Group assignment international entry modes of pfizer

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY Group assignment INTERNATIONAL ENTRY MODES OF PFIZER Class: International Business Administration CLC Module: International Business Hanoi, February 2023 INTRODUCTION I OVERVIEW: History Vision, mission, achievements a Pfizer Mission Statement b Pfizer Vision Statement c Pfizer’s achievements Organization chart Product lines 1 2 II INTERNATIONAL STRATEGY OF THE OVER YEARS/ MILESTONES The reason that Pfizer wants to internationalize the business: Pfizer’s international strategy 7 III INTERNATIONAL MODES OF ENTRY Direct export Foreign Direct Investment and Subsidiaries Merger & Acquisition Partnership & Joint Venture 10 10 10 12 14 IV CASE STUDY OF PFIZER’S ENTRY MODE IN CHINA Chinese pharmaceutical market Entry modes in China 15 15 15 V EMERGING ISSUES NOWADAYS FOR SELECTING INTERNATIONAL ENTRY MODES Strengths Weaknesses Opportunities Threats 16 16 18 19 20 REFERENCES 22 INTRODUCTION Pfizer Inc is an American multinational pharmaceutical and biotechnology corporation headquartered 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) I OVERVIEW: History German-American cousins Charles Pfizer and Charles Erhart began Pfizer in 1849 Brooklyn was Pfizer’s first home The company started as a manufacturer of fine chemicals It operated out of one building The stand-alone structure served as an office, laboratory, factory and warehouse As the company expanded, the headquarters moved to Manhattan in 1868 A separate warehouse opened in Chicago in 1882 In 1952, Pfizer moved into eight new international locations It also established its Agricultural Division, later known as Animal Health 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 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.” 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 broadspectrum antibiotic was introduced and quickly became a top seller In 1980, Feldene (piroxicam) became one of the largest-selling prescription antiinflammatory medications in the world and, ultimately, Pfizer’s first product to reach a total of a Billion US Dollars in sales 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 Document continues below Discover more from: Kinh doanh quốc tế KDQT1 Đại học Kinh tế Quốc dân 999+ documents Go to course Vợ nhặt - Đoạn trích Kinh doanh quốc tế 100% (61) Đề thi Kinh doanh quốc tế NEU Kinh doanh quốc tế 100% (11) Quan điểm toàn diện - nothing Kinh doanh quốc tế 100% (9) 22856309 cấu tổ chức cty đa quốc gia Nestle 25 Kinh doanh quốc tế 100% (9) Cơ cấu tổ chức chiến lược kinh doanh quốc tế Grab 52 54 Kinh doanh quốc tế 100% (8) Chiến lược cấu tổ chức kinh doanh quốc tế Apple Kinh doanh quốc tế 100% (8) 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 => 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 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 10 III INTERNATIONAL MODES OF ENTRY 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." 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 11 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 countries 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 12 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 have prescription drug sales of $31 billion next year, and it projects growth of 25 percent a 13 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 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 14 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 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 or 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 15 IV CASE STUDY OF PFIZER’S ENTRY MODE IN CHINA Chinese pharmaceutical market The Chinese pharmaceutical industry is one of the earliest industries in China that were opened up to foreign investors Nationwide expenditure on pharmaceuticals in China increased from 35 billion Yuan (equivalent to 4.2 billion U.S dollars) at the end of the 1980s to 125 billion Yuan (15 billion US dollars) in 2002 Attracted by the remarkable market growth rate and the huge potential market capacity based on China’s population base, most of the top-ranked multinational corporations in the world pharmaceutical industry set up subsidiaries in China The first wave of multinational corporations’ entries occurred in the early 1980s Foreign invested joint ventures established in that period included Tianjin Otsuka, Xi’an Jansen, Tianjin SmithKline Beecham, Shanghai Bristol Myers Squibb (BMS), Wuxi Pharmacia and Beijing Ciba-Geigy These first-movers enjoyed hefty profits and achieved more than 40% annual sales growth rate This led to the second wave of entries by industrial giants such as Pfizer, Merck, and Glaxo in the earlier 1990s Entry modes in China Pfizer operates in China mainly through Pfizer Pharmaceuticals Ltd, a joint venture ( established with Dalian Pharmaceutical Plant in the Liaoning province of North-eastern China in 1993): 16 ● Initial investment was 58 million US dollars ● Pfizer holds 67% share of the ownership (Economist Intelligence Unit, 1997) The joint venture became fully operational