Pfizer is a large pharmaceutical company founded in 1849. In 2014, Pfizer's revenue was $53.8 billion with net income of $22 billion. Pfizer's top selling drugs include Lipitor, Lyrica, and Viagra. The company is evaluating strategic options to maintain its leadership position, including horizontal integration through an acquisition of AstraZeneca. In May 2014, Pfizer offered $117 billion for AstraZeneca, but the offer was rejected. Pfizer will likely need to make another major acquisition in the next 4-5 years to continue growing and remain the largest pharmaceutical company.

1. Sanjaya
Tarumanegara University Post Graduate-2014
Strategic Management Case-Pfizer

2. Company Overview
 Founded 1849 in New York City by Charles Pfizer & Charles
Erhart as a manufacturer of fine chemicals.
 2014: an American multinational pharmaceutical
 Popular products: Lipitor, Lyrica, Diflucan, Zithromax,
Viagra, Celebrex
Revenue US$ 53.8 bio (↓12.2)
Net Income US$ 22.003 bio
Total Assets US$ 172.101 bio
Total Equity US$ 76.620 bio
Employees 77.700
Websites www.pfizer.com
*2013

3. Big Pharma
Rank Company
Total Revenues (in
millions of USD)
Net income/ (loss)
(in millions)
R&D Expenses (in
millions)
Fortune 500
Ranking[1]
1 Johnson & Johnson[2] 71,312 13,831 2,411 121
2 Pfizer[4] 51,584 22,003 6,678 191
3 Roche[5] 52,080 12,652 9,678 196
4 GlaxoSmithKline[7] 45,402 8,015 3,929 170
5 Novartis[9] 57,920 9,292 9,600 157
6 Sanofi[11] 44,563 9,043 1,685 238
7 AstraZeneca[13] 25,711 8,390 4,269 468
8 Abbott Laboratories[15] 21,848 2,576 1,452 136
9 Merck & Co.[17] 44,000 4,404 7,503 241
10 Bayer HealthCare[19] 54,211 4,702 4,306 154
11 Eli Lilly[21] 23,113 4,684 5,531 129
12 Bristol-Myers Squibb[23] 16,385 2,340 3,715 176
*Based on Fortune 500 Ranking of 2013

4. Vission & Mission
 VISION
We apply science and our global resources to bring therapies to
people that extend and significantly improve their lives through
the discovery, development and manufacture of healthcare
products.
 MISSSION
We will
 develop bold and innovative partnerships
 reach patients we have never reached before
 provide medicines and services in an affordable manner
 be recognized for having the best talent in healthcare
 becoming a leading biopharmaceutical company in Emerging
Markets
Proposed Vision
To be the biggest pharmaceutical
company in the world.

5. External Factor Evaluation
(EFE) Matrix
Key External Factors Weight Rating Score
Opportunities
1. Technology advancement 0.20 3 0.60
2. Opportunities in Emerging Markets 0.10 3 0.30
3. Longer life expectancy 0.10 4 0.40
4. High entry barriers 0.10 4 0.40
5. Increase of chronic disease 0.10 2 0.20
Threats
1. Increase strengh of US Dollar 0.05 2 0.10
2. Higher effective tax rate 0.10 2 0.20
3. Patent Litigation settlement 0.10 3 0.30
4. Medicaid or other similar gov. programs 0.05 2 0.10
5. Development of blockbuster drugs by
competitors 0.10 1 0.10
Total 1.00 2.70

6. Competitive Profile Matrix (CPM)
Critical Success Factor Weight
PFIZER BMS NOVARTIS
Rating Score Rating Score Rating Score
Innovation 0.15 2 0.30 3 0.45 4 0.60
People Management 0.05 1 0.05 3 0.15 4 0.20
Use of Corporate Assets 0.05 2 0.10 4 0.20 3 0.15
Social Responsibility 0.10 3 0.30 4 0.40 3 0.30
Quality of Management 0.15 2 0.30 4 0.60 4 0.60
Financial Soundness 0.15 2 0.30 3 0.45 4 0.60
Long-term Investment 0.10 2 0.20 3 0.30 3 0.30
Quality of Products 0.15 2 0.30 4 0.60 3 0.45
Global Compatitiveness 0.10 3 0.30 1 0.10 4 0.40
Total 1.00 2.15 3.25 3.60

7. Internal Factor Evaluation
(IFE) Matrix
Key Internal Factors Weight Rating Score
Strength
1. Strong brand image 0.10 3 0.30
2. The most profitable company 0.10 3 0.30
3. Big pile of cash 0.20 4 0.80
4. Strong sales force 0.20 4 0.80
Weakness
1. Patent expiration 0.05 2 0.10
2. Too big to grow organically 0.10 2 0.20
3. No potential new blockbuster drugs 0.10 1 0.10
4. Litigation in several courts around the
world 0.05 2 0.10
5. Internal politics 0.10 1 0.10
Total 1.00 2.80

