PFIZER INC.

Group 5 MMBM44A :
Andrea Yunike Hadi P
Ega Erlangga
Florentina Laut
Mohammad Bayu Indiartoputra
Nadia Farwinda
ABOUT COMPANY
Its starts in 1894 when cousins Charles Pfizer and Charles Erhart
founded a pharmaceutical company that has remained dedicated to
developing and discovering new and better ways to prevent and treat
disease and improve health of wellbeing. Pfizer, Inc., incorporated on
June 02, 1942

Pfizer Inc., the world’s largest research-based pharmaceutical

company, discovers, develops, manufactures and markets
prescription medicines in 11 therapeutic areas including oncology,
cardiovascular, pain, neuroscience, and infectious diseases, including
HIV/AIDS. Pfizer is also the world’s largest animal health company.
Pfizer is committed to applying science and global resources to
improve health and well-being at every stage of life.
VISION AND MISSION
VISION
We dedicate ourselves to humanity’s quest for
longer, healthier, happier lives through
innovation in pharmaceutical, consumer, and
animal health products.

MISSION
We will become the world’s most valued
company to patients, customers, colleagues,
investors, business partners, and the
communities where we work and live.
 BUSINESS
STRATEGY
Pfizer pursues a "Blockbuster" business model
that is heavily reliant on its R&D pipeline to
consistently develop and launch high volume
drugs.
 INNOVATIVE PRODUCTS
BUSINESS

Global Innovative Pharma (GIP) Business.

This business focuses on developing, registering and
commercializing novel, value-creating medicines that
improve patients' lives.
Products : Xeljanz®, Eliquis® and Lyrica®.

Global Vaccines, Oncology, and Consumer

Healthcare Business.
This segment consists of three businesses with the
following key elements: 1) poised for high, organic
growth; 2) distinct specialization and operating models
in science, talent, and market approach; and 3)
structured to ideally position Pfizer to be a market
leader on a global basis.
Products : Advil®, Centrum®, Robitussin®,
Nexium® and ChapStick®.
 ESTABLISHED PRODUCTS
BUSINESS

Global Established Pharma (GEP) Business.

This area consists of three primary product segments:
Peri-LOE products which are losing or approaching
a losing position in market exclusivity
Legacy established products in developed markets
that have lost market exclusivity and those with
growth opportunities
Emerging market products with growth
opportunities such as organic initiatives,
partnerships, product enhancements, sterile
injectables, and biosimilars.
Products : Celebrex®, EpiPen®, Zoloft®, and
Lypitor®.
 PRICING
STRATEGY

57% Increased price of Viagra

Pfizer revenue growth has been 51% Increased price of Lyrica

largely dependent on raising the
price of older drugs.
34% 41% Increased price of Premarin

Of Pfizer's revenue growth over

the past 3 years has come from
increasing prices on existing
20
22
drugs.
 INNOVATION
STRATEGY

The opportunities for revolutionary drugs have

been mostly exploited, with very few areas of
medicine in which breakthrough drugs can have a
huge impact.

Pfizer has shifted its strategy of maintaining an industry

leading drugs pipeline from in-house development to
being more reliant on strategic partnership and
mergers and acquisitions.

Pfizer's acquisitions have been focused on two main strategies : Expanding its capabilities and
2000
Acquires Warner-
Lambert for $90 Bio
for biologics and
consumer
2007
Acquires Coley
Pharma. for $164
Mio. for portofolio
of biotech., cancer,
and vaccines drugs
GROWTH STRATEGY
acquiring brands with strong revenues
2003 2005 2006
Acquires Pharmacia Acquires Vicuron Sells consumer
Corp. for $60 Bio. Pharma. for $1.9 products div. to
and Acquires rights Bio. for antibiotic Johnson&Johnson
to Celebrex, Bextra, R&D for $16.6 Bio.
Detrol and Xalatann
2009 2010 2015 2016
Acquires Wyeth for Acquires King Acquires Hospira Acquires Anacor for $5.1 Bio.
$68 Bio. for Pharma for $3.6 Bio. for $16 Bio. for their for tropical inflammatory
portofolio of and rights to EpiPen biosimilat, drugs and an acquires teh
biotech drugs injectable drugs, rights to Crisaborole
annd infusion Acquires Medivation for $14
technologies Bio. for its prostate cancer drug
Xtandi
 MAJOR COMPETITORS

