Top decile
group

Charles Pfizer, a chemist by profession along with his cousin Charles Erhart, a confectioner started
Pfizer, a company manufacturing chemicals in Brooklyn, USA in 1849. Pfizer commenced operations
in India in 1950, as a private limited company under the name of Dumex Ltd. in Mumbai. It also set up
an organic synthesis unit in West Bengal and a formulations plant in Gujarat which were subsequently
shut down. In 1960, the company set up its manufacturing facility at Thane, Navi Mumbai. This plant
was recently accorded the CGMP certification.

The company's collaborators, Pfizer Corporation & Associates (Warner Lambert Company, Parke
Davis) owned a 41.2 per cent share of its Indian arm as on 30 November 2007. Its current CMD is
Mr.Kewal Handa.

Pfizer India's revenues are segregated into three different groups. Pharmaceuticals accounted for bulk
(87 per cent) of the company's revenues in 2007 while its animal health business chipped in 10 per cent.
Its service business contributed the remaining three per cent.

Pfizers pharmaceuticals business spans an entire gamut of ailments ranging from prescription drugs to
consumer health products. Its prescription medicines portfolio includes drugs for hypertension, stroke,
respiratory tract infections and anti--biotics. Some of its important brands include Caduet
(hypertension), Corex (cough syrup), Lyrica (neuropathic pain) and Viagra (erectile dysfunction).

The company's animal health division caters to the dairy, poultry and companion animal healthcare
business (pet food) in the country.

Its services business is a group of 30 people looking after medical affairs & research, clinical research,
regulatory affairs, clinical development and quality standards and training.

The amalgamation of Parke--Davis (India) with Pfizer India was sanctioned by the Mumbai High Court
on 7 February 2003. Consequently, the paid up capital of the company increased to Rs.28.8 crore in
November 2003. The amalgamation of Pharmacia Healthcare (India) with Pfizer India was sanctioned
by the Mumbai High Court on 4 February 2005. Consequently, the paid up capital of the company
increased to Rs.29.8 crore in November 2005. On 24 April 2006, Pfizer India announced its intention to
merge its wholly owned subsidiary, Duchem Laboratories with itself.

On 31 December 2007, following the global divestiture of Pfizer's Consumer Healthcare Business to
Johnson & Johnson in June 2006, Pfizer India transferred the exclusive license relating to the
trademarks for Benadryl, Caladryl, Benylin and Listerine to Johnson & Johnson for Rs.214.9 crore.
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On 18 June 2008, the company reached an out--of--court settlement with Indian generic drug major,
Ranbaxy for its largest selling drug, Lipitor. Accordingly, Ranbaxy will launch its generic version of
Pfizer's cholesterol lowering drug, Lipitor (atorvastatin) and Caduet (amlodipine besylate and
atorvastatin) on 30 November 2011 in the US instead of March 2010.

Innovate to bring therapies to patients that significantly improve their lives.

Our Values are a declaration of our core beliefs and the defining features of a culture that
breeds achievement. Not only do they provide the direction necessary for making our Vision a
reality, they are also the principles that guide us in our day-to-day decision-making.
These Values crystallize who we are, who we have always been, and what we stand for. They
reflect the enduring character of Pfizer and its people.

INTEGRITY
We demand of ourselves and others the highest ethical standards, and our products and
processes will be of the highest quality. The Pfizer name is a source of pride to us and should
inspire trust in all whom we come in contact.

RESPECT FOR PEOPLE

We recognize that people are the cornerstone of Pfizer's success. We come from many
different countries and cultures, speak many languages, and value this diversity as a source of
strength. We are proud of Pfizer's history of treating employees with respect and dignity, and
we are committed to building upon this tradition.

CUSTOMER FOCUS
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We are deeply committed to meeting the needs of our customers, and we constantly focus on
customer satisfaction. We take genuine interest in the welfare of our customers, both internal
and external.

COMMUNITY
We play an active role in making every country and community in which we operate a better
place to live and work, knowing that the ongoing vitality of our host nations and local
communities has a direct impact on the long-term health of our business.

INNOVATION
Innovation is the key to improving health, sustaining Pfizer’s growth, and enhancing our
contribution to society. The quest for innovative solutions should invigorate all of our core
businesses and the Pfizer community worldwide.

TEAMWORK
We know that to be a successful company we must work together, frequently transcending
organizational and geographic boundaries to meet the changing needs of customers.

PERFORMANCE
We strive for continuous improvement in our performance, measuring results carefully, and
ensuring that integrity and respect for people are never compromised. When we commit to
doing something, we will do it in the best, most timely way possible. Then we will try to think
of ways to do it better the next time.

LEADERSHIP
We believe that leaders lead by establishing clarity of purpose, a shared sense of goals, and
commitment to excellence. Leaders demonstrate courage, pursuing actions based on a well-
defined sense of what is right and a view to long-term success. Leaders empower those
around them by sharing knowledge and rewarding outstanding individual effort. We
encourage leadership at all levels of the organization and are dedicated to providing
opportunities for leaders to grow and develop.

QUALITY
Since 1849, the Pfizer name has been synonymous with the trust and reliability inherent in the
word Quality. Quality is ingrained in the work of our colleagues and all our Values. We are
dedicated to the delivery of quality healthcare around the world. Our business practices and
processes are designed to achieve quality results that exceed the expectations of patients,
customers, colleagues, investors, business partners and regulators. We have a relentless
passion for Quality in everything we do.

Maintaining world-class quality standards and delivering innovative products have been the
cornerstones of Pfizer India’s manufacturing philosophy. A system of very vigilant quality
control involving multiple tests operates through the entire gamut of production to ensure the
safety, efficacy and dependability of every Pfizer product.
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Quality Governance

Pfizer Global Supply has always recognized Quality as a Value. Our customers and regulators
hold us in the highest regard for the quality of our products and services.

PGS launched Quality as a Value for the entire Company with the introduction of a new Icon
symbolizing Quality. This recognition of Quality as a Value has now been embraced by all of
Pfizer and stands side by side with our other 8 values: Integrity, Respect for People, Customer
Focus, Innovation, Teamwork, Performance, Leadership and Community.

The Quality of Pfizer people and products has always been part of the Pfizer heritage. Now,
that same Quality is formally recognized as a Value for the Company, part of our Vision, one
of the guiding principles by which we run our business.

The Pfizer Quality Value

Since 1849, the Pfizer name has been synonymous with the trust and reliability inherent in the
word Quality. Our business practices and processes are designed to achieve quality results
that exceed the expectations of patients, customers, colleagues, investors, business partners
and regulators. The Quality Value is a standard against which we measure ourselves and a
guide for decision-making in ambiguous situations. We dedicate ourselves to providing the
highest quality products to our patients and customers. And at the same time, we focus our
energy on the quality of health and healthcare around the world.

Environment, Health and Safety

At Pfizer, we aim to set the best environment, health and safety records in the Industry.

Environment, Health and Safety (EHS) Policy

We are committed to protect the environment, health and safety of our employees, contractors
and neighbouring community.
To achieve this, we will:

Comply with all regulatory requirements and align with Pfizer Global Guidelines
Adopt newer technologies to improve efficiency of operations and achieve continual
improvement of our EHS performance
Conserve resources
Reduce, reuse and recycle wastes thus effectively preventing pollution
Enhance EHS awareness amongst employees by training and educating our customers and the
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neighbouring community

Pfizer in India

 Pfizer Limited has a turnover of Rs. 1827.74 crores for the year ended March 31, 2015.
 The company was awarded the FICCI SEDF (Socio Economic Development Foundation)
Certificate of Commendation for its social responsibility efforts
 Pfizer has won several awards including that for the multinational pharmaceutical company of
the year and the most respected MNC

About our products

 Six Pfizer brands feature among the Top 100 pharmaceutical brands in India
 Two of Pfizer India's brands -- Corex (Cough Formulation) and Becosules (Multivitamin) --
continue to rank among the Top 15 pharmaceutical drug brands
 Pfizer has won the Golden Peacock Innovative Product for Magnex (Sulperazon)
 Becosules has won the Most Trusted Brand Award

Going beyond medicines

 In India, Pfizer instituted the first ever Disease Management Programme -- Healthy Heart™ in
Cardio Vascular Disease (Hypertension, Chronic Stable Angina and Dyslipidemia), in
partnership with Apollo Hospital, Hyderabad and Apollo Hospital, Chennai
 We offer Patient Assistance Programmes for Glaucoma, Breast Cancer and Neuropathic Pain
 We partner with physician associations to develop recommendations / guidelines of managing
specific diseases

Location & People

 Headquartered in Mumbai
 Over 4,000 colleagues spread across India
 State-of-the-art manufacturing facilities at Thane, Maharashtra

Academic Contribution

 Formed the Academy of Clinical Excellence (ACE) in collaboration with Bombay College of
Pharmacy to provide professional training to investigators and other clinical research personnel

 We have also partnered with other pharmaceutical companies, contract research organisations
and investigators to establish the Indian Society for Clinical Research (ISCR), a professional
society aimed at raising the standards of clinical research
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Research methodology

Choice of study:

Critical analysis of an Organization is a paper in which we apply all our basic concepts that we
have learnt in our previous year and by applying those ideas and concepts we analyse the
performance of an organization and link it to corporate level strategy and business level strategy.
The analysis of an organization is done by tools and techniques, analytical frameworks and these
help to understand and know the Vision and Mission of the organization, and the process of
management that is visible in the company, the growth prospects, the market size, the customer
profile, the competitive position and financial performance.

