Pfizer Inc.: Company Analysis

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Executive summary

Founded in 1849 in New York, Pfizer Inc. has been a market leader in the provision of pharmaceutical products needed in healthcare. The company was a brainchild of two cousins, Charles Pfizer and Charles Ehrhardt. Since its inception over a century ago, Pfizer Inc. has grown by leaps and bounds to emerge as one of the best pharmaceutical firms in the manufacture of medical and healthcare products. Initially, the company was a major producer of citric acid. However, due to expansion through mergers and acquisitions, Pfizer Inc. has greatly diversified its line of production and largely deals with two lines of products. These are consumer and pharmaceutical products used by human beings and animals.

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In spite of its global presence, Pfizer Inc. has been facing stiff competition from rival pharmaceutical companies which are equally growing at a very fast rate. Hence, competition is the main threat and problem facing Pfizer Inc. bearing in mind that any loss or decline in market opportunities is a potential killer to any business.

From this perspective, Pfizer Inc. has put in place radical marketing campaigns by spending millions of dollars sponsoring advertisements both in print and electronic media. Besides, the company has adopted a rigorous innovative approach aimed at improving the effectiveness of its products. The company has also secured heavy spending on research and development so as to conduct exclusive innovation on both consumer and pharmaceutical products it manufactures. Interestingly, the evidence obtained from the cost benefit analysis reveals that the higher the amount spent on R&D activities, the higher the revenue base.

In order to implement innovative approaches as a way of solving the problem associated with competition, Pfizer Inc. will have to increase its revenue base so that enough financial resources can be set aside for the purpose of research and development. In addition, Pfizer Inc. will have to set up smaller managerial units dealing with innovation that can be accounted for with ease. On the same note, the management of the company should create a working environment that is not only comfortable to workers but also inwardly satisfying and rewarding.


Since the old days the need to provide effective and efficient healthcare has been a major issue of concern in many nations. Heavy casualties have been caused by a myriad of illnesses. Besides, lives have been lost due to disease outbreaks and especially in cases where proper healthcare mechanism is not in place to address the challenge.

In order to develop a sound healthcare plan to cater for the health needs of the rising population, the pharmaceutical industry has undergone significant revolution in terms of service and product provision (Pfizer par 2). One such pharmaceutical firm is the Pfizer Inc. which was founded in 1849 by two cousins, Charles Ehrhardt and Charles Pfizer. This pharmaceutical products firm has been in the forefront in increasing accessibility to high quality medical and healthcare. The company headquarters is located in Brooklyn, New York.

The production of large quantities of citric acid was the main activity of Pfizer Inc during the 1950s. However, increased research into diversity in production as well as improved quality of production has seen the company grow by leaps and bounds to become a market leader in the pharmaceutical products. Besides, Pfizer Inc. has initiated quite a number of mergers in its production life (such as the Warner-Lambert Pfizer merger of 2000) in order to build a vibrant pharmaceutical company with a global presence.

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According to the Pfizer Inc. company statement, the purpose behind the formation of the pharmaceutical firm is to assist in increasing the lifespan of people by innovating and inventing better healthcare products and accessibility to healthcare for all (Pfizer par.1). The company does not only cater for human based healthcare and medicine products but also animals. Specifically, Pfizer Inc. boasts in two key lines of production namely consumer products and pharmaceutical products used by human beings and animals.


Although this pharmaceutical company commands a significant share of the global pharmaceutical market, there are a myriad of challenges it faces in the day to day running of its activities. These challenges also form part of the problem statement of the company. For example, the company has quite often experienced failure of its new products in the market that may be still under research. In addition, product expiries have led to losses. However, the main problem remains to be the highly competitive global pharmaceutical market. Stiff competition has compelled companies to reduce production cost while at the same time struggling to maintain the quality of production and meaningful profit margin.

Out of all the challenges facing profitability and well being of Pfizer Inc., competition remains to be the worst challenge affecting pharmaceutical companies (Chesbrough 32). Innovation and improved product portfolio is always in progress and any pharmaceutical firm that does not comply to the dynamism of the market is likely experience gross difficulty as far business operations are concerned.

Globalization and its effects as indeed contributed significantly to the threat posed by competition on profitability of pharmaceutical firms. Innovation and the manner in which governments interact with the aftermath of globalization have even accelerated the effects of globalised economies on pharmaceutical industry. It is imperative to note that if Pfizer has to increase its marketing base, it has to go global. This is a similar strategy used by other pharmaceutical firms. Hence, the structure of pharmaceutical firms in the contemporary world is characterized by complexity in production as well as competition.

The fact that young upcoming companies that have no global presence are emerging and competing favorably with old experienced market players is indeed a worrying trend for pharmaceutical companies like Pfizer Inc. In addition, competition is further aggravated by the increasing demand for healthcare and medical products of high quality. Achieving this desired high quality of products definitely calls for stiff competition. Therefore, it is upon Pfizer Inc. to devise marketing strategies that will assist it capture the greatest market opportunity both at the local and global level.