Merck & Co. (MRK)

Merck & Co. was founded
Novartis AG (NVS)
in 1891 and had $39.5B in Founded in 1996 in
2015 revenues, making it Switzerland, Novartis AG is
one of the largest the pharmaceutical
pharmaceuticals industry's world leader in
companies in the world sales, generating $50.4B in
today. 2015 revenues.

Johnson & Johnson

Bristol-Myers (JNJ)
Squibb (BMY) Founded in 1886, Johnson &
Johnson is an American
Bristol-Myers Squibb was multinational medical
founded in New York in devices, pharmaceutical
1887 and had $18.8B in 2015 (40% by revenues) and
revenues. consumer packaged goods
manufacturer.
 EXTERNAL FACTORS
LEGAL POLITICAL TECHNICAL ECONOMICAL
FACTORS: FACTORS: FACTORS: FACTORS:
The rising cost if Reduction in R&D in
Food and Drugs Act in 1906:
Inflation: As
Regulatory authority over reaction to expanding costs
drugs in the US
healthcare is a inflation,
has resulted in:
Food and Drug and Cosmetic growing concern
Act signed by President A decrease in increased
among voters.
Roosevelt in 1938: Drug innovation and crisis for regulation and
labelling and advertising Health care reform many large drug
regulation. and regulation are manufacturers
other factors
Prescription Drug Users Fee
Act passed by Congress in
reaching political No drugs produced of have affected the
1992: the FDA can collect fees platforms. significant value; the pharmaceutical
from drug manufactures to aid Political lobbyist on number of new drugs
in funding the pre-market industry .
both sides are approved by FDA per
review process for new drug
billion dollars of R&D A 2012 study
approvals. spending millions of
Creation of the Office
dollars to influence
expenditures has indicated that the
Pharmaceutical Quality in halved every nine years
January 2015 in order to the outcome of cost per drug for
since 1950
reduce product recalls and initiatives such as Rapid increase in the the largest
shortages of critical drugs and
limit inspection efforts.
limiting the amount cost of drug manufacturers
ACA: acceleration approval for that state agencies development and the
has increased to
biosimilar products i.e. generic
pay for prescription reduction in the
drugs by the FDA.
approval frequency over $5.5 billion.
drugs
 THREAT OF NEW RIVALRY AMONG
ENTRANTS COMPETITORS
INDUSTRY ANALYSIS Moderate High
BIG Companies have substantial There are many big players in this Industry
PORTER'S 5 FORCES OF Companies are finding ways to differentiate
engineering capabilities that are hard to
COMPETITION replicate their products from competitors.
Their products are protected by patents and Limited patient numbers have also
have larger marketing budgets to protect tightened the competition. Companies are
their brand. in a race to get their patents approved so
that their drug reaches the market first.

THREAT OF BARGAINING POWER BARGAINING POWER

SUBTITUTES
Moderate to High
Patents protect products only for a certain
years. Once it expires, These are when
generic drugs pop out, the cheaper version
that may be substituted with the products.
Another type of substitute may be herbal
remedies which are gaining popularity
these days.
OF SUPPLIERS
High
Since the supplies may be rare chemicals,
production hangs in the 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,
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.
GLOBAL
STRATEGY IN
PFIZER
Choice of International Entry Mode
Exporting
the firm sends products it produces in its domestic market to international markets

Licensing
An agreement is formed that allows a foreign company to purchase the right to
manufacture and sell a firm’s products within a host country’s market or a set of host
countries’ markets

Strategic alliances
Strategy in which firms with headquarters in different countries decide to combine Joint venture
some of their resources to create a competitive advantage

Joint Venture
Association of two or more firms create legally independent company to share some of
their resources to create competitive advantage.
Acquisition
A firm from one country acquires a stake in or purchases all of a firm located in another
country.
New Wholly Owned Subsidiary
A firm invests directly in another country or market by establishing a new wholly owned
subsidiary
EXPORTING
Europe represents a key export hub, with over
60% of our medicines handled in Europe,
supplying patients in over 170 countries.

