Pfizer strategy for internationalization and some financial analysis

1. Submitted By :
Group 1
Aamir: 13074
Himanshu: 13021
Sruthi:13073
Salil Garg:13045
Krishnapriya:13027
1
Submitted to :
Professor :Dr.Ajay Singal
IMT ,Dubai

2. Introduction
 Research-based, global pharmaceutical
company
 Function : Discovers, develops, manufactures
and markets leading prescription medicines
 Segment : Humans and Animals
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3. CORPORATION SIZE
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4. 4

5. VISION & MISSION
Vision:
To become the world’s most valued company to
patients, customers and businesses
Mission :
To develop medicines to cure & treat diseases,
symptoms & sufferings.
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6. 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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7. 7
2012

8. PFIZER’S STRATEGIC MOVES
 Enter New Product / Geographic Market
 Capture Emerging Market
 Strengthen Market Standing & Competitiveness : Acquiring
or merging with the other companies
8

9. STRATEGIC PRIORITIES
 Drive incremental organic growth
 Pursue strategic acquisitions & partnerships
 Seek game changing opportunities for innovation.
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10. 10

11. Internationalisation
 1951: Brazil , Cuba, Mexico ,Belgium , Canada (Decentralized
Decision 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 value
based )
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12. 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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13. Global Access Strategy
 Pfizer's Global Access team : exploring innovative business models
 Increase access to healthcare and medicine for low-income populations in
emerging 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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14. EMERGING MARKETS
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15. OPPORTUNITIES FOR INNOVATION IN
EMERGING MARKETS
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16. ACQUISITION OF WYETH
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17. 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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18. 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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19. Pfizer Organizational Structure
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20. 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 Joint
partnerships.
 Divided world in 4 regions( Europe, West, Middle east & far east) placed
Regional director in NY HQ.
 Subsidiary Autonomy
 Timely decision making with reduced dependence on HQ
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21. 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 and
Among Subsidiaries.
 Transnational Firm
 Centralization of firm
 Resource Concentration( labour and capital) located in foreign.
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22. 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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23. Pfizer Organisation Structure
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24. Pfizer Organisation Structure
 HQ monitored divisions to align their activities to corporate strategy.
 Pfizer centralized strategic responsibility of firm but decentralized
Operational responsibility to divisions and subsidiaries.
 Used mix rules approach and market approach to control corporate
activities.
 Interdependence: Integrated Network structure
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25. 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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26. Pfizer Functional Area
Human Resources
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27. 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 and
execute plans
 Represent the M&A HR team on cross-functional teams and
interdependencies.
 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 , customer
focus, teamwork, leadership, performance and community.
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28. HRM Role in Merger Integration
 Warner-Lambert acquisition in 2000 and merger integration process at
PGRD.
 To integrate and align cultures, systems , structure and processes.
 Managing potential redundancy in staffing and research projects during
budgetary 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 and
recommending integration strategies with respect to culture, programs,
systems, structure, and processes.
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29. HRM challenges
 Cash and stock merger & Acquisition ofWyeth 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, 25
percent 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 move
organisation forward.
 Need in complex and high speed organisation
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30. PFIZER FINANCIAL ASPECTS
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31. Revenue Growth Ratio
31
40.00
30.00
20.00
10.00
0.00
-10.00
-20.00
20004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
USD Mil
YEARS
Revenue Growth Ratio (%)

32. ROA, ROI, ROE
32
80
70
60
50
40
30
20
10
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Years
Return on Assets %
Return on Invested Capital %
Return on Equity %

33. Net Profit Margin
33
35
30
25
20
15
10
5
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Years
Net Profit Margin

34. Debt - Equity Ratio
34
0.6
0.5
0.4
0.3
0.2
0.1
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
%
Years
Debt/Equity

35. Current Ratio
35
3
2.5
2
1.5
1
0.5
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Times
Years
Current Ratio

36. INDUSTRY CHALLENGE
 High fixed costs and long –lead time
 Discovering and developing a new medicine takes atleast 12 years and an
average cost of more than $1B(including cost of unsuccessful compounds)
 Cost drivers for the innovative pharmaceuticals:R&D and SG&A account for
approx.45% of revenue
 Wave of patent expiration
 Slow down in product introductions
 Increasing pricing pressure
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37. Growth in demand is fuelled by:
 Aging population ,lengthening of average life
expectancy and rising incidence of chronic
disease
 New diseases-Although impossible to predict
,surfacing of new diseases will trigger demand
 Demand in emerging markets- increasing
standard of living & improving healthcare
systems globally
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38. 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

39. 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

40. 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 unmet
medical need,growing economies.
 Targeting new markets
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Src: https://www.google.ae/?gfe_rd=cr&ei=Dd1LVMn6FseH8QeQwIGACw#q=pfizer

41. CONCLUSION
Despite sound financial results, Pfizer
market cap outperforms its competitors
Pfizer has a clear focus on emerging
markets
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42. THANK YOU…
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