Transcript Pfizer, Inc. Animal Health Products Pat Gross Gavin Batchelder

Pfizer, Inc. Animal Health
Products
Pat Gross
Gavin Batchelder
Introduction to Pfizer
• Founded in 1889 as a chemical company
• Headquartered in New York, NY
• Made up of three major parts– Pfizer Animal Health
– Consumer Health Care Group
– US Pharmaceuticals
Introduction to Pfizer
• Research and Development facilities both in
the U.S. and abroad.
• Listed on the New York Stock Exchange,
London Exchange, Euronext, and Swiss
Exchange.
• Pfizer employs 120,000 individuals
worldwide.
Introduction to Pfizer
1999 Revenues
• 89% from Human Pharmaceuticals
• 8% from the animal sector
• 3% from over the counter products
including– Listerine, Visine, Rolaids, and Sudafed
Introduction to Pfizer
• Pfizer’s products include such well know
names as – Zyrtec
– Celebrex
– Viagra
Introduction to Pfizer
Mission Statement
• "We will become the world’s most valued
company to patients, customers, colleagues,
investors, business partners, and the
communities where we work and live."
Introduction to Pfizer
Pfizer’s Purpose
• "We dedicate ourselves to humanity’s quest
for longer, healthier, happier lives, through
innovation in pharmaceutical, consumer and
animal health products."
Introduction to Pfizer
Pfizer Today
• Pfizer was named by Fortune magazine as
the fifth best wealth creator in America
• Pfizer has merged with Warner-Lambert
– They expect revenues to climb by 40% from a
wider and heightened volume and a more
favorable product mix
Introduction to the case
• This case centers on Pfizer’s Animal Health
Division.
• About their Animal health business Pfizer
has this to say:
• "Leading the way to better animal health care, Pfizer
Animal Health discovers, develops, manufactures and sells
products that improve the safety, quality and productivity
of the food supply and help pets live longer, healthier
lives.”
Introduction to Pfizer Animal
Health
• Pfizer Animal Health recently acquired
Pharmaci Animal Health. Pharmaci alone
has operations in the United States,
Argentina, Australia, Brazil, Canada,
France, Germany, India, Italy, Japan, Korea,
The Netherlands, New Zealand and Spain.
Introduction to Pfizer Animal
Health
• Pfizer divides consumers into two groups.
– Pet owners, horse owners, and vets
– livestock/beef cattle, dairy cattle, and pork.
Introduction to Pfizer Animal Health
Pfizer’s Strengths
• Pfizer has consistently superior product.
• Competitive products typically can’t match
Pfizer’s performance.
The Environment
• Currently the pharmaceutical industry is strong,
experiencing growth over the last 10 years in
terms of absolute growth and as a percentage of
Gross Domestic Product.
• This may be caused by several factors such as: the
aging populace, increasing price of prescriptions,
new drugs for previously untreatable conditions
and even inappropriate prescriptions by doctors
The Environment
• The government plays a major role in
pharmaceutical industry.
– Restricting types of drugs that get government
support
– Allowance of cheaper, generic brands
– Arresting counterfeiters
The Environment
• Animal Health sales fell from 12% in 1998
to 8% in 1999.
• The cattle industry feels threatened
because:
– More meals are being eaten out
– Beef is being passed over due to concerns about
cholesterol, bacteria, and Mad Cow disease.
– New alternatives always coming to market.
The Industry
• There were times not long ago that drug companies were
merely the size of nations. Now, after a frenzied two-year
period of pharmaceutical mega-mergers, they are
behemoths, which outweigh entire continents. The
combined worth of the world’s top five drug companies is
twice the combined GNP of all sub-Saharan Africa and
their influence on the rules of world trade is many times
stronger because they can bring their wealth to bear
directly on the levers of western power."
– from The Guardian
The Industry
• Pfizer’s competitors include:
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Merck
Glaxo SmithKline
Novartis
Bristol Myers Squib
AstraZeneca
The Industry
• Research and Development comprise a
significant portion of pharmaceutical cost.
– In 1999 Pfizer budgeted more than any
competitor for R&D, 5 billion.
– Critics charge that companies spend twice as
much on sales and advertising
The Industry
• Pharmaceutical makers are using new
techniques to sell their products–
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Direct advertisements to consumers
large pre-launch product advertisements
Incentive programs to sales people
Increased concentration of sales people
Marketing
• Pfizer’s techniques are aggressive and
expensive
– The largest advertiser in the Journal of the
American Medical Association
– Advertise extensively in Beef Magazine and
Bovine Veterinarian as well as many others
– Advertise in direct media, treating
pharmaceuticals like any other household
product.
Marketing Criticisms
• Pfizer is accused of trying to persuade
doctors to replace effective drugs that have
been used for years.
• Files have been found that show company
ghost-writers have written medical journal
articles for doctors and offered expensive
vacations or other gifts for the winners
Other marketing strategies
• Pfizer provides educational programs to
educate people about their products and the
benefits
• Pfizer sells animal products only to vets and
“feed and seed” stores based on the fact that
farmers and ranchers perceive vets as their
most trusted contacts
Other marketing strategies
• Pfizer uses thousands of sales reps to build
the trust of customers, gain their friendship,
and sell their products while offering
personal assistance in problematic areas and
setting up educational programs.