WHY EUROPE?

Trade has long been one of Europe’s strengths,

enabling economic growth across the continent,
building links with allies and partners across the
world, and contributing to greater resilience in
global downturns.
THE BENEFITS
OF EXPORTING
Extending to a global scale
Maximizing profit
Increased competitiveness and market share
Government Support

Pfizer played a big role in the vaccine export from

Belgium, which exported coronavirus vaccines worth
€3.8 billion, of which Pfizer reported sales of its
vaccines equivalent to €2.9 billion euros.
 THE RISKS
EXPORTING
Product adaption
Supply chain disroption
Currency fluctuations

"We operate in many countries and transact in over 100 different

currencies. Changes in the value of those currencies relative to the U.S.
dollar, or high inflation in thesecountries, can impact our revenues, costs
and expenses and our financial guidance. Significant portions of our
revenues, costs and expenses, as well as our substantialinternational net
assets, are exposed to exchange rate changes. 48% of our total 2020
revenues were derived from international operations, including 23% from
Europe and17% from China, Japan and the rest of Asia"
 Pfizer will not receive royalties on sales in all countries
covered by the agreement, including low-income nations,
while COVID-19 remains classified as a Public Health
LICENSING Emergency of International Concern by the WHO.

U.S. pharmaceutical giant Pfizer has agreed to a

license-sharing deal that would allow its
experimental covid-19 drug (PAXLOVID) to be
manufactured more widely around the globe.

Under the terms of the license agreement between

Pfizer and the MPP, qualified generic medicine
manufacturers worldwide were granted sub-
licenses to supply the new drug in combination
with ritonavir to 95 countries.
 JOINT VENTURE
Fully Integrated

Pfizer operates in China mainly through Pfizer WHY IN CHINA?

Pharmaceuticals Ltd, a joint venture it established
with Dalian Pharmaceutical Plant in the Liaoning China has huge population which has potential
province of North-eastern China in 1993. market size for pharmaceutical company.

Initial investment was 58 million US dollars, and

Pfizer holds 67% share of the ownership (Economist
Intelligence Unit, 1997).
The joint venture produces drugs that are sold mainly
in the Chinese market, with some exported via Pfizer’s
corporate-wide coordination of Global production.
In April 1997, it became the first pharmaceutical
company in China that received the Good
Manufacturing Practice (GMP) certificate granted by
the State Pharmaceutical Administration of China
(SPAC).
BENEFITS OF JOINT VENTURE
STRATEGY WITH CHINA
Gaining partner’s knowledge of local market conditions
Achieving economies of scale through joint operations
Gaining technical expertise and local market knowledge
Sharing distribution facilities and dealer networks, and
mutually strengthening each partner’s access to buyers
Directing competitive energies more toward mutual rivals
and less toward one another
Establishing working relationships with key officials in the
host-country government
THE RISKS OF JOINT VENTURE STRATEGY
WITH CHINA

Chinese Cultural and language barriers

Costs of establishing the working arrangement
Conflicting objectives and strategies or deep differences of opinion about joint
control
Differences in corporate values and ethical standards
Overdependence on foreign partners for essential expertise and competitive
capabilities (especially the regulative policies of drug production and new drug
application in China)
 STRATEGIC ALLIANCE

Pfizer Forms Global Strategic Alliance with Merck KGaA, Germany, to Jointly Develop
and Commercialize Anti-PD-L1 to Accelerate Presence in Immuno-Oncology.

