The global pharmaceutical industry is widely known to be a highly competitive and dynamic sector that requires companies to constantly adapt and evolve their business strategies with a view to prolonging their market position and sustaining growth. This report explores the international business strategy of Pfizer, one of the worlds leading pharmaceutical firms, over the period from 2014 to the present. Pfizer, founded in 1849, has established itself as a prominent player in the global healthcare market. Over the years, the company has strategically expanded its operations across borders, leveraging its strong research and development capabilities, innovative product portfolio, and robust marketing strategies to gain a competitive edge in various international markets. The period from 2014 to the present has been a transformative one for Pfizer, marked by significant strategic initiatives and adaptations in response to evolving market dynamics, regulatory changes, and emerging healthcare challenges. This report aims to analyze and assess the key elements of Pfizers international business strategy during this period, highlighting the companys efforts to penetrate new markets, enhance global partnerships, and drive innovation. By delving into some key aspects, this report will provide valuable insights into Pfizers international business strategy and shed light on the companys strategic decisions, achievements, and challenges faced during the period from 2014 to the present. Such an analysis will enable a comprehensive understanding of Pfizers global expansion efforts and its positioning within the highly competitive pharmaceutical industry.
FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS INTERNATIONAL BUSINESS REPORT INTERNATIONAL BUSINESS STRATEGY OF PFIZER FROM 2014 TO PRESENT Instructor : Dr Nguyen Hong Hanh Group : Credit Class : KDOE307 Hanoi, June 2023 TABLE OF CONTENTS INTRODUCTION I Overview of Pfizer History development 2 Mission, vision, and core value 2.1 Pfizer’s mission 2.2 Pfizer’s vision 2.3 Pfizer’s core value 3 II Current status on the global market & business industry .3 Analyze the international business strategy of Pfizer in the period of 2014- 2023 .4 Analyzing the value chain model of Pfizer 1.1 Primary activities 1.2 Supportive activities .8 Reasons for Pfizer adopting transnational strategy .11 2.1 Business characteristics - VRIO framework analysis 11 2.2 Environment characteristics and pressures 13 Pfizer’s response to cost reduction pressure and local responsiveness pressure 18 3.1 Response to high-cost reduction pressure 18 3.2 Response to high local responsiveness pressure 19 III Evaluate the international business strategy of Pfizer 20 Achievements 20 Factors contributing to the success 21 Challenges of Pfizer in the global market 21 CONCLUSION .22 REFERENCE 23 LIST OF FIGURES Figure Timeline for the development of the COVID-19 mRNA vaccine Figure Pfizer’s value chain model Figure Pfizer’s Global PGS Map Figure VRIO framework .11 Figure 5: VRIO analysis of Pfizer 13 Figure Leading companies based on their revenue in 2022 16 INTRODUCTION The global pharmaceutical industry is widely known to be a highly competitive and dynamic sector that requires companies to constantly adapt and evolve their business strategies with a view to prolonging their market position and sustaining growth This report explores the international business strategy of Pfizer, one of the world's leading pharmaceutical firms, over the period from 2014 to the present Pfizer, founded in 1849, has established itself as a prominent player in the global healthcare market Over the years, the company has strategically expanded its operations across borders, leveraging its strong research and development capabilities, innovative product portfolio, and robust marketing strategies to gain a competitive edge in various international markets The period from 2014 to the present has been a transformative one for Pfizer, marked by significant strategic initiatives and adaptations in response to evolving market dynamics, regulatory changes, and emerging healthcare challenges This report aims to analyze and assess the key elements of Pfizer's international business strategy during this period, highlighting the company's efforts to penetrate new markets, enhance global partnerships, and drive innovation By delving into some key aspects, this report will provide valuable insights into Pfizer's international business strategy and shed light on the company's strategic decisions, achievements, and challenges faced during the period from 2014 to the present Such an analysis will enable a comprehensive understanding of Pfizer's global expansion efforts and its positioning within the highly competitive pharmaceutical industry I Overview of Pfizer History development In 1849, Pfizer was firstly found by Charles Pfizer and his cousin, Charles