Other marketing strategies
• Pfizer has gained considerable respect from
consumers by offering superior products
and high quality production techniques.
• Pfizer markets direct to consumers,
eliminating most of the middle-men.
Pfizer SWOT Analysis
-Strengths• Currently the largest pharmaceutical company in the
industry.
• Realizes potential and strength in mergers and
takeovers, and actively pursues those opportunities.
• Strong educational programs.
• Lack of international regulations offer time and
opportunity to validate potential drugs in foreign
countries.
Pfizer SWOT Analysis
Strengths cont.
• Adequate revenues to pursue aggressive
advertising, marketing programs.
• Innovative marketing structure that is
usually followed by other corporate fire and
then followed by example by the other
companies.
Pfizer SWOT Analysis
Weaknesses
• Marketing expenditures exceeding Research and
Development budget have come under scrutiny. Much of it
is publicly funded.
• Compensation packages for top executives are under
scrutiny. Public record shows a huge amount of revenue is
channeled to executive bank accounts.
• Accused of R & D budgets being inflated by creative
accounting.
• Poor public relations regarding maintenance of high prices
bringing drugs beyond the reach of the potential users.
Pfizer SWOT Analysis
Weaknesses cont.
• Pfizer has been sited twice for price fixing conspiracies
and is No. 17 on the list of "Top Corporate Criminals of
the 1990’s",
• Pfizer has recently been accused of stealing indigenous
knowledge. 3rd world countries have low legal regulations
and have natural resource information that is used and
profited by Pfizer.
• Pfizer uses animals to test it’s products, a real no-no in the
animal avocation sector that is making it’s way to public
avocation in the US and other countries, as well..
Pfizer SWOT Analysis
Opportunities
• Wealth offers acquisition of smaller
companies to heighten product base.
• Global infiltration, with less stringent
regulation offer longer study statistics to
solidify results that offer marketing facts
needed to gain FDA approval.
• Opportunity for public funding gained from
historic success.
Pfizer SWOT Analysis
Threats
• Other major competitors merge to form a super power.
• Continuous threat of FDA disapproval of new products.
• Potential litigation from other companies regarding
marketing procedures.
• Potential litigation regarding theft of ideas.
• Government regulation and restrictions.
• Failure of target industry, such as the beef industry in the
US.
The Basic Problem
The failing market for U.S. beef
producers and the resulting sales
decline of Pfizer products
Per Capita Meat Consumption
Cow
60%
40%
Poultry
20%
Pig
0%
1970 1980
1992
Year
1997 2003
Other
(Veal/Lamb)
Options
• Recognize the shifting market and focus on
the emerging markets
• Begin reducing expenditures on the
declining beef market, and instead focus on
growth markets
• Partner with U.S. beef growers to help
return producers to profitability
Option #1
Recognize the shifting market and focus on the
emerging markets
• Positives– Focusing on growth industries may allow Pfizer to make more
effective use of new Research and Development dollars
– Pfizer may sell more product overall by concentrating marketing
and sales efforts in different markets
– Pfizer could begin more aggressive efforts to market their products
in Canada, Mexico, and Australia using their new acquisition
Pharmaci
– Acquiring market share in emerging markets will make it more
difficult for competitors to gain a foothold.
Option #1
Recognize the shifting market and focus on the
emerging markets
• Negatives– Pfizer may not have be as dominant player in other markets, and
may not be able to command a premium price based on their
consistent quality
– Low cost producers in Mexico, Canada, and Australia may not
have the capability to pay Pfizer’s prices
– Competitors may already have secured the dominant position in
other markets requiring an expensive battle for market share
Option #2
Begin reducing expenditures on the declining beef
market, and instead focus on growth markets
• Positives– Greater potential sales
– Reduced marketing costs
– Less expenditures on research and development
in a shrinking market
Option #2
Begin reducing expenditures on the declining beef
market, and instead focus on growth markets
• Negatives– Pfizer’s position may be weakened, and the
market may enter a growth mode
– Pfizer may not have the profit margin or
product selection in other industries
– The market may be more competitive in other
segments of the industry
Option #3
producers
Partner with U.S. beef growers to help return
to profitability
• Positives:
– Pfizer has extensive skill and experience in marketing and
advertisement
– Pfizer’s products are recognized as consistently high quality
– Pfizer is very aggressive in the market and could help to educate
producers
– Pfizer has extensive capital
– Pfizer has strong trusting relationships with ranchers
– Currently only four packing houses control access to the U.S. beef
market
– Pfizer “Certified” beef
Option #3
Partner with U.S. beef growers to help return producers
to profitability
• Negatives:
– Pfizer has no experience in marketing of beef
or in meatpacking operations
– Ranchers may trust Pfizer’s pharmaceuticals
because they are recommended by Vets, not
because they trust Pfizer
– They may not make any money trying to
compete with the major players
The Solution
• Option #3
• Pfizer should partner with ranchers to build their own
packing house and market a premium line of “certified”
beef using their extensive experience in marketing
• Business is about finding a customer need and meeting that
need for profit
– The ranchers have a need for a closer connection to the
customer and the skills to market their products direct
to consumers at a premium price - Pfizer can fill that
need
Pfizer Animal Products
Any Questions?