Group assignment international entry modes of pfizer

The reason that Pfizer wants to internationalize the business: 7 2.. Pfizer Mission Statement “Our mission is to become the world’s most valued company to patients, customers, colleague

MINISTRY OF EDUCATION AND TRAINING

NATIONAL ECONOMICS UNIVERSITY

INTRODUCTION 1

II INTERNATIONAL STRATEGY OF THE OVER YEARS/ MILESTONES 7

1 The reason that Pfizer wants to internationalize the business: 7

2 Foreign Direct Investment and Subsidiaries 10

4 Partnership & Joint Venture 14

V EMERGING ISSUES NOWADAYS FOR SELECTING INTERNATIONAL

Pfizer Inc is an American multinational pharmaceutical and biotechnology corporationheadquartered on 42nd Street in Manhattan, New York City The company was established in 1849 in New York by two German entrepreneurs, Charles Pfizer (1824–1906) and his cousin Charles F Erhart (1821–1891)

Pfizer acquired several other companies over the years Many of these companies made billions for Pfizer with their established research and drug development.

Pfizer has been successful with popular drugs such as Santonin - an intestinal worm medicine, vitamin C, penicillin, Terramycin - a broad-spectrum antibiotic, or most recently, the Covid 19 vaccine Pfizer

In 2021, Pfizer generated total revenue of around 81 billion U.S dollars worldwide with oncology products accumulating some 12.3 billion U.S dollars In the same year, Pfizer made more than one third of its revenues in the United States

2 Vision, mission, achievements

a Pfizer Mission Statement

“Our mission is to become the world’s most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live.”

Pfizer has clear goals that it explicitly shows in the mission statement It zeroes down

on its achievement and aims at exceeding patients' and partners’ expectations The given components are associated with Pfizer’s mission statement

● Making Healthcare Simplified and Accessible

● Improving Quality of Life

● Exceeding Expectations to Serve Community

b Pfizer Vision Statement

“Innovate to bring therapies to patients that significantly improve their lives.”

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Pfizer believes in evolving as a corporation Its vision statement has been updated and incorporated new elements to signify its growth However, the company’s desire to achieve its goals, in the long run, remains the same.

● Innovation for Product Betterment

● Remain Competitive To Make the World a Healthier Place

c Pfizer’s achievements

In 1936, Pfizer became the world’s leading producer of vitamin C

In 1944, Pfizer was successful in its efforts to mass-produce penicillin and became the world’s largest producer of the ‘miracle drug’

In 1950, Terramycin (oxytetracycline), a broad-spectrum antibiotic that is the result of the Company’s first discovery program, became the first pharmaceutical sold in the USA under the Pfizer label Pfizer begins expansion into overseas markets and the

International Division is created

In 1967, Vibramycin (doxycycline hyclate), the company’s first once-a-day spectrum antibiotic was introduced and quickly became a top seller

broad-In 1980, Feldene (piroxicam) became one of the largest-selling prescription inflammatory medications in the world and, ultimately, Pfizer’s first product to reach a total of a Billion US Dollars in sales

anti-In 2020-2022, Pfizer leads the world in developing a vaccine and treatment in response

to the COVID-19 pandemic and commits to lightspeed manufacturing to expand vaccine and treatment access to people around the world

3 Organization chart

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4 Product lines

Pfizer produces pharmaceutical products for a wide range of medical sectors that include but are not limited to immunology, cardiology, and neurology In 2021, Pfizer generated total revenue of around 81 billion U.S dollars worldwide with oncology products accumulating some 12.3 billion U.S dollars

Some of Pfizer’s well-known products:

● Lyrica and Lipitor, which generated around 3.3 and five billion U.S dollars in revenue, respectively, in 2019

● Lipitor, one of Pfizer’s more well-known products, generated revenue of 12.9 billion U.S dollars in 2006, however, after Pfizer’s patent on Lipitor expired in

2011, revenue has fallen to under two billion U.S dollars Currently, generic forms

of atorvastatin (Lipitor) are available

● In 2021, Pfizer's top product was COVID-19 vaccine Comirnaty, generating 36.8 billion U.S dollars in alliance revenues and direct sales

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The graph depicts Pfizer's top 10 products based on revenue in 2021 Pfizer Inc is a

multinational pharmaceutical corporation

II INTERNATIONAL STRATEGY OF THE OVER YEARS/ MILESTONES

1 The reason that Pfizer wants to internationalize the business:

a. Develop economies of scale in sourcing, production, marketing and R & D.