The above mentioned course can be learnt by observing of annual reports of Indian companies,
which will help us to measure the respective performance of an organization.

In this context, I have chosen to do the critical analysis of Pfizer India Limited.
The pharmaceutical industry in India ranks 3rd in the world terms of volume and 14th in terms of
value.[1] According to Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers,
the total turnover of India's pharmaceuticals industry between 2008 and September 2009
was US$21.04 billion. Hyderabad, Mumbai, Bangalore and Ahmedabad are the major
pharmaceutical hubs of India.[2] The domestic market was worth US$13.8 billion in 2013.[3]

The Government started to encourage the growth of drug manufacturing by Indian companies in
the early 1960s, and with the Patents Act in 1970.[4] However, economic liberalization in 90s by
the former Prime Minister P.V. Narasimha Rao and the then Finance Minister, Dr. Manmohan
Singh enabled the industry to become what it is today. This patent act removed
composition patents from food and drugs, and though it kept process patents, these were
shortened to a period of five to seven years.

India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.137 billion
($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the biggest
contributor generating 60 percent of the industry's growth at Rs.8,829 crore, followed by bio-
services at Rs.2,639 crore and bio-agri at Rs.1,936 crore.

Largest companies:
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Sales, marketing, and business

Multinational Pharmaceutical Companies ranked as per active presence of sales,
marketing and business in India

1. Pfizer
2. GlaxoSmithKline
3. Sanofi Aventis
4. Merck
5. Johnson and Johnson
6. Amgen
7. Novartis
8. Roche

Pharmaceutical industry has been growing steadily in the last few decades and Pfizer India is
here to expand its wings. This study will enable us to understand the type of organization that
Pfizer India is and as a result will help us understand the pharmaceutical industry as well.

Data Collection:

The aim of this critical analysis of the organization is to gather qualitative and

quantitative data that will lead to the critical understanding of Pfizer, Inc. The quantitative data

were obtained from studying and analyzing the information presented in the case. Additional

information was also collected from Pfizer’s company website in the form of financial

statements, annual reports, newsletters, financial diagrams, among others. To ascertain

credibility of information, financial information about Pfizer’s performance was collected from

Prowess. Information about Pfizer, Inc.’s operations, history, strategies, and other qualitative

data was obtained from news articles, company profile, and other reportorial statements of the

company obtained from credible internet sites.

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Theoritical framework:

1. SWOT ANALYSIS:

1.3.1 Strengths

One of the main strengths of Pfizer is the company’s’ experience in over 150 years Research &
Development, providing a broad therapeutic coverage. Pfizer’s product pipeline currently
consists of 82 projects at different stages of development. Furthermore Pfizer possesses a strong
market position with high sales and a solid marketing infrastructure. Another strength of Pfizer is
the high amount of strategic agreements and mergers & acquisitions, which increase the
portfolio, the brand reputation and lead to an improvement of know-how and further resources.
For instance, Pfizer possesses various research agreements with competitors such as Merck &
Co. Finally, the corporation benefits from a strong brand image; this image is especially
generated by Pfizer’s blockbuster products like Viagra, Lipitor and Lyrica. Thus, Pfizer is
defined by adequate usage of its internal resources and smart choices of valuable partnerships.

1.3.2 Weaknesses

Pfizer’s main weakness lies in its strong reliance on the blockbuster portfolio that generates
almost a half of the overall sales. As it is shown in the graphic, the blockbuster products, such
as Lipitor and Viagra, accounted for 49% of the revenues of biopharmaceutical products, which
in turn generated 94% of Pfizer’s overall revenues in 2012.

Figure 1: Segmentation of the Biopharmaceutical Products

This weakness is strongly connected to the following one, the expiration of patent rights. The
loss of exclusivity has an important impact on all of Pfizer’s products, but especially on their
blockbusters. Patent expirations cause a loss of technological advance for Pfizer, since
competitors will immediately penetrate the markets with generic products. Thus, the sales will
significantly decrease, as well as the prices for the respective products. This was, for instance,
the case for the blockbuster product Lipitor, when its patent expired in 2011. Lipitor revenues
decreased from US$ 9.6 billion in 2011 to US$2.3 billion in 2013. Unfortunately, Pfizer is not
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able to develop new compounds at the same rate at which patents are expiring. In addition, Pfizer
does not produce enough low-cost pharmaceuticals, to firstly penetrate the markets with generic
products and, secondly, to be independent on economic downturns that in most cases lead to a
higher demand of these generic compounds.
A further weakness is the stagnation of Pfizer’s business units. As presented in the adjoining
table, the most profitable business units, Specialty Care andPrimary Care, show decreasing
revenues.

Figure 2: Revenues per Business Unit

The business unit Emerging Markets shows only a slight increase and Established Products is
again characterized by falling sales. High increases can only be registered for the two business
units with the lowest revenues. This stagnation and decrease of revenues in the most important
units could be interpreted as an inability to invent new and profitable products. Pfizer should
invest and focus on growing markets to ensure a balanced market penetration to react better on
customer needs and to compensate shocks.

1.3.3 Opportunities

The emergence of new markets as well as new market segments represents one big opportunity
for Pfizer. From a demographic point of view, the continuously ageing society, as well as the fast
growing emerging markets will significantly contribute to an increase in the demand of
pharmaceutical products. Moreover, Pfizer could expand its activities in the production of
generic compounds to further diversify its product portfolio and become more independent from
external shocks. Due to the high investments in Research and Development, the future
development time, as well as the cost of production will likely decrease. The R&D agreements
with health institutes and competitors will also be favourable for this development. In addition, a
rising awareness about healthcare needs can be expected and will also ensure a growing demand
of biopharmaceutical and customer healthcare products. Due to this rising awareness, the
demand for high quality therapies is likely to increase as well.

1.3.4 Threats

As already mentioned, Pfizer is highly dependent on external effects. This includes government
control and healthcare regulations. Since the sales in the United States count for almost 40% of
the overall revenues, especially reforms in the American Healthcare system could have
significant impact on Pfizer’s business, e.g. in terms of pricing and access restrictions for its
products. For instance, an increase in the minimum rebate on branded prescription drugs within
the U.S. Healthcare Legislation will affect the 2013 revenues ex post by a reduction of US$ 458
million, according to the Financial Report of 2013. Moreover, the expiration of patents is also a
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considerable threat since it causes high competition through generic pharmaceuticals.

Furthermore, national and international competitors could launch similar products, even earlier
than Pfizer, which represents another threat. Both of these threats lead to price decreases and
thus potential losses in Pfizer’s revenues.

A. Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

1 SO Strategies

It can use its reputation as one of the largest pharmaceutical company in the world to
gain strategic agreements with other companies such as Wyeth and other

organizations to boost its research.

It can use its fully integrated manufacturing facilities to expand into the biologics
market like vaccines, blood or blood components, allergenics, somatic cells, gene

therapies, tissues, recombinant therapeutic protein, and the living cells used in cell

therapy.

It can use its marketing infrastructure to have a marketing agreements with the
industries’ leading companies in terms of marketing such as Sanofi and AstraZeneca

2 ST Strategies

It can use its excellent research and development (R&D) program to reduce the
threats or unsuccessful new products introductions
It can use its strong mergers and acquisitions strategies against the industries’ leading
pharmaceutical companies such as Wyeth to abate the increasing market competition

Its strong brand name and recall globally can reduce the threats given by increasing
entries of private individuals
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3. WO Strategies

Use E-commerce to reduce reliance to Indian markets and small number of

distributors

Marketing agreements with Wyeth or Sanofi to broaden the scope of market share
growth in India.

Use excess funds to penetrate into the biologics market specifically vaccines and the
living cells used in cell therapy which is highly in demand in the African regions

specially in the Central and Northern Africa and underdeveloped parts of India.

4. WT Strategies

Allocate further research efforts before new inductions in the market specifically into
the biologics market which requires keen and thorough studies

Fund capital expenditures on infrastructures for fermentation-based drug remedies

and effluent treatment plants
Provide added marketing efforts to regain an acceptable public image for previously
sued products through using different promotional tools like traditional media such as

TV, radio and newspaper advertising and product placement.

