Introduction
An organization’s strategic analysis is vital in marketing strategy planning and optimization. Strategic planning may help a company connect and realize its marketing goals with the broader vision. The case study involves a drug company, Pfizer, which aims to improve its revenue growth aligned with the company’s vision and goals. However, Pfizer is a worldwide pharmaceutical and biotechnology company that develops and manufactures vaccines and medications. It has faced various strategic issues such as financial crisis, strict regulatory measures, unsuccessful entry to foreign markets, and decreased annual revenue. Therefore, the paper provides appropriate recommendations to guide Pfizer to improve its revenue growth and offer quality products in the market.
Pfizer’s Identified Strategy
A strategy is a long-term plan developed to help a company attain the desired goals. A solid strategy must align with a company’s objectives, target market, and type of business. Pfizer, a drug manufacturing company, aims to increase its annual revenue by reducing the research and development budget increasing the costing price. Therefore, Pfizer’s strategies include growth, pricing, and innovative approaches. Hence, the company develops these strategies according to its objectives and goals to increase its revenue and market share.
Pfizer’s goal is to grow in the drug manufacturing and supply industry and meet the demands in the market. The company is serious with growth; hence, it has made merger and acquisitions strategy the central part. According to Harrison et al. (168), Pfizer’s annual revenue has decreased in the past five years to $6.96 billion affecting the investment. Pfizer’s aim to increase its revenue depended on the decision to merge with Allergan with the $160 billion deal (Harrison et al. 165. Hence, the merger and acquisition strategy helps company overcome competitors in the industry even with no inherent competitive advantage.
The innovation strategy is appropriate for a company to achieve product differentiation and increase its revenue. Pfizer has shifted its strategy from R&D to the reliance on strategic partnerships and mergers and acquisitions to develop blockbuster drugs. The innovative approach started with an approximately $50 million annual budget. The company aligns the innovation strategy with the investment goals and leads healthcare technologies (Harrison et al. 166). Finally, Pfizer focuses on pricing strategy to increase the revenue growth rate. The approach to this strategy is focused-cost differentiation, whereby the company increases the cost of existing drugs to increase sales profit.
Explication of the Strategic Issues Facing the Company
A strategic issue is a long-term challenge that a company needs to address or resolve to achieve growth and development. Currently, Pfizer’s revenue has constantly been decreasing, thus affecting the net income year. Pfizer’s balance sheet is relatively stable, but its total liability is higher and has low equity due to the short-term borrowing rate increase in the previous years. Additionally, Pfizer is limited in corporate inversion since it faces a competitive disadvantage from overseas rivals due to decreased tax bills; hence, it has failed to move its headquarters to foreign countries. Biosimilar developers have barriers to acquiring proper guidance, contributing to delays in product introductions and late returns on investments (Rahalkar et al. 236). The regulatory measures in many countries limit the improper labeling, poor manufacturing, and storage of drugs. Moreover, Pfizer still focuses on improving the older innovation strategy of producing blockbuster drugs, reducing its marketing chances. Therefore, industry experts believe in exploiting revolutionary medicines and that the era of blockbuster drugs is over.
Henceforth, Pfizer’s strategic issue is the entry into foreign markets. The company faced a lot of criticism following its attempt to venture into new foreign markets. The United States and Exchange Commission fined Pfizer for attempting to bribe foreign officials to secure regulatory approval extra prescriptions, several subsidiaries, and sales, hence, altering their marketing strategies. Another strategic problem facing Pfizer is its organizational culture, which is challenging and lacks diversity. The company’s place has broken since the employees and managers fail to identify drug approval problems. The FDA frequently ignored the need to review the submitted application because the drug application process was poor and could not meet the required standards (Lempert and Glantz 417). Finally, Pfizer has encountered a big challenge in its operation and supply chain system. Majorly, Pfizer complains that manufacturing pharmaceutical is complex and non-profitable, such as the production of Prevenar, which requires many participants, different raw materials, and quality text. Hence, the company prefers to have an international supply chain network with internal manufacturing facilities.
