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

26

 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

27 2. Internal Factor Evaluation (IFE) Matrix

Strengths Weight Rating Weighted

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

more than 50 countries 0.03 4 0.12

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

breakthrough products 0.05 3 0.15

3. Mergers and acquisitions with big pharmaceutical companies increasing

brand reputation 0.07 4 0.28

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

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

infrastructure is well established throughout the world 0.05 4 0.20 7. Therapeutic coverage is very large and the innovative researchers are

broadening it further 0.03 3 0.09

8. Well established reputation for years on number of products 0.05 3 0.15 9. Wide range of area being worked, that includes human health, animal health,

customer health, and corporate groups 0.04 4 0.16

10. Involved in licensing agreements with different companies for collaborative

research work 0.07 3 0.21

Weaknesses Weight Rating Weighted

Score 1. Tough competition from other major pharmaceutical brands means limited

scope for market share growth 0.08 2 0.16

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

marketing its drug illegally 0.05 2 0.10

3. Very limited penetration of biologics market 0.09 2 0.18

4. Marketing with other companies and merging with other pharmaceuticals

can halter its global popularity 0.05 3 0.15

5. Overreliance on the mature market (U.S.) and a small number of distributors 0.02 2 0.04 6. Irrational drug policies such as bringing over 70 percent of the drugs under

price control 0.03 4 0.12

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

treatment plants 0.04 3 0.12

8. Lack of or inadequate subsidies and fiscal incentives for the industry 0.03 3 0.09 9. Inadequate quality testing facilities for the regulatory authorities, which have

more administrative and less technical capabilities as a result 0.08 4 0.32

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.

28 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)

29 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)

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

Financial Position

Return on Investment (ROI) 3

Leverage 6

Liquidity 5

Working Capital 5

Cash Flow 4

Financial Position (FP) Average 4.6

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:

Barriers to Entry into Market -3 Stability Position (SP) Average -3.6

Competitive Position

Competitive Position (CP) Average -2.6

Industry Position

Industry Position (IP) Average 4.0

X – AXIS = CP + IP

31 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.

• Integration Strategies

• Market Penetration

• Market Development

• Diversification Strategies

32 C. Boston Consulting Group (BCG) Matrix

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.

International

US

33 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.

Corporate

Pharmaceuticals

Animal Health

34 D. Internal-External (IE) Matrix

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.

Pharmaceuticals

IFE – 2.88