Erhart The business then set up to be Charles Pfizer and Company in Brooklyn, New York The Civil War (1861-1865) was a prime time of significant development for Pfizer It is noted that there were different medical supplies in high demand, therefore Pfizer was able to provide the front lines with preservatives, disinfectants, iodine, chloroform, and morphine In 1919, Pfizer invented a method for generating citric acid in large quantities, ending the dependency on imports from Europe In 1944, Pfizer produced penicillin massively and became the world’s largest producer In 1952, the company established into greater scales as it extended into the field of animal health by acquiring the J.B.Roerig nutritional company and setting up a specialized research farm in Terre Haute, Indiana In 2018, Pfizer and BioNTech committed to a contract to start thoroughly working into mRNA-based influenza vaccines In December 2020, the company became the first to receive an emergency use authorization from the FDA for a COVID-19 vaccine As April 2021, Pfizer and BioNTech had manufactured 316.5 million vaccine doses, which have been approved in 70 countries and territories Since December 2020, nearly 4.6 billion Pfizer-BioNTech COVID-19 vaccines have been shipped to 181 countries, of which more than 1.8 billion have gone to low- and middleincome countries (Dangers, n.d) Figure Timeline for the development of the COVID-19 mRNA vaccine Source: Elsevier Mission, vision, and core value 2.1 Pfizer’s mission Pfizer’s mission is to “become the world's most valued company to patients, customers, colleagues, investors, business partners, and communities.” 2.2 Pfizer’s vision With the vision “Breakthroughs that change patients' lives”, Pfizer aims at innovation for product betterment and remaining competitive to make the world a healthier place First, Pfizer has always emphasized product innovation, which is reflected in its mission and vision statements The top pharmaceutical corporation concentrates on producing top-notch medical products and medicines Second, by working toward making the world a healthier place, the business demonstrates its dedication to creating and offering goods that directly enhance the health of the patient Pfizer states in its vision statement that improving patients' lives through product development is its top priority 2.3 Pfizer’s core value Pfizer culture is driven by four core values: courage, excellence, equity, and joy (Pfizer, n.d) Courage: Breakthroughs start by challenging convention, especially in the face of uncertainty or adversity They achieve this when they think broadly, speak up, and take action Excellence: They can only change patients’ lives when they perform at their best together This occurs when people pay attention to what important, decide who does what, and track their results Equity: They believe that every person deserves to be seen, heard, and cared for When they are inclusive, behave honourably, and lessen healthcare inequities, this occurs Joy: Although they give themselves to their work, they also receive from it When they take pride, acknowledge one another, they are happy Current status on the global market & business industry Pfizer Inc (Pfizer) discovers, develops, manufactures, and commercializes biopharmaceuticals Their products cure a range of ailments, including cancer, inflammation, rare diseases, metabolic, cardiovascular, metabolic, and pain disorders, as well as women's health issues Additionally, it offers contract manufacturing services, sterile injectable drugs, biosimilars, active pharmaceutical ingredients (APIs), and medicines Pfizer distributes its goods through distributors, merchants, pharmacies, hospitals, private physician offices, clinics, and public institutions Their primary manufacturing facilities are in India, China, Japan, Ireland, Italy, Belgium, Germany, Singapore, and the US (GlobalData, 2023) Due to its COVID-19 vaccine, Pfizer has been in the spotlight since 2020 The first COVID-19 vaccination was developed by Pfizer and was broadly endorsed by national health authorities Pfizer is currently the top pharmaceutical firm in the world based on pharma sales revenue as a result of its enormous sales during the epidemic In 2022, the New York Citybased business's overall income reached a new high of over 100 billion dollars, with about 42% of that coming from the US With a market valuation of more than 240 billion USD as of 2022, Pfizer was one of the top five most valuable pharmaceutical and biotechnology firms II Analyze the international business strategy of Pfizer in the period of 2014- 2023 Analyzing the value chain model of Pfizer Figure Pfizer’s value chain model Source: B2U 1.1 Primary activities 1.1.1 Inbound logistics Inbound logistics is associated with such activities as: receiving raw materials, storing them, and managing inventory As a leading global