Each of the pharmaceutical industries is attempting to manufacture high quality and effective medicines that are equally cost effective compared to other competitors (Bertschek 342). Pfizer Inc. is currently straggling to maintain its market leadership by introducing low cost products that are also quite effective when used. This is a competition strategy which in one or the other might lower the profit margin of the company. Pfizer has faced market competition for well over 100 years.

This implies that for the company to remain competitive in the pharmaceutical industry, it has devise workable and dynamic marketing plan and strategy for its products. This is necessary bearing in mind the number of potential competitors in the pharmaceutical industry is increasing by the day. For instance, there are over 100 pharmaceutical firms in the United States of America alone and out of this lot, 42 are large pharmaceutical companies that have a global presence in the provision of pharmaceutical and medical products.

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Although Pfizer Inc. is among the largest international firms, it is on the receiving end for tight competition from both the small and large and well established firms. Pfizer has international ties with more than 100 countries and this global move has been necessitated by the need of the company to capture the widest market possible (Bertschek 350).

In order to gain a thorough understanding of the threat or problem caused by competition at Pfizer Inc., it is also important to have a critical look at the competitor analysis. An environmental scanning involving the analysis of Pfizer competitors is relevant. Firstly, Bristol-Myers Squibb is one of the stiff competitors of Pfizer Inc. in the pharmaceutical industry. The company is located in the US and its main lines of production lies in the manufacture of drugs needed for prescription besides other drugs and medical products that are required for therapeutic purposes.

The pharmaceutical company also deals in the production of over-the-counter drugs. There is an assortment of baby and mother care products that are manufactured by this company. Revenue derived from the sale of healthcare products in Bristol-Myers Squibb amounted to 47,348 million dollars in 2004 alone. However, the company is second to Pfizer in terms of profitability and revenue base.

Another competing pharmaceutical firm to Pfizer is GlaxoSmithKline. It is based in the United Kingdom. Although it deals in a variety of pharmaceutical products ranging from anti-infective to vaccines, it ranks position two to Pfizer. Its net income in 2004 totaled to 7,866 million US dollars. Its market performance is impressive (Nickell 740). The two close competitors to Pfizer Inc. are growing pharmaceutical companies that may be a real threat to the market environment. Therefore, competition stands out to be the main problem facing Pfizer Inc.


As Pfizer demands to control the market share in selling of pharmaceutical drugs, the company has embarked on a massive sales and marketing strategy that is costing it billions of dollars. One such heavy spending in marketing is the 3 billion US dollars spend for annual budgetary requirements (Layard & Glaister 87). Some of this amount has been spent on costly TV and magazine ads.

However, the problem emerges from the fact that the targeted consumers may not necessarily go these products without proper prescription from medical doctors in spite of the heavy spending o ads. Pfizer spends millions of dollars in advertisement ad is currently among the top four advertisers. Indeed, the main reason why advertising has been intensified is because of the prevailing tough competition from other pharmaceutical firms around the world (Nickell 740).

In an attempt to produce high quality and effective drugs, Pfizer Inc. has set up multiple laboratories globally and hired fifteen thousand medical research scientists.

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Pharmaceutical companies including Pfizer Inc. have embarked on a cut-throat marketing strategies to the extent that sales representatives from different companies are finding it more difficult to operate in the field. Due to declining volume of sales occasioned by competition, some laboratories and research centers are not fully operational.

There have been contentious hearings concerning some of the highly promoted drugs from Pfizer Inc. some of the advertised drugs from Pfizer Inc. have been linked to heart related complications. Celebrex is one example of drugs that have been aggressively marketed by Pfizer in spite of the serious risks associated with them. Definitely, the company has found itself in this fix due to the need of maintaining marketing edge over other competitors. The stiff competition amid the growing number of pharmaceutical companies will result into a decline in sales and revenue. Pfizer Inc. volume of sales is also expected to decline by a margin of 1.5 percent on an annual basis. The company has adopted cost cutting measures in the recent past as a way of improving its profitability in the pharmaceutical industry.

Alternative solutions to the competition problem facing Pfizer are necessary in order to improve its performance and profitability in the pharmaceutical industry.

To begin with, Pfizer Inc. needs to adopt a opposition strategy in its marketing plan. The company ought to influence factors within its operating environment so that their impacts are significantly negated. The influence brought about by competition can be negated through innovation and invention of new ideas aimed at improving not just the quality and effectiveness of pharmaceutical products but also the cost implications (Jones 760).

However, the company should monitor its production expenses to ensure that it remains fairly profitable both in the short and long term. Alternatively, Pfizer Inc. can engage itself in an adaptation strategy whereby the marketing plan is moderated to match with the prevailing marketing conditions and competition structure in general. Although there are several competitors in the market offering similar pharmaceutical products, Pfizer Inc. can stand out by adopting a marketing plan that is dynamic enough and meeting the needs of consumers (Chesbrough 39). For instance, the company can use untapped means of advertising rather than the commonly used media.

The second most important strategy that Pfizer Inc. can adopt is to create a smooth flow of communication between the company and consumers of its products. The company should listen to the needs of its consumers and act accordingly. There are some recommendations which consumers might make on the products sold to them. The company should respond to such comments as much as it is possible. The use of one on one survey or questionnaires in a detailed market research can indeed be helpful in obtaining relevant information from consumers.