A Recommendation Plan for Dealing with Strategic Issues
A drug manufacturing company must focus on quality and drug availability to meet the demands in the market. The manufacturing, storage, and delivering processes require high costs and adequate knowledge. However, Pfizer has the opportunity to enter new and foreign markets to sell its products and increase the annual revenue. The company adopts a strategic business model involving innovation, which results in product differentiation. Therefore, the following recommendations will help Pfizer improve its operation, solve the identified problems and achieve revenue growth.
Understanding and adhering to the National and international regulatory measures
The drug manufacturing company must adhere to rules and regulatory guidelines to preserve medicines’ potency, quality, and purity. WHO and regulatory authorities aim to protect the well-being of patients; hence, Pfizer must produce and deliver safe and effective products (Sacks et al. 17). These guidelines follow the manufacturing, distributing, and storage processes. The company must ensure the drugs are safe for consumption and are stored under favorable conditions.
Pfizer should follow necessary lawsuits to enter foreign markets
For a long time, companies have used cross-border mergers and acquisitions to expand internationally. Firms evaluate the legislation of the target nation before determining whether or not to execute an acquisition plan. Foreign ownership in some countries is severely restricted and may hinder successful entry. Domestic or cross-border mergers can remedy over-capacity and increase efficiency by consolidating and rationalizing resources (Grøgaard, Rygh, and Benito 1311). Additionally, the company can focus on partnerships and strategic alliances to enter foreign markets. The strategy is affordable since partners share costs, thus reducing investments needed and possible risks.
The company needs to reduce its debts and increase the annual revenues
Pfizer should understand the source of revenue, variable and fixed costs to plan for its budget. Since the company experienced losses on returns while it focused on research and development strategy, the innovative business model will help Pfizer gain profits in the future. Therefore, having a budget can help the company adapt to setting aside operation costs (Setiany 66). Pfizer should increase its sales by producing common and high-demanded drugs, and raising the prices, thus paying its debts and making profits.
Conclusion
Pfizer’s innovative strategies focus on change implementation in the pricing and marketing sectors. The company is considering raising the price of its products following the increasing cost of healthcare in the United States. Pfizer’s future business model is to enter foreign markets and apply its effective marketing strategies. Since mergers and acquisitions are relevant to market entry strategies, the company should also focus on partnerships to reduce investment costs, regulations, and lawsuit risks. Hence, the appropriate aspect of achieving revenue growth is focusing on change to improve business operations successfully.
Works Cited
Grøgaard, Birgitte, Asmund Rygh, and Gabriel RG Benito. “Bringing Corporate Governance into Internalization Theory: State Ownership and Foreign Entry Strategies.” Journal of International Business Studies, vol. 50, no. 8, 2019, pp. 1310-1337.
Harrison, Jeffrey S., et al. “Pfizer.” (2017).
Lempert, Lauren Kass, and Stanton Glantz. “Analysis of FDA’s IQOS Marketing Authorization and Its Policy Impacts.” Tobacco Control, vol. 30, no. 4, 2021, pp. 413-421.
Rahalkar, Hasumati, et al. “Challenges Faced by the Biopharmaceutical Industry in the Development and Marketing Authorization of Biosimilar Medicines in BRICS-TM Countries: An Exploratory Study.” Pharmaceutical Medicine, vol. 35, no. 4, 2021, pp. 235-251.
Sacks, Chana A., et al. “Assessment of Variation in State Regulation of Generic Drug and Interchangeable Biologic Substitutions.” JAMA Internal Medicine, vol. 181, no. 1, 2021, pp. 16-22.
Setiany, Erna. “The Effect of Investment, Free Cash Flow, Earnings Management, and Interest Coverage Ratio on Financial Distress.” Journal of Social Science, vol. 2, no. 1, 2021, pp. 64-69.