- Reducing economies of scales per unit cost manufacturing due to operating in highvolume

- Producing more units is much cheaper than producing little units

- Firms may operate in countries where demands are high to be able to produce more units

● Specifically:

In India, where there are often very serious dengue epidemics, Pfizer has opened a company in India so that it can easily sell the dengue vaccine due to high demand.

b.Gain ideas about products, services and business methods

- International businesses are characterized by toughness and ability to constantly meet customer's ever changing demands

- New environment exposes foreign firms to new ideas, products, processes and business methods

● Specifically:

For example, thanks to a global business strategy, when the COVID pandemic appeared, Pfizer grasped the situation very quickly Thanks to many branches around the world, they can closely monitor the situation of the virus affecting people directly From there, the most suitable and safest vaccine for humans can be found

c Superior profit

When investing abroad, foreign market profit is superior to domestic market profit Where money is invested is influenced by production, distribution, transportation costs, and the investment climate

In the past decade, Prizer has made many acquisitions, following previous mergers

of companies below them in the pharmaceutical food chain

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=> Prizer experienced operational difficulties and may in the near future come under hard times financially, making it difficult to define their internationalization strategy Their stock price has declined since February 2004 They had not made any significant discoveries, which are not helping their business As a combination of these 2 factors, their internationalization strategy might be non-existent, as they are in the middle

of restructuring internationally

=> This means that right now they are consolidating

For the purpose of evaluating a company in a specific archetype and

internationalization strategy, Pfizer really makes one question their activities and distinguish which activities are research oriented, which are development, which are mostly done in their domestic market (the US and which are mainly done abroad)

● 2019-now

Pfizer sells its products in more than 125 countries world-wide, has 58 manufacturing sites world-wide, approximately 92,400 employees globally and owns 470 subsidiaries Pfizer can be considered a global company with a total of 11 countries outside of the United States producing more than $500 million dollars in revenue Pfizer has expanded globally in efforts to increase its profitability and growth Pfizer has done so through market seeking due to a mature industry, efficiency seeking and resource seeking.Pfizer faces pressure to reduce its cost as well as respond to its local markets Within the 125 countries Pfizer sells its products in, the company must be aware of local communities, laws and needs in which it should respond to (Proxy Statement for 2019 Annual Meeting of Shareholders) A conflicting pressure that Pfizer also faces is the pressure to reduce its costs Pfizer handles its pressure for cost reduction by mass producing its generic drugs, driving down costs Although both global pressures are high,the pressure for local responsiveness is more prevalent than the pressure for cost reduction

=> In order to handle two simultaneous high pressures, Pfizer has globalized using a transnational strategy, where VRIN resources are achieved in each country

III INTERNATIONAL MODES OF ENTRY

1 Direct export

For some businesses, this is the fastest way to get into international business, and Pfizer is no exception

The export division of Pfizer sells its products through the Government or the Ministry

of Health of another country for direct distribution to the people This type of business gives Pfizer more control and bargaining power over its medical operations

Pfizer chose to export directly to eliminate intermediaries, decrease risks, and swiftly enter international markets in their early years as a newcomer to the international market with little economic potential Also, Pfizer can utilize the direct exporting strategy to test their products in international markets before making a bigger investment in the overseas market

In 1951, Pfizer set up export divisions to neighboring countries such as Belgium, Brazil, Canada, Cuba, England, Mexico, Panama, Puerco Rico John "Jack" Powers, Jr., then assistant to Pfizer President John McKeen, directs his international teams to “study the economy, establish proper contacts with government officials, learn the language, history, and customs, and hire local employees wherever possible."

2 Foreign Direct Investment and Subsidiaries

The next step forward for Pfizer's international entry is to invest directly in operations conducted in another country to enhance its competitive advantage

➢ 1955, Pfizer opened a fermentation plant in the UK, laying the groundwork for

UK research and development activities

➢ 1958, New Pfizer pharmaceutical plants began production in Mexico, Italy, and Turkey International personnel increased from 4,300 in 1957 to over 7,000

➢ 1971, Pfizer acquired Mack Illertissen, a prosperous manufacturer of

pharmaceutical, chemical, and consumer products oriented to the needs of the German marketplace The Central Research Division was established, combining pharmaceutical, agricultural, and chemical R&D worldwide

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Pfizer made the right move when it decided to build and acquire factories, expanding its distribution network in several countries around the world after importing directly in 8countries in 1951 This gave Pfizer greater control over its operations, reducing labor and material costs, and benefiting from subsidies and concessions from local governments.

