Introduction
Pfizer, Inc. is an American pharmaceutical company that specializes in the research, advancement, production, and promotion of prescription medicines for people and animals. Pfizer is among the largest global biomedical and pharmaceutical corporations. The firm’s headquarters is located York City, New York, USA (Pfizer, 2019). Charles Pfizer, a German scientist as well as business owner, and his cousin Charles Erhart originally established this corporation in Brooklyn, New York, in 1849. The startup investment was $25000, provided by Pfizer’s father in the form of a loan (Pfizer, 2019). Their first medicine, which has been used to cure intestinal worms, a frequent issue, was a great achievement. The emergence of the American civil war increased the demand for painkillers, preservatives, and disinfectants, which they manufactured. This war enabled Pfizer to double its revenue leading to expansion.
The U.S government-contracted Pfizer to manufacture penicillin using fermentation technology to produce the drug to treat its soldiers in World War II. In the following decades, Pfizer expanded significantly, affiliating with Taito, a firm from Japan, to manufacture and dispense antibiotics. Pfizer attained more pharmaceutical companies such as warner lambert in 2003, Pharmacia Corporation in 2003, and Wyeth in 2009 (Pfizer, 2019). Pfizer’s popular drugs include Xanax, an anti-anxiety medication, Viagra, a treatment for erectile dysfunction, Zoloft used to treat depression, and the Pfizer vaccine used to control COVID-19.
Recently, Pfizer’s business model has changed. This change has been brought by changes in their business both technically and technologically. The reason for these changes is the need to adapt to the changing business models and technology (Pfizer, 2019). Business models which have increased efficiency by enabling automation of processes that earlier required humans were needed at Pfizer. Models of business have changed to be more customer oriented thus Pfizer had to also adapt. This was important to reduce the continued increase of the cost of business. To maximize their revenue, Pfizer’s management had to shift their business model to be more technology and patient oriented.
One of the major driving force was to increase efficiency in the manufacture and distribution of drugs. Technology would increase the rate of production and enable research to take a few days. The second force was to meet customer demands. In order to keep their customers, Pfizer had to comply with their demand this would mean customizing their drugs to the customer’s preference which was only possible by updating their production line (Pfizer, 2019). The executives at Pfizer had a role in moving the company forward. This involved using new technology to enable the company to compete with others.
One of the restraining forces is capital investment. Pfizer needed a huge amount of capital to purchase and set up the equipment for this transformation (Ouma, 2017). The other force was fear among the employees and the executives on the outcome of the change. They felt that the change could disrupt the progress of the company and their jobs. Lack of training was also another force whereby for the transformation to be successful, former workers needed to get new training to correctly handle the new machinery.
Analysis of Strengths and Weaknesses
For Pfizer to remain a market leader in the pharmaceutical industry, it must adjust its business structure, and this is based on its strengths and weaknesses. Their first strength is capital due to their large cash flow. This enables them to service their debts, pay wages and have enough to continue researching new products and partner with other firms. Secondly, Pfizer is a large firm; this enables the company to have significant economies of scale whereby their margins are high (Rathnayake, 2018). It also allows it to win over its competitors as it has easy access to the resources required to produce and market the drug.
A change is necessary to enhance the revenue and increase market access. Pfizer’s size is also their weakness as it is challenging to coordinate all the divisions and acquisitions. This contributes to the loss of revenue due to delays in communication between the involved divisions (Lee, Lee, and Jung, 2020). The second weakness is the firm relies on research and development only. New drug improvement requires a considerable amount of cash, whereas there is no guaranteed success. This calls for change to increase the stakes of the success of the drug.
Critical Evaluation of the Background for the Organizational Change
Pfizer’s change can be attributed to the declining old business model. Pfizer relied on its patents to protect its dominance in the market, which has recently changed as the patents expired, allowing other manufacturers to use the formula and produce similar drugs. Such drugs include lipitor, a cholesterol-reducing drug, and Viagra, a cure for erectile dysfunction. These drugs contributed to the vast incomes of Pfizer, and the entry of similar generic drugs will hurt Pfizer’s income. For Pfizer to stay competitive, they have to find other means to generate income (Ouma, 2017). Pfizer has also cut down the number of workers in their departments and the research fund budget. This has delayed the production, development, and sales of new products. These cost-cutting actions are not sustainable in the long run, as they should be substituted with other ways to increase income generation while keeping the cost of production low (Lee, Lee, and Jung, 2020). Failure to undertake the changes could lead to a series of consequences.
Firstly, there could be a decline in accuracy whereby plans requiring different departments’ inputs may take time as there are no common channels of sharing information in time. Secondly, there will be inefficient manufacturing as old processes take time and use more energy, leading to losses (Ouma, 2017). Thirdly, the firm’s productivity will be low as access to accurate information is limited without a proper database. The firm cannot communicate with the suppliers and consumers as the information is not easily accessible to all parties.