in 1993 In April 1997, it became the first pharmaceutical company in China that received the Good Manufacturing Practice (GMP) certificate granted by the State Pharmaceutical Administration of China (SPAC) The joint venture produces drugs that are sold mainly in the Chinese market, with some exported via Pfizer’s corporate-wide coordination of global production To improve customer services and business coordination, in1997, Pfizer re-located its regional headquarter in Beijing It also set up sales offices throughout China and undertook R&D activities in China as well The R&D activities were largely limited to the clinical tests in new drug development By 2000, Pfizer hired approximately 750 employees in China, and its sales revenues were 52.6 million US dollars Its revenues in China also grew rapidly, increasing from 8.1 million US dollars in 1993 to 55.9 million US dollars in 2001 The average annual growth rate for Pfizer Pharmaceuticals Ltd (China) during the period was 27.3% V EMERGING ISSUES NOWADAYS FOR SELECTING INTERNATIONAL ENTRY MODES Strengths a Response To Pandemic Pfizer had a remarkable and quick response to the development of the vaccine for COVID-19, and then its mass production and distribution across the globe Many experts and analysts in the pharmaceutical industry are saying that Pfizer’s vaccine got approval much quicker than any other brand in the history of vaccines 17 b Recognized Brand Pfizer is a well-established brand name and people recognize it from across the globe It’s because the medicine brand has produced some of the most famous products over the years Nexium24HR, EpiPen, Xanax, Viagra, and Advil are some of the tops c Background Pfizer has been in the pharmaceutical industry for more than 170 years since 1849 It has evolved and transformed from a small shop to a multinational corporation It was two entrepreneurs who laid the foundation of the medical business Pfizer also offers a diverse product portfolio that includes numerous best-selling medications d Research & Development Research and development is the key area in the pharmaceutical industry According to an estimate, Pfizer has an annual R&D budget of over Billion US dollars It’s the world’s highest expense in the medical industry It’s because the brand is developing medicines and vaccines in various fields like neurology, cardiology, oncology, and immunology e Market Leading Position According to Pfizer's latest financial reports, the company's current revenue (TTM) is $99.67 Billion As of February 2023, Pfizer has a market cap of $246.31 Billion This makes Pfizer the world's 36th most valuable company by market cap according to the most recent available data f Brand Value According to Brand Finance Healthcare 2022, Pfizer went from 7th in 2021 to 3rd in 2022 in the rankings, with a brand value of $6.3 Billion Also, Pfizer is one of the businesses in the Fortune 500 It falls under the category of the world’s largest pharmaceutical company 18 Weaknesses a Poor Demand Forecasting & Marketing Strategy Poor Demand forecasting results in more lost opportunities than rivals Pfizer’s inability to estimate demand leads to greater inventory levels both internally and outside In addition, product promotion of Pfizer is seriously lacking Its positioning and unique selling proposition are not well defined, leading to competitive threats in this area Pfizer forecast a sharp fall in annual sales in 2023 due to the easing of the pandemic and reduced contributions from its COVID-19 vaccine and antiviral medicine b Failure In Mergers & Acquisitions Even though there were some successes in merging the company with some good names, it still wasn’t enough There are failures on the company’s part to collaborate with other companies to consider the previous mergers a complete success For instance: ❖ In 2014, Pfizer attempted a merger with rival AstraZeneca, which faced fierce opposition from lawmakers on either side In the end, Pfizer walked away from the $118 billion deal after rejection by AstraZeneca’s board ❖ In 2016, Pfizer entered into an agreement to merge with Allergan However, this company abandoned a $160 billion deal after the Obama administration introduced rules that would make the deal much less attractive 19 Opportunities a Mergers & Acquisitions With upcoming mergers and acquisitions, Pfizer is getting the opportunity to reach more people and business on a global level For instance: The company has recently merged its Upjohn department with Mylan MV b Emerging Markets Innovating consumer behaviors may open up new markets It enables new revenue streams and product categories The market evolution will reduce competitors’ advantages enabling Pfizer to sustain itself The company has recently invested considerably in online platforms This investment gave Pfizer a new sales channel 20 c Increasing Demand For Healthcare People are getting more health conscious with time, and the number of epidemics, pandemics, and other diseases has increased by a lot as well So, Pfizer, one of the leading Pharma companies in the world, has