Executive Summary

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, is one of the world’s largest multinational

pharmaceutical company engaged in the discovery, development, manufacture, and marketing of

prescription drugs for humans and animals worldwide. It operates its business through three

segments, namely, Pharmaceuticals, Animal Health, and Corporate & Other. Pfizer is recognized

for its prescription and over-the-counter drugs. Some of its well-known products are Lipitor,

Viagra, Lyrica, Zeldox, and Aricept.

Despite the economic recession, Pfizer is still in a strong position to recover from

decreasing revenues. The market outlook seems to be positive based on opportunities available,

such as entry to biologics market, mergers/acquisitions, and strategic agreements, despite many

threats that the company will face over the coming years, such as loss of patent protection, global

pricing pressure, and increasing competition.

Pfizer has a major advantage in the pharmaceutical industry because of its global brand

recall, possibly increased by its continued acquisition of other pharmaceutical companies.

However, tougher competition may limit its market share growth. To counter this, the firm will

have to stop depending too much on their leading brand products, and explore emerging markets.
 To recuperate from its decline in overall revenue, Pfizer must take advantage of available

opportunities, harness its strengths, mitigate its weakness, and avoid threats.

In 2009, Pfizer proposed the Acquisition of Wyeth, a company based in Madison, New

Jersey, for a cash and stock price of $68 billion. The acquisition would enable Pfizer to enter the

biologics market and would diversify Pfizer’s product offerings.

The acquisition would also enable Pfizer to get hold of Wyeth’s ongoing research and

increase the likelihood of producing successful products. It will also result to enhanced presence

in emerging markets, such as China, India, Brazil, Turkey, and Philippines.

This paper will present Pfizer’s company profile, external and internal analysis, strategy

formulation, implementation, and evaluation.

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 Table of Contents
I. Introduction-Challenges and issues pertaining to company under study
II. Vision/Mission Statements
III. External Analysis
A. General Environment
B. Industry Analysis
C. Competitive Analysis
D. Summary and conclusion
IV. Internal Analysis
A. Management
B. Marketing
C. Finance / Accounting
D. Production / Operations
E. Research and Development
F. Management Information Systems
G. Summary and conclusion
V. Strategy Formulation
A. The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
B. The Strategic Position and Action Evaluation (SPACE) Matrix
C. The Boston Consulting Group (BCG) Matrix
D. The Internal-External (IE) Matrix
E. The Grand Strategy Matrix
F. The Quantitative Strategic Planning (QSPM) Matrix
VI. Strategic Objective and the Recommended Strategies
A. Strategic and Financial Objectives
B. Recommended Business and Organizational Strategies
C. Financial Projections and Overall Evaluation of the Strategies Proposed
VII. Action Plans and Departmental Programs
VIII. Strategy Evaluation, Monitoring and Control
Appendices
Bibliography

3
 I. Introduction

Recovering from the aftermath of the great recession, Pfizer must take actions to improve

its market presence and increase its revenues. However, this will not be without any challenges.

Competition is tougher. Regulatory authorities are becoming more stringent. Research is

unsuccessful. Pfizer needs to formulate and implement a suitable strategy to respond to these

challenges.

A. Company Profile

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.

Pfizer Inc. employs approximately 90,000 colleagues worldwide, all of whom are

devoted to working for a healthier world. Pfizer conducts more biomedical research than any

other organization, and has 12,000 professionals working in six major R&D sites worldwide,

including Sandwich in Kent. Pfizer offers a diversified product portfolio in three business

segments: (1) Pharmaceuticals; (2) Animal Health; and (3) Corporate & Other. The

Pharmaceuticals segment offers products for the treatment of cardiovascular diseases, central

nervous system disorders, arthritis and pain, infectious and respiratory diseases, urogenital

conditions, cancer, eye disease, endocrine disorders, and allergies, among others. The Animal

Health segment offers medicines for livestock and pets. The Corporate & Other segment

comprises of empty gelatin capsules, producing contracts, and bulk pharmaceutical chemicals. It

only constitutes 3% of Pfizer’s total sales.

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 In the company’s global biopharmaceutical businesses, the company promotes its

products to healthcare providers and patients. Through its marketing organizations, the company

explains the approved uses, benefits, and risks of its products to healthcare providers, such as

doctors, nurse practitioners, physician assistants, pharmacists, and the managed care

organizations that provide insurance coverage, such as hospitals, integrated delivery systems,

pharmacy benefit managers, health plans, employers, and government agencies. The company

also markets directly to consumers in the U.S. through direct-to-consumer advertising that

communicates the approved uses, benefits, and risks of its products. The company serves

wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual

provider offices, as well as centers for disease control and prevention.

Pfizer, relative to its competitors, has distinct competitive advantages. Being in the

market for more than one and a half century, Pfizer had already established its name as a reliable

pharmaceutical company dedicated to help mankind in battling diseases that threaten our

existence. Moreover, Pfizer had also proved to be one of the leading, if not best, pharmaceutical

companies to develop new medicines. This had been possible because of Pfizer’s dedicated and

competent research and development teams and Pfizer’s access to needed resources. Pfizer also

had the opportunity to participate in collaborative research works enabling them to obtain

research data with promising potential.

In terms of market share, Pfizer serves the largest portion compared to its competitors.

Pfizer operates in 180 countries worldwide and focuses on emerging markets like China, India,

Philippines, Turkey, among others.

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 The company’s revenues are primarily contributed by international operations. The

detailed information of revenues by segment and geographic is presented below:

The United States has historically been the industry’s largest and most profitable market,

but now pharmaceutical companies are looking more and more to developing countries. Sales in

developing countries significantly increased in the past years. The acquisition of Wyeth will

prove advantageous to Pfizer’s dedication to develop in the emerging markets.

B. Paper Design and Methodology

The aim of this strategic management plan is to gather qualitative and quantitative data

that will lead to the formulation of a successful and feasible strategy for Pfizer, Inc. The

quantitative data were obtained from studying and analyzing the information presented in the

case. Additional information was also collected from Pfizer’s company website in the form of

financial statements, annual reports, newsletters, financial diagrams, among others. To ascertain

credibility of information, financial information about Pfizer’s performance was collected from

Bloomberg. Information about Pfizer, Inc.’s operations, history, strategies, and other qualitative

data was obtained from news articles, company profile, and other reportorial statements of the

company obtained from credible internet sites.

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 The following tools and processes were used to analyze gathered data:

Framework Tools Activities Output

STEP

 Social, Cultural and Societal -

Demographic EFE Environmental Opportunities and
 Technological Analysis Threats
 Economic
 Political, Government
and Legal

Porter’s 5 forces EFE and CPM Industry Analysis

Strengths and
Core Competencies IFE Company Analysis
Weaknesses
 Threats-
Opportunities-
Weaknesses-
Strengths (TOWS)
Matrix
 Strategic Position
and Action
Evaluation
Strategy
Matrices (SPACE) Matrix Strategies
 Boston Consulting
Formulation
Group (BCG)
Matrix
 Internal-External
(IE) Matrix
 Grand Strategy
Matrix

Quantitative
Prioritization of
Strategic Planning Prioritized Strategies
(QSPM) Matrix Strategies
Functional Areas of Strategy
Programs
Management Implementation
Strategy Evaluation
Financial Projections Control Standards
and Control
Balanced Scorecard

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 II. Vision and Mission Statements

A. Current Vision and Mission Statements

 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.

B. Critiquing of the Current Vision and Mission Statements

The current vision statement of Pfizer answers what the company wants to become. It is

concise and well put together in a single sentence. On the other hand, the company’s mission

statement does not articulate three essential components of a mission statement which are the

company’s concern for employees, technology, and the concern for its survival, growth, and

profitability.

C. Recommendation of Revised Vision and Mission Statements

In line with the previous observations pointed out, we have decided to keep Pfizer’s

vision statement and to add a few words to its mission statement.

