Case Study: Success Story of Pfizer Inc

Pfizer was founded in 1849 in Brooklyn, New York. It started as a company that focused primarily on human health services and products. Now it focuses on three major segments of the health care industry, namely Pharmaceutical Health, Consumer Health and Animal Health, or Veterinary Services.

Pfizer has headquarters in New York. Initially it was a small company operating in the USA. Currently, it has more than 115000 employees in 180 countries. It has over 70 manufacturing facilities around the globe and invests $7.7 Billion in R&D annually! Furthermore, Pfizer’s R&D locations are spread out in five countries and Pfizer also has 18 therapeutic areas across the globe. A total of 15 medicines made by Pfizer are leaders in their respective segments.  Lipitor, for example is the world’s largest selling medicine which is a cholesterol reduction medicine. Other names that are noteworthy are Listerine and Sudafed which can be found in 85 percent of American households. Pfizer is also the largest animal health company and leader in annual R&D investment.

These achievements by Pfizer make it one of the largest multinationals in the world and probably the biggest in the pharmaceutical sector.

Success Story of Pfizer

Pfizer offers an excellent example of how executives can recognize what their companies do well and use that understanding to build superior strategies. In June 2001 Pfizer revealed a new mission for the company “to become the world’s most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live”.

Success Story of Pfizer

While working on the mission, the company aimed to transform its business model and structure of get maximum benefits from emerging trend of outsourcing and to concentrate on its brand identity and core competencies. Pfizer unite operations with Pharmacia Corporation to take advantage of each other growth in 2003. 2008 was the year in which Pfizer took forward steps in evolution and sketched the company’s plan to launch small size operating units intended to improve innovation and responsibility, to gain benefit of Pfizer’s scale and resources. Through this restructuring Pfizer could be able to respond effectively to the continual evolvement of marketplace by anticipating customers and patient’s needs.

Diversified R&D strategy tagged by Pfizer as “Worldwide Research and Development” is initiated in 2010 and the company started licensing agreements with two Indian-based pharmaceutical companies. As the result Pfizer geared the momentum in R&D resulting into sustained product pipeline and delivering numerous new products in reduced time.

Pfizer formed two separate research organizations which are meant to exploit new prospects and to stand out as innovative and to deliver research into products more quickly. These are the Pharma Therapeutics Research & Development Group and The Bio Therapeutics Research & Development Group. Moreover Pfizer evolve its commercial operating structure into an enhanced and efficient system to deliver expected results. Pfizer nine assorted health care holdings are bestowed with the resources by the company and partners to track desirable growth prospects and to fabricate benefits to all parties involved all around the world.

Pfizer is improving and managing supply chain of the company through outsourcing and taking all opportunities to add value and reduce cost. Pfizer Global Manufacturing (PGM) supplies products to Pfizer’s businesses. The company shrinking its internal network (from 2003 to 2008) reduced manufacturing plants from 93 to 46 further to 41 in 2010. Many of these plants are striped off and sold to other companies with the supply agreements of several years. Through this strategic plan both companies gain benefits as the Pfizer can be supplied the same quality without spending capital on operations, maintenance and development of the plant and the buying company would be able to gain business from Pfizer to make the plant sustainable. Due to the speed and effectiveness of that integration, Pfizer progresses to this new model while maintaining the same breadth and research programs.

Pfizer established competitive “make or buy” supply network through PGM. This network was established to increase outsourced manufacturing of products from about 17% to 30% from 2008 to 2010. This decision was taken to increase ability to supply, capacity flexibility, cost competitiveness, and technology. PGM’s sub organization is Global Contract Manufacturing (GCM). This organization deals with the business with almost 150 contract manufacturers from whole world. This strategic outsourcing of PFE furnished the company with upgrading different projects with substantial performance advantages, as cutting down packaging and transportation expenses, and removal of discarding chemicals through process advancement. The outsourcing strategy remained successful by reducing 40% costs of in making time and shipment as products are manufactured at the country of nearby the supply market. This process also reduced inventory which gave the company a positive lift in business.

