pfizer strategy for internationalization

Submitted By :

Group 1

Aamir: 13074

Himanshu: 13021

Sruthi:13073

Salil Garg:13045

Krishnapriya:130271

Submitted to :Professor :Dr.Ajay SingalIMT ,Dubai

Introduction

Research-based, global pharmaceutical company

Function : Discovers, develops, manufactures and markets leading prescription medicines

Segment : Humans and Animals

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CORPORATION SIZE

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VISION & MISSION

Vision:

To become the world’s most valued company topatients, customers and businesses

Mission :

To develop medicines to cure & treat diseases,symptoms & sufferings.

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Evolution Of Pfizer Pfizer was founded by cousins Charles Pfizer and Charles

Erhart in 1849

First Product : Santonin ( Anti-Parasitic)

1900 : From family business to Incorporation

1939 : leading producer of citric acid

1944: leading producer of Pencillin “Miracle Drug “

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2012

PFIZER’S STRATEGIC MOVES

Enter New Product / Geographic Market

Capture Emerging Market

Strengthen Market Standing & Competitiveness : Acquiring or merging with the other companies

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STRATEGIC PRIORITIES

Drive incremental organic growth

Pursue strategic acquisitions & partnerships

Seek game changing opportunities for innovation.

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Internationalisation

1951: Brazil , Cuba, Mexico ,Belgium , Canada (DecentralizedDecision Making)

1952-58 :New R&D plants , Agriculture & Nutritional Divisions

1967 :Started Acquisitions , Partnerships (Eg:Warner Lambert ,Wyeth)

2013: Restructured into 3 Business units (2 innovative , 1 valuebased )

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Global Strategy

Mergers ( includes Warner Lambert)

Acquisitions ( includes Taito , Mark Illertissen, Wyeth ,NextWave, Excaliard, AstraZeneca Pharma, Inno Pharma etc.)

Partnerships & Joint Venture (Pfizer & Zhejiang Hisun Pharma Co,together formed Hisun Pfizer.)

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Global Access Strategy

Pfizer's Global Access team : exploring innovative business models

Increase access to healthcare and medicine for low-income populations inemerging markets

Private Sector Involvement in India

Growing Research and education:

Preferred research centres to build research capacity

Pfizer Education and Research League Training Programs

Supporting Public health Initiatives

Opened 600 smoking cessation clinics in 2010

Partnership with Max Health care.

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EMERGING MARKETS

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OPPORTUNITIES FOR INNOVATION IN EMERGING MARKETS

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ACQUISITION OF WYETH

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PFIZER’S SHIFT IN SEGMENTS

BEFORE 2014

1. Primary Care;

2. Specialty Care and Oncology;

3. Established Products and Emerging Markets;

4. Consumer Healthcare.

AFTER 2014

1.Global Innovative Pharmaceutical business (GIP);

2.Global Vaccines, Oncology and Consumer Healthcare business(VOC)

3.Global Established Pharmaceutical business (GEP).

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EXTERNAL DRIVERS

Global Pricing Pressure

Foreign Exchange Risk

Threats of new entrants

Suppliers bargaining power

Buyers bargaining power

Rivalry of competitors

Threats of product substitute

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Pfizer Organizational Structure

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Pfizer Organisation Structure

Established 1st International division in 1950

Established offices, subsidiaries and partnerships all over the world

Entry strategy was based on wholly owned subsidiaries and Jointpartnerships.

Divided world in 4 regions( Europe, West, Middle east & far east) placedRegional director in NY HQ.

Subsidiary Autonomy

Timely decision making with reduced dependence on HQ

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Pfizer Organisation Structure

Transformed from Manufacturing in 1990s to Research based Pharma Co.

In 2003, Geocentric Approach

Implemented standards that were universal and local to evaluate &Control all aspects.

Intended to measure performance both at HQ and each subsidiaries

Multidirectional Flow of Knowledge between HQ & subsidiaries andAmong Subsidiaries.

Transnational Firm

Centralization of firm

Resource Concentration( labour and capital) located in foreign.

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Pfizer Organisation Structure

Product Offerings

Human healthcare

Consumer healthcare

Animal healthcare

Divisions

Pfizer Global Research & Development

Pfizer Global Pharmaceuticals

Pfizer Global Manufacturing

Pfizer Animal Health

Pfizer Consumer Healthcare

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Pfizer Organisation Structure

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Pfizer Organisation Structure

HQ monitored divisions to align their activities to corporate strategy.

Pfizer centralized strategic responsibility of firm but decentralizedOperational responsibility to divisions and subsidiaries.

Used mix rules approach and market approach to control corporateactivities.