 Vision

We dedicate ourselves to humanity’s quest for longer, healthier, happier lives through

innovation in pharmaceutical, consumer, and animal health products.

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 Mission

Pfizer’s mission is to become the world’s most valued company to patients,

customers, colleagues, investors, business partners, and the communities where we work and

live. We will strive for a continuous improvement in our performance, profitability, financial

stability, technology, and measuring results carefully, ensuring that integrity and respect for

people are never compromised. We also believe that leaders empower those around them by

sharing knowledge and rewards in outstanding individual effort and therefore providing

opportunities for leadership at all levels in our organization.

D. Current Strategies of the Company

 Horizontal Integration

Horizontal integration is a strategy seeking ownership or increased control over a

firm’s competitors. Pfizer is capitalizing on this tactic to keep its growth steady. It allows the

company to increase its economies of scale which provides a major competitive advantage

and enhances resource transfer. Acquiring a competitor is more likely to create efficiencies,

since Pfizer has not had a breakthrough since Viagra. The reason for this is the greater

potential for gaining the acquired companies’ researches, facilities, and market. With 80,250

employees and $97.13 billion in market capitalization, Pfizer is an organization that have

both the capital and human talent needed to successfully manage an expanded organization.

The procurement of Warner-Lambert and Pharmacia shows how Pfizer has the ability to

successfully manage its acquisitions.

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 Product development

This strategy seeks to increase sales by improving or modifying present products or

services. This is usually the strategy implemented with regards to pharmaceutical companies

because of the nature of this industry. Because of rapid technological developments, high

competition in the industry exists. High growth rate of product development is essential to

sustain Pfizer in the race. Since competitors like Novartis and Merck & Co. can create and

offer quality products at comparable prices, Pfizer uses product development to counter those

threats. Product development is also used by Pfizer to replace their currently successful

products that are nearing the expiration of their patent rights.

 Market Development

Market development involves introducing present products or services into new

geographic areas. Pfizer is currently capitalizing on this strategy because it has the excess

production capacity, capital needed and human resources to manage expanded operations.

Since the markets are unsaturated in some areas it is easy for Pfizer to implement this kind of

strategy and also at the same time, the fact that the organization’s basic industry is rapidly

becoming global in scope makes it even easier. Lastly, since Pfizer is obviously successful at

what it does, this is a big factor in the effectiveness of this strategy.

Currently, Pfizer’s international operations contributed $27.9 billion in revenues in

2008 as compared to the $20.4 billion generated in the United States. The double digit

decline in the U.S. sales of Pharmaceuticals has been offset by the double-digit growth in

international sales. One of the struggles that Pfizer currently facing on its international

operations is the multiple and diverse regulatory environments it contends with.

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 Global companies like Pfizer are subject to unexpected changes in revenues and

profits resulting from unpredictable currency fluctuations. Because of these problems,

Pfizer’s consolidated Balance Sheet shows that total assets shrunk from $113.84 billion in

2006 to $111.15 billion in 2008, and total liabilities increased from $43.38 billion in 2006 to

53.59 billion in 2008. Stockholder’s equity also fell 19.34 percent, from $71.36 billion in

2006 to $57.56 billion in 2008.

Pfizer is looking more and more to developing countries like Venezuela. Sales of

prescription drugs in developing markets increased to $152.7 billion in 2008, up from 76.2

billion in 2003. This number should reach $265 billion in 2013, according to IMS Health. In

addition to Venezuela, Pfizer is expanding rapidly into China, India, Brazil, Russia, and

Turkey. During the first quarter of 2009, Pfizer’s revenues from emerging markets were $1.4

billion, out of $10.8 billion total Pfizer revenues that quarter. Rather than focusing on

middle- and upper-class people, Pfizer and its rival firms are now also focusing on lower-

class people in emerging countries.

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 III. External Analysis

A. General Environment

1. Social, Cultural, and Demographic Environment (And economic)

The world’s pharmaceutical industry affects the society as a whole. It employs

millions of people directly, tens of millions indirectly. Its products have transformed

society, bringing undreamed-of levels of healing and continuous renewal of wellbeing,

changing the ways people live and work. The social value of the elevated sense of health

and cure that this industry brings involves the value of the people being able to live a

healthier lifestyle and that those on the brink of illnesses or even death can be nursed

back to health, among many others. There are, on the other hand, social issues to address.

One of those issues are the cultural differences. With other people’s beliefs differing with

modern treatment methods, there is a barrier stopping the pharmaceutical industry in

reaching more conservative countries.

In the context of Pfizer, the world is in continuous need of quality medicines and

healthcare products. Though the world contains varied audiences, it universally a fact that

most people would like to live longer or healthier. No matter what concept or religion

they believe, a community in need will always seek out the help of medicine.

2. Technological Environment

The level and diversity of technologies that the pharmaceutical industry must

deploy are increasing. To maintain a company’s position in the industry, it must make a

number of discoveries in a span of a few years in between.

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 The key is to make advances and ensure that the market receives it well. Pfizer is

always on the edge; always on the verge of creating new products with the intent to help

the debilitating sickness that mankind succumbs to everyday. Due to the advent of new

technology, it will be easier to create quality products which would aid the continuous

search for immunity to diseases. The aid of technology has brought new hope to people

around the world who are down with sickness and disease.

The industry uses manufacturing technology that is the cutting edge of science.

Nowadays, energy is getting more and more scarce and expensive. In order to sustain the

company’s production and operations, they must find a way to get a large supply of

energy. There are numerous additional near-term technological opportunities to adapt the

automobile to changing energy availability. The possibilities suggest that pharmaceutical

industry is unexpectedly robust and provides a powerful defense against energy

starvation even if the real price of energy climbs steadily during the next couple of

decades.

3. Economic Environment

With the Great Recession plaguing the United States, the pharmaceutical industry,

along with a great number of other industries, has suffered losses. Pfizer has sacrificed

and cut back its operations in a few places to ensure that the company has funds to

sustain the company. The troubled economy has slowed down drugs sales. More

unemployed people also means a drop in the number of insured Americans. In turn they

worry about costs and therefore cut their spending on health care. Due to this, more and

more people rely on over-the-counter or generic drugs. The latter are on the rise due to

the fact that a lot of patents for brand names have or are about to expire.

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 Consumers are also more aware of the possible side effects of drugs, especially

concerning medications for depression or other mental disorders. Pfizer’s investments in

different countries have contributed a lot to prevent the pharmaceutical giant’s ship from

sinking. Pfizer’s international operations contributed $27.9 billion in revenues in 2008 as

compared to the $20.4 billion generated in the United States. The double digit decline in

the U.S. sales of Pharmaceuticals has been offset by the double-digit growth in

international sales.

4. Political, Governmental, and Legal Environment

The government fights for the wellbeing of its constituents. It is only fair that

those that put the people at risk are held accountable. Pfizer has been a repeat offender in

illegal marketing of their products. The US government did not tolerate Pfizer’s slip up

and filed for a lawsuit which cost Pfizer 2.3 billion dollars. This has been the largest

criminal fine in the US history. Along with this, the US government will also supervise

the company’s behavior in the next five years. This lawsuit, even if it has been only a

small blow on Pfizer’s earnings, was disparaging to its public image. Many citizens have

expressed that Pfizer has not been punished enough.

The company has promised to strengthen its internal controls and pioneer new

procedures to ensure that they not only comply with state and federal laws, but also meet

the high standards that patients, physicians, and the public expect.

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B. Industry Analysis

1. Threat of New Entrants

Moderate to High - Companies such as Pfizer, Merck, Novartis and Bayer have

substantial engineering capabilities that are hard to replicate; their products are protected

by patents and have larger marketing budgets to protect their brand. Only legislations,

such as 1984 Waxman-Hatch Act, has made it easier for generic drug companies to enter

the market.