Nonetheless, caution should be exercise to the latter to ensure that marketing communication received from consumers is impartial and not biased in any way.

The third solution to the competition problem is the need to work on product innovation from Pfizer (Nickell 729). Although its new products are usually received by consumers positively, it is also necessary for the company to bear in mind that a long lasting impression and liking of its products by consumers is a lot more important than just a few months of high sales which later declines perhaps due to customer dissatisfaction. Pfizer should always engage in the process of innovating new products or improving on the existing brands so as to capture the interest of consumers (Bertschek 345). Rebranding is equally necessary as a way of maintaining the interest of consumers on the usage of the product.


From the possible solutions noted above, innovation remains to be the best solution to the challenge caused by stiff competition. In order to appreciate this solution, a simple cost benefit analysis is highly recommended in order to determine whether Pfizer should embark on innovation of its products to remain competitive. The shareholders magazine of Canada carried out an assessment in 2002 and came up with some findings. For instance, it was established that the growth of Pfizer in future will largely depend on the buying ability of the aging baby boomers who are more likely to develop chronic conditions and therefore require drugs relevant to their illnesses (Jones 765).

If Pfizer Inc. will be aggressively innovative as it focuses on the future, then it will be in a position to capture the broad marketing opportunities. Moreover, the expiry of the patents is a major issue of concern to all pharmaceutical companies that manufacture generic drugs (Lexchin 132). However, new products launched from Pfizer out of numerous research activities is expected to spur the growth of Pfizer Inc. the company had an investment portfolio of 4.8 billion dollars way back in 2001. This constituted only about 15 percent of all income generated from the company in one fiscal year. In addition, the innovative approach adopted recently towards developing drugs that cut down cholesterol levels in the body is expected to boost the sales. Hence, innovation remains to be the best solution to this problem.


Through its Research and Development activities, Pfizer has managed to innovate new products into the market. The company has identified innovation as the best solution to deal with the threat of competition (Mishan & Quah 81). From the cost benefit analysis, the company spent 7.7 billion US dollars in carrying out research and innovation through its Research and Development activities. Additionally, a total of 12,500 scientists were deployed to work on innovative research. As a result of this additional spending, the overall expenditure of Pfizer went up dramatically but this heavy spending on innovative research also led to higher revenue. In 2002 before R&D activities were put in place, revenues totaled 32,294 US dollars (Menem 5).

This amount rose to 44,736 US dollars in 2003 and finally in 2005, the total revenue recorded in Pfizer Inc. was 52,516 US dollars. In terms of business operations, Research and Development (for the sake of innovation) consumed a total of 5,208 US dollars in 2002. The R&D expenditure rose to 7,487 US dollars in 2003 and in 2004, the expenditure on R&D was the highest at 7,648 US dollars (Menem 5). From this cost benefit analysis, it is evident that spending on innovative research has a direct proportion to the volume of revenue earned by Pfizer Inc.


In order to achieve the above solution, quite a number of strategies should be put in place by Pfizer Inc. firstly, the company should attempt to maximize revenue both in the short and long term so that it can spare adequate financial resources for carrying out Research and Development projects (Menem 5). In addition, Pfizer Inc. should also establish a cost base that is lower and relatively flexible (Layard & Glaister 72).

Furthermore, innovation can be enhanced by establishing smaller units that are easy to manage (Chandler & Samaroo 157). In addition, the management of Pfizer should be in a position to engage with all the stakeholders like patients, collaborators, physicians and customers so that a proper feedback can be obtained. Finally, the management of Pfizer should create a safe, secure and comfortable environment for research and work within Pfizer Inc.


Bertschek, Irene. “Product and Process Innovation as a Response to Increasing Imports and Foreign Direct Investment” The Journal of Industrial Economics, 1995 (43): 341-357.

Chandler, Lisa Lucarelli and Samaroo, Harry Dutt. “Pfizer and the Greenstone brand: A sustainable competitive advantage?” Journal of Medical Marketing 2010(10):155–164.

Chesbrough, Henry William. “Open innovation: the new imperative for creating and profiting from technology”, Boston: Harvard Business School Publishing Corporation, 2006.

Pfizer. About Pfizer. 2010. Web.

Jones, I. Charles. “R&D-Based Models of Economic Growth”, Journal of political economy. 1995 (103): 759-768.

Layard, P.Richard and Glaister, Stephen. “Cost-benefit analysis”, Cambridge: Cambridge Unoveristy Press, 1994.

Lexchin, Joel. “Bigger and Better: How Pfizer Redefined Erectile Dysfunction”. PLoS Med, 2006 (4): 132.

Mennen, Miriam. “Innovation & Growth – A Case Study of Pfizer”, Norderstedt: Grin Verlag, 2007.

Mishan,J. Edward and Quah, Euston. “Cost-benefit analysis”, Oxon: Routledge, 2007.

Nickell, Stephen. “Competition and Corporate Performance,” Journal of Political Economy, 1996 (104): 724-746.

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