Interdependence: Integrated Network structure

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Pfizer Organisational Structure

Plans to segregate commercial operations into 3 business segments: Two innovative business

Includes Product across multiple therapeutic areas. Other includes vaccines, oncology and consumer healthcare Operate as separate global business with different Market Approach

One value business line Led by Value Products Group Provide lower cost treatment and include cash flow products

Reorganisation will provide Enhanced ability to respond to market dynamics Greater visibility and focus Distinctive capabilities to deliver to patents and shareholders.

“ Transition from Current Emerging Markets Organisation to regional structure”

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Pfizer Functional Area

Human Resources

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Pfizer HRM

Top Leadership views HR department as central to achieve business results

HR team focussed on planning for mergers, acquisitions and divestitures.

Partner with a global cross-functional HR team to develop integration andexecute plans

Represent the M&A HR team on cross-functional teams andinterdependencies.

Pfizer has adopted “ Investment in People philosophy”

Attract the best talent

Build an environment that retains

Invest in development

Pfizer’s value includes integrity, innovation, respect for people , customerfocus, teamwork, leadership, performance and community.

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HRM Role in Merger Integration

Warner-Lambert acquisition in 2000 and merger integration process atPGRD.

To integrate and align cultures, systems , structure and processes.

Managing potential redundancy in staffing and research projects duringbudgetary decisions.

Retain Key talent by reviewing staff performance and commitment.

Merger of Pfizer Animal health group and SmithKline Beecham

Used In house Knowledge to guide thinking.

Solid communication tactics and involvement of staff in planning andrecommending integration strategies with respect to culture, programs,systems, structure, and processes.

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HRM challenges

Cash and stock merger & Acquisition of Wyeth by Pfizer in 2009 case

Overall company size has declined by about 5 percent this year .

Client was quite concerned that the company lost top talent. Moreover, 25percent of its workforce was on retirement age.

HR programs came into play to effectively manage talent.

For Merger integration

Challenge to integrate the best of both the organisations.

Balance b/w consulting everybody and making decisions that moveorganisation forward.

Need in complex and high speed organisation

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PFIZER FINANCIAL ASPECTS

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Revenue Growth Ratio

31

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

20004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

US

D M

il

YEARS

Revenue Growth Ratio (%)

ROA, ROI, ROE

32

0

10

20

30

40

50

60

70

80

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

%

Years

Return on Assets %

Return on Invested Capital %

Return on Equity %

Net Profit Margin

33

0

5

10

15

20

25

30

35

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

%

Years

Net Profit Margin

Debt - Equity Ratio

34

0

0.1

0.2

0.3

0.4

0.5

0.6

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

%

Years

Debt/Equity

Current Ratio

35

0

0.5

1

1.5

2

2.5

3

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tim

es

Years

Current Ratio

INDUSTRY CHALLENGE

High fixed costs and long –lead time

Discovering and developing a new medicine takes atleast 12 years and anaverage cost of more than $1B(including cost of unsuccessful compounds)

Cost drivers for the innovative pharmaceuticals:R&D and SG&A account forapprox.45% of revenue

Wave of patent expiration

Slow down in product introductions

Increasing pricing pressure

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Growth in demand is fuelled by:

Aging population ,lengthening of average lifeexpectancy and rising incidence of chronicdisease

New diseases-Although impossible to predict,surfacing of new diseases will trigger demand

Demand in emerging markets- increasingstandard of living & improving healthcaresystems globally

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SWOT

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STRENGTH• Strong sales and

marketing infrastructure• Strong R&D departments• R&D innovation with

abroad therapeutic coverage

• Existing patent protection for a number of years on key products

WEAKNESS• Over reliance on Lipitor

franchise• Very limited

penetration of biologics market

• Discontinuation of products in the latter stages of development

• Co-marketing agreements can limit Pfizer’s global presence

SWOT

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THREAT• Lipitor’s patent

expiration in 2011• Further large scale M&A

activity could further decline Pfizer’s profitability

• Increased competition for core products

• The new economic potential of emergent china, India and completion in diverse regional markets

OPPORTUNITIES• Restricting strategy

designed to cut costs and create a leaner company

• Funding available to facilitate product/company

• Biological market expansion

• Decreasing development time through favourable R&D collaborations and internal efforts

Recommendations Emerging markets outside of north America,Europe and japan, are now

increasingly attractive for low-cost manufacturing and clinical trials

The emerging market opportunities include large population sizes and unmetmedical need,growing economies.

Targeting new markets

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Src: https://www.google.ae/?gfe_rd=cr&ei=Dd1LVMn6FseH8QeQwIGACw#q=pfizer

CONCLUSION

Despite sound financial results, Pfizermarket cap outperforms its competitors

Pfizer has a clear focus on emergingmarkets

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THANK YOU…

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