2. Rivalry Among Competitors

High - There are many players in the pharmaceutical industry that have revenues of over

$3 billion. The pharmaceutical industry is expected double its revenues in emerging

markets in the near future. Companies are finding ways to differentiate their products

from competitors. Limited patient numbers have also tightened the competition.

Companies are in a race to get their patents approved so that their drug reaches the

market first.

3. Threat of Substitutes

Moderate to High - Patents protect a company’s products only for a certain number of

years. Once it expires, the product’s basic formula is open for the public to see. These are

when generic drugs pop out, the cheaper version that may be substituted with the

company’s products. Another type of substitute may be herbal remedies which are

gaining popularity these days.

4. Bargaining Power of Suppliers

High – With the pharmaceutical industry’s nature, supplies are very important. Since

these supplies may be rare materials of chemicals, the company’s production hangs in the

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 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, demand supplement resources and not fully cooperate with the

experiment. This will have an effect on the company’s ongoing researches.

5. Bargaining Power 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.

6. Summary of Porter’s Five Forces of Competition

Potential Development of Substitute

Products
MODERATE - HIGH

Bargaining Power of Rivalry among Bargaining Power of

Suppliers Competing Firms Consumers
HIGH HIGH MODERATE - HIGH

Potential Entry of New Competitors

HIGH

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C. Competitive Analysis

1. Profile of Competitors

 Merck & Co. (MRK)

Merck & Co. (established in 1891) is an American pharmaceutical company with

headquarters located in Kenilworth, New Jersey. Merck is one of the world's largest

pharmaceutical company by market capitalization and revenue. Its products consist of

vaccines (BCG Vaccine, MMR II, and Rota Teq); prescription drugs (cardiovascular

disease, respiratory disease, oncology, neuroscience, infectious disease, immunology, and

women's health); animal health products (vaccines, anti-infection, anti-parasitic). Merck

uses different strategies to maintain their competitive advantages. These include mergers

and acquisitions, product development, market development, and partnerships.

 Bayer AG

Bayer AG is a German multinational chemical and pharmaceutical company

headquartered in Leverkusen, Germany. It is well known for its original brand of aspirin.

Bayer's primary areas of business include Bayer HealthCare (hematology, cardiology,

oncology, anti-infective, contraceptives, and gynecological therapies); Bayer Crop

Science (high value seeds, crop protection solutions like fungicide, herbicide, insecticide,

seed treatment); Bayer Material Science (coatings, adhesive, polycarbonates, and

polyurethanes). The 150 year old company implements strategies like corporate social

responsibility, unrelated diversification, mergers and acquisitions, product development,

and market development.

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 Novartis AG

Novartis International AG is a Swiss multinational pharmaceutical company

based in Basel, Switzerland. It is Pfizer’s strongest competitor, ranking just below the

number one spot. It has several divisions that include Pharmaceutical (cardio metabolic,

respiratory, neurosciences, immunology, dermatology, oncology, and cell & gene

therapy); Alcon - Eye care (surgical products, ophthalmic pharmaceuticals, vision care);

Sandoz – Generics and OTCs (cough, cold, respiratory, pain relief, digestive health,

smoking cessation, and supplements); Vaccines. Novartis, being the second largest

pharmaceutical company in the industry implements the following strategies: product

development, related diversification, and mergers & acquisitions.

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 2. Competitive Profile Matrix (CPM)

MERCK &
PFIZER NOVARTIS BAYER
Co.
Critical Success
Weight Rating Score Rating Score Rating Score Rating Score
Factors
Advertising 0.05 4 0.20 3 0.15 3 0.15 3 0.15
Market
0.10 3 0.30 3 0.30 4 0.40 3 0.30
Penetration
Customer
0.09 4 0.36 2 0.18 4 0.36 3 0.27
Service
Store Locations 0.04 4 0.16 2 0.08 3 0.12 2 0.08
R&D 0.14 3 0.42 4 0.56 4 0.56 3 0.42
Employee
0.09 3 0.27 2 0.18 4 0.36 3 0.27
Dedication
Financial Profit 0.10 4 0.40 4 0.40 2 0.20 4 0.40
Customer
0.06 3 0.18 2 0.12 3 0.18 3 0.18
Loyalty
Market Share 0.10 4 0.40 3 0.30 2 0.20 2 0.20
Product Quality 0.09 3 0.27 3 0.27 3 0.27 3 0.27
Top Management 0.05 3 0.15 3 0.15 2 0.10 2 0.10
Price
0.09 3 0.27 4 0.36 3 0.27 3 0.27
Competitiveness
Totals 1.00 3.38 3.05 3.17 2.91

The most important factor to being successful in the industry is the Research and

development as indicated by weight of 0.14. We can notice that Pfizer has the best market

advertising, customer service, store locations, financial profit and market share but they were

defeated in terms of research and development which we note as the most important factor.

Overall Pfizer is still the best among its competitors with a score of 3.38 and Novartis as its

strongest rival with 3.17 weighted score.

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D. Summary and Conclusion

1. Summary of Key External Factors

 Opportunities

1. Strategic agreements with other pharmaceutical companies and organizations to

boost its research.
2. Increasing awareness of people about their healthcare needs
3. Global penetration through mergers and acquisitions
4. Increasing demand for quality healthcare solutions
5. Restructuring strategy designed to cut costs and leaner company
6. Funding available to facilitate product/company
7. Acquisitions (Wyeth) and in-licensing/co-development opportunities
8. Expansion into biologics market
9. E-Commerce
10. High profits, revenues and funds are available to uplift the company’s progress

 Threats
1. Risk of unsuccessful new products
2. Regulatory environment is becoming more & more stringent
3. Economic slowdown in European markets
4. Increased market competitions
5. Losing of patent individuality by focusing on one product
6. Loss of patent protection of major products
7. Risk of Eisai terminating long-standing partnership
8. Outstanding competition of regional markets along with emerging markets of
India and China
9. Negatively publicized by being sued by their customers
10. Healthcare reform in the US affects revenue growth

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 2. External Factor Evaluation (EFE) Matrix

Weighted
Opportunities Weight Rating
Score
Strategic agreements with other pharmaceutical
1. 0.09 3 0.27
companies and organizations to boost its research.
2. Increasing awareness about healthcare needs 0.06 3 0.18
3. Global penetration through mergers and acquisitions 0.07 4 0.28
4. Increasing demand for quality healthcare solutions 0.07 3 0.21
Restructuring strategy designed to cut costs and
5. 0.03 3 0.09
leaner company
6. Funding available to facilitate product/company 0.02 3 0.06
Acquisitions (Wyeth) and in-licensing/co-
7. 0.07 4 0.28
development opportunities
8. Expansion into biologics market 0.05 3 0.15
9. E-Commerce 0.03 2 0.06
High profits, revenues and funds are available to
10. 0.04 4 0.16
uplift the company’s progress
Weighted
Threats Weight Rating
Score
1. Risk of unsuccessful new products 0.04 2 0.08
Regulatory environment is becoming more & more
2. 0.05 3 0.15
stringent
3. Economic slowdown in European markets 0.03 2 0.06
4. Increased market competitions 0.06 3 0.18
Losing of patent individuality by focusing on one
5. 0.08 3 0.24
product
6. Loss of patent protection of major products 0.07 4 0.27
7. Risk of Eisai terminating long-standing partnership 0.04 3 0.12
Outstanding competition of regional markets along
8. 0.03 2 0.06
with emerging markets of India and China
Negatively publicized by being sued by their
9. 0.04 4 0.16
customers
10. Healthcare reform in the US affects revenue growth 0.03 3 0.09
TOTALS 1.00 2.88
The table illustrated above shows that Pfizer got a total weighted score of 2.88 for its

External Factor Evaluation (EFE) matrix, which shows an above average response to its existing

opportunities and threats in the industry. The current strategies that the company is using is

satisfactory, but these will need to be improved for Pfizer to keep the top position among its

competitors.

