RiDUCES and Competitor Analysis
Pfizer, Inc: Branded Pharmaceutical Industry-Oncology Pharmaceuticals Executive Summary
The value that the branded pharmaceutical industry adds to the US economy is growing slower than US GDP (Snyder, 2012). Rivalry has intensified while the rate of blockbuster drug development has slowed due to an increase in regulation from the government and the industry trade association, PhRMA. The number of new entrants is fairly low and some are exiting or consolidating through mergers and acquisitions. Downstream and upstream factors are crucial to the specialty pharmaceutical sector of this industry since supply and distribution are different than in traditional branded pharmaceuticals. Complementors such as antiemetics and substitutes such as marijuana and acupuncture exist but currently do not play a large enough role to affect rivalry.
In the pharmaceutical market, the degree of market concentration changes as one looks more narrowly at specific therapeutic areas (Schweitzer, 2006). For this analysis, that area will be the targeted therapies class of oncology pharmaceuticals. The RiDUCES analysis will focus on three of the main five companies that compete in this class. An analytical framework for understanding the competitive environment in which Pfizer competes will be outlined by describing the industry/market structure and analyzing the accompanying competitive dynamics, tactics, and strategies.
The analysis shows the factors that significantly impact competition in the branded pharmaceutical industry include rivalry, upstream and downstream trade channels, and entry barriers. Rivalry is intense as the industry is in a mature life cycle. One competitive advantages belonging to Pfizer regarding trade channels is the ability to maintain control as the company shifts away from wholesaling and toward specialty pharmacy usage. All companies benefit from the industry’s high barriers to entry which contains the threat of new companies entering and enables companies to focus on their existing strategic plans to gain advantage in the marketplace.
Of the six forces analyzed within the competitive analysis, the most important are the ability to conceive and design and the ability to finance. Pfizer’s position within the competitive matrix is strong, as it leads both of these categories. In regards to the ability to conceive and design, Pfizer’s high R&D funding and large sales force size give it the advantage. Ability to finance is measured as with the largest gross profit margin, where Pfizer also dominates. Additionally, Pfizer wins in the ability to adapt to changing conditions with the highest free cash flow and number of acquisitions. Competitors have the advantage in the ability to produce, led by Roche with the highest PPE and level of integration. GSK leads in the ability to market with a successful advertising campaign showcasing features and benefits. Finally, Roche wins in the ability to manage with the simplified structure of the business and impressive CEO and board of directors.
Pfizer, Inc: Branded Pharmaceutical Industry-Oncology Pharmaceuticals RiDUCES Analysis
Seven companies represent 80% of the market share for the overall branded pharmaceutical manufacturing industry. Overall, these companies compete in an industry with a profit of $19.0B. The industry is mature, with well-established, well-recognized companies dominating. Most of the larger companies have deep pockets and compete not only through mergers but aggressive branding and marketing campaigns. Revenue volatility and capital intensity is high in the industry (Snyder, 2012) This high level of competition is one of the negative factors affecting the industry because as it increases the rivalry it places downward pressure on pricing and profitability (Snyder, 2012). The main U.S. trade association is the Pharmaceutical Research and Manufacturers of America, PhRMA, and all five companies...
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