8. SWOT Matrix Strategies
Strengths-
Opportunities
•Focus on vitamins &
supplements (S1, O3)
•Finance all R&D
proposal (spread the
bets) (S3, O1)
Weakness-
Opportunites
•Spinoff generic
brands (W1, O2)
Strength-Threats
•Move HQ to other
country with
stronger currency
and lower tax (S3,
T1,4)
Weakness-
Threats
•Acquire promising
competitors with
potential
blockbuster drugs
(W3, T5)
Strengths Weaknessess
1. Strong brand image 1. Patent expiration
2. The most profitable pharmaceutical company
in the world 2. Too big to grow organically
3. Big pile of cash 3. No potential new blockbuster drugs
4. Strong sales force 4. Litigation in several courts around the world
5. Blockbuster drugs 5. Internal politics
Opportunities
1. Technology advancement
2. Opportunities in Emerging Markets
3. Longer life expectancy
4. High entry barriers
5. Increase of chronic disease
Threats
1. Increase strengh of US Dollar
2. Higher effective tax rate
3. Patent Litigation settlement
4. Medicaid or other similar gov.
programs
5. Development of blockbuster drugs by
competitors

9. SPACE Matrix
Industry Position Competitive Position
Opportunities of
Blockbuster drugs
2.0Brand image -2.0
Generic drug threats 2.0Market share -2.0
Medicaid programs 3.0Product quality -1.0
Patent Litigation 3.0Customer Loyalty -2.0
X axis 2.5 -1.8 0.8
Financial Position Stability Position
Revenue 7.0Growth Potential -4.0
Profit 6.0Patent Expiration -3.0
Cash Flow 6.0
Competition among
branded drugs
-2.0
Leverage 5.0Litigation Potential -2.0
Y axis 6.0 -2.8 3.3 -7
-6
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7
Financial Position
Stability Position
Competitive
Position
Industry
Position
•A firm whose financial
strength is a dominating factor
in the industry.
• Aggressive stratgies:
•Horizontal integration
•Market penetration
•Product development

10. 1
2
3
4
1.02.03.04.0
IE Matrix
EFE
(2.70)
IFE
(2.80)
Hold & Maintain
•Market Development
•Entry into emerging markets
•Product Development
•Development of new drugs

11. The Grand Strategy Matrix
Rapid Market Growth
Slow Market Growth
Weak
Competitive
Postion
Strong
Competitive
Postion
Quadrant I
1. Market Penetration to
emarging markets
2. Product Development:
R&D
3. Horizontal Integration:
Acquire Competitor

12. QSPM Matrix
Key Factors Weight
Horizontal
Integration
Penetration into
Emerging Markets
Increase R&D
AS TAS AS TAS AS TAS
Opportunites
Sales in emerging markets 0.15 2 0.30 4 0.60 1 0.15
Longer life expectancy 0.15 3 0.45 1 0.15 4 0.60
Increase appetite in vitamin products 0.10 3 0.30 1 0.10 2 0.20
Threats
Medicaid or similar government program 0.20 2 0.40 4 0.80 1 0.20
Generic drugs 0.20 1 0.20 4 0.80 1 0.20
Competition from Branded Products 0.20 3 0.60 2 0.40 4 0.80
Total 1.00 2.25 2.85 2.15
Strengths
Increase brand awareness 0.20 4 0.80 3 0.60 1 0.20
Bigger sales force 0.15 4 0.60 3 0.45 1 0.15
Stronger financial stability 0.20 4 0.80 2 0.40 3 0.60
Weakness
Patent expiration 0.20 3 0.60 1 0.20 4 0.80
Litigation processed 0.10 2 0.20 3 0.30 4 0.40
Internal politics 0.15 1 0.15 2 0.30 4 0.60
Total 1.00 3.15 2.25 2.75

13. Strategy: Horizontal Integration
 Acquire other big pharma companies to be the biggest
and baddest pharmaceutical company in the world.
Tax inversion
Bigger revenue
Cost synergy
Acquire new expertise
“The only way for a shark to
survive is to keep going
forward. To maintain its
leadership, Pfizer will again
need to make a major
acquisition in the next 4-5
year.”
-John LaMattina
Forbes.com
5/06/2014

14. Proposed Pfizer – Astra Zeneca Merger
 The offer: US$ 117 billion of US$ 92 per share.
 Pfizer will hold 74% of the combined company.
 Tax benefit of moving Pfizer’s HQ to UK: US $ 12 bio.
 Astra Zeneca’s strong points:
 Cancer immunotherapy
 Pulmonary disease
 Area of complimentary research:
 Cardiovascular
 Metabolic
 Oncology
Patents: Pfizer 80%, AZ 20%.
 Rejected in May 26, 2014.
 Still in consideration. Main reason: Blackrock.

15. Thank You
Mergers in the industry are done out of weakness. We are not weak.”
-Bill Steere
(Pfizer CEO 1991-2001,
a year before acquiring Warner-Lambert)