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Running head: PFIZER CASE ANALYSIS

Pfizer Case Analysis Shondrell Edwards Troy University MGT 6685 XTIA Management Strategy Term 2, 2011 December 5, 2011 Dr. Chekwa

Author Note Shondrell Edwards, Student, Troy University.

Pfizer Case Study

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Correspondence concerning this sample paper should be addressed to Shondrell Edwards, Student, E-mail: sameri@troy.edu.

Pfizer Case Study

EDWARDS, SHONDRELL Executive Summary

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Pfizer Case Study

EDWARDS, SHONDRELL Pfizers Vision, Mission, Objectives, and Strategy

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Pfizer, Inc. is a research-based, global biopharmaceutical company whose diversified global healthcare portfolio includes human and animal biologic and small molecule medicines and vaccines, as well as nutritional products (Pfizer, 2010). The company was founded by Charles Pfizer and Charles Erhart in 1849 and is headquartered in New York, NY. .Pfizers Vision outlined in the text, was as follows: We will be recognized for meeting the diverse medical needs of patients in Emerging Markets around the world in an innovative, socially responsible and commercially viable manner. This vision or intent of the company for future dealings outlines the new prospects for business in developing countries. The company operates in two commercial organizations which constitute two business segments: Biopharmaceutical and Diversified. The Biopharmaceutical segment includes the Primary Care, Specialty Care, Established Products, Emerging Markets and Oncology Customer-Focused units, which includes products that prevent and treat cardiovascular and metabolic diseases, central nervous system disorders, arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye disease and endocrine disorders, among others (Pfizer, 2010). The Diversified segment includes Animal Health products that prevent and treat diseases in livestock and companion animals; Consumer Healthcare products that include over-the-counter healthcare products such as pain management therapies, cough/cold/allergy remedies, dietary supplements, hemorrhoidal care and other personal care items; Nutrition products such as infant and toddler formula products; and Capsugel, which represents its hard capsules business (Pfizer, 2010). The mission statement of Pfizer says, We will build bold and innovative partnerships, reach patients we have never reached before, provide medicines and services at an affordable manner, be recognized for having the best talent in healthcare, become a leading pharmaceutical company in emerging

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markets. The objectives are to become a leader in biologics, enter the vaccines market, expand and investing and areas, strengthen leadership in emerging markets, create new opportunities for established products, invest in complementary businesses, and establishing a lower and more flexible cost base. The strategies for achieving this goal are to extend global health care leadership, improve current performance by having a unique business model, having consistent and stable earnings, and meeting the unmet needs of patients, physicians, and other customers (The World's Premier Pharmaceutical Company, 2009). Mission and Vision Statements In response to the objectives and strategies, I propose the following vision statement: Pfizer will continue to lead the world by helping mankind across the world. My proposed mission statement is as follows: Pfizer is more than medicine. We will help patients, human and otherwise to become healthy as possible with our products and continue to develop cutting edge methods, provide our great products at affordable prices, while satisfying ethical and environmental concerns. Pfizer External Opportunities and Threats Pfizer has many opportunities for growth, due to their strengths. Pfizers opportunities include 1) Proposed Wyeth acquisition 2) Global growth 3) Expansion into biologics/vaccine market 4) Partnership with other countries Pfizers threats include 1) Regulation hurdles in the United States and European Commission 2) Pfizer will have to take on Wyeths possible litigation 3) Norvasc, Celebrex, and Bextra lawsuits abroad. 4) Major competition in the pharmaceutical industry 5) Over the counter drug availability.

Pfizer Case Study

EDWARDS, SHONDRELL Pfizer Competitive Profile Matrix (CPM)

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Stage one (1) of the strategy analytical framework is the input stage where a CPM, IFE, and EFE are created for the company. The purpose of a Competitive Matrix analysis is to critically profile and compare your firm against known competitors.
P FIZER Crit ical Success Fact ors MERCK NOVART IS W eight ed Score

W eight W eight Rating ed Rat ing Score

W eight ed Rat ing Score

1
M arket C ap Employees R evenue Gross M argin Operatio nal M argins Net Inco me EP S T OT A L

0.20 0.20 0.15 0.10 0.15 0.20 0.30 1.30

3 3 3 2 2 3 2

0.60 0.30 0.45 0.20 0.30 0.60 0.20 2.65

2 1 2 3 3 2 1

0.40 0.10 0.30 0.30 0.45 0.40 0.10 2.05

0.20 0.10 0.15 0.10 0.15 0.20 0.10 1.00 2 1 1 1 1 3

As you can see from the table above Merck has the lowest score, which shows they have the strongest position. Pfizer External Factor Evaluation (EFE) Matrix External Factor Evaluation (EFE) matrix method is a strategic management tool that shows current business conditions, visualize, and prioritize the opportunities and threats that a business is facing. The EFE matrix is concerned solely with external factors. External factors assessed in the EFE matrix are the ones that are subjected to the will of social, economic, political, legal, and other external forces. As you can see from the chart, Pfizer total weighted 6

