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Pfizer Company: Case Study

Pfizer was already a dominant global pharmaceutical company in 2002, operating revenues amounting to $30 billion in approximation. The company was already running the largest R&D budget in the industry, amounting to $4.4 billion in 2000. The company was a leader in marketing and well known for its “massive sales force” prowess (261). One of the capabilities of Pfizer was offering drugs as well as pharmaceuticals that would provide solutions for health problems. There was an advance in research and development, a process through which the company discovers and develops its commodities. The company has been in operation for so long now that they have established a wide base of operation, large customer base, among other things. The company had already started advances in the production of Viagra by preparing for large production of Viagra even before it has received the final FDA approval. Pfizer was able, through this technique, to meet the anticipated market demand for the product. The firm was also able to complete the research faster than would have been expected because they utilized smaller partner firms to complete more than half of the necessary clinical trials for Viagra. The company was already running a lot of resources that could aid in the research of Viagra and other drugs. It operated an England facility which was the largest pharmaceutical research center outside the United States, namely, Sandwich. This facility was already a success owing to, as said, the combination of its parent’s American entrepreneurship and British irreverence. Less than 15% of the company’s 2000 pharmaceutical sales would be exposed to generic cannibalization before 2005 and therefore the company was being faced with the lowest risks of market share loss due to generic drug sales.

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Firm’s Sustainability

The firm is already a well-established leader in pharmaceuticals, both distribution, and innovation, and this makes it maintain its competitive advantage. Pfizer already commands a large market segment in many parts and therefore has established leadership in the industry. It has a well-established sales and marketing channel and therefore the competitors, new or existing companies continue to find it a threat in the market. The diversity of the company as relates to the type of commodities it offers makes it maintain its competitive advantage. The company is already marketing eight of the “world’s top 25 medicine” (Barry, 1). The company offers also consumer products in addition to pharmaceutical drugs. Therefore, the company may continue to give others a real run of their money because it does cover many markets. The originality of the firm and its strategies make it difficult for other companies to either reach or imitate it. Pfizer has already an established channel of partners in the pharmaceutical industry, which it has established through mergers and acquisitions strategies. This has helped in the expansion and the growth of the company as well as provided more market coverage for its products. The company took command of 13% of its market share within its first four months on the market. The company acquired Roerig, which was a drug maker, and also moved into the field of consumer products through the “purchase” of BenGay, Desitin, and Coty, the latter being a cosmetics maker (Afuah, 263). Some of the companies that it acquired were already leaders in their fields of operation. In that respect, the company may continue giving competitors a rough time because of its advances in commanding the market as a result of the aforementioned mergers and acquisitions.

Costs

The development of Viagra took a lot of expenses as well as time. The development of pharmaceutical products is a very lengthy process that takes time and consumes a lot of money. Pharmaceutical products will be consumed by human beings and to avoid the dangers of loss of life, one has to make sure that they are safe. This makes it hard to avoid the utilization of large amounts of cash for the development process. Development costs have been estimated to be about $500 million before a product reaches the market. Moreover, cost factors represent also the facilities to be used during the development of drugs and their maintenance, although the discovery may be as swift and out of luck.

The major processes that represented costs for the drug were the testing of Viagra. Viagra begin to capture the market by storm, and by the second week of approval by the FDA, the drug had captured 79% of the ED market by its second week on the market and entered the historic arena at the launch. This represented a substantial earner for Pfizer. The weekly prescriptions hit a record high of “300, 000 prescriptions per week by early May” (Afuah, 266). Of course, the production of these drugs on a large scale meant that a large amount of money was to be used. Marketing also represented a substantial cost for the whole process because of the distribution of the drugs. Pfizer also spent money in terms of advertising costs through the DTC (Direct-to-Consumer Advertising (DTC)) “so as to reach Viagra’s target audience” (Afuah, 266).

Works Cited

Afuah, Allan. Business Models: A Strategic Management Approach. Irwin: McGraw-Hill, 2003

Barry, Christopher. Pfizer’s strategy is good medicine: Drug Packager of the Year. 2003. Web.

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StudyCorgi. 2021. "Pfizer Company: Case Study." December 3, 2021. https://studycorgi.com/pfizer-company-case-study/.

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StudyCorgi. (2021) 'Pfizer Company: Case Study'. 3 December.

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