2. BCG MATRIX:

Boston Consulting Group Matrix

In the following paragraphs, the Boston Consulting Group matrix will be used to
show the current market position of several top-selling products of Pfizer, their blockbusters.
Since information regarding the products’ market shares is difficult to obtain, a complete BCG-
analysis could not be conducted.
Lyrica: This medicine is indicated for the treatment of neuropathic pains. The product showed
the highest increases in revenues within the Pfizer portfolio in 2013 (+11% in comparison to
2012). It has a comparatively high market share of approximately 34%. Its patent rights will not
expire until 2018, so it Lyrica will likely maintain a blockbuster position in the upcoming years.
Enbrel: This product is used for the treatment of moderate-to-severe rheumatoid arthritis and is
the second best-selling medicine worldwide in this segment. However, Enbrel’s total revenues
increased by only 1% in 2013. In the U.S. and in Canada, the sale is based on a co-promotion
agreement between Pfizer and Amgen, which expired in the end of 2013. Therefore, Pfizer will
only receive royalties in the following 2 ½ years, and will not be entitled to any further revenues
from Enbrel in the U.S. and in Canada. Nevertheless, since revenues from the rest of the world
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are solid, the market share is high and the growth relatively low, Enbrel can be considered as a
cash cow.
Viagra: In 2013, total revenues of Viagra decreased by 8%. This development is mainly due to
the entry of generics in the European market, since Viagra lost exclusivity in these markets in
mid-2013. But since it is the most recognized treatment for erectile dysfunction in the world, it
still possesses a market share of approximately 45%. Viagra has a high brand reputation and
generates solid revenues within the Pfizer portfolio; thus, it can be considered as a cash cow.
Lipitor: This pharmaceutical is used for the treatment of elevated LDL-cholesterol levels in the
blood. Since the expiration of its patent rights in 2011, the market share of Lipitor significantly
dropped to currently approximately 4%. Lipitor faces strong generic competition in all major
markets. Its total revenues decreased by 41% from 2012 to 2013. But since it is still generating
over US$ 2 billion of revenues, it can be considered as a cash cow with slow tendency of
becoming a poor dog.
Zyvox: Zyvox is the world’s best-selling branded agent for treatment of Gram-positive
pathogens, including methicillin-resistant staphylococcus-aureus. Its market share amounts to
almost 50%. However, total revenues increased by only 1% in 2013. Zyvox will not lose
exclusivity before 2015. Therefore, further solid revenues will be generated until then. It can be
considered as a cash cow with some characteristics of a star in emerging markets, since the
growth in emerging markets strongly contributed to the total increase of revenue.
Sutent:This pharmaceutical is indicated for the treatment of renal cell carcinoma and various
tumours. Even if total revenues decreased by 3%, it can be considered as the most important star
within Pfizer’s biopharmaceutical product portfolio. Sutent is market leader in its segment and is
still under patent protection until 2018. Thus, it will most likely generate significant revenues in
the upcoming years.

Figure 3: BCG matrix

3. Ansoff Matrix
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As the largest pharmaceutical company in the world, Pfizer is continuously trying to improve its
portfolio. To give insight into those portfolio changes and the direction Pfizer is taking right
now, we took into account the past five years (2009-2013).

2.1.1 2009

The acquisition of Wyeth, a large US pharmaceutical company, for 68$ billion in the end of
2009, enabled Pfizer to grow its business significantly (market penetration). Besides improving
its portfolio in areas where Pfizer already well established (oncology, pain, inflammation,
Alzheimer’s disease, psychoses and diabetes), the acquisition also increased Pfizer’s emphasis
on biotherapeutics and vaccines.
In connection with the acquisition, both Pfizer and Wyeth divested some of their animal health
assets. They sold them to the German drug manufacturer Boehringer Ingelheim. The products
being divested primarily include cattle and small animal vaccines and some animal
health pharmaceuticals(consolidation). Furthermore, engaged in a joint venture with
GlaxoSmithKline (the fourth biggest pharmaceutical company worldwide) to create ViiV
Healthcare. This new company brings together the industry’s best assets in order to counteract
HIV/AIDS (market penetration). Also in 2009, Pfizer entered a partnership with the Israeli
pharmaceutical company Protalix to develop a drug to treat Gaucher’s disease, empowering its
Established Products business. This partnership was Pfizer’s first move into the biosimilar drug
market (product development).
Pfizer entered major licensing agreements with three India-based pharmaceutical companies
(Aurobindo Pharma Ltd., Claris Lifesciences Ltd. and Strides Arcolab). They add new non-
Pfizer products to the portfolio and enhance the access of medicine to underserved people
worldwide (market and product development).
A new established partnership with Bausch & Lomb, a global supplier of eye care treatments,
allows both companies to promote each other’s prescription ophthalmic products, extending their
level of support to eye care professionals (market penetration).
Joining forces with Eli Lilly and Merck, Pfizer established the Asian Cancer Research Group. It
is an independent non-profit organization, whose goal it is to gain knowledge of cancers
prevalent in Asia and to accelerate drug discovery efforts by sharing the findings with the
scientific community (product development).
Moreover, Pfizer teamed up with the innovator in privacy-enhanced search technology, Private
Access, in order to raise recruitment into clinical trials by founding the first online community to
address privacy concerns, giving participants full control over how much and what information
they share with researchers (diversification).
2.1.2 2010

The acquisition of Ferrosan’s consumer healthcare business, a Copenhagen-based consumer

health care company concentrating primarily on Northern and recently expanding to Eastern
Europe, allows Pfizer to improve its presence on dietary supplements with a new set of brands
and pipeline products. This improves Pfizer’s distribution channels in Europe and allows
expanding the marketing of Ferrosan’s brands through Pfizer’s global footprint (market
penetration).
Pfizer’s acquisition of King Pharmaceuticals, Inc. complements its portfolio of pain treatments in
the Primary Care unit and provides potential growth opportunities in the Established Products
and Animal Health units (market penetration).
Furthermore, the acquisition of FoldRx Pharmaceuticals, Inc. is expected to increase Pfizer’s
presence in the growing rare medical disease market, which complements its Specialty Care
unit (market penetration).
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The company also created an alliance with the Indian biopharmaceutical company Biocon
complementing its Established Products and Emerging Markets unit by advancing in biosimilars
and positioning themselves competitively in the diabetes market over time (market penetration).
The alliance was cancelled in 2012.
In addition, Pfizer acquired a 40% stake in Laboratório Teuto Brasileiro S.A. (Teuto) to
complement their Emerging Markets units, including commercial agreements. This allows the
organization to expand its portfolio in generic medicines in Brazil and seize growth opportunities
in important emerging markets (market penetration and development).
2.1.3 2011

Towards the end of the year, Pfizer completed the acquisition of Excaliard Pharmaceuticals, Inc.,
a privately owned biopharmaceutical company focused on developing novel drugs for the
treatment of skin fibrosis, more commonly referred to as skin scarring (market penetration).
The company came to an agreement with GlycoMimetics, Inc. for their investigational
compound GMI-1070 to receive an exclusive worldwide license to the compound (product
development).
Furthermore, Pfizer bought a majority of the shares of Icagen, a biopharmaceutical company
focused on discovery, development and commercialization of novel orally-administered small
molecule drugs that modulate ion channel targets, resulting in an approximately 70%
ownership (market penetration).
The corporation also divested its Capsugel unit for $2.38 billion to private-equity firm Kohlberg
Kravis Roberts & Co. to go back to its core pharmaceutical businesses (consolidation).
In the same year, Pfizer acquired King Pharmaceuticals, Inc. King’s principal businesses consist
of a prescription pharmaceutical business focused on delivering new formulations of pain
treatments designed to discourage common methods of misuse and abuse; the Meridian auto-
injector business for emergency drug delivery, which develops and manufactures the EpiPen; an
established products portfolio; and an animal health business that offers a variety of feed-
additive products for a wide range of species (market penetration).
Moreover, the company announced to explore new strategic alternatives for its animal health &
nutrition unit. Those might include a partial or complete separation of this
business (consolidation).
2.1.4 2012

Pfizer sold its Nutrition business, including Wyeth’s baby food division, to Nestlé for $11.85
billion. This divestiture allowed Pfizer to concentrate more on its core businesses and Nestlé
could improve its position as global market leader in the food industry (consolidation).
Furthermore, the company added NextWave Pharmaceuticals Incorporated (NextWave), a
privately held, specialty pharmaceutical company to its portfolio. As a result of the acquisition,
Pfizer now holds exclusive North American rights to Quillivant XR™, the first once-daily liquid
medication approved in the U.S. to treat ADHD. The total consideration for the acquisition was
approximately $442 million (market penetration and product development).
Pfizer and Zhejiang Hisun Pharmaceuticals Co., a leading Chinese pharmaceutical company,
engaged in a joint venture, Hisun Pfizer Pharmaceuticals Company Limited (HPP), to develop,
manufacture and commercialize off-patent pharmaceutical products in China and global
markets (market penetration and development).
In august, the organisation entered into an agreement with AstraZeneca for the global over-the-
counter rights for Nexium, a leading prescription drug to treat the symptoms of gastroesophageal
reflux disease (product development).
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Besides, Pfizer completed the acquisition of Alacer Corporation, a company that manufactures
markets and distributes Emergen-C, a powdered drink mix vitamin supplements that is the
largest-selling branded vitamin C line in the U.S. (market penetration).