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score for its External Factor Evaluation (EFE) Matrix is 2.92, which shows average response to existing opportunities and threats in its industries. The current strategy utilized is average, but will need to be improved to keep Pfizer in the top position amongst all competitors.
Weight Opportunities 1) Proposed Wyeth acquisition 2) Global growth 3) Expansion into biologics/vaccine market 4) Partnership with other countries Threats 1) Regulation hurdles in the United States and European Commission 2) Pfizer will have to take on Wyeths possible litigation 3) Norvasc, Celebrex, Bextra lawsuits abroad 4) Over the counter drug availability Total Weighted Score 100% 8% 15% 15% 9% 2 2 2 3 0.16 0.30 0.30 0.27 2.92 15% 15% 15% 8% 4 4 3 3 0.60 0.60 0.45 0.24 Rating Weighted Score

Poor (1), Below Average (2), Above Average (3), Superior (4)

Pfizers Internal Strengths and Weaknesses Pfizer has many strengths and as such those things have contributed to the company being strong and succeeding this long. Pfizers strengths are as follows: 1) Pharmaceuticals dominate the majority of the business units within Pfizer 2) Lipitor is the strongest drug in its category 3) Pfizer has the largest market cap in the world 4) Pfizers employee workforce is the largest in the world .5) Pfizers program of helping those who need drugs and lost jobs has helped build a loyal customer base. 6) Pfizer is very active and known in politics 7) Greatest marketing power Pfizer has had extremes of all factors, meaning their good things are great, and their bad things are extremely bad. Pfizers weaknesses are 1) Pfizers continued problem with disobeying regulations 2) Many patent protections ending and Food and Drug Administration (FDA) issues 7

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in 2010 3) Customer disapproval due to medicines not being approved and/or safe. 4) Finances need more visibility 5) Lowest earning per share (EPS) although ranked ahead all competition 6) FDA 7) Changes in health care coverage may impact Pfizer's sales. Pfizer Internal Factor Evaluation (IFE) Matrix The IFE Matrix together with the EFE matrix is a strategy formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company. Pfizer total weighted score for its Internal Factor Evaluation (IFE) Matrix is 2.64, and that score shows the company has possesses a very strong internal position within the industries.
Internal Strengths 1) Pharmaceuticals dominate the majority of the business units within Pfizer 2) Lipitor is the strongest drug in its category 3) Pfizer has the largest market cap in the world 4) Pfizers employee workforce is the largest in the world 5) Pfizers program of helping those who need drugs and lost jobs has helped build a loyal customer base. 6) Pfizer is very active and known in politics 7) Greatest marketing power Internal Weaknesses 1) Pfizers continued problem with disobeying regulations 2) Many patent protections ending and Food and Drug Administration (FDA) issues in 2010 3) Customer disapproval due to medicines not being approved and/or safe. 4) Finances need more visibility 5) Lowest earning per share (EPS) although ranked ahead all competition 6) Changes in health care coverage may impact Pfizer's sales. 10% 5% 10% 5% 10% 10% 8% 5% 5% 10% 10% 9% 3% 4 4 4 3 4 4 3 1 1 1 1 1 2 0.40 0.20 0.40 0.15 0.40 0.40 0.24 0.05 0.05 0.10 0.10 0.09 0.06

TOTAL WEIGHTED SCORE

100%

33

2.64

Major weakness (1), Minor weakness (2), Minor strength (3), Major strength (4)

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Pfizer SWOT Matrix Strengths


1) Pharmaceuticals dominate the majority of the business units within Pfizer 2) Lipitor is the strongest drug in its category 3) Pfizer has the largest market cap in the world 4) Pfizers employee workforce is the largest in the world 5) Pfizers program of helping those who need drugs and lost jobs has helped build a loyal customer base. 6) Pfizer is very active and known in politics 7) Greatest marketing power

Weaknesses
1) Pfizers continued problem with disobeying regulations 2) Many patent protections ending and Food and Drug Administration (FDA) issues in 2010 3) Customer disapproval due to medicines not being approved and/or safe. 4) Finances need more visibility 5) Lowest earning per share (EPS) although ranked ahead all competition 6) Changes in health care coverage may impact Pfizer's sales.