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 IV. Internal Analysis
A. Management

A company as large as Pfizer would never reach its prime without the semblance of any

structure. It is evident that the company uses strategic management concepts in every aspect. The

company’s functional organizational structure helps delegate work and responsibility to its

divisions around the world. The only fault we can find with it is Mr. Jeff Kindler holding both

the positions of CEO and Chairman of the Board of Directors. To ensure that the company’s

interests are put first, it is best to segregate these duties distribute the power.

Up to now, Pfizer employs and takes care of 80,250 people and their families. It provides

plenty of benefits and fitting wages to all of its employees. Since the company depends upon its

employees to ensure that their products are of great quality, they make sure that the employees

are well taken care of.

B. Marketing

Pfizer’s markets are segmented carefully to ensure profitability in different parts of the

world. It currently holds the top position in the pharmaceutical industry. The company is

interested in bagging emerging markets such as China, India, and parts of Africa. Since these

places have large populations, if Pfizer succeeds to capture these markets, it will bring a huge

increase in its earnings.

Pfizer is known to reach out to its consumers directly. Usually, it enlists doctors to help

market their products to patients. This method has earned the company the top spot in sales and

marketing. On the other hand, Pfizer’s TV advertisements are not very many, but the most

popular ones can be seen as those that do not talk about their products.

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 These popular TV ads reach consumers by reaching through their emotions. A great

example of this is the “Be Brave” commercial which emphasizes that “it takes more than

medication” to get well from any sickness. Pfizer wants its customers to see that their goal is not

to sell medicine, but to keep the world healthy.

C. Finance/Accounting

For the years 2006 to 2008, Pfizer’s assets decreased and its liabilities increased due to

the Great Recession that plagued the United States. Pfizer has discontinued a few of its

operations to pay off its debts and to sustain most of its operations. This is why its net income

has dropped from 19 billion in 2006 to 8 billion in 2008.

We have gathered data from Pfizer’s financial statements and determined its financial

ratios (See Appendix C). Its current ratios have dropped from 2.2 in 2006 to 1.6 in 2008. This

means that the company’s ability to pay its current obligations have lessened. The debt-to-equity

ratios have climbed up from 0.1 in 2006 to 0.3 in 2008. We can deduce from here that the funds

provided by creditors have increased marginally from the funds provided by the shareholders.

This is parallel to the tremendous increase of 6 billion in the company’s long term debt. Its return

on investment has decreased from 0.2 to 0.1. This means that after tax profits for every dollar of

asset has decreased. The return on the stockholders’ equity is in the same situation. The

tremendous decrease in net income influenced this drop.

The economy in the US has forced Pfizer to take different measures to keep the company

going. It has discontinued some operations to raise needed short-term capital and ensure that it

has enough working capital. Seeing that the company has managed to maintain a substantial

amount of net income, we can assume that its budgeting procedures have been effective.

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 With the stockholders’ and the investors’ support, Pfizer has gone through the recession,

though not exactly unscathed, well enough. Despite these difficulties, Pfizer still remained on top

compared to the others in the industry.

D. Production/Operations

The Great Recession has also impaired the Pfizer’s production. The company had to close

several facilities to keep up with the declining economy. This has hindered the company

operations, though not by much since the company only shut down those facilities which are too

costly but do not earn much.

E. Research and Development

Pfizer has several R&D state-of-the-art facilities located optimally around the world.

These facilities employ top-notch scientists and doctors known internationally. These 10

facilities are strategically located in optimal places. One might think that Pfizer’s R&D is very

extensive, but for a company with this size, it is hardly sufficient. In the pharmaceutical industry,

to maintain the top position, one must make a few breakthroughs in the course of a few years.

But Pfizer has not discovered a single drug since Viagra. The budget in R&D has not been very

hefty, considering the company’s size, if compared with the R&D of other companies in the

industry.

F. Management Information System

Priss is Pfizer’s £600,000 project information and support system jointly developed with

Atlantic Global PLC has allowed the informatics department to stretch itself across the very

diverse range of demands that are placed on it.

24
 Being able to see how those demands line up against each other has helped us to talk

about priorities in a way we would not have been able to before. This information system has

helped Pfizer consolidate with its previous acquisitions.

G. Summary and Conclusion

1. Summary of Key Internal Factors

 Strengths

1. One of the largest pharmaceutical company in the world and spread over more than

50 countries

2. Excellent research and development (R&D) creating innovative and breakthrough

products

3. Mergers and acquisitions with big pharmaceutical companies increasing brand

reputation

4. Has over 100,000 employees as a part of the organization

5. Strong brand name and recall globally

6. Number one pharmaceutical from sales point of view and its marketing infrastructure

is well established throughout the world

7. Therapeutic coverage is very large and the innovative researchers are broadening it

further

8. Well established reputation for years on number of products

9. Wide range of area being worked, that includes human health, animal health,

customer health, and corporate groups

10. Involved in licensing agreements with different companies for collaborative research

work

25
 Weaknesses

1. Tough competition from other major pharmaceutical brands means limited scope for

market share growth

2. Negative brand image due to involvement in largest healthcare fraud of marketing its

drug illegally

3. Very limited penetration of biologics market

4. Marketing with other companies and merging with other pharmaceuticals can halter

its global popularity

5. Overreliance on the mature market (U.S.) and a small number of distributors

6. Irrational drug policies such as bringing over 70 percent of the drugs under price

control

7. Inadequate infrastructure for fermentation-based drug remedies and effluent treatment

plants

8. Lack of or inadequate subsidies and fiscal incentives for the industry

9. Inadequate quality testing facilities for the regulatory authorities, which have more

administrative and less technical capabilities as a result

10. Limited emission rights

26
 2. Internal Factor Evaluation (IFE) Matrix

Weighted
Strengths Weight Rating
Score
One of the largest pharmaceutical company in the world and spread over
1. 0.03 4 0.12
more than 50 countries
Excellent research and development (R&D) creating innovative and
2. 0.05 3 0.15
breakthrough products
Mergers and acquisitions with big pharmaceutical companies increasing
3. 0.07 4 0.28
brand reputation
4. Has over 100,000 employees as a part of the organization 0.04 3 0.12
5. Strong brand name and recall globally 0.07 3 0.21
Number one pharmaceutical from sales point of view and its marketing
6. 0.05 4 0.20
infrastructure is well established throughout the world
Therapeutic coverage is very large and the innovative researchers are
7. 0.03 3 0.09
broadening it further
8. Well established reputation for years on number of products 0.05 3 0.15
Wide range of area being worked, that includes human health, animal health,
9. 0.04 4 0.16
customer health, and corporate groups
Involved in licensing agreements with different companies for collaborative
10. 0.07 3 0.21
research work
Weighted
Weaknesses Weight Rating
Score
Tough competition from other major pharmaceutical brands means limited
1. 0.08 2 0.16
scope for market share growth
Negative brand image due to involvement in largest healthcare fraud of
2. 0.05 2 0.10
marketing its drug illegally
3. Very limited penetration of biologics market 0.09 2 0.18
Marketing with other companies and merging with other pharmaceuticals
4. 0.05 3 0.15
can halter its global popularity
5. Overreliance on the mature market (U.S.) and a small number of distributors 0.02 2 0.04
Irrational drug policies such as bringing over 70 percent of the drugs under
6. 0.03 4 0.12
price control
Inadequate infrastructure for fermentation-based drug remedies and effluent
7. 0.04 3 0.12
treatment plants
8. Lack of or inadequate subsidies and fiscal incentives for the industry 0.03 3 0.09
Inadequate quality testing facilities for the regulatory authorities, which have
9. 0.08 4 0.32
more administrative and less technical capabilities as a result
10. Limited emission rights 0.03 3 0.09
TOTALS 1.00 3.06
The table illustrated above shows that Pfizer got a total weighted score of 3.06 for its

Internal Factor Evaluation (EFE) matrix, which shows an above average response to its existing

Strengths and weaknesses inside the company. Pfizer tries its best to capitalize on its strengths

and eliminate its weaknesses.

