The pharmaceutical industry includes companies that research, develop, market or distribute generic and branded drugs. The industry expanded during the 1980’s and drugs to treat heart disease and AIDS were prominent. Consumer demand for nutritional supplements and alternative medicine increased during the 1990’s with the Internet facilitating direct purchases of drugs. Advertising for direct consumption of pharmaceutical drugs became more prominent; pharmaceutical companies were criticized for over medicating personality or social problems. Society expects drug companies to improve people’s well-being and to behave like a nonprofit company not overly concerned with making large profits. However, investors expect pharmaceutical companies to earn profits making it unlikely that life-saving drugs will be sold at the lowest possible price. Some interest group is bound to be displeased with mutually exclusive expectations and the pharmaceutical industry is often criticized. Pfizer Inc.
Mission & Products: Pfizer’s mission is to help increase peoples’ life spans and help them live healthier lives. Its products help treat and prevent minor conditions like back pain and more serious ones such as psychotic disorders. Strategy: Pfizer is the world’s number one pharmaceutical company. Its best-selling products include Lipitor, the world’s best- selling medicine, and eight of the top twenty-five medicines in the world. Acquisition of successful competitors such as Pharmacia and Warner Lambert has helped Pfizer to offer best-selling products and further differentiate itself from competitors. The acquisition of the latter company helped bring Lipitor under Pfizer’s control. Diverse packaging is needed to implement Pfizer’s strategy of a wide product offering and to differentiate its products. Pfizer reviews more than 5,400 packaging materials and 8,500 package specifications. Successful diverse packaging earned it the 2003 Drug Packager of the Year award. Research and Development : Research and development, major activities of drug companies, are key success factors for profitability. R&D benefits are not immediately realizable; it may take ten to fifteen years to develop a drug that survives the testing and approval process. The chances of developing a best-selling drug are lessened as companies who have successfully done so reach maturity. Another complicating factor in earning profits is that drug companies sometimes lose patent protection without replacement drugs in their pipeline. Pfizer suspended tests of a new drug for cholesterol treatment in the face of lost patent protection for Lipitor, which generates yearly revenues of about $12 million. Turnaround Strategy: Lost patent protection and insufficient drugs in its pipeline makes successful controlling of costs an important component of Pfizer’s turnaround strategy. Talented employees who can help fill the pipeline are especially needed after patent protection is lost and competitors offering generic drugs can more easily enter the market. Pfizer is trying to use existing employees with similar skill sets needed for open research positions, which could reduce training and hiring costs. The development of a successful a drug like Lipitor may not happen soon, but creatively using employees’ talents could result in a larger array of products to sell. The company’s turnaround strategy will hopefully allow Pfizer to quickly and flexibly respond to industry changes and risks.
Merck & Co, Inc.
Mission & Products: Merck, a global pharmaceutical company, develops and makes vaccines and medicines. Some of its products are Singulair (asthma treatment) and Vioxx (arthritis treatment). Merck also publishes health information as a not-for-profit. Strategy: Merck’s strategy is to maintain a stream of new products that advance patient care and provide consumers with value. A realistic profit goal coincides with a strategy of cost...