Opportunities
1) 2) 3) 4) Proposed Wyeth acquisition Global growth Expansion into biologics/vaccine market Partnership with other countries

Threats
1) Regulation hurdles in the United States and European Commission 2) Pfizer will have to take on Wyeths possible litigation 3) Norvasc, Celebrex, Bextra lawsuits abroad 4) Over the counter drug availability

Pfizer Case Study

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Pfizer SPACE Matrix Values and Dimensions

I n t e r n a l S t r a t e g i c P o s i E i x tne r n a l S t r a t e g i c P o s i t i o n to X A x i s
C o m p etitiv en es s ( C A ) I n d u s t r y ( I S)

Y A x i s

- 2 P r o d u c t Q u a l i t4 y B ar r ier s to E n tr y -2 M ar k et Sh ar e 6 G r o w th P o ten tia l - 2 B r a n d & I m a g e6 A c c e s s t o F i n a n c i n g - 1 P r o d u c t L i f e C y 5c l e C o n s o l i d a t i o n - 1 .7A5v e r a g e 5 .2 A v e r a g e 5 To t al Ax i sXScor e: 3 . 50 F i n a n c i a l ( F SE) n v i r o n m e n t a l ( E S ) -1 ROA 3 I n fla tio n -1 L ev er age 6 T ec h n o lo gy -2 L iq u id ity 5 D em an d E lastic ity -2 C ash F lo w 5 T axatio n - 1 .5 v e r a g e A 4 .7 A v e r a g e 5 T o t a l A x i s Y S c o r e : 3 .2 5

CA -1 (best) to -6 (worst) FS -1 (best) to -6 (worst)

IS +1 (worst) to +6 (best) ES +1 (worst) to +6 (best)

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Pfizer Completed SPACE Matrix

Aggressive-Suggested strategy type

6 5 4 3 2 1 1 2 3 4 5 6

This particular SPACE matrix tells us that our company should pursue an aggressive strategy, and has a strong competitive position in the market with rapid growth. It needs to use its internal strengths to develop a market penetration and market development strategy. Some suggestions are product development, integration with other companies, and acquisition of competitors.

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Pfizer Case Study

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Pfizer BCG Matrix

high
Viagra is in the dog category because it has been found that a safer herbal supplement can produce the same results with less risk. Pfizer must consider the question marks of the generic 12

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drugs, and if they should venture into that area or continue their research and development. Lipitor and Zoloft catapulted the company into its number one position.

Phizer IE Matrix EFE Sco 4 re 2.9 2 3 2 1 4 IFE Scor e 2.64 3 2 1 Low Strong Average Weak High HOLD AND MAINTAIN Medium

The IFE matrix score for Pfizer is 2.64, which means they have an above-average internal strength. The EFE matrix for Pfizer is 2.92, which suggest a less than average ability to respond to external factors. The total weighted score calculated on this page is 2.78, which points at a company with an above-average internal strength. Cells IV, V, and VI suggest the hold and

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maintain strategy. For Pfizer this means tactical strategies should focus on market penetration and product development.

Pfizer GSM Matrix Pfizer GSM

Pfizer is in Quadrant 1 of the GSM. Pfizer has competitive situation and rapid market growth, and is in excellent strategic position. Therefore, Pfizer must focus on current market and

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appropriate to follow market penetration, market development, and products development are appropriate strategies.

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Q PM(Q AN S U TITATIVE S TRETEG PLAN IN M IC N G ATRIXF R PF ER O IZ Alterna tive 1 Alternative 2 Acquire C petitor om E xpand Internally KeyFa ctors W ht eig SRN T S TE GH
1 Pharm ) aceuticalsdom inatethe majority of the businessunitswithin Pfizer Attractiveness Score Total Attractiveness Score W eight Attractiveness Score

Total Score

Attractiveness

7.00 5.00 7.00 7.00 5.00 6.00 8.00 7 0 .0 8 0 .0 8 0 .0 8 0 .0 7 0 .0 1 .0 0 0 7 0 .0 10 0 0 .0 1 .0 5 0 9 0 .0 1 .0 0 0 1 .0 0 0 1 .0 2 0

2 4 2 3 5 4 2 5 3 2 1 2 4 4

2) Lipitor isthestrongest drug in itscategory 3) Pfizer hasthe largest market cap in the world 4) Pfizersemployeeworkforce isthe largest in the world 5) Pfizersprogramof helping those who need drugs and lost jobshashelped build a loyal custom base. er 6) Pfizer isvery active and known in politics 7) Greatest marketing power

1 4 2 0 1 4 2 1 2 5 2 4 1 6 3 5 2 4 1 6 8 1 4 4 0 2 8 29 9 4 5 1 8 1 0 1 0 4 8 3 3 7 2 4 5 21 8 50 8

7.00 5.00 7.00 7.00 5.00 6.00 8.00 7 0 .0 8 0 .0 8 0 .0 8 0 .0 7 0 .0 1 .0 0 0 7 0 .0 10 0 0 .0 1 .0 5 0 9 0 .0 1 .0 0 0 1 .0 0 0 1 .0 2 0 1 .0 1 0 1 .0 8 0 1 .0 5 0 10 0 0 .0 >