2.1.5 2013

Pfizer completed the full disposition of its animal health business. The full disposition was
completed through a series of steps, including the formation of Zoetis, an initial public offering
(IPO) (consolidation).

The following Ansoff Matrix marks the most important changes in Pfizer’s portfolio over the last
five years:

Figure 9: Ansoff Matrix applied to Pfizer

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4. Porter’s generic strategies:

As global market leader in the pharmaceutical industry, Pfizer uses the following two of the
generic strategies: differentiation and differentiation focus.

Differentiation Strategy

Pfizer is working in various fields of the pharmaceutical industry, but focusing on

biopharmaceuticals and customer health care. A lot of its products, especially in the customer
health business unit, are produced for the mass market and therefore indicate a broad target
scope. The company spends a lot of money on research and development. In 2013, 12.9% of
Pfizer’s revenues were used to fund the companies’ R&D activities. The organization strives for
innovation and pioneering the industry. It holds a significant amount of patents (i.e. Lipitor and
Viagra), which is decreasing due to expiration of those patents (i.e. Lipitor in 2011). Those
products, often becoming blockbusters (prescription drugs that generate more than US-$ 1 billion
revenue), allow Pfizer to use their first-mover advantage to offer the products to higher prices,
establish their drug and skim revenues before competitors follow. Due to its extensive
engagement in R&D, Pfizer is offering innovative and high quality pharmaceutical products all
around the world. Furthermore, Pfizer is the global market leader in its industry. To be able to
maintain its position, the company needs to keep growing and improving. Besides organic
growth, Pfizer engages in partnerships and horizontal integration for future growth. Those
partnerships and acquisitions allow the corporation to lower its costs, add new products to the
portfolio as well as expanding distribution channels.

2.2.2 Differentiation Focus Strategy

Among the areas of the pharmaceutical industry Pfizer is working on, there are some (i.e.
specialty care and oncology), that address a narrow target scope, meaning a special group of
19

customers. Those include cancer patients, infectious and gastrointestinal diseases. The company
has increased R&D expenditures especially in those business units to discover new innovative
solutions to cure or at least improve patient’s conditions in those domains.

5. Balance scorecard:

The balanced scorecard (BSC) is a strategy performance management tool that identifies and
improves diverse internal functions and their resulting external outcomes in an attempt to
measure and provide feedback to the company in order to assist in implementing strategies and
objectives.
Pfizer uses a Balanced Scorecard approach that evaluates both financial as well as non-financial
measures. Practically relevant information and performance data of Pfizer are collected via an
online system and used as part of formal mid-year and annual evaluation.

The Business Unit Pfizer’s Global Operations (PGO) is in charge of leveraging scorecards to
drive the integration efforts of various acquisitions and to ensure the capture of best practices
throughout Pfizer. As per PGO, a successful integration depends on unifying all employees
behind a single set of strategic objectives. By starting with strategy and the vision, Pfizer’s
workforce has a clear understanding of the criteria and parameters to use in driving integration
activities and designing go-forward business processes, therefore the Pfizer’s strategic objectives
provide the ‘‘right’’ pathway to follow and a framework for the organization’s scorecard efforts.
Though various criteria are used to determine scorecard measures, the most important criterion is
the metric which links directly to a strategic objective and support and drive the attainment of
strategy.
20

Figure 19: 360 Review Process – The Balanced Scorecard Approach

A sample of goals and measures with regard to the application of the BSC on Pfizer are
presented below and are mainly based on given information of the previous chapters:

Goals Measures
Almost constantly rising
share price and
marketcapitalization Marketcapitalization
Market leader by Profit Growth
revenues Revenue Growth
Problem: decreasing Sales Growth
revenues after 2010 Return on Assets
FINANCIAL Necessity for more Return on Investment
PERSPECTIVE investments in R&D and Market share
21

marketing
Successful M&A to
ensure future growth à
i.e. Wyeth in 2009
Increase sales,
especially in emerging
markets (presently the
US is still the most
important market for
Pfizer)
Growth of businesses
Increase Margins
Raise dividends
Decrease operating costs
Investments in
promotion of Pfizer
“brand”
Customersatisfaction
Improvement of
products
Development of generic
drugs (in order not to
lose to competition
when patents expire)
Conduct market Investments
research to better Brand awarenesssurvey
understand customer Customer satisfaction /
needs (for various survey / ratio
medications) Profitable customers
CUSTOMER Increase access to Customer retention
PERSPECTIVE healthcare R&D Expenses
Production process
optimization
(efficiency↑,
effectiveness↑)
Improvements of
distribution channels
(especially through
partnerships and M&A)
Divestitures of non-core
businesses (animal
health and nutrition
units) Finished products per
Continuous day peremployee
Improvement Cost of inventoriesheld
endeavours Cycle time
Improvement in Number of vendors
INTERNAL corporate decision Product quality
BUSINESS making Machine downtime
22

Drive business
excellence
Number of employees
in required
trainingprograms
Learning through M&A Participation in
andpartnerships voluntary
Investments in R&D educationprograms
Innovation Aggregate ROI of new
Employee training ideas implemented
Motivated workforce Investment in R&D
LEARNING Internal and external New processes
& GROWTH benchmarking Employee suggestions

6. Porter’s five forces:

1. Threat of New Entrants

Moderate to High - Companies such as Pfizer, Merck, Novartis and Bayer have

substantial engineering capabilities that are hard to replicate; their products are protected

by patents and have larger marketing budgets to protect their brand. Only legislations,

such as 1984 Waxman-Hatch Act, has made it easier for generic drug companies to enter

the market.

2. Rivalry Among Competitors

High - There are many players in the pharmaceutical industry that have revenues of over

$3 billion. The pharmaceutical industry is expected double its revenues in emerging

markets in the near future. Companies are finding ways to differentiate their products

from competitors. Limited patient numbers have also tightened the competition.

Companies are in a race to get their patents approved so that their drug reaches the

market first.
23

3. Threat of Substitutes

Moderate to High - Patents protect a company’s products only for a certain number of

years. Once it expires, the product’s basic formula is open for the public to see. These are

when generic drugs pop out, the cheaper version that may be substituted with the

company’s products. Another type of substitute may be herbal remedies which are

gaining popularity these days.

4. Bargaining Power of Suppliers

High – With the pharmaceutical industry’s nature, supplies are very important. Since

these supplies may be rare materials of chemicals, the company’s production hangs in the

15
24

balance if or when suppliers suppress the supply. The patients who participate in

trials may also be considered as suppliers. These patients have the power to ask

for more compensation, demand supplement resources and not fully cooperate

with the experiment. This will have an effect on the company’s ongoing

researches.

5. Bargaining Power of Buyers

Moderate to high - Buyers can negotiate a price reduction or threaten to go to

rival companies or generics if their needs are not meet. If this happens, sales will

decrease. Hospitals and health care buy in bulk and ensure that pharmaceutical

companies keep prices in check.

6. Summary of Porter’s Five Forces of Competition

25

5. Company description:

1. History of the company:

Pfizer was founded in 1849 by cousins Charles Pfizer and Charles F. Erhart in New York City as
a manufacturer of fine chemicals. Its discovery of Terramycin (oxytetracycline) in 1950 put it on
a path towards becoming a research-based pharmaceutical company. It has made numerous
acquisitions, including Warner–Lambert in 2000, Pharmacia in 2003, and Wyeth in 2009 (the
largest of the three at $68 billion).[9][10]
19th century[edit]

Charles Pfizer
Pfizer is named after German-American Charles Pfizer who co-founded the company with his
cousin Charles F. Erhart. Originally from Ludwigsburg, Germany, they launched a chemicals
business, Charles Pfizer and Company, from a building at the intersection of Harrison Avenue
and Bartlett Street[11] in Williamsburg, Brooklyn, in 1849. There, they produced
an antiparasitic called santonin. This was an immediate success, although it was the production
of citric acid that really kick-started Pfizer's growth in the 1880s. Pfizer continued to buy
property to expand its lab and factory on the block bounded by Bartlett Street; Harrison Avenue;
Gerry Street; and Flushing Avenue. Pfizer's original administrative headquarters was at 81
Maiden Lane in Manhattan.[11]
20th century[edit]
By 1906, sales totaled $3.4 million.[12]
World War I caused a shortage of calcium citrate that Pfizer imported from Italy for the
manufacture of citric acid, and the company began a search for an alternative supply. Pfizer
chemists learned of a fungus that ferments sugar to citric acid and were able to commercialize
production of citric acid from this source in 1919. As a result, Pfizer developed expertise
in fermentation technology. These skills were applied to the mass production of
the antibiotic penicillin during World War II in response to the need of the U.S. government to
treat injured Allied soldiers; most of the penicillin that went ashore with the troops on D-Daywas
made by Pfizer.[13]
In the 1940s, penicillin became very inexpensive. As a result, Pfizer searched for new antibiotics
with greater profit potential. Pfizer's discovery and commercialization of Terramycin
(oxytetracycline) in 1950 changed the company from a manufacturer of fine chemicals to a
26

research-based pharmaceutical company. To augment its research in fermentation technology,