Fourthly, the service levels of the firm will decline. This can be attributed to customer preferences in service whereby recent customers are concerned with after-sale services such as follow-ups. Without a proper technology change, the firm will lose customers to its competitors who follow up. Fifthly, the reduced research funds will affect the development of new drugs, which will, in turn, reduce the firm’s income (Lee, Lee, and Jung, 2020). Thus there is a need for a new efficient research technology. This is achieved by the use of machines that can run the tests unmanned.
Pfizer’s future depends on the implementation of the changes. These changes will enable the firm to maintain its position and increase its income while lowering the cost of research and production (Ouma, 2017). Firstly, these changes include digitizing the supply chain whereby Pfizer has collaborated with GEA as well as G-CON to develop a Portable, Continuous, Miniature, and Modular (PCMM) technology that minimizes manufacturing space and costs. This system speeds up production and can customize the drugs to the customer’s needs.
Second, Pfizer has launched its Highly Orchestrated Supply Network (HOSuN), which integrates its worldwide distribution network with the widespread data supply chain. This technology enables the firm to track the global demand for biologic and biological goods and manufacture them in a timely manner (Ouma, 2017). Thirdly, Pfizer has invested in the Internet of things, which is essential to track demand changes without the involvement of other shareholders such as hospitals and drug stores (Doan, 2020). This information was previously unavailable in the old business model.
The Model System Used for the Change
Pfizer used the Bullock and Batten model to transform the organization. Their change was mainly in the machine to enhance research, production, sales, and after-sale services. This model involved four phases that Pfizer had to go through as they implemented the changes (Maes and Van Hootegem, 2019). The forces that led to the change were both external and internal. The external forces include, firstly, the competition from other similar companies, which was caused by the expiry of the drug patents making entry of generic drugs possible.
Secondly, the technology used had become obsolete; thus, newer technologies were needed for manufacturing to keep up with the growing demand. Thirdly, the market had changed whereby Pfizer needed new methods to access new markets. One of the internal forces that influenced the change is the new strategic direction to achieve Pfizer’s purpose of changing patients’ lives through science. The company had to make changes to produce drugs that are focused on patient satisfaction.
The first phase is the exploration phase, where Pfizer had to decide on the need for change. This was brought about by the decline in income from patented drugs such as Viagra. This decline was a result of the expiration of the patents. Pfizer was forced to seek other methods to sustain its growth and keep up with its competitors with this decline in income. The merger with Wyeth increased the company’s size, which brought management difficulties due to delays in communication. The cost of running a business increased due to employee wages, taxes, and other logistics such as rent. After identifying this shortcoming, Pfizer determined the resources required to enact the changes; these resources included a partnership with technology companies such as GEA and G-CON to automate their systems.
The second phase involves planning. Pfizer diagnosed the problems affecting its development and set reasonable goals and objectives to move the company. The set objectives included cutting costs, enhancing production processes, research, and sales. This meant that there would be a reduction of the workforce and increased use of machines in the production line. There would also be technology to pass information between the firm and its customers efficiently (Maes and Van Hootegem, 2019). The third phase is the action phase. With the support of the stakeholders, Pfizer laid-off workers and substituted them with machines.
In addition, Pfizer made their supply network the Highly Orchestrated Supply Network (HOSun). This network allows the company to check the progress of its items by linking the worldwide information distribution system with the worldwide physical supply infrastructure (Doan, 2020). The fourth phase is integration. Pfizer integrated the new technology in their old system, which improved it. The production of drugs was made efficient and flexible to suit customer needs. The systems also enable the company to fast track its product uptake worldwide (Shanley, 2017). This data is essential in planning for expansion and correcting sale patterns. This data can also be used to predict future patterns and thus making future adaptations of the firm easy.
Evaluation of the Appropriateness of the Management of Stakeholders
Pfizer’s stakeholders had to be involved in the change process. These stakeholders involved include the health professionals, public health organizations, regulatory authorities, patient advocacy groups, colleagues, and their biggest shareholder, The Vanguard Group, who passes all the decisions together with institutional investors. The shareholders’ desires are considered in the change plan to enable a smooth transformation. The other influential stakeholders are the regulatory authorities, which include the government and policymakers. These bodies influence the uptake of technology in a firm as they set the standards to be attained before a change takes place (Garrigós and Molina, 2020). The changes occurring in a firm should be in line with the government policies to be passed.