biopharmaceutical company, Pfizer owns a vast supply network that stretches throughout the world and offers capacity and redundancy as needed with more than 300 suppliers worldwide Hence, Pfizer's raw material supplies are always very stable, abundant, and decentralized from various nations Although Pfizer’s inbound logistics in different countries have some changes to adapt to the laws and regulations of those nations, like regulations on material imports, inventory management, etc , Pfizer still sets a global standardized process and requirements for inbound logistics activities to ensure the raw materials quality, timeliness, and costeffectiveness Pfizer always upholds very high standards, requirements, and environmental protection with all of its supply partners to guarantee a reliable supply, hence, Pfizer is extremely careful when choosing suppliers, negotiating contracts, and monitoring supplier performance Once arrived at Pfizer's facilities, raw materials have to undergo strict quality control to verify their quality, and quantity, as well as guarantee that they meet the necessary standards and adhere to regulatory requirements Additionally, Pfizer also implements a special security program that covers every step of production and delivery, including inbound logistics in every nation In 2020, the breaking out of the COVID-19 pandemic disrupted Pfizer's global supply chain, while the demand for vaccines was increasing, Pfizer decided to develop its own raw materials to keep a stable vaccine supply for the epidemic season Not only does this shorten vaccine production time, but it also saves a part of the production costs, making the cost of vaccines affordable for everyone, including poor and underprivileged countries 1.1.2 Operations The processes used in operations include those for converting raw materials into finished goods before launching them into the market, like: formulation development, production planning, packaging, quality control, and compliance with Good Manufacturing Practices (GMP) Seamless operations With over 35 manufacturing sites equipped with state-of-the-art facilities spanning four continents, Pfizer assists in the yearly distribution of more than 50 billion doses of medications and vaccines to more than 181 nations, reaching over 1.3 billion patients, accounting for one-sixth of the people on earth Additionally, by leveraging the global supply chain with mass production, Pfizer can not only gain the benefits of economies of scale, which contribute dramatically to cost reduction, but also enhance the speed of manufacturing, leading to an increase in medicine supply around the world These also make up the competitive advantage of Pfizer in the pharmaceutical industry The manufacturing of Pfizer has been decentralized to some extent as Pfizer wants to utilize benefits from such low labor costs and rich-labor countries as China, India, and Indonesia; nevertheless, the majority of operation was centralized in the USA and Europe where most of Pfizer’s manufacturing sites are located Figure Pfizer’s Global PGS Map Source: Website of Pfizer Quality control As a long-established and leading company in the biopharmaceutical industry, Pfizer has applied extremely stringent product quality control to ensure that it is always providing customers with safe, effective products that meet regulatory requirements and other relevant standards and guidelines This is not only for the headquarter but applied consistently and synchronously in global manufacturing sites Accordingly, Pfizer formed a Quality Management System (QMS) to regulate and supervise all manufacturing processes to ensure the safety, quality, and efficacy of products 1.1.3 Outbound logistics Outbound logistics refers to the procedures and activities involved in distributing and managing final products from a business's premises to its consumers With a more than 170year history of development, Pfizer has established a vast distribution network that supplies more than 50 billion doses every year to more than 185 countries with 11 distribution centers and numerous distributors on multiple continents to reduce the risk of interruptions in the supply of vital medications and meet global demand Pfizer combines both centralized and decentralized distribution models in its outbound logistics activities to achieve the highest effectiveness and efficiency Besides focusing on delivering to 11 distribution centers - centralized distribution, Pfizer also distributes its products through various local distribution networks, including local wholesalers, local distributors, local pharmacies, local hospitals, and local healthcare facilities to meet the huge local needs in the fastest way As a result of the Covid pandemic's complicated development, Pfizer's distribution system has become more centralized, with the primary distribution channel being