1 2 1 2 1 3 1 2 1 2 1 1 2 1

7 1 0 7 1 4 5 1 8 8 1 4 8 1 6 8 7 2 0 7 19 4 1 5 1 8 1 0 3 0 2 4 1 1 3 6 1 5 19 5

W AK E S S E N SE
1 Pfizerscontinued problemwith disobeying ) regulations 2) Many patent protectionsendingand Food and Drug Adm inistration(FDA) issuesin 201 0 3) Custom disapproval due to medicinesnot being er approved and/or safe. 4) Financesneed more visibility 5) Lowest earningper share (EPS) although ranked ahead all competition 6) Changesin healthcare coverage may im pact Pfizer'ssales.

O P R U IT S P O T N IE
1 ProposedWyeth acquisition ) 2) Global growth 3) Expansion into biologics/vaccine m arket 4) Partnershipwith other countries

3 2 1 1 4 3 4 3

1 2 1 3 2 1 2 1 38 0

T RA S HE T
1 Regulation hurdlesinthe United Statesand ) European Com mission 2) Pfizer will have to take on Wyethspossible litigation

1 .0 1 0 1 .0 8 0 4) Over the counter drug availability 1 .0 5 0 10 0 0 .0 S MT T LA T A T E E SS O E U O A T R C IV N S C R


3) Norvasc, Celebrex, Bextra lawsuitsabroad

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Stage 3 is the QSPM, which is the decision stage for the strategy framework.

Pfizer Recommended Strategies, Objectives, Policies, Review, and Evaluation My recommendations for Pfizer are as follows: (1) Focus on short-term goals and orientation when it comes to working with drugs that have a patent expiration coming up. (2) Continue their focus on customer relationship to build customer loyalty and have their brand become the preference, due to the number of pharmaceutical companies in existence today. (3) Continue cutting edge technology of pills that can treat more than one ailment (Caduet). (4) Make safety a number one priority by providing more information about their products, side effects, and consumption. (5) Continue and focus on global expansion and international sales. (6) Consider lowering prices to compete with competitors. Pfizer is able to maintain their spot at the number one position. Pfizer trail blazes in a lot of new ways, such as their joining the United Nations Global Impact (that focuses on corporate responsibility and citizenship). The Research & Development business unit has been very successful as far as their new developments and this is where spending exuberant amounts of money has paid off for Pfizer. Between their workforce, investments in R & D, and global goals Pfizer should continue to dominate the pharmaceutical market. Pfizer should adopt the expansion program and indulge in backward, forward, or horizontal integration in a careful way that includes biannual review and evaluation. Pfizer may also want to exploit the external opportunities and magnify the wealth in numerous areas of dealings.

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REFERENCES 2010 Financial Report (2010). Pfizer.com. Retrieved from http://www.pfizer.com/investors/financial_reports/financia l_reports.jsp

American Psychological Association (2010). Publication Manual of the American Psychological Association (6th ed.). Washington, DC: American Psychological Association. Company Symbol PFE (2011). MSN Money. Retrieved from http://investing.money.msn.com/investments/company-report? symbol=PFE David, F. (2011). Strategic management: Concepts and cases (13th ed.). New Jersey: Prentice Hall. Pfizer. (2010, September 30). Retrieved October 30, 30, from CNN Money: http://money.cnn.com/quote/profile/profile.html?symb=PFE Pfizer, Inc. and Subsidiary Companies (2010). 2010 Financial Report. Retrieved from http://www.pfizer.com/files/annualreport/2010/financial/fi nancial2010.pdf Pfizer, Inc. (2011). Pfizers commitments for a healthier world. Retrieved from http://www.pfizer.com/files/about/pfizer_commitments.pdf PricewaterhouseCoopers (2007). Pharma 2020: The vision. Which path will you take? Retrieved from http://www.pwc.be/en/pharma/pdf/Pharma-2020-vision- PwC-09.pdf. The World's Premier Pharmaceutical Company. (2009, January 26). Retrieved October 30, 2011, from Pfizer : http://www.pfizer.com/files/investors/presentations/q4earnings_january012509.pdf U.S. Department of State (2011). Why population aging matters: A global perspective. Retrieved from http://www.imshealth.com/portal/site/imshealth/menuitem.a9

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53aef4d73d1ecd88f611019418c22a/vgnextoid=bb967900b55a5110V gnVCM10000071812ca2RCRD&vgnextfmt=default www.strategyclub.com S& P Industry Survey material in the college library http:// finance. yahoo. com or http:// moneycentral. msn/ investor/ home. asp

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