The public health organizations influence the uptake of new technology in Pfizer. This organization seeks to guard the public against exploitation by drug manufacturers. For Pfizer’s technology to be accepted by these organizations, it should be proven safe and maintain the highest standards. The technology must also prove that it does not affect the environment. Customers are also influential in the transformation as they aspire to be given the best services and their services to be customized to their expectations (LaVelle, 2020). Industry partners such as drug stores and hospitals are also involved in the decision-making. They provide Pfizer with sales information and change in patterns of drug use. They also monitor the effectiveness of the drug.
Business and technology analysts played part in the transformation. Their input influenced the methods to be used to conduct the changes. Business analysts provided their expertise in developing the model which will enable maximum profits and also advised Pfizer management on the best locations to start the change. Technology analysts provided inputs on the best equipment to use; their limitations and strengths. These analysts input was key in setting up the first system and in choosing the companies to partner with in enacting these changes.
Assessment of Available Options tor the Organization in Implementing the Project
One of the available options for change was to partner with other firms to streamline the transformation process. Pfizer chose GEA and G-CON manufacturing to make a Portable, Continuous, Miniature, and modular system (PCMM). These firms are well known to be world leaders in system automation. Pfizer’s other option was to develop its supply system, the Highly Orchestrated Supply Network (HOSun). With this system, Pfizer can track its sales and analyze the demand for its products.
Recommendations and Justification of the Appropriate Change Model
The changes made by Pfizer attract some resistance from the shareholders in the medical world. Shareholders such as regulatory authorities require enough information to allow the use of new technology. The technology must undergo various tests to ensure it meets the highest standards set by the authority. The processes involved for the technology to be certified time and funds, which causes the delay of the change (Arnestad, Selart, and Lines, 2019). The workers in Pfizer feel threatened by the machines introduced as they are taking up some of their duties.
Thus, the above could lead to employee layoffs; thus, the employee’s uptake of the technology is not easy and will need a strategy to enable the employees to work in harmony with the machine. One of the strategies that can be used is explaining to them carefully the reasons for change by showing them the potential of the new technology. Patient advocacy groups will resist the technology as they believe it infringes the patients’ rights (Arnestad, Selart, and Lines, 2019). They feel that Pfizer’s access to patient data is against the right to privacy. This may be countered by explaining the purpose of the information and giving them assurances that the data is kept safe.
Hospitals and pharmacy owners could feel that the changes of supply chain could interfere with their business activities. This is because the supply chain system would be collecting their sales data which is private and access to that data by their competitors would interfere with the business. Allowing Pfizer to collect their sales information would give them access to patient’s information which is not allowed by federal laws (Arnestad, Selart, and Lines, 2019). This fear will make these businesses to avoid cooperation with this plan. To solve these, Pfizer has to prove that their systems are safe and do not put their business into the risk of accusations to exposure of confidential data.
Conclusion
In conclusion, Pfizer’s transformation into technology has reduced business operation costs by integrating all the production process in one space. This has seen them increase their revenue. In recent times, Pfizer has made a breakthrough in producing a COVID-19 vaccine. This has earned the firm a huge publicity and revenue, making the company one of the world leaders. The use of technology to further business has also been witnessed in The Lego Group, toymaker, and the company is now known for its patented plastic interlocking brick toys.
Reference List
Arnestad, M., Selart, M. and Lines, R., 2019. The causal effects of referential vs ideological justification of change. Journal of Organizational Change Management, 32(4), pp.397-408.
Doan, T., 2020. Supply chain management drivers and competitive advantage in manufacturing industry. Uncertain Supply Chain Management, pp.473-480.
Garrigós, J. and Molina, M., 2020. Integrating Customers and Suppliers in Retail Co-innovation. Research-Technology Management, 63(3), pp.33-41.
LaVelle, J., 2020. Anticipating and Addressing Stakeholders’ Stereotypes of Evaluation. Canadian Journal of Program Evaluation, 35(2).
Lee, J., Lee, S. and Jung, K., 2020. Balanced SWOT: Revisiting SWOT analysis through failure management and success management. SSRN Electronic Journal.
Maes, G. and Van Hootegem, G., 2019. A systems model of organizational change. Journal of Organizational Change Management, 32(7), pp.725-738.
Pfizer, 2019. Enhancing Patient Care Through Digital Transformation. [online] Pfizer.com.
Ouma, C., 2017. Planning for organizational change and the role of leadership in implementing change. International Journal of Innovative Research and Development, 6(7).
Rathnayake, S., 2018. Strengths, weaknesses, opportunities and threats (SWOT) Analysis for farmer companies to re-emerge as social business models in Sri Lanka: A Case study in Ridebendiela Farmer Company. Asian Journal of Agricultural Extension, Economics & Sociology, 28(3), pp.1-6.
Shanley, A., 2017. PCMM, The Next Generation. [online] PharmTech.