Pfizer initiated R&D outsourcing in few areas fro late 90s. During 90s Pfizer followed its goal to expand its compound collection (PMC). The technology at was considered as the core competence for any pharmaceuticals for platform-centric, IT-intensive and capital-intensive. Pfizer employed strategic partnerships to acquire the technology. Pfizer’s Research and development immense expenditures during 2000-2004 ($32,752,000) were able to obtain only four NME approvals from FDA and average research productivity was very low as RP value (12.2). Around the end of 2006 changed its strategy of R&D and started new progress. The outsourcing of the PMC technology continued with 4 providers and finished its drug-library contract in 2005 with three organizations (Arqule, DPI, and Tripos) but continued with ChemBridge. Business environment of 2000s evolved into outsourcing drug-discovery to contract research organizations (CROs) and most of Pfizer’s collaborators either developed into independent organizations or outsourced the discovery stage to small CROs.

In 2005 Pfizer launched an R&D center in Shanghai to consider the capability of India and China’s CROs. Pfizer have established subsidiaries in India due to low cost drug discovery, development and manufacturing. Pfizer has contracts with Indian companies for data operations, clinical research, and formulation development. Certain services were considered to be well suited to outsource to these organizations in Asia. Pfizer created three probable operating models for outsourcing R&D as outlined to CRO’s of India and china to take full advantage of their capabilities and low cost.

An integrated model makes one CRO responsible or all actions included discovery, examination, screening, testing, and absorption, distribution, metabolism, and excretion testing. The model gives logistical advantages, reduce developing period, and the capability to cultivate correlation with an recognized CRO. A rationalized model which take numerous CROs o provide he solutions for biology R&D and chemistry R&D. the advantage of using the model enhanced Pfizer’s power to administer IP. Working with multiple CROs risk can be distributed and more competitive business emerges. A diffused model in which three different CROs are contracted to provide to conduct research on different stages of R&D of drugs. The advantages include minimum investments and provide Pfizer to choose the best CRO in each task.

Late 2006 marked with the changing profile of Pfizer not only in structure but also in culture. In 2008 Pfizer became a flexible entrepreneurial after dramatic steps of reshape the organization. The new approach of organization enables it to move ahead with the entrepreneurial zeal inherent in small businesses, backed by the scope and strength of a global enterprise.

The key to success of Pfizer is their strong sales team and huge investment on R&D. Moreover, Pfizer sales force uses leading edge information systems and technology to track the perception histories of physicians and to respond with sales coverage that delivers the biggest bang for the sales effort. The company’s information system also allows top management to plan the expansion of the sales force, to track its performance, and to link that performance with compensation. Further, this strong sales capability is a major asset of Pfizer, won the company co-marketing rights for several major drugs produced by other companies like Glaxo SmithKlein. Furthermore, an aggressive investment in R&D, Pfizer hired many of industries most experienced and talented scientist by offering them attractive compensation and un-beatable opportunity to conduct leading edge research.

‘Zoloft’, Pfizer’s most lucrative mental drug in history. According to analyst ‘Zoloft’, accounted for 40% of the market share in antidepressant bazaar compare to 18% Eli Lilly’s ‘Prozac’. Despite the similarity between two products, Pfizer gained share from Eli Lilly in the marketplace. The main reason for this success seems to have been Pfizer’s aggressive marketing and sales strategy, which created an impression in the eyes of physicians that Zoloft is a safer drug. Moreover Company creates a value chain through distribution strategy to the customers because of easy availability of Zoloft. Moreover, Pfizer sales force also logged more “face time” with psychiatrists than Eli Lilly. The target market strategy was not just psychiatrists. Pfizer sales rep(s) also meet with general physicians to recommend the basic primary care if the patient cites with nausea, nervousness, anxiety, insomnia, and drowsiness. General Physicians are encouraged to prescribe Zoloft as antidepressants drug.

Pfizer believes in collaborating with outside companies to multiply the efforts of in house scientists. From 2008 the company progressed in an outstanding manner through outsourcing R&D like for compound development. Now company is working of new outsourcing strategy of getting best wherever available. Under this new strategy Pfizer started partnerships with outstanding academic institutions, among them the University of Pennsylvania, the University of California, San Francisco, Washington University in St. Louis and the Broad Institute of MIT and Harvard University.

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