27
 V. Strategy Formulation

A. Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

1. SO Strategies

 It can use its reputation as one of the largest pharmaceutical company in the world to

gain strategic agreements with other companies such as Wyeth and other

organizations to boost its research (S1, O1)

 It can use its fully integrated manufacturing facilities to expand into the biologics

market like vaccines, blood or blood components, allergenics, somatic cells, gene

therapies, tissues, recombinant therapeutic protein, and the living cells used in cell

therapy. (S10, O8)

 It can use its marketing infrastructure to have a marketing agreements with the

industries’ leading companies in terms of marketing such as Sanofi and AstraZeneca

(S6 O10)

2. ST Strategies

 It can use its excellent research and development (R&D) program to reduce the

threats or unsuccessful new products introductions (S2 T1)

 It can use its strong mergers and acquisitions strategies against the industries’ leading

pharmaceutical companies such as Wyeth to abate the increasing market competition

(S3 T4)

 Its strong brand name and recall globally can reduce the threats given by increasing

entries of private individuals (S5 T9)

28
3. WO Strategies

 Use E-commerce to reduce reliance to US markets and small number of distributors

(W6 O8)

 Marketing agreements with Wyeth or Sanofi to broaden the scope of market share

growth in the Northeastern and Mid-Atlantic regions of the United States (W1 O10)

 Use excess funds to penetrate into the biologics market specifically vaccines and the

living cells used in cell therapy which is highly in demand in the African regions

specially in the Central and Northern Africa (W3 O6)

4. WT Strategies

 Allocate further research efforts before new inductions in the market specifically into

the biologics market which requires keen and thorough studies (W6 T1)

 Fund capital expenditures on infrastructures for fermentation-based drug remedies

and effluent treatment plants (W7 T1)

 Provide added marketing efforts to regain an acceptable public image for previously

sued products through using different promotional tools like traditional media such as

TV, radio and newspaper advertising and product placement. (W1 T7)

29
B. Strategic Position and Action Evaluation (SPACE) Matrix

Financial Position Stability Position

Return on Investment (ROI) 3 Rate of Inflation -4
Leverage 6 Technological Changes -3
Liquidity 5 Price Elasticity -4
Working Capital 5 Competitive Pressure -4
Cash Flow 4 Barriers to Entry into Market -3
Financial Position (FP) Average 4.6 Stability Position (SP) Average -3.6

Competitive Position Industry Position

Market Share -2 Growth Potential 4
Product Quality -3 Financial Stability 3
Customer Loyalty -2 Ease of Entry into Market 4
Technological Know-how -4 Resource Utilization 4
Control Over Suppliers and Profit Potential 5
-2
Distributors
Industry Position (IP) Average 4.0
Competitive Position (CP) Average -2.6

These values that have been averaged for the Financial, Stability, Competitive, and

Industry Position will be used to compute for the coordinates. These coordinates are computed as

illustrated below:

X – AXIS = CP + IP Y – AXIS = SP + FP
= (-2.6) + 4 = (-3.6) + 4.6
= 1.4 = 1.0

30
 • Integration Strategies
• Market Penetration
• Market Development
• Diversification
Strategies

The Space matrix illustrated tells us that Pfizer should pursue an aggressive strategy

because it is financially strong in achieving competitive advantage in a growing and stable

industry. Pfizer should use integrative and intensive strategies. They can also use diversification

strategies to maintain its position should the first two fail. They can use their internal strengths to

take advantage of the opportunities, to overcome their weaknesses and avoid threats.

31
C. Boston Consulting Group (BCG) Matrix

US

International

The graph above illustrates the geographical divisions of Pfizer. It can be observed from

the information provided that the international division has greater sales volume and profit

compared to US division. Even with this given information, we cannot simply discount the

merits of the performance of the US division. If we look at it from a different perspective, the

international division covers the rest of the world, while the US division only covers 50 states.

We can safely say that Americans patronize Pfizer compared to any other country in the whole

world.

32
 Pharmaceuticals

Animal Health

Corporate

In contrast with the previous graph, this illustration above give information on the

company’s divisions by their products. It can be observed from this graph that Pharmaceutical

products are the stars of the company while its Animal Health and Corporate are its cash cows.

Pharmaceuticals, being the company’s star, has a large market share and shows the greatest

potential for growth among other divisions. The other two segments, while having large market

shares, show low levels of growth. The pie slices within the circles also reveals the percent of

corporate profits contributed by each division. This shows that Pharmaceuticals contributed most

profits, with Animal Health in second, and Corporate bringing up the rear.

33
D. Internal-External (IE) Matrix

Pharmaceuticals
IFE – 2.88
EFE – 3.06

Grow and Build

 Integration Strategies
 Intensive Strategies

From matching Pfizer’s IFE of 2.88 and EFE of 3.06, the IE Matrix above shows that

Pfizer falls in cell number II. This which shows that the company should grow and build its

operations. Integrative and intensive strategies are the most appropriate strategies for this

sections.

34
E. Grand Strategy Matrix

• Integration Strategies
• Intensive Strategies
• Related Diversification

Pfizer has high enough cash flows that even though there are direct and rising competitors,

it still grows. Because of its strong competitive position and rapid market growth, Pfizer can

employ integration and intensive strategies in order to boost its sales and market share, as well as

to fulfill its goal of becoming the leading biopharmaceutical company.