Pfizer developed a drug discovery program focusing on in vitro synthesis. Pfizer also established
an animal health division in 1959 with an 700-acre (2.8 km2) farm and research facility in Terre
Haute, Indiana.
By the 1950s, Pfizer had established offices in Belgium, Brazil, Canada, Cuba, Mexico, Panama,
Puerto Rico, and the United Kingdom. In 1960, the company moved its medical research
laboratory operations out of New York City to a new facility in Groton, Connecticut. In 1980
Pfizer launched Feldene (piroxicam), a prescription anti-inflammatory medication that became
Pfizer's first product to reach one billion United States dollars in total sales.[14]
During the 1980s and 1990s, Pfizer Corporation growth was sustained by the discovery and
marketing of Zoloft, Lipitor, Norvasc, Zithromax, Aricept, Diflucan, and Viagra.[15]
2000–2010[edit]
In this decade, Pfizer grew by mergers, including those with Warner–
Lambert (2000), Pharmacia (2003), and Wyeth (2009).
In 2003, the company acquired Esperion Therapeutics for $1.3 billion (later selling the unit in
2008), protecting Lipitor from ETC-216.[16] In 2004, Pfizer announced it would acquire Meridica
for $125 million.[16] In 2005, the company made a number of acquisitions: Vicuron
Pharmaceuticals for $1.9 billion, Idun for just less than $300 million and finally Angiosyn for
$527 million.[16]
On June 26, 2006, Pfizer announced it would sell its Consumer Healthcare unit (manufacturer
of Listerine, Nicorette, Visine, Sudafed and Neosporin) to Johnson & Johnson for
$16.6 billion.[17][18][19]
Development of torcetrapib, a drug that increases production of HDL, or "good cholesterol",
which reduces LDL thought to be correlated to heart disease, was cancelled in December 2006.
During a Phase III clinical trial involving 15,000 patients, more deaths occurred in the group that
took the medicine than expected, and a sixty percent increase in mortality was seen among
patients taking the combination of torcetrapib and Lipitor versus Lipitor alone. Lipitor alone was
not implicated in the results, but Pfizer lost nearly $1 billion developing the failed drug and the
market value of the company plummeted afterwards.[20][21][22] The company also announced it
would acquire Powermed and Rivax.[16][when?]
In September 2009, Pfizer pleaded guilty to the illegal marketing of the arthritis drug Bextra for
uses unapproved by the U.S. Food and Drug Administration (FDA), and agreed to a $2.3 billion
settlement, the largest health care fraud settlement at that time.[23]
A July 2010 article in BusinessWeek reported that Pfizer was seeing more success in its battle
against makers of counterfeit prescription drugs by pursuing civil lawsuits rather than criminal
prosecution. Pfizer has hired customs and narcotics experts from all over the globe to track down
fakes and assemble evidence that can be used to pursue civil suits for trademark infringement.
Since 2007, Pfizer has spent $3.3 million on investigations and legal fees and recovered about
$5.1 million, with another $5 million tied up in ongoing cases.[24]
On May 6, 2013, Pfizer told The Associated Press it would begin selling Viagra directly to
patients via its website.[25]
Warner–Lambert acquisition[edit]
Pfizer acquired Warner–Lambert in 2000 for $111.8 billion,[26] at the time, created the second
largest pharmaceutical company in the world.[27] Warner–Lambert was founded as
a Philadelphia drug store in 1856 by William R. Warner. Inventing a tablet-coating process
27

gained Warner a place in the Smithsonian Institution. Parke–Davis was founded in Detroit in
1866 by Hervey Parke and George Davis. Warner–Lambert took over Parke–Davis in 1976, and
acquired Wilkinson Sword in 1993 and Agouron Pharmaceuticals in 1999.
Pharmacia acquisition[edit]
In 2002, Pfizer merged with Pharmacia. The merger was again driven in part by the desire to
acquire full rights to a product, this time Celebrex (celecoxib), the COX-2 selective
inhibitor previously jointly marketed by Searle (acquired by Pharmacia) and Pfizer. In the
ensuing years, Pfizer carried out a massive restructuring that resulted in numerous site closures
and the loss of jobs including Terre Haute, Indiana; Holland, Michigan; Groton,
Connecticut; Brooklyn, New York; Sandwich, UK; and Puerto Rico.
Pharmacia had been formed by a series of mergers and acquisitions from its predecessors,
including Searle, Upjohn and SUGEN.
Searle was founded in Omaha, Nebraska, in April 1888. The founder was Gideon Daniel Searle.
In 1908, the company was incorporated in Chicago, Illinois. In 1941, the company established
headquarters in Skokie, Illinois. It was acquired by the Monsanto Company, headquartered in St.
Louis, Missouri, in 1985.
The Upjohn Company was a pharmaceutical manufacturing firm founded in 1886 in Kalamazoo,
Michigan, by Dr. William E. Upjohn, an 1875 graduate of the University of Michiganmedical
school. The company was originally formed to make friable pills, which were specifically
designed to be easily digested. Greenstone was founded in 1993 by Upjohn as a generics
division.[28] In 1995, Upjohn merged with Pharmacia, to form Pharmacia & Upjohn. Pharmacia
was created in April 2000 through the merger of Pharmacia & Upjohn with the Monsanto
Company and its G.D. Searle unit. The merged company was based in Peapack, New Jersey. The
agricultural division was spun off from Pharmacia, as Monsanto, in preparation for the close of
the acquisition by Pfizer.[29]
SUGEN, a company focused on protein kinase inhibitors, was founded in 1991 in Redwood City,
California, and acquired by Pharmacia in 1999. The company pioneered the use of ATP-mimetic
small molecules to block signal transduction. After the Pfizer merger, the SUGEN site was shut
down in 2003, with the loss of over 300 jobs, and several programs were transferred to Pfizer.
These included sunitinib (Sutent), which was approved for human use by the FDA in January
2006, passed $1 billion in annual revenues for Pfizer in 2010.[30] A related compound, SU11654
(Toceranib), was also approved for canine tumors, and the ALK inhibitor Crizotinib also grew
out of a SUGEN program.[31]
In 2003, the new Pfizer made Greenstone (originally established as a division of Upjohn) its
generic division, and its focus turned to selling authorized generics of Pfizer's products.[28][32]
In 2008, Pfizer announced 275 job cuts at the Kalamazoo manufacturing facility. Kalamazoo was
previously the world headquarters for the Upjohn Company.[33]
Wyeth acquisition[edit]
On January 26, 2009, after more than a year of talks between the two companies, Pfizer agreed to
buy pharmaceuticals rival Wyeth for a combined US$68 billion in cash, shares and loans,
including some US$22.5 billion lent by five major Wall Street banks. The deal cemented Pfizer's
position as the largest pharmaceutical company in the world, with the merged company
generating over US$20 billion in cash each year, and was the largest corporate merger
since AT&T and BellSouth's US$70 billion deal in March 2006.[34] The combined company was
expected to save US$4 billion annually through streamlining; however, as part of the deal, both
companies must repatriate billions of dollars in revenue from foreign sources to the United
28

States, which will result in higher tax costs. The acquisition was completed on October 15, 2009,
making Wyeth a wholly owned subsidiary of Pfizer.[10]
The merger was broadly criticized. Harvard Business School's Gary Pisano told The Wall Street
Journal, "the record of big mergers and acquisitions in Big Pharma has just not been good.
There's just been an enormous amount of shareholder wealth destroyed."[35] Analysts said at the
time, "The Warner–Lambert and Pharmacia mergers do not appear to have achieved gains for
shareholders, so it is unclear who benefits from the Wyeth–Pfizer merger to many critics."[36]
King Pharmaceuticals acquisition[edit]
In October 2010, Pfizer agreed to buy King Pharmaceuticals for $3.6 billion in cash or $14.25
per share: an approximately 40% premium over King's closing share price October 11, 2010.[37]
2011–present[edit]
In February 2011, it was announced that Pfizer was to close its UK research and development
facility (formerly also a manufacturing plant) in Sandwich, Kent, which at the time employed
2,400 people.[38] However, as of 2014, Pfizer has a reduced presence at the site;[39] it also has a
UK research unit in Cambridge.[40]
On September 4, 2012, the FDA approved a Pfizer pill for a rare type of leukemia. The medicine,
called Bosulif, treats chronic myelogenous leukemia (CML), a blood and bone marrow disease
that usually affects older adults.[41]
In July 2014, the company announced it would acquire Innopharma for $225 million, plus up to
$135 million in milestone payments, in a deal that expanded Pfizer's range of generic and
injectable drugs.[42]
On January 5, 2015, the company announced it would acquire a controlling interest
in Redvax for an undisclosed sum. This deal expanded the company's vaccine portfolio targeting
human cytomegalovirus.[43] In March 2015, the company announced it would restart its
collaboration with Eli Lilly surrounding the phase III trial of Tanezumab. Pfizer is expected to
receive an upfront sum of $200 million.[44] In June 2015, the company acquired
two meningitis drugs from GlaxoSmithKline—Nimenrix and Mencevax—for around
$130 million, expanding the company's meningococcal disease portfolio of drugs.[45]
In May 2016, the company announced it would acquire Anacor Pharmaceuticals for $5.2 billion,
expanding the companies portfolio in both inflammation and immunology drugs areas.[46] On
their final trading day, Anacor shares traded for $99.20 each, giving Anacor a market
capitalisation of $4.5 billion. In August, the company made a $40 million bid for the assets of the
now bankrupt BIND Therapeutics through the U.S. Bankruptcy Court.[47] The same month, the
company announced it would acquire Bamboo Therapeutics for $645 million, expanding the
company's gene therapy offerings.[48] Later, in August, the company announced the acquisition
of cancer drug-maker - Medivation - for $14 billion.[49][50] On Medivation's final day of trading,
its shares were valued at $81.44 each, giving an effective market capitalisation of $13.52 billion.
Two days later, Pfizer announced it would acquire AstraZenecas small-molecule antibiotics
business for $1.575 billion[51] merging it into its Essential Medicines business[52] In the same
month the company licensed the anti-CTLA4monoclonal antibody, ONC-392,
from OncoImmune.[53]