In addition, in 2012, Pfizer established a subsidiary called Zoetis™ Inc and shortly Zoetis™ Inc filed a registration statement with the US Securities and Exchange Commission for a potential initial public offering (IPO) of Class A common stock.Although the process of establishing a new, wholly owned subsidiary is often complex and potentially costly, it affords Pfizer maximum control and has the most potential to provide above-average returns

3 Merger & Acquisition

Acquisition is a good entry strategy to choose when scale is needed, which is particularly the case in certain industries Throughout its history of establishment and development, Pfizer has done several major and small mergers and acquisitions to grow its scale and fast reach the international market The year 2000 was a tumultuous year for the economy when the growth rate set 4.9% and the US GDP surpassed the 5% mark for the first time, making a significant contribution to the commonwealth, Pfizer acquired

Warner-Lambert for about $91.5 billion in stock and assumed debt, bringing together

two of the fastest-growing companies in the pharmaceutical industry and adding to Pfizer's global strengths and rich heritage With Warner-Lambert, Pfizer gained product lines ranging from Parke-Davis branded pharmaceuticals to Listerine mouthwash to Schick and Wilkinson Sword wet-shave products With Warner-Lambert, Pfizer will haveprescription drug sales of $31 billion next year, and it projects growth of 25 percent a

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year That means it will soon leapfrog the combination of Glaxo Wellcome PLC and SmithKline Beecham PLC, which will have sales of $27 billion in 2001.

At the end of 2004, Pfizer's patent for anti-cholesterol drug Lipitor would expire Global sales of this best-selling prescription drug have reached $11 billion Once faced with peer-to-peer competition, Pfizer's revenue could drop by as much as 80%.That is why the biggest corporate combination in 2003, Pfizer Inc agreed to buy

Pharmacia Corp with a research and development budget at $7,1 billion, to secure

income and increase its presence in the tens of billions of dollars worth of global pain relievers

In addition, the acquisition of King will strengthen Pfizer's presence in the painkiller market by adding King's well-known drugs such as Lyrica, Celebrex, Avinza, Flector Patch, Embeda and even pain relievers

Pfizer expects the billion-dollar deal to result in cost savings of more than $200 million, of which about 50% in the first year, 75% in the second year, and 100% in the third year It also hopes to increase earnings per share by 2 cents in 2011 and 2012; then increased by 3-4 cents between 2013-2015

The global analgesic market is a large and growing market King's advantage in pioneering the development of new pain relievers formulations will give Pfizer easy access to new drugs and open up opportunities for long-term growth In addition to pain relievers, King also manufactures veterinary drugs and feed additives

Pfizer believes that King's three key areas of activity not only complement Pfizer's activities but also support its three key businesses, Primary Care, Established Products and Animal Health, creating a combination to maximize King's assets along with Pfizer's resources and global scale

In 2015, Pfizer acquired Hospira, a leading US-based supplier of injections and infusion technology, for approximately $17 billion Hospira's $90 per share acquisition improves Pfizer's global established pharma business (GEP) and strengthens its portfolio

of generic injectables and tech clones biology Pfizer predicts that this market could grow

to $ 20 billion by 2020, while the injectable drug market could reach $ 70 billion in size

In particular in the field of manufacturing cancer drugs, the acquisition of Hospira not only helps Pfizer's list of chemotherapy drugs significantly increase with 12 active

ingredients being used in cancer treatment regimens such as breast cancer, lung cancer, and colorectal cancer, but also helps this group own more modern technologies in the production and packaging of chemotherapy drugs.

4 Partnership & Joint Venture

Strategic alliances and joint ventures have become increasingly popular in recent years After making strides in entering the international market by means of direct export,mergers and acquisitions, and foreign direct investment, Pfizer chooses to partner and joint ventures to be able to share risks and resources required to enter international markets And while the profits may also have to be shared, they give Pfizer a level of flexibility that direct investments cannot afford

On December 19, 2018, two pharmaceutical groups GlaxoSmithKline (GSK) of the

UK and Pfizer of the US announced the merger of the healthcare businesses of the two firms, which produce medicines sold without a prescription, and establish a joint venture company Pfizer said the group would take a 32% stake in the joint venture

By combining its consumer health business with GSK's in 2019, Pfizer made clear its plan to focus on innovative medicines and vaccines Now, in exiting the consumer market, the New York pharma is collecting a huge cash windfall

Both Pfizer and GSK will bring together two portfolios of trusted consumer health brands These include GSK’s Sensodyne, Voltaren, and Panadol and Pfizer’s Advil, Centrum, and Caltrate

“The Joint Venture will be a category leader in Pain Relief, Respiratory, Vitamin and Mineral Supplements, Digestive Health, Skin Health and Therapeutic Oral Health,” a Pfizer press release explained “The Joint Venture will be the global leader in OTC products with a market share of 7.3% ahead of its nearest competitor at 4.1% and have number 1 or 2 market share positions in all key geographies, including the US and China.”

The transaction is expected to deliver $650 million in peak cost synergies and to be slightly accretive on a full-year basis for Pfizer in each of the first three years following the closing

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