PFIZER AND THE

CHALLENGES OF THE
PHARMA INDUSTRY
Introduction
Pfizer is an American pharmaceutical company with headquarters in New York.
The company has the ambition to come up with innovative and differentiated
products that would help to overcome the health challenges worldwide. Pfizer is
one of the largest pharmaceutical companies all across the world with its
operations from more than 150 years. Innovation and differentiation is now a
major contributing factor to the success of pharmaceutical companies.
Successful innovation can be applied if the company understands the industry.
The analysis of the global pharmaceutical industry is done by using Porter's five
forces analysis for helping Pfizer for future planning.
PESTLE ANALYSIS OF
PHARMACEUTICAL INDUSTRY
POLITICAL
• Participation in lobbying and political contributions
• Regulatory Frameworks
• consisting of numerous governmental agencies and various drug-related laws, lays out crucial rules for
operating within the pharmaceutical industry.
• It may also affect how medications can be advertised and where they can be sold.
• Regulations on disclosing payments to Doctors on public database
• Pricing Pressure/Price control
• In the United States, pharmaceutical companies are free to price medications however they want. In recent
years, this has caused significant outrage
• governments are starting to take interest in limiting the prices drugs can be sold at.
• this would mean that pharmaceutical companies are left with less profit after all things are considered.
ECONOMIC
•Growing Healthcare Spend 
             •Overall, there’s an upward trend in household healthcare spending.
             •the average individual spends more and more money on healthcare — including medication — every year.
             •it can only mean greater revenue for the pharmaceutical industry.
• Factors that matter in other countries - 
• Exchange rates & stability of host country currency.
• Skill level of workforce in Drug Manufacturers 
• Education level in the economy
• Labor costs and productivity in the economy
• Business cycle stage (e.g. prosperity, recession, recovery)
• Economic growth rate
SOCIO CULTURAL
• Aging Population
• As healthcare around the world has rapidly improved, we now face the issue of an aging population.
The average person is now older than ever before.
• This creates greater demand for pharmaceutical products and will lead to more revenue for
the pharmaceutical industry.
• Growing Obesity Rates
• There are a number of secondary health issues associated with obesity, and many of these
require pharmaceutical treatment. 
• As a result, growing obesity rates are actually driving more sales of some drugs, thereby increasing the
overall revenue of the pharmaceutical industry.
TECHNOLOGICAL
• Growing Biologics Industry
• As new medications are created from various biological sources, pharmaceutical companies might have a wider range of
drugs to produce and distribute, generating additional revenue. 
• On the other hand, if biotechnology is used to produce healthier food options, it might take away from the pharmaceutical
industry. 
• Direct Advertising
• it’s the sophisticated advertisement systems that allow brands to interact with users on their favorite portals that can greatly
improve advertising potential. 
• By advertising direct to consumers, businesses will be able to lower their customer acquisition costs and gain more
customers as a result. 
• This should help the industry grow, as clever marketing professionals attract new individuals to purchasing various
medications
LEGAL
• The Legal Framework should be Robust to protect intellectual rights of the organization.
           Some of the factors are:

1. Anti-trust law in Drug Manufacturers - Major industry and overall in the country.
2. Handle Between patent and within patent competition
3. 19% tax on both financial and in-kind benefits from Pharma companies
4. Copyright / Intellectual property law
5. Consumer protection and e-commerce
6. Employment law
7. Health and safety law
8. Data Protection
ENVIRONMENTAL
• Climate change
• Laws regulating environment pollution
• Air and water pollution regulations in Drug Manufacturers - Major industry
• Recycling
• Waste management in Healthcare sector
• Attitudes toward “green” or ecological products
• Endangered species
• Attitudes toward and support for renewable energy
PORTERS 5 FORCES
 • The demand for medicine and pharmaceutical products
around the globe is exceptional and the industry has
gained enormous growth in the last few decades. 
• Pfizer is the largest in 2018 with annual revenue of 52.8
billion US dollar. Roche, Johnson & Johnson, Sanofi
Merch, Novartis, Abbvie, Amgen & GSK collected revues
of 45.6, 40.7, 39.3, 39.7, 34.9, 32.8, 23.7, and 23 billion
US dollar in 2018 (Ellis, 2019). 

Competitive • The collection of such a large amount of revenue by

these company shows the growth of industry and the

Rivalry
tough competition among firms as there are multiple
players dominating the industry rather than two or
three.
•  The presence of these players with exceptional
financial and revenue strengths intensifies the
competitive rivalry in the pharmaceutical industry at a
global level.
• Two types of competition - 'inter patent' and 'within
patent'.
• Competition is low for innovative (patent protected
products) but high for Generic product.
 • Medicine and other health-related products are the
basic needs of human life. Now looking at the
pharmaceutical industry, there does not seem to be
any close substitute for the pharmaceutical
industry.

Threat of • The threat of substitute for specific products within

the industry is always high as the innovation keeps

Substitutes
on replacing the older products but the
pharmaceutical industry itself is safe from the
threat of being replaced.
• The lack of significance and availability of
substitutes for health-related products have
decreased the threat of substitutes for the
pharmaceutical industry.
 • Pharmaceutical products are those products that are
completely unknown to customers in terms of

Bargainin differentiation and costing.

•  Despite the number of companies available, the buyers

g Power
do not have any control over the pricing of the products
in case of non-prescription/OTC drugs. They have to buy
at the price what is set by the companies. 

of
• However, when it comes to prescription drugs, doctors
as customers have moderate to high bargaining powers.
• Governments do have control over prices but the lack of

Customers
knowledge about the products lead to no control or
bargaining of buyers over the products.
• Therefore, the bargaining power of buyers for the
pharmaceutical industry is low to moderate.
 • The power of suppliers is high when the products
provided by suppliers are scarce or do not have

Bargainin multiples providers. This is not the case with drug

suppliers for the pharmaceutical companies which
is the reason for the low bargaining power of

g Power
suppliers.
• But in case of equipment supplier of
pharmaceutical machinery, the suppliers are less as

of compared to drug suppliers. The machinery is

technical equipment that is not possible to be
provided by anyone. In the case of machinery the

Suppliers bargaining power of suppliers is high.

• Balancing the impact of both types of suppliers for
the pharmaceutical industry, the overall bargaining
power of suppliers is moderate.
 • Due to growth and the size of industry and
contribution of innovation in the products, the new
entrants are always keen to start businesses in the

Threat
pharmaceutical industry.
• The researchers that are expert in research and
finding out innovative products and ideas in the

of
industry attach venture capitalists with them to
enter into the market.
• The industry that has room for innovation is always
inviting the new entrants.

Entrants • The lack of knowledge of customers for

pharmaceutical products is another benefit that
attracts the new entrants towards the
pharmaceutical industry.
Therefore, the threat of new entrants is high.