6. Present scenario of the company:

1. Corporate strategy:
29

The purpose of the action plan is to translate the corporate strategy into “action”. In order to do
this specific functional tactics and actions, the time frame for completion and the immediate
goals have to be provided (at least). The action plan in the table below shows a sample of some
of the goals and resources, as well as planned actions and a respective time schedule that will
facilitate Pfizer to achieve its strategic goals.

Objectives Actions and Tactics Schedule

Reorganization of commercial
operations:
New global commercial structure
consisting of three businesses
Global Innovative pharmaceutical
business (GIP)
Global Vaccines, Oncology &
Consumer Healthcare business (VOC)
Global Established Pharmaceutical
business (GEP)
Estimated costs of approximately $350
million related to the streamlining of
certain functions, the realignment of
regional locations and colleagues to
increase support the businesses and
efficiency implementing the necessary system
and changes to support future reporting 2014 -
effectiveness requirements 2016
Finalize cost-reduction/productivity
initiative:
manufacturing plant network 2014 -
cost-savings rationalization 2016
Approval (and launch) of new products
to overcome the loss of revenue due
togenericcompetition- two drugs look
set to dominate the headlines for Pfizer
in 2014:
increase pneumonia vaccine
revenue breast cancer drug palbociclib 2014
Developmental collaborative
develop new arrangements:
generation of Pfizer and Merck to collaborate on
blockbuster innovative anti-cancer combination from
drugs Studies 2014

2. Collaborations:
30

When we think partnerships, we think diverse, bold, and inspired. It's in those
partnerships where we can find an innovative medicine that saves a life. Or the licensing
deal that broadens access to a critical drug. Or the technology collaboration that brings an
experimental medicine to clinical trials faster. Or, even a business process that improves
the way we help our customers.

Our partnerships, while individualized in scope and breadth, all offer the possibility of a healthier
world. Read about some of our partnerships

RECENT PARTNERSHIPS

August 16, BioNTech Signs Collaboration Agreement with Pfizer to Develop

2018 mRNA-based Vaccines for Prevention of Influenza

HUB Announces Collaboration with Pfizer Inc. on Human Gut

May 1, 2018 Organoids for IBD

March 19, BioDuro Collaboration with Pfizer Inc. Leads to Creation of a Shelf-
2018 Stable Fluorosulfation Reagent

BIOGEN TO ACQUIRE FROM PFIZER FIRST-IN-CLASS PHASE

March 12, 2b READY ASSET FOR COGNITIVE IMPAIRMENT ASSOCIATED
2018 WITH SCHIZOPHRENIA

March 9, AM‐Pharma announces Phase II study results of recAP in

2018 sepsis‐associated Acute Kidney Injury

March 2,
2018 Neofluidics Announces Collaboration with Pfizer Inc.

February 28, Inserm announces research agreement with Pfizer Inc. to study rare
2018 neuromuscular disease
31

February 6, NetVation DL Medicine Announces Research Collaboration with Pfizer

2018 Inc.

January 22, MINDIMMUNE THERAPEUTICS TO CONDUCT RESEARCH ON

2018 SPECIALIZED IMMUNE CELLS WITH PFIZER INC.

January 17, Circle Pharma announces publication in Journal of Medicinal Chemistry

2018 of results from collaboration with Pfizer Inc.

Adapsyn Bioscience Completes Financing to Advance its Small

January 9, Molecule Natural Products Platform and Pipeline; Announces Research
2018 Collaboration with Pfizer Inc

January 8, Imcyse announces a research collaboration with Pfizer Inc. in

2018 rheumatoid arthritis (RA)

Regeneron Forms Consortium of Leading Life Sciences Companies to

January 8, Accelerate Largest Widely-Available ‘Big Data’ Human Sequencing
2018 Resource with UK Biobank

Alexandria Venture Investments Launches the Alexandria Seed Capital

January 8, Platform, a Novel and Innovative Seed-Stage Life Science Funding
2018 Model and a Natural Extension of Alexandria LaunchLabs

January 5, Distributed Bio Announces SuperHuman Platform License Agreement

2018 with Pfizer Inc.

January 5, Distributed Bio Announces SuperHuman Platform License Agreement

2018 with Pfizer Inc.

Arvinas Announces Research Collaboration and License Agreement

January 4, with Pfizer Inc. for the Discovery and Development of Protein
2018 Degradation Drug Candidates

January 4, Berkeley Lights Announces Research Collaboration and License

2018 Agreement with Pfizer
32

December 18, CMAC Medicines Manufacturing Consortium Welcomes Pfizer as

2017 Newest Partner

November Ground-breaking €34 million project to develop better test for liver
21, 2017 disease

November COMBACTE Adds a New Project to its Consortium: COMBACTE-

16, 2017 CDI

November UC San Diego Center for Microbiome Innovation Announces Pfizer as

15, 2017 Corporate Member

November 1, Encycle Therapeutics announces discovery collaboration with Pfizer

2017 Inc.

September LabCentral to Open Next-Stage Facility for Growing Life Science

21, 2017 Companies, Supported by Pfizer

12. Competitive analysis:

1. Profile of Competitors

Merck & Co. (MRK)

Merck & Co. (established in 1891) is an American pharmaceutical company with

headquarters located in Kenilworth, New Jersey. Merck is one of the world's largest

pharmaceutical company by market capitalization and revenue. Its products consist of

vaccines (BCG Vaccine, MMR II, and Rota Teq); prescription drugs (cardiovascular

disease, respiratory disease, oncology, neuroscience, infectious disease, immunology, and

women's health); animal health products (vaccines, anti-infection, anti-parasitic). Merck

uses different strategies to maintain their competitive advantages. These include mergers

and acquisitions, product development, market development, and partnerships.

33

Bayer AG

Bayer AG is a German multinational chemical and pharmaceutical company

headquartered in Leverkusen, Germany. It is well known for its original brand of aspirin.

Bayer's primary areas of business include Bayer HealthCare (hematology, cardiology,

oncology, anti-infective, contraceptives, and gynecological therapies); Bayer Crop

Science (high value seeds, crop protection solutions like fungicide, herbicide, insecticide,

seed treatment); Bayer Material Science (coatings, adhesive, polycarbonates, and

polyurethanes). The 150 year old company implements strategies like corporate social

responsibility, unrelated diversification, mergers and acquisitions, product development,

and market development.

17
34

Novartis AG

Novartis International AG is a Swiss multinational pharmaceutical company based in

Basel, Switzerland. It is Pfizer’s strongest competitor, ranking just below the number one spot. It

has several divisions that include Pharmaceutical (cardio metabolic, respiratory, neurosciences,

immunology, dermatology, oncology, and cell & gene therapy); Alcon - Eye care (surgical

products, ophthalmic pharmaceuticals, vision care); Sandoz – Generics and OTCs (cough, cold,

respiratory, pain relief, digestive health, smoking cessation, and supplements); Vaccines.

Novartis, being the second largest pharmaceutical company in the industry implements the

following strategies: product development, related diversification, and mergers & acquisitions.

Company beyond the balance sheet

Qualitative approach to a company:

Evidence of Core Ideology High (Well explained in the official documents

Statements of Ideology
Historical Continuity of Ideology
Ideology Beyond Profits
Consistency Between Ideology and Actions
Evidence of Cultism
Evidence of Management Continuity
Evidence of Self-Improvement
Long-Term Investments
Investment in Human Capabilities
of Pfizer)
High (Clear and well imbibed in the
organisation)
Medium (Consistent in ideology on the major
front.)
High (The aim is welfare and then profits
through innovation)
Highly consistent
Medium (Though they consider themselves to be
one of the pioneers in the industry, but the
cultism is not highly prevalent.
High (The top management is trained and
incubated in the organisation from the nascent
stage itself)
Low (The company though has expanded its
horizons both geographically as well as product
portfolio wise, but the quantitative numbers are
quite stagnant.)
High (Huge R&D pipeline)
Medium (Consistent investment YoY on human
capabilities)

Earning Respect From Society

35

Pfizer operates in a global society that gives us a license to operate. That license is rooted in the respect
and trust we earn.