through 11 distribution centers and governments However, this does not imply that Pfizer doesn't use any decentralized distribution channels Instead of directly delivering to local distributors as before, Pfizer has participated in a multilateral distribution mechanism such as COVAX and international health organizations and coalitions like WHO, which are other forms of decentralized distribution This versatile combination of two delivery routes enables Pfizer to deliver vaccines in the fastest, safest, and most effective way possible With that remarkable and effective distribution process, Pfizer has successfully distributed millions of doses of its high-quality COVID-19 vaccines to over 165 countries, which makes Pfizer’s reputation spread all around the world and reach the peak point of Pfizer's business success 1.1.4 Marketing and sales Local marketing Pfizer's localization approach entails adapting marketing efforts to specific regions and nations while taking into account the particulars of each target market Pfizer customizes its products, messages, and services to suit the various requirements and cultural preferences of the local population Pfizer's localization strategy enables the business to strengthen its global client relationships and expand its market footprint Product strategy Pfizer's product strategy is centered on creating and offering high-quality and innovative pharmaceutical goods that guarantee compliance with safety and efficacy regulations as well as satisfy a variety of consumer needs from many different countries They have a diverse product portfolio, including disease treatments, vaccines, healthcare supplies, and personal care items Pfizer makes significant investments in R&D to release cutting-edge solutions that offer clients value in healthcare Additionally, Pfizer drugs are localized in terms of their designs, packaging, and usage instructions to fit each country's culture, language, customer preferences, medical standards, and safety standards Through this strategy, Pfizer has established a name for itself and won customers' trust in various markets in the pharmaceutical industry low because new companies have limited resources, so it is difficult to have a competitive advantage with other large long-standing pharmaceutical companies New companies that want to survive in this field must either find a niche market to develop or compete with other large companies To fend off these potential competitors, Pfizer must constantly raise entrance barriers As a result, Pfizer has faced significant pressure from utilizing available advantages such as the cost of raw materials, technology, labor, and economies of scale to reduce production costs and improve efficiency This makes it more difficult for new businesses to enter the market High bargaining power of suppliers In the pharmaceutical industry, where raw materials are frequently relatively scarce, suppliers have a lot of negotiating power With the strict requirements for quality control, there are not many vendors on the market, which provides the suppliers significant leverage over Pfizer Since there aren't many companies that provide the machinery needed for manufacturing processes, these companies will also have a lot of negotiating leverage Inversely correlated with supplier base concentration is suppliers' bargaining strength Due to their strategic importance to the operations of the buyer, suppliers who have a concentrated or small supplier base often have more influence over buyers A fragmented supplier base, on the other hand, gives customers more power by giving them more options for where to buy goods and services Pfizer operates in a sector with a tightly knit supplier base that is dominated by a select group of significant vendors This concentration of suppliers could give them additional negotiating leverage Due to the high bargaining power of suppliers over Pfizer, it has been under considerable pressure to reduce production costs and manage the suppliers power to maintain competitive advantage and long-term profitability High competition in the industry As a vital and incredibly important segment of every person's life, the pharmaceutical industry is crowded with businesses vying for the same market According to Wipperfurth et al (2010), due to the reduction in switching costs for hospitals; changes related to reimbursement; regulatory; and biologic issues, the current competition is highly fierce The diminishing venture capital investment may also be evidence of intense rivalry in this industry Despite the fierce rivalry, this industry is expected to expand With $340 billion in annual sales, the United States leads the world pharmaceutical business by more than a third, followed by the European Union and Japan China, Russia, South Korea, Mexico, and other emerging markets outgrew that market, rising by a staggering 81 percent