Pfizer, Inc' Animal Health Products

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Pfizer, Inc. Animal Health Products

• Pat Gross
• Gavin Batchelder

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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

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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.

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Introduction to Pfizer1999 Revenues

• 89 from Human Pharmaceuticals
• 8 from the animal sector
• 3 from over the counter products including-
• Listerine, Visine, Rolaids, and Sudafed

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Introduction to Pfizer

• Pfizers products include such well know names as
  -
• Zyrtec
• Celebrex
• Viagra

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Introduction to PfizerMission Statement

• "We will become the worlds most valued company
  to patients, customers, colleagues, investors,
  business partners, and the communities where we
  work and live."

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Introduction to PfizerPfizers Purpose

• "We dedicate ourselves to humanitys quest for
  longer, healthier, happier lives, through
  innovation in pharmaceutical, consumer and animal
  health products."

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Introduction to PfizerPfizer 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

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Introduction to the case

• This case centers on Pfizers 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.

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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.

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Introduction to Pfizer Animal Health

• Pfizer divides consumers into two groups.
• Pet owners, horse owners, and vets
• livestock/beef cattle, dairy cattle, and pork.

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Introduction to Pfizer Animal HealthPfizers
Strengths

• Pfizer has consistently superior product.
• Competitive products typically cant match
  Pfizers performance.

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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

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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

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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.

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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
  worlds 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

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The Industry

• Pfizers competitors include
• Merck
• Glaxo SmithKline
• Novartis
• Bristol Myers Squib
• AstraZeneca

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The Industry

• Research and Development comprise a significant
  portion of pharmaceutical cost.
• In 1999 Pfizer budgeted more than any competitor
  for RD, 5 billion.
• Critics charge that companies spend twice as much
  on sales and advertising

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The Industry

• Pharmaceutical makers are using new techniques to
  sell their products-
• Direct advertisements to consumers
• large pre-launch product advertisements
• Incentive programs to sales people
• Increased concentration of sales people

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Marketing

• Pfizers 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.

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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

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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

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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.

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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.

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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.

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Pfizer SWOT AnalysisStrengths 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.

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Pfizer SWOT AnalysisWeaknesses

• 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.

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Pfizer SWOT AnalysisWeaknesses cont.

• Pfizer has been sited twice for price fixing
  conspiracies and is No. 17 on the list of "Top
  Corporate Criminals of the 1990s",
• 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 its products, a real
  no-no in the animal avocation sector that is
  making its way to public avocation in the US and
  other countries, as well..

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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.

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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.

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The Basic Problem

• The failing market for U.S. beef producers and
  the resulting sales decline of Pfizer products

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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

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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.

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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
  Pfizers prices
• Competitors may already have secured the dominant
  position in other markets requiring an expensive
  battle for market share

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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

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Option 2 Begin reducing expenditures on the
declining beef market, and instead focus on
growth markets

• Negatives-
• Pfizers 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

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Option 3 Partner with U.S. beef
growers to help return producers to
profitability

• Positives
• Pfizer has extensive skill and experience in
  marketing and advertisement
• Pfizers 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

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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 Pfizers 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

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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

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Pfizer Animal Products

• Any Questions?