Integration Strategies
Intensive Strategies
35 E. Grand Strategy Matrix
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.
• Integration Strategies
• Intensive Strategies
• Related Diversification
36 F. Quantitative Strategic Planning Matrix (QSPM)
Key Factors
1. Strategic agreements with other pharmaceutical companies and orgs to boost its research.
0.09 4 0.36 1 0.09 3 0.27
2. Increasing awareness about healthcare
needs 0.06 3 0.18 3 0.18 2 0.12
3. Global penetration through mergers
and acquisitions 0.07 3 0.21 2 0.14 4 0.28
4. Increasing demand for quality
healthcare solutions 0.07 2 0.14 3 0.21 3 0.21
5. Restructuring strategy designed to cut
costs and leaner company 0.03 3 0.09 3 0.09 4 0.12
6. Funding available to facilitate
product/company 0.02 4 0.08 3 0.06 4 0.08
7. Acquisitions (Wyeth) and in-licensing/co-development opportunities
0.07 3 0.21 3 0.21 4 0.28
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 progress
0.04 2 0.08 3 0.12 3 0.12
Threats
1. Risk of unsuccessful new products 0.04 3 0.12 2 0.08 3 0.12 2. Regulatory environment is becoming
more & more stringent 0.05 2 0.1 3 0.15 3 0.15
3. Economic slowdown in European
markets 0.03 3 0.09 2 0.06 3 0.09
4. Increased market competitions 0.06 2 0.12 3 0.18 4 0.24 5. Losing of patent individuality by
focusing on one product 0.08 2 0.16 2 0.16 2 0.16
6. Loss of patent protection of major
products 0.07 2 0.14 2 0.14 4 0.28
37 7. Risk of Eisai terminating
long-standing partnership 0.04 3 0.12 3 0.12 4 0.16
8. Outstanding competition of regional markets along with emerging markets of India and China
0.03 3 0.09 4 0.12 3 0.09
9. Negatively publicized by being sued
by their customers 0.04 2 0.08 3 0.12 2 0.08
10. Healthcare reform in the US affects
revenue growth 0.03 3 0.09 3 0.09 3 0.09
1 2.62 2.53 3.15
Strengths
1. Largest pharmaceutical company in the world and spread over more than 50 countries
0.03 3 0.09 3 0.09 2 0.06
2. Excellent R&D creating innovative
and breakthrough products 0.05 4 0.2 3 0.15 3 0.15
3. Mergers and acquisitions with big pharmaceutical companies increasing brand reputation
0.07 3 0.21 3 0.21 4 0.28
4. Has over 100,000 employees as a part
of the organization 0.04 3 0.12 3 0.12 2 0.08
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 infrastructure is well established throughout the world
0.05 4 0.2 4 0.2 3 0.15
7. Therapeutic coverage is very large and the innovative researchers are broadening it further
0.03 3 0.09 2 0.06 3 0.09
8. Well established reputation for years
on number of products 0.05 3 0.15 2 0.1 2 0.1
9. Wide range of area being worked, that includes human health, animal health, customer health, and corporate groups
0.04 3 0.12 3 0.12 3 0.12
10. Involved in licensing agreements with different companies for collaborative research work
0.07 2 0.14 2 0.14 4 0.28
Weaknesses
1. Tough competition from other major pharmaceutical brands means limited scope for market share growth
0.08 2 0.16 3 0.24 4 0.32
2. Negative brand image due to involvement in largest healthcare fraud of marketing its drug illegally
0.05 3 0.15 3 0.15 4 0.2
3. Very limited penetration of biologics
market 0.09 3 0.27 4 0.36 4 0.36
38 4. Marketing with other companies and
merging with other pharmaceuticals can halter its global popularity
0.05 1 0.05 3 0.15 4 0.2
5. Overreliance on the mature market (U.S.) and a small number of distributors
0.02 2 0.04 1 0.02 3 0.06
6. Irrational drug policies such as bringing over 70 percent of the drugs under price control
0.03 2 0.06 2 0.06 3 0.09
7. Inadequate infrastructure for
fermentation-based drug remedies and effluent treatment plants
0.04 2 0.08 2 0.08 3 0.12
8. Lack of or inadequate subsidies and
fiscal incentives for the industry 0.03 3 0.09 1 0.03 2 0.06 9. Inadequate quality testing facilities
for the regulatory authorities, which have more administrative and less technical capabilities as a result
0.08 3 0.24 2 0.16 3 0.24
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.
39 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.
40 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.
41 C. Financial Projections and Overall Evaluation of the Strategies Proposed