Pfizer and BioTech firms produce a COVID-19 vaccine . Pfizer will contribute its leading
global vaccine clinical research and development, regulatory,manufacturing, and
distribution infrastructure and capability, whereas BioNTech will contribute multiple
mRNA vaccine candidates as part of its BNT162 COVID-19 vaccine program.
 ACQUISITIONS

Pfizer has attempted unsuccessfully to acquire a foreign drug company because

the U.S. Department of Treasury took measures to limit corporate inversions.

A corporate inversion occurs when a U.S. multinational corporation completes a merger that
results in its being treated as a foreign corporation in the U.S. tax system, even though the
shareholders of the original U.S. company retain more than 50 percent of the new combined
company.

In 2014, Pfizer tried to acquire AstraZeneca, but it ultimately abandoned the pursuit
after AstraZeneca repeatedly snubbed Pfizer’s approaches.
How does
Pfizer Compete
Internationally?
The reason is grounded in Michael Porter’s
analysis of why some nations are more
competitive than other nations and why and how
some industries within nations are more
competitive relative to those industries in other
nations.

Porter’s core argument is that conditions or

factors in a firm’s home base—that is, in its
domestic market—either hinder or support the
firm’s efforts to use an international business-
level strategy for the purpose of establishing a
competitive advantage in international markets.
A multidomestic strategy is an international strategy in which
strategic and operating decisions are decentralized to the strategic
business units in individual countries or regions, allowing each unit
the opportunity to tailor products to the local market. (Unilever)

Thus, a multidomestic strategy focuses on competition within each

country because market needs are thought to be segmented by
country boundaries.

The multidomestic strategy is most appropriate for use when the

differences between the markets a firm serves and the customers in
them are significant.
A global strategy is an international strategy in which a firm’s
home office determines the strategies that business units are to
use in each country or region. (IKEA & PFIZER)

These needs indicate that, compared to a multidomestic strategy,

a global strategy seeks greater levels of standardization of
products across country markets. The firm using a global strategy
seeks to develop economies of scale as it produces the same, or
largely the same, products for distribution to customers
throughout the world who are assumed to have similar needs.

A global strategy is most effective when the differences between

markets and the customers the firm is serving are insignificant.
A transnational strategy is an international strategy through which the
firm seeks to achieve both global efficiency and local responsiveness.

“Flexible coordination”—building a shared vision and individual

commitment through an integrated network—is required to
implement the transnational strategy.

Transnational strategies are becoming increasingly necessary to

successfully compete in international markets.

However, some argue that transnational strategies are not required to

successfully compete in international markets. Those holding this
view suggest that most multinational firms try to compete at the
regional level (e.g., the European Union) rather than at the country
level.
How Does Pfizer Build
Competitive Advantage
in International
Markets?
Research has shown that as international
diversification increases, a firm’s returns decrease
initially but then increase quickly as it learns how
to manage the increased geographic
diversification it has created.

Many factors contribute to the positive effects of

international diversification, such as private versus
government ownership, potential economies of
scale and experience, location advantages,
increased market size, and the opportunity to
stabilize returns.
An international diversification strategy creates
the potential for firms to achieve greater returns
on their innovations (through larger or more
numerous markets) while reducing the often-
substantial risks of R&D investments.

Effective R&D should enhance the firm’s returns,

which then provide more resources for continued
geographic diversification and investment in R&D.
Managing the business units of a geographically
diverse multinational firm requires skill, not only in
managing a decentralized set of businesses, but
also coordinating diverse points of view emerging
from businesses located in different countries and
regions.
Advantages and Disadvantages
What is Pfizer Global
Supply?
 “Our mission is to have an integrated internal and external supply network to provide a
competitive advantage for Pfizer by offering fast, flexible, and innovative supply solutions”
John Kelly - VP of strategy and transitioning sites for PGS

Pfizer's goal is for patients to receive uninterrupted access to our medicines and vaccines.

PGS’s strategy is to optimize internal and external partnerships in sourcing, capacity, capital allocation, costs, and
asset utilization.