They strive for society’s respect and trust in several ways. The effort begins with listening to and
learning from our customers and other stakeholders. Through what they hear and what they learn in
quantitative and qualitative research, they know that customers want access to information from that
will help them live longer, healthier and happier lives.

Creating an Ownership Culture

During the past year, the diverse talents, experiences and abilities of their colleagues allowed to navigate
multiple forces of change while keeping a focus on the commitment to create consistent and steady
growth in revenues and earnings over time.

Ongoing success in their industry requires Pfizer to be faster as they become more innovative and
entrepreneurial. It requires colleagues who understand the business, seize opportunities to make an
impact and take personal accountability for their actions and a set of behaviors that will drive value
throughout the company.
36

Talent Development

One of the most important responsibilities of leadership at Pfizer is

bringing along the next generation of leaders. Pfizer leaders have a
range of tools available to help them recruit and develop talented
people, and Pfizer’s senior leaders review the pipeline of talent and
its alignment with the most essential jobs in the company. Beyond
making sure we have a sustainable supply of leaders, we also
challenge colleagues to discover new ways to learn, perform and
grow, and to create—and own—a unique experience at Pfizer.

Executive Compensation Aligned With Shareholders’ Interests

We believe that executive compensation policies should reflect that

shareholder funds are at stake and must be used wisely. Therefore,
the overarching goal of our compensation approach is to align each
executive’s compensation with Pfizer’s short-term and long-term
performance and to provide the compensation and incentives
needed to attract, motivate and retain key executives who are
37

crucial to Pfizer’s long-term success. To this end, we regularly

consult with shareholders to refine our executive compensation
philosophy, program and practices.

Ethics

Strong standards of ethics and strong ethical performance are at

Pfizer’s core. We are committed to upholding the highest ethical
standards in every aspect of our business.

Our training programs and organizational structures have been

developed to go beyond compliance. All colleagues are expected to
take ownership of compliance and to perform all tasks with
integrity. We continuously scrutinize our internal practices and
have put into place procedures for taking immediate action when
we identify potential violations. We offer a Compliance Helpline,
an Open Door Policy and anti-retaliation protections, and launched
in 2011 an Office of the Ombudsman to further encourage all
Pfizer colleagues to report potential violations or concerns.

Ethical Sales and Marketing

The use of prescription-only medications and vaccines is intermediated by a number of experts,

including doctors, pharmacists and payers. Patients depend on these intermediaries to make the right
choices in medicines, with the goal of the best health outcome. It is important that these intermediaries,
doctors in particular, fully understand the range of options for treatment available to them, and also fully
understand the risks and benefits of each treatment. Patients should similarly be informed about
treatment choices so they are better equipped to engage in discussions with their doctors and know how
to use products safely and effectively.
Disclosing Payments to Health Care Professionals

Transparency in our relationships with health care professionals

sets the right tone for our business. We publish on our website
Pfizer’s payments and the value of noncash items provided to
licensed U.S. health care professionals, including in connection
with speaking engagements and clinical research activities. Our
disclosure of research payments further identifies major academic
institutions involved with clinical trials, and the principal
investigators on clinical trials. We do not pay health care
38

professionals for prescribing our medicines or as an inducement

for promoting our medicines, vaccines or nutritional products.

Human Rights

As a global company, we operate in complex economic, social and political environments. These
complexities bring with them an enlarged role for us in ensuring human rights within our operations
and in working for human betterment through our increasingly broad global presence.

Thus, we account for and respect human rights in all of our business activities, wherever we operate in
the world. We fully support the principles contained in the Universal Declaration on Human Rights and
the International Labour Organization Declaration on Fundamental Principles and Rights at Work.
Pfizer is a signatory of the United Nations Global Compact and we support its Ten Principles on human
rights, labor, environment and the fight against corruption.

Diversity and Inclusion

Diversity and inclusion are core values of Pfizer, and for good reason. The ownership culture they want
to build is rooted in inclusion, the recognition that good ideas come from all sources. The willingness to
encourage diversity of thinking sharpens both planning and performance. Consequently, we place a high
value on inclusive behaviors and respect for individuals, communities and cultures. Our commitment to
diversity and inclusion helps all our colleagues connect their special skills, knowledge and life
experiences with those of stakeholders outside our company.

Conducting Clinical Trials to the Highest Standards

Clinical trials are at the heart of biomedical progress, and we honor volunteers for clinical trials as
the unsung medical heroes of our day.

We have always been committed to the highest standards of integrity and conduct in clinical trials, and
now we are working to further improve our clinical trial infrastructure. Our goal is to make the clinical
trial process simpler and better, and to make sure that all of our trials are done to the highest standards,
fully protecting the rights and welfare of the trial participants.
39

Building Quality and Accountability Into Clinical Trials

Late in 2010, Pfizer launched the Clinical Trial Excellence Project, a top-to-bottom re-engineering of
our clinical trial process to make sure that quality procedures are built into every step of the way. The
project is achieving its milestones and is expected to complete in late 2012. When complete, it will give
us additional state-of-the-art capabilities to help ensure patient safety, data integrity and full compliance
with ethical and regulatory standards for clinical research.

To improve efficiency and accountability, we have established strategic partnerships with the
respected global firms, Icon and PAREXEL, for clinical trial implementation services. We will be
moving 200 of our existing 800 ongoing trials to Icon and PAREXEL, and all future trials will be
handled in collaboration with them.

Investments in Health

We offer a strategic, coordinated approach to improve access to medicines and health care for
underserved patients around the world. Our social investments focus on effective and sustainable health
care delivery while empowering our colleagues, strengthening our stakeholder relationships, and
ultimately having a positive impact on society and our business.

Quantitative approach to a company:

1. Business efficiency:

Business efficiency ratios

Parameter 2014 2015 2016 2017 2018
Gross profit margin 20.7 15.6 21.2 17.7 25.6
Net profit margin 17 4.6 13 9.4 16.8
Current ratio 2.227 2.024 2.414 2.625 2.426
Debt to equity ratio 0 0.001 0.001 0.001 0.001
Interest cover 930.694 297.935 862.327 397.448 1,282.91
Total income / compensation to employees 6.609 6.277 7.817 7.033 6.634

Interpretation:

The company has been showing stagnancy in terms of profitability in the last 5 years. The profits have
been a little volatile but overall it has been stagnant.
40

The company does not believe in debt instruments and thus have been mostly using the equity for its
functioning and investments.

The current ratio of Pfizer has been maintained strictly over the ideal ratio and the interest coverage ratio
is huge as the company hardly has to pay any interest.
Compensation to employees have remained good and the income to compensation has been steadily
maintained by the company.

2. Business effectiveness:

Business effectiveness ratios

Parameter 2014 2015 2016 2017 2018
Growth in sales (Indexing method) 148.1 244.9 267.2 260.4 252.5
Return on net worth 13.41 13.41 13.92 14.09 3.53
Return on total assets 9.75 9.75 10.32 10.56 2.67
Dividend payout ratio 30.58 0 24.52 22.56 81.9
Asset turnover ratio 53.34 53.34 60.29 69.67 70.96
Growth in plant and machinery (Indexed) 41.2 30.3 75.4 94.2 79.8
Growth in Transport & commn.
equipment & infrastructure (Indexed
growth) 7.5 0 11.9 6.9 1.9

Interpretation:

The sales of the company has been increasing steadily and though the company has not increased the
prices and neither has it reduced the expenses but the profitability has still been maintained due to the
huge sales volume.

The return on net worth has been very consistent but it decreased in 2018 as the sales and the
profitability decreased in that year. The reduction in sales resulted in the dip in the return on total assets
as well. The company has maintained the asset turnover ratio and it shows that the assets are utilised
optimally.

3. Innovation:

Innovation
Parameter 2014 2015 2016 2017 2018
RATIO OF R&D EXP TO SALES 1.60% 1.27% 0.90% 0.97% 1.34%
INCREMENTAL OUTPUT CAPITAL RATIO - - 0.02 - -
MARKETING EXPENSES/TOTAL EXPENSES 8.90% 8.30% 7.90% 9.10% 7.80%
COMPANY SALES/INDUSTRY SALES 0.91% 0.86% 1.72%

Pfizer has always been focusing on research and development and its strong collaboration has helped in
R&D as well as the marketing innovation.

