Internal and External Assessment of Pfizer Research Paper
- Length: 10 pages
- Sources: 10
- Subject: Business
- Type: Research Paper
- Paper: #8021893
Excerpt from Research Paper :
business model canvas developed by Osterwalder and Pigneur in order to evaluate and diagnose Pfizer Inc. organizational model. This is done to provide recommendations for improvements as identified using the canvas model. Key areas of internal assessment include its products and services offerings, key resources, capabilities and competitive advantages. Key areas of external assessment include Porter's five forces, including but not limited to, key products, major competitors, new entry and market dynamics, suppliers and customers.
Pfizer Inc. has its headquarters in New York City. It has a staff of about 115,000 people. It is involved in the manufacture of pharmaceutical products for both animals and humans.
Principal Services and Product-line
The company manufactures 31 different products, which are categorized into ten different divisions. Each division has a major product that it promotes as follows:
Cardiovascular and Metabolic Diseases (Lipitor, Caduet, Norvasc)
Central Nervous System Disorders (Aricept, Geodon, Lyrica, Zoloft)
Arthritis and pain (Celebrex)
Infectitious and Respiratory Diseases ( Diflucan, Zithromax)
Urology (Detrol, Viagra)
Endocrine Disorders (Genotropin)
All Other (Chantix, Zyrtec)
Pfizer also has other products which it sells and which are in the late stages of its research and development program. These products are:
UK-427,857 for HIV therapy.
Parecoxib for the treatment of acute pain.
Edotecarin for the treatment of colorectal cancer.
Torcetrapib/Lipitor for the treatment of heart disease.
Asenapine fir the treatment of the bipolar disorder.
Zithromax-chloroquine for the treatment of malaria.
Present Financial Condition
Currently, Pfizer is overall not financially stable. However, compared to preceeding years, 2014 has been an improvement (Research and Markets, 2014b). The reason for the better performance is the major products in the company's pipeline. For the year 2006, the company has intentions of bringing six new products to the market, three of which are projected to be worth billions. An examination of the company's money will include revenues as well as growth, price of stocks, net profits, budget for research and development, cash flow and ESPS. First, the company has experienced a drop in revenue growth in recent years. For example, the revenues for 2010 were $51,298, a drop of 2.4% in comparison to 2008.
The overall revenues for the first quarter of 2014 were an increase compared to 2013. There was an increase of 3% in revenues in the human health department, which recorded revenues of $11 billion. Secondly, despite the increase in revenue during the first quarter of 2014, Pfizer is still experiencing low prices in stocks which are selling at $25.98, a situation that has lasted for the last eight years (Research and Markets, 2014b). Third, in 2012 the net income for the company dropped by 29% compared to 2011, and amounted to $8,085 million. Fourth, the company is the leading spender in the R&D industry, and no other pharmaceutical company can match it in this respect ($7.7 billion in 2011).
In terms of cash flow, Pfizer is expected to reach a cash flow of $34 billion in the next 30 months (after capital expenditures as well as dividends). Finally, Due to expired inimitability on drugs, the company's EPS growth has dropped in about the last one year. However, in the latest quarterly results, the EPS growth has increased by 15.2% (Research and Markets, 2014a).
The company aims to turn into the world's most esteemed company to patients, customers, colleagues, patrons, business associates and the communities where they operate (Research and Markets, 2014a).
The objectives set for 2014 should accommodate some factors such as the fact that the company has been very large in size. Other factors the objectives need to consider include increasing generic competition, the fact that the company has a number of its drugs going off patent and it has light product pipelines (Research and Markets, 2014a). The objectives are as follows:
First is to make acquisitions on an ongoing basis to drive growth for the company's business in the long-term. Pfizer has set aside $17 billion which is intended to be used in acquiring products and technologies over the next 30 months (Research and Markets, 2014a).
The company is interested in inventing new technologies and building existing ones, especially R&D productivity, growth of important in-line medicines and any new information they can get from new medicines (Research and Markets, 2014a).
Pfizer is committed to providing solutions for physicians and advanced treatment options for patients. For example, it will offer training for physicians to be able to diagnose diseases better, and at the same time provide support programs for patients (Research and Markets, 2014a).
Pfizer must look for ways to cut on costs and maximize profits so that shareholders can reap greater benefits from their investments in the company. One way the company has strived to do this is by sending a memo to all its employees, requesting them to make decisions which help in reducing costs and increasing the efficiency in operations. The memo was sent by the new CEO, Jeffrey Kindler (Research and Markets, 2014a).
This pharmaceutical company can be evaluated using Porter's five forces model of competitive pressure. The forces are divided into sources of horizontal competition and sources of vertical competition. Horizontal competition includes product substitutes, current rivals in the market and new entrants. Vertical competition includes bargaining power of suppliers and bargaining power of buyers.
Competition from Product Substitutes
If a product is unique to the industry, the danger paused by substitution of products is minimal. However, if there are other medicines which serve the same purpose as the medicine that Pfizer offers, then there is a possibility of substitution of products, especially if they are marketed in a better way. An example of a Pfizer drug which is faced by a threat from product substitutes is Zyrtec, an allergy medicine. This danger is posed due to availability of generic and over-the-counter allergy medicine. Pfizer deals with the problem of competition from product substitutes by creating the generic subsidiary named Greenstone, through which they manufacture and promote generic versions of their products. Through this generic subsidiary, Pfizer is making a generic version of their Zoloft drug (Research and Markets, 2012).
Competition from Established Rivals
The pharmaceutical industry is highly competitive due to a number of reasons. Firstly, there are too many firms in the industry. Secondly, the drugs being produced by the firms serve the same purposes, and lastly, due to the presence of exit barriers. There are currently over 500 companies in the pharmaceutical industry. These firms are all competing for the same markets, resources and superiority in the market. It is therefore very hard to enter the industry. The companies who are already in the industry are finding it hard to survive due to the large amounts of revenue they have to spend on marketing their products in a way that makes the product look different from all the others. Lastly, the high exit barriers exist due to the high costs required to get rid of a specific product, or service or a subsidiary (Research and Markets, 2012).
Competition arising from New Industry Entrants
Four key factors lead to high competition from new entrants in the pharmaceutical industry. They include cost barriers, capital needs, product uniqueness (brand awareness), along with government policies. New entrants in the industry are required to find distribution channels hire many employees and deal with overhead expenses before they can be allowed to sell any drugs. Secondly, new entrants are required to have large capital requirements in order to invest in new technologies, machineries and raw materials if they expect to have any benefits from their firm. Thirdly, they have to invest heavily in advertisements in order to make their product look different from those of their competitors. Lastly, the government applies heavy regulations to the pharmaceutical industry before they can finally sell their products in the market, to ensure that the products being distributed to the market are safe for use (MarketLine, 2014).
Bargaining Power of Suppliers
Suppliers of raw materials in the pharmaceutical industry are many. Therefore, they generally don't have much bargaining power. If they were few, they probably would have a lot of bargaining power (Research and Markets, 2013a).
Bargaining Power of Buyers
The bargaining power of buyers is high when there is a large supply of drugs. It is low when there is a drug which is unique in the market, such as Pfizer's Viagra which had been priced highly when it was first launched in the market (Research and Markets, 2013a).
Resources are assets that a certain company owns and Pfizer's main resources are tangible, intangible, along with human resources. Its tangible resources are mainly in the finances they own and its free cash flow. Recently, Pfizer sold its consumer products department to J & J. For nearly seventeen billion dollars. This money will be used to invest in new opportunities as well as add to the cash flow in the company. According to the company's vice chairman, the company…