35
F. Quantitative Strategic Planning Matrix (QSPM)

Market
Increase
Developme
R&D funds
nt
to increase
specifically
probability Acquisition
Key Factors on
of of Wyeth
Emerging
developing
Markets
new
(China,
products
India)
Weig
Opportunities AS TAS AS TAS AS TAS
ht
1. Strategic agreements with other
pharmaceutical companies and orgs to 0.09 4 0.36 1 0.09 3 0.27
boost its research.
2. Increasing awareness about healthcare
0.06 3 0.18 3 0.18 2 0.12
needs
3. Global penetration through mergers
0.07 3 0.21 2 0.14 4 0.28
and acquisitions
4. Increasing demand for quality
0.07 2 0.14 3 0.21 3 0.21
healthcare solutions
5. Restructuring strategy designed to cut
0.03 3 0.09 3 0.09 4 0.12
costs and leaner company
6. Funding available to facilitate
0.02 4 0.08 3 0.06 4 0.08
product/company
7. Acquisitions (Wyeth) and in-
licensing/co-development 0.07 3 0.21 3 0.21 4 0.28
opportunities
8. Expansion into biologics market 0.05 2 0.1 3 0.15 3 0.15
9. E-Commerce 0.03 2 0.06 2 0.06 2 0.06
10. High profits, revenues and funds are
available to uplift the company's 0.04 2 0.08 3 0.12 3 0.12
progress
Threats
1. Risk of unsuccessful new products 0.04 3 0.12 2 0.08 3 0.12
2. Regulatory environment is becoming
0.05 2 0.1 3 0.15 3 0.15
more & more stringent
3. Economic slowdown in European
0.03 3 0.09 2 0.06 3 0.09
markets
4. Increased market competitions 0.06 2 0.12 3 0.18 4 0.24
5. Losing of patent individuality by
0.08 2 0.16 2 0.16 2 0.16
focusing on one product
6. Loss of patent protection of major
0.07 2 0.14 2 0.14 4 0.28
products
36
7. Risk of Eisai terminating long-
0.04 3 0.12 3 0.12 4 0.16
standing partnership
8. Outstanding competition of regional
markets along with emerging markets 0.03 3 0.09 4 0.12 3 0.09
of India and China
9. Negatively publicized by being sued
0.04 2 0.08 3 0.12 2 0.08
by their customers
10. Healthcare reform in the US affects
0.03 3 0.09 3 0.09 3 0.09
revenue growth
1 2.62 2.53 3.15
Strengths
1. Largest pharmaceutical company in
the world and spread over more than 0.03 3 0.09 3 0.09 2 0.06
50 countries
2. Excellent R&D creating innovative
0.05 4 0.2 3 0.15 3 0.15
and breakthrough products
3. Mergers and acquisitions with big
pharmaceutical companies increasing 0.07 3 0.21 3 0.21 4 0.28
brand reputation
4. Has over 100,000 employees as a part
0.04 3 0.12 3 0.12 2 0.08
of the organization
5. Strong brand name and recall globally 0.07 3 0.21 3 0.21 3 0.21
6. Number one pharmaceutical from
sales point of view and its marketing
0.05 4 0.2 4 0.2 3 0.15
infrastructure is well established
throughout the world
7. Therapeutic coverage is very large
and the innovative researchers are 0.03 3 0.09 2 0.06 3 0.09
broadening it further
8. Well established reputation for years
0.05 3 0.15 2 0.1 2 0.1
on number of products
9. Wide range of area being worked, that
includes human health, animal health, 0.04 3 0.12 3 0.12 3 0.12
customer health, and corporate groups
10. Involved in licensing agreements with
different companies for collaborative 0.07 2 0.14 2 0.14 4 0.28
research work
Weaknesses
1. Tough competition from other major
pharmaceutical brands means limited 0.08 2 0.16 3 0.24 4 0.32
scope for market share growth
2. Negative brand image due to
involvement in largest healthcare 0.05 3 0.15 3 0.15 4 0.2
fraud of marketing its drug illegally
3. Very limited penetration of biologics
0.09 3 0.27 4 0.36 4 0.36
market
37
4. Marketing with other companies and
merging with other pharmaceuticals 0.05 1 0.05 3 0.15 4 0.2
can halter its global popularity
5. Overreliance on the mature market
(U.S.) and a small number of 0.02 2 0.04 1 0.02 3 0.06
distributors
6. Irrational drug policies such as
bringing over 70 percent of the drugs 0.03 2 0.06 2 0.06 3 0.09
under price control
7. Inadequate infrastructure for
fermentation-based drug remedies and 0.04 2 0.08 2 0.08 3 0.12
effluent treatment plants
8. Lack of or inadequate subsidies and
0.03 3 0.09 1 0.03 2 0.06
fiscal incentives for the industry
9. Inadequate quality testing facilities
for the regulatory authorities, which
0.08 3 0.24 2 0.16 3 0.24
have more administrative and less
technical capabilities as a result
10. Limited emission rights 0.03 3 0.09 2 0.06 3 0.09
1 2.76 2.71 3.26
TOTAL 5.38 5.24 6.41

From the previous matrices from the matching stage, namely the SWOT matrix, SPACE

matrix, BCG matrix, IE matrix and Grand Strategy Matrix, we came up with three alternative

strategies to help secure Pfizer’s position in the industry. These matrices all suggest having an

integrative strategies and intensive strategies. For the first one, we have an integrative strategy

which is the horizontal integration. Specifically, this is the acquisition of Wyeth. Secondly, we

have an intensive strategy which is product development. To specify, this strategy pushes for the

increase in the R&D funds to help develop new products. Lastly, we have another intensive

strategy, which is market development on emerging markets.

Based on the Total Attractiveness score of 6.41, acquiring Wyeth is the most preferred

and beneficial strategy that will maximize the use of its strengths, weaknesses, threats and

opportunities for Pfizer. This strategy will help cover the lack of breakthroughs currently, and

mitigates the impact of the recession and the expiration of the patents of its top selling products.
38
 VI. Strategic Objective and the Recommended Strategies

A. Strategic and Financial Objectives

 Financial Objectives

1. To reposition that no single drug will account for more than 10% of the company's

revenue.

2. To contain costs resulted from the patent expiration of its major products especially the

Lipitor which is the biggest contributor of the company's revenue.

3. To expand the revenue produced from the rest of the world.

4. To raise stock price and improve cash flows.

5. To reduce the costs and risk associated with time extensive process of R&D for

producing new drug.

 Strategic Objectives

1. To soften the impact of the patent expiration of top selling products

2. To pursue emerging markets.

3. To cater to unmet medical needs.

4. To continue its extensive efforts in creating a huge impact in the international market

through its effective marketing strategies.

5. To formulate ways to strictly comply with the different regulatory hurdles that often leads

to litigation.

B. Recommended Business and Organizational Strategies

 Strategy in Entering Emerging Markets

1. The acquisition of Wyeth allows Pfizer to an effective entry to emerging markets and can

be used to grow the existing business in new segments.

39
 2. The most relevant emerging pharmaceutical markets where Pfizer should focus

investments are Brazil, Russia, India, China, Mexico, South Korea and Turkey. Together,

these markets are forecasted to grow at a compounded growth rate of 13-16% over the

next 5 years, compared to 4-7% for the overall market.

3. Chief among the market opportunities is China where private incomes are growing and

government announced a significant healthcare expansion plans.

 R&D – Product Development

1. Develop various medicines which caters to the therapeutic opportunities in the emerging

markets such as large pediatric populations, infectious diseases, respiratory diseases due

to high rate of smoking, and etc.

 Marketing and Sales

1. Tailoring marketing to targeted customer segments maximizes returns. In particular it is

important to avoid pricing out mass markets.

2. Targeting promotions according to private, public, or mixed healthcare which will be an

essential part of sales strategies which will vary by country. Rather than hiring thousands

of sales representatives, they will have to employ specialists who can negotiate and talk

to qualified managers.

 Regulation

1. Address additional emerging market security risks: security of data and manufacturing

supply chain, protection of company image and reputation, and protection of assets.

2. Tailored approach in formulating and implementing policies regarding regulatory hurdles

as larger companies often have varying regional regulations and segments.

40
C. Financial Projections and Overall Evaluation of the Strategies Proposed

Projected Income statements

Period 2008 2009 2010 2011
Total revenue 48,296,000.00 82,096,000.00 74,231,340.00 72,013,208.00
Cost of revenue 8,112,000.00 26,912,000.00 25,201,232.00 23,093,034.00
Gross Profit 40,184,000.00 55,184,000.00 49,030,108.00 48,920,174.00
Operating expenses:
Research and Development 7,945,000.00 10,328,500.00 10,431,785.00 12,518,142.00
Selling and general administrative 14,537,000.00 20,351,800.00 18,316,620.00 18,316,620.00
Non recurring 3,308,000.00 2,900,000.00 2,023,012.00 1,098,343.00
Others 2,668,000.00 3,090,800.00 2,400,783.00 1,093,433.00
Total operating expense 28,458,000.00 36,671,100.00 33,172,200.00 33,026,538.00
Operating Income or Loss 11,726,000.00 18,512,900.00 15,857,908.00 15,893,636.00
Income from Continuing Operations -
Total Other Income/Expense Net -1,516,000.00 1,390,900.00 -1,463,534.00 -1,453,453.00
Earnings Before Interest and Taxes 10,210,000.00 19,903,800.00 14,394,374.00 14,440,183.00
Interest Expense 516,000.00 1,314,981.00 1,070,406.00 890,670.00
Income Before Tax 9,694,000.00 18,588,819.00 13,323,968.00 13,549,513.00
Income Tax Expense 1,645,000.00 2,950,105.00 2,114,556.32 2,150,351.03
Minority interest -23,000.00 -33,731.00 -37,731.00 -15,000.00
Net income from Continuing Ops 8,026,000.00 15,604,983.00 11,171,680.68 11,384,161.97
Non-recurring Events:
Discontinued operations 78,000.00 0.00 1,109,000.00 500,940.00
Extraordinary items - - - -
Effects of Accounting Changes - - - -
Other Items - - - -
Net income from continuing ops 8,104,000.00 15,604,983.00 12,280,680.68 11,885,101.97
Preferred stock and other adjustments - - - -
Net income aplicable to common shares 8,104,000.00 15,604,983.00 12,280,680.68 11,885,101.97