4. Sustainability:
41

Sustainability
Parameter 2013 2014 2015 2016 2017
Price/Book value 3.73 3.73 3.58 3.78 5.17
P/E ratio 17.47 112.17 28.94 43.17 31.46
Ratio of training and dev exp to sales 0.57% 0.42% 0.27% 0.17% 0.16%
Company D/E / Industry D/E 0.0024 0.0029 0.0042
Return on retained earnings -22% -11% 1% 0% -2%
CSR expense to Total expense 0.07% 0.35% 0.40%

The consistency in the price to Book value and the expenses on the training and development has shown
that the company has sustainability and is here for the long haul. Few more details about innovation and
sustainability is given below which is directly taken from their annual report:

Engine For Sustainable

Innovation

We have launched a multiyear effort to accelerate Pfizer’s R&D

strategy and create an Engine for Sustainable Innovation (ESI).

Pfizer has responded to today’s biopharmaceutical R&D

challenges with a rigorous strategy to drive steady progress
towards three horizons centered on delivering the portfolio,
innovating new capabilities, and creating the R&D ecosystem
of the future.

In 2011, Pfizer made significant changes in our R&D model to

accelerate the implementation of this strategy, create an ongoing
flow of important medicines and vaccines, and improve return on
invested capital. These changes reflect our commitment to:

Greater Focus

Strengthening our scientific core and focusing on areas of greatest

medical and commercial potential

Strategic Externalization
42

Forging novel partnerships to access the best science and focus

internal activities on those driving competitive advantage for
Pfizer

Differentiated Innovation

Positioning ourselves for breakthrough innovation by developing

the approach and the culture to deliver the most important
medicines and vaccines, with

a special focus on Precision Medicine R&D—an approach to

discovering and developing medicines and vaccines that deliver
superior outcomes for patients, by integrating clinical and
molecular information to understand the biological basis of disease

Pfizer Annual Review 2011

www.pfizer.com/annual Research &
Development 1
43

Annual Review 2011

With biomedical innovation at
our core, everything we do is
centered on inventing and
delivering the novel medicines
and vaccines that people need.
That is our purpose, and it is
well worth our efforts.

To initiate this acceleration effort, in February 2011 we selected

the research areas in which we believe we can deliver the greatest
medical and commercial impact. Based on these choices, we honed
and prioritized our programs and portfolio. We also shifted our site
network to more closely align with key hubs for science and
technology, putting us in closer contact with leading biomedical
research institutions and providing access to a deep talent base in
the life sciences. We established new models to access the best
external science and technology, and we created novel and flexible
partnerships to externalize R&D services that can be done by
specialized service providers enabling Pfizer to focus internal
resources on the highest value activities. In making these changes,
we reduced both our research site footprint and the number of
vendors who provide services. Taken together, these and other
changes are helping us improve Pfizer’s performance as an
innovator, while reducing the cost base from which we develop
and deliver differentiated medicines and vaccines.

In summary, our ESI efforts reset our R&D investments in a careful

manner, to create a higher return platform from which we can
grow. Improving R&D return is a priority for the entire industry to
sustain an innovative biopharmaceutical R&D model. It requires
that we shift from a “high volume” R&D approach that was the
industry paradigm for several decades to a more selective approach
in which we strive to increase the value of every activity we
undertake, reduce the cost of failures and increase our probability
of success. That’s a shift from pursuing high volume, to seeking to
deliver high value. And it requires us to work differently. In the last
year, Pfizer has addressed this challenge head-on.
44

12 in the post-proof-of-
concept portion, to focus
more resources on promising
drug and vaccine candidates,
and found development
partners or new homes for
some of the assets in
discontinued programs.

2011 Highlights
Refreshed and strengthened
key research units—
Cardiovascular, Metabolic
Prioritized the portfolio, providing additional resources to
and Endocrine Diseases,
accelerate the most promising programs.
Inflammation

and Remodeling,
Launched a specialized research unit for pain and sensory
Immunology and
disorders, Neusentis, located in Cambridge, U.K. Autoimmunity,
Neuroscience, Oncology
and Vaccines.
Discontinued 91 programs in the pre-proof-of-concept portion of
our pipeline and
45

Pfizer Annual Review 2011

www.pfizer.com/annual Research &
Development 2
46

Annual Review 2011

Horizons of Innovation

As referenced above, our R&D strategy spans three horizons,

which are described below.
47

Horizon 1: Deliver the Portfolio

In 2011, a number of new medicines and indications emerged from

our reinvigorated pipeline and were approved, underscoring our
ability to translate science into patient benefit. Key regulatory
authorizations included Xalkori in the U.S.; Xiapex, Vyndaqel and
Eliquis in the EU; and Prevnar 13/Prevenar 13 for the prevention of
pneumococcal pneumonia in adults over 50, in the U.S. and EU. As
of February 2012, we had 90 new medicines and vaccine programs
in development. These include treatments for diabetes,
hypercholesterolemia, lupus, hematological and solid tumors, acute
pain, Alzheimer’s and other neuropsychiatric diseases, and a
Staphylococcus aureus vaccine, as well as multiple indications for
tofacitinib, our novel JAK-3 inhibitor already under review in
Europe, the U.S. and Japan for rheumatoid arthritis (Click here for
an overview of our pipeline). We continue to work to more
effectively integrate scientific, business and financial parameters,
so that we can deliver on the promise of our mid-stage pipeline of
highly differentiated molecules and vaccines—and bring to market
the next wave of important medicines and vaccines.

Pfizer Annual Review 2011

www.pfizer.com/annual Research &
Development 3
48

Annual Review 2011

Horizon 2: Innovate New Capabilities

Several emerging science and technology platforms are driving

important new R&D capabilities and the progress of our pipeline.
Examples include ion channel technology that offers the potential
for a new approach to treating pain and other disorders associated
with this mechanism. Our recent acquisition of Icagen further
strengthens our leading capability in this area. Our growing
portfolio of antibody drug conjugates could yield powerful
treatments for cancer, including inotuzumab, which is currently in
Phase 3 studies for Non-Hodgkin’s Lymphoma. Our vaccine
technology platforms are making it possible for Pfizer to expand
into vaccines for all ages and geographies, with an important
program in prevention of meningococcal B disease in adolescents.
We also are investing in the next generation of sophisticated small
molecules, including tissue-selective drugs, such as liver-selective
glucokinase activators against type 2 diabetes.

A new, more expansive approach to external collaboration is

essential to our R&D strategy—forging partnerships that connect
the assets and capabilities of different sectors to speed the
development of new medicines. Our Centers for Therapeutic
Innovation, or CTI, blends the research expertise of academics in
disease, targets and patient populations with Pfizer’s R&D
knowledge, resources and development capabilities. CTI’s
innovative business model is based on partnerships to accelerate
the translation of science into novel antibody-based treatments,
and positions Pfizer to broaden and diversify its R&D pipeline
with additional next generation therapeutics.
49

Pfizer Annual Review 2011

www.pfizer.com/annual Research &
Development 4
 Annual Review 2011

Horizon 3: R&D Ecosystem of the Future

In our third horizon, we will move to a much more

networked R&D model— shaping the innovation
ecosystem of the future and optimizing the promise of
Precision Medicine. The R&D ecosystem of the future
will scale and expand the emerging collaborations
getting underway today, drawing on the total capabilities
in the biomedical research community, reducing silos
and increasing productivity. Precision Medicine R&D
will be a major focus of our efforts. This approach
should lead to better selection of disease pathways and
identification of patient sub-populations that
demonstrate better clinical outcomes. Ultimately,
Precision Medicine R&D is intended to result in
treatments that deliver bigger treatment effects, with
acceptable or favorable safety profiles. As the recently
fast-tracked and approved Xalkori (for ALK-positive
Non Small Cell Lung Cancer patients) attests, Precision
Medicine holds considerable promise for patients and
our business.

We are driving a Precision Medicine

strategy across Pfizer, with the following
goals in mind:

By 2012, half of proof-of-concept study

starts will have a Precision Medicine
approach.
1

By 2015, two out of every three drugs

entering Phase III will have a Precision
Medicine approach.

By 2020, four out of every five drugs launched will be Precision

Medicine drugs.

Summary and Conclusion

1. Summary of Key External Factors

Opportunities

1. Strategic agreements with other pharmaceutical companies and organizations

to boost its research.

2. Increasing awareness of people about their healthcare needs

3. Global penetration through mergers and acquisitions

4. Increasing demand for quality healthcare solutions

5. Restructuring strategy designed to cut costs and leaner company

6. Funding available to facilitate product/company

7. Acquisitions (Wyeth) and in-licensing/co-development opportunities

8. Expansion into biologics market

9. E-Commerce

10. High profits, revenues and funds are available to uplift the company’s progress

Threats

1. Risk of unsuccessful new products

2. Regulatory environment is becoming more & more stringent

2

3. Economic slowdown in European markets

4. Increased market competitions

5. Losing of patent individuality by focusing on one product

6. Loss of patent protection of major products

7. Risk of Eisai terminating long-standing partnership

8. Outstanding competition of regional markets along with emerging markets of

India and China

9. Negatively publicized by being sued by their customers

10. Healthcare reform in India affects revenue growth