PGS has developed a co-manufacturing approach by combining and consolidating global operations

Pfizer has 87 manufacturing sites across all business sectors—pharmaceuticals, consumer healthcare, and animal-
health care. This supply network includes 188 logistics centers, more than 500 supply partners, and more than
30,000 employees. On a geographic basis, the company has 30 sites in North America, 20 in Europe, 7 in China, 17
in the rest of Asia, and 7 in Latin America.
 WHEN TO DISPERSE ACTIVITIES ACROSS MANY
LOCATIONS

Buyer-related activities can be conducted at a distance.

There are high transportation costs.
There are diseconomies of large size.
Trade barriers make a central location too expensive.
Dispersing activities reduces exchange rate risks.
Dispersion helps prevent supply interruptions.
Dispersion helps avoid adverse political developments.
Dispersion allows for location-based technology and production cost competitive advantages.

The pharmaceutical industry is heavily influenced by legal, political , and technologies forces. As
a global company, Pfizer faces pressure to reduce its cost as well as respond to its local markets.
Within the 125 countries Pfizer sells its products, the company must be aware of local
communities, laws, and needs to which it should respond. A conflicting pressure that Pfizer also
faces is the pressure to reduce its costs.
 COMPETING IN THE MARKETS OF DEVELOPING
COUNTRIES

Compete on the basis of low price

Prepare to modify the firm's business model or strategy to accomoodate local circumtances
Try to change the local market to better match the way firm does business elsewhere
Stay away from developing markets where it is impractical or uneconomical to modify the Company's business
model to accomodate local circumtances

To compete on the basis of low price, Pfizer handles its pressure for cost reduction by mass-producing its generic
drugs, driving down costs.

Pfizer Strategy also using VRIN Strategy (Valuable, Rare, Inimitable, Non-Substituable) which resources are
achieved in each country including developing countries.
SUMMARY
Pfizer has shifted its strategy of maintaining an industry leading
drugs pipeline from in-house development to being more reliant
on strategic partnership and mergers and acquisitions.
Pfizer operates in China mainly through Pfizer Pharmaceuticals
Ltd, a joint venture it established with Dalian Pharmaceutical
Plant in the Liaoning province of North-eastern China in 1993.
Pfizer Forms Global Strategic Alliance with Merck KGaA, Germany,
to Jointly Develop and Commercialize Anti-PD-L1 to Accelerate
Presence in Immuno-Oncology and with BioTech to produce
COVID-19 vaccine.
To compete internationally Pfizer use a global strategy, is an
international strategy in which a firm’s home office determines
the strategies that business units are to use in each country or
region.
Pfizer disperse activities across many locations to prevent
supply interruptions and facing challenges in the pharmaceutical
industry in each countries.
RECOMMENDATIONS
It is recommended for decision makers to start the buying process
taking into account the growth potential in the current core business
and the growth potential associated with creating innovative value for
underserved customer groups.

Build on existing ties with key allies such as the US to eliminate

regulatory barriers and promote bilateral trade, and seize major
opportunities, such as free trade agreements in the asia pasific region,
to expand access to other markets

With different conditions in each country regarding regulations and

local responses. A transnational strategy is an international strategy
that Pfizer can consider to achieve global efficiency and local
responsiveness. Pfizer can perform “Flexible Coordination”— through a
unified network.
RECOMMENDATIONS
Use each country’s specific local knowledge to customize its
products to the needs of the local markets. This can be done by
allowing the subsidiary managers to have substantial control over
decision-making while still sharing information and resources with
the parent company.

Achieve economies of scale in each location. The need for location

economies with a transnational strategy is critical in handling both
global and local pressures.
REFERENCE
Wang et al . 2008. Strategic choices of firms in expanding overseas business ―A case study
of Pfizer’s production scope evolution in China (1993–2002). Front. Bus. Res. China 2008,
2(1):67–97

https://www.pfizer.com/news/press-release/press-release-
detail/pfizer_forms_global_strategic_alliance_with_merck_kgaa_germany_to_jointly_develop_
and_commercialize_anti_pd_l1_to_accelerate_presence_in_immuno_oncology

https://www.mbaknol.com/management-case-studies/case-study-pfizers-strategy-
analysis/