The projected income statement respectively for 2009, 2010, and 2011 with the last year’s actual 2008
income statement is based on the assumptions and projections:

 In 2009, The Acquisition of Wyeth will increase the revenue of Pfizer by its product by 23 billion
dollars and additional 10.8 Billion dollars increase in revenue coming from the entrance to emerging
markets and will continue to increase by 10% each year.
 The expiration of Lipitor and Aricept which contribute around 15 billion of its revenues will
decrease by 60% for additional generic products will come to the market on 2010. In addition, the
expiration of its patent Xalatan on 2011 will also decrease its revenues by half billion dollars.
 Cost of revenue is increase by the acquisition and making of more products for Wyeth and the
emerging markets and will be base on the number of sales on the upcoming years being a variable
expense.
 The Research and development cost will be increase by 30% in 2009 for utilizing of acquisition of
Wyeth, 1% in 2010 for reduction of cost and 20% in 2011 for the expiration of patent of Lipitor and
Aricept.
 Selling and administrative expense will increase by 40% on 2009 for the acquisition of Wyeth but
should be decrease by 20% on 2010 and 2011 for the reduction of expenses in consideration of fall
down in revenues.
 The interest expense is base on its current and projected Long term debt multiply by 3.5%
 The income tax expense is base on its current and projected Income before tax multiply by 17%
 The net Operating income will increase largely on 2009 through the acquisition of Wyeth but the
expiration of the patent of Lipitor and Aricept will decrease the revenue in 2010 and 2011 which will

41
 be compensated by a reduction of expenses on various items that will make the Net Operating
Income stable for the year 2010 and 2011.
Projected Balance Sheets

Period 2008 2009 2010 2011

Assets
Current Assets
Cash and cash equivalent 2,122,000.00 2,023,023.00 2,343,432.00 2,042,984.00
Short Term Investments 22,433,000.00 29,342,200.00 31,023,232.00 30,930,304.00
Net recievables 13,992,000.00 23,909,734.00 20,984,125.00 21,032,043.00
Inventory 4,529,000.00 11,590,456.00 12,803,045.00 11,908,303.00
Other Current Assets - - - -
Total Current Assets 43,076,000.00 66,865,413.00 67,153,834.00 65,913,634.00
Long Term Investments 11,478,000.00 21,908,808.00 22,984,343.00 24,093,283.00
Property Plant and Equipment 13,287,000.00 29,456,372.00 35,093,443.00 36,098,343.00
Goodwill 21,464,000.00 29,009,402.00 30,100,232.00 30,203,940.00
Intangible Assets 17,721,000.00 28,003,427.00 20,940,393.00 22,904,930.00
Accumulated Amortization - - - -
Other Assets 4,122,000.00 9,034,394.00 10,329,324.00 8,930,334.00
Deferred Long Term Asset Charges - - - -
Total Assets 111,148,000.00 184,277,816.00 186,601,569.00 188,144,464.00

Liabilities
Current Liabilities
Accounts Payable 6,233,000.00 9,157,125.00 7,094,939.00 6,233,000.00
Short/ Current Long Term Debt 9,320,000.00 12,094,043.00 11,032,343.00 10,904,323.00
Other Current Liabilities 11,456,000.00 16,764,000.00 14,093,203.00 13,090,940.00
Total Current Liabilities 27,009,000.00 38,015,168.00 32,220,485.00 30,228,263.00
Long Term Debt 14,531,000.00 37,031,000.00 30,143,560.00 25,089,303.00
Other Liabilities 8,909,000.00 9,606,900.00 10,232,343.00 10,000,100.00
Deferred Long term Liability Charges 2,959,000.00 5,647,394.00 8,034,834.00 7,003,022.00
Minority Interest 184,000.00 207,000.00 213,233.00 300,000.00
Negative Goodwill -
Total Liabilities 53,592,000.00 90,507,462.00 80,844,455.00 72,620,688.00

Stockholder's Equity
Misc. Stocks Options Warrants - - - -
Redeemable Preferred Stock - - - -
Preferred Stock 73,000.00 110,000.00 130,000.00 132,000.00
Common Stock 443,000.00 750,000.00 760,000.00 780,000.00
Retained Earnings 49,142,000.00 71,909,323.00 73,094,094.00 79,094,332.00
Treasury Stocks -57,391,000.00 -54,093,003.00 -46,309,303.00 -45,873,922.00
Capital Surplus 70,283,000.00 73,004,015.00 79,085,023.00 82,425,289.00
Othe Stockholders' Equity -4,994,000.00 2,090,019.00 -1,002,700.00 -1,033,923.00
Totatl Stockholders' Equity 57,556,000.00 93,770,354.00 105,757,114.00 115,523,776.00
Total Liabilities and SE 111,148,000.00 184,277,816.00 186,601,569.00 188,144,464.00

42
The projected balance sheet respectively for 2009, 2010, and 2011 with the last year’s actual 2008
balance sheet is based on the assumptions and projections:

 The funding methods to be use in acquisition of Wyeth will composed of 22.5 billion from cash,
22.5 billion as part of equity and 23 billion as Pfizer stock for the price of 68 billion dollars, thus will
increase its debt and common stock on 2010.
 Short Term and Long term investment will be increase by investing to it competitors in pursuing its
strategy to enter the emerging markets such as China, India, Brazil and Turkey.
 Net Receivables, Inventory, and Property Plant and Equipment will increase due to the acquisition of
Wyeth as more products and manufacturing sites will now be owned by Pfizer.
 The acquisition will arise to goodwill since the Fair market Value of Wyeth Net Asset is greater than
the cash price.
 Intangible will be increase by additional patents and products of Wyeth.
 The total asset will be increase by 73 Billion dollars coming from the Acquisition of Wyeth,
additional investments in emerging markets, goodwill and acquisition of additional assets and the
company aim to increase it by 2 billion dollar per year.

Current Ratio Quick Ratio

3.0 3.0
2.7
2.0 2.2 2.1 2.1 2.0 2.2
1.8 1.9 1.9 1.7
1.6 1.4 1.5
1.0 1.0
0.0 0.0
2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011

0 0 0 0

 With this projected balance sheet, Pfizer current ratio will also increase from 1.5 to 1.8 on 2009, 2.1
on 2010 and finally 2.7 on 2011.The current ratio is a liquidity ratio that measures the company’s
ability to pay its short term obligations. In addition it will also increase its quick ratio from 1.4 to 2.2
on 2011.Quick ratio is also a liquidity measures but it uses only the most liquid assets of the
company excluding its inventories.
 Pfizer’s liabilities will increase because Pfizer will assume Wyeth’s current liabilities and other
litigation expense but will pay this liabilities as soon as possible to decrease its liabilities back to
normal to have a good credit rating in Moody’s and S&P.
 Its Common stock is increase by the issuance in the acquisition of Wyeth and aims to limit the
issuance of stock by certain amount not exceeding 1 Billion dollar.
 Its retained earnings is increase by the net income from 2009, 2010 and 2011
 Overall, Pfizer aims to increase its assets and decrease its liabilities. It also aims to utilize the
acquisition of Wyeth in becoming the premiere biopharmaceutical company in the world and
increase its investment in emerging markets.

43
 VII. Action Plans and Departmental Programs

Person/Unit
Plan of action Activity Expected Output Timetable
Responsible
A. Combine the right
mix of funds such as
debt and issuance of
equity

Planning the B. Identify the pros

Planned Funding Accounting
components of the and cons of each
Mix that will be Department,
funds that will be funding method 2 weeks
used in acquiring Finance
used in acquiring
Wyeth department
Wyeth C. Vote and choose
from the proposed
funding mix that will
be used in acquiring
Wyeth

A. Presentation of
Planned Funding
method for acquisition
of Wyeth

B. Suggestions and
Recommendations Accounting
Presentation and
from the board of Approved Department,
Approval of the
directors Funding Mix that Finance
planned Funding 1 day
will be used in department,
Method to the
C. Revision of acquiring Wyeth Board of
board of directors
planned funding Directors
methods

D. Approval of the
Planned Funding
Method by the board
of directors
A. Finalize the terms
of agreement in the
contract
Meeting with
Executives of
Wyeth Executives Contract of
B. Propose the 1 day Wyeth and
for finalizing the Acquiring Wyeth
approved budget Pfizer
acquisition
C. Sign the contract of
acquisition

44
 A. Propose a new
agreement to Eisai
that will allow the
partnership to
continue even with the
Negotiating and
acquisition of Wyeth
solving the New contract with
Executives of
misapprehension Eisai for
B. Pay the necessary 1 day Wyeth and
with Eisai continuing
expenses for the new Pfizer
regarding the Partnership
agreement and terms
Wyeth acquisition
C. Sign the new
contract with Eisai to
carry on the
partnership
A. Become a leader in
biologics with the use
of Wyeth’s Enbrel
manufacturing
excellence and
pipeline Increased income
generation of
Research and
B. Establishing a Pfizer that will
Utilizing the Development
lower and more contribute in 1 to 3
benefit of Department,
flexible cost base promoting the years
acquiring Wyeth Operations
using Wyeth to long term growth
Department,
promote long term and stability of the
growth and stability company

C. Increase the
breadth and depth of
portfolio for
established products
A. Enter the vaccines
market with the use of
Wyeth’s Prevnar
which has a strong late
stage pipeline Increased income Marketing
generation of department,
Pursuing and
B. Invest in acquiring Pfizer and 1 to 5 Operations
entering the
competitors in Brazil, increased market years Department,
emerging markets
Russia, India, Mexico, share around the tactical
South Korea, and world Managers
Turkey

C. Invest in ways to
penetrate the market
45
 in China where private
incomes are growing
and its government
announced significant
healthcare expansion
plans.
A. Develop medicine
that caters to
therapeutic
opportunities in the
emerging markets
Increased product
B. Invest more in
line for major
Focusing on areas which augments
disease problems
product in line and pipeline
around the world Research and
development portfolios in 1 to 5
to retain Pfizer’s Development
through using the inflammation, years
standing as Department
newly acquired neuroscience,
number the
company - Wyeth oncology and
primary care
infectious diseases
company
C. Add Consumer and
Nutritionals
businesses and
strengthen Animal
Health Business
A. Settle the necessary
expenses (interest and
damages) from
litigations, which will
help the company Decreased income
regain it’s good image for upcoming year
in the public for the increase in
expenses but will Marketing
Improving
B. Increase be compensated Department,
Marketing, Sales
advertisements in by the increase of Sales
and following 5 years
emerging markets but sales which will Department,
Legal Regulations
avoid exaggerated also contribute to Operations
advertisement the good Department
reputation of the
C. Increase sales and company in the
income generating upcoming years
products by promoting
and developing
additional products in
the market

46
 A. Extend Global
health care leadership
in different countries
Making Pfizer the by increasing Maintained top 3 to 7 Top managers
world’s Premiere corporate social position in years
Biopharmaceutical responsibility projects primary care and
Company to the community become the
World’s Premiere
B. Enhance the ability Biopharmaceutical
to satisfy unmet needs company
of patients, physicians
and other customers

C. Strengthen
platforms for
improved, consistent
and stable earnings
growth
A. Matching the
expected results from
Monitoring and
the achieved results Evaluation and Operating
controlling of the Annually
and taking necessary Monitoring Paper Managers
strategies
actions

47
 VIII. Strategy Evaluation, Monitoring, and Control

Pfizer’s patent problem is shared by other big drug makers, like Merck, Bristol-Meyers

Squibb and Eli Lily, which will face major revenue losses in the next few years it certainly is

challenged. They are facing unprecedented patent expirations. Lipitor is simply the largest in

terms of loss of sales. But, as mentioned, all the major pharmaceutical companies are looking at

billions of dollars of lost revenue. What most of them are trying to do is fill those foregone sales

with new products that they bring in either by licensing from smaller companies or acquiring

smaller companies.

Based on the result of the QSPM that we have made, the acquisition of Wyeth Company

garnered the highest score. The Pfizer's acquisition of Wyeth makes strategic sense by expanding

the company into a range of new areas, and by helping make up for an expected loss of more

than $12 billion in annual revenues once its Lipitor patent expires in 2011. If Pfizer will not push

through into the acquisition, they would have been in deep trouble because they would have lost

one quarter of their revenue in two years from Lipitor. Moreover, Pfizer cannot develop a

product easily to replace their major product due to the costly and time extensive process of their

R&D for producing new drugs.

Wyeth brings both the products that are already on the market, and significant capability

in biologics that they have built up over the years. They were one of the first pharmaceutical

companies to move fairly aggressively into biologics. This is an area Pfizer has also invested in.

All the drug companies have moved in the direction of switching from chemistry-based

drugs to biologics. But Wyeth was one of the earliest, and they have done that both with their

main portfolio, but also with their vaccine division. That is a strength that they certainly will

bring to Pfizer.
48
 One of Wyeth’s strengths is not just marketing biologicals, but manufacturing

biologicals. Many people can develop biologicals. But manufacturing these on a very large scale

consistently requires a lot of skill. And Wyeth's manufacturing capabilities — in biologicals are

unmatched. Pfizer definitely needed that. To get into this business fast, you need the

manufacturing capabilities.

Pfizer can get new drugs. Pfizer has always been a very strong marketing company. They

have taken other people’s products to levels which other companies could not. For example,

Lipitor, had it been in the hands of Warner-Lambert, would have probably been a $5 billion

product. With Pfizer, it was $13 billion and will do the same thing with Wyeth products.

On the other hand, Pfizer and Wyeth are geographically reasonably closely situated and

having similar cultures. It is expected from them to move very quickly in trying to take out

unnecessary duplicated functions. Having said that, they have to make significant cuts, not just in

the traditional marketing area, but also in administration and even in R&D. So it will certainly

produce a much leaner company if they do go ahead with the sort of projected cuts as proposed.

Today, the combined revenues are about $70 billion. But two years down the road, $15 billion

will be gone. So one way or the other, they will have to reduce their expenses significantly and

there will be a lot of cuts on the marketing side also.

There are clearly difficulties in the acquisition, but also a lot of opportunities. Such as an

aging population, the rest of the world with incomes growing, and the European companies

becoming very strong in R&D. At the end of the day, if governments start evaluating products

for their innovativeness, the strong, large companies will have a better day because they can

afford to be more innovative. And they can afford to spend the monies.

49
 Looking at the history, Pfizer has been able to historically do better with existing

products than other companies. So if Lipitor is an example, most probably Pfizer could take

Wyeth's products to new heights. If Pfizer can help take these products to market faster by being

a very strong marketing company, everyone could stand to gain, including the shareholders.

BALANCE SCORECARD

50
 Appendices

Appendix A: Company Products

Cardiovascular and Metabolic Diseases Infectious and Respiratory Diseases

Lipitor Zyvox
Norvasc Vfend
Chantix/champix Zithromax/Zmax
Caduet Diflucan
Cardura
Urology
Central Nervous System Disorders Viagra
Lyrica Detrol/Detrol LA
Geodon/Zeldox
Zoloft Oncology
Aricept Sutent
Neurontin Camptosar
Xanax/ Xanax XR Aromasin
Relpax
Endocrine Disorders
Arthritis and Pain Genotropin
Celebrex Zyrtec/Zyrtec D

Opthalmology
Xalatan

51
Appendix B: Organizational Structure

52
53
Appendix C: Financial Ratios

54
55
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http://www.slideshare.net/AileenMarshall/business-report-on-pfizer

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incorporated.html

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Wyeth#.VRA3FuEwBUs

http://seekingalpha.com/article/976561-pfizer-company-is-still-cleaning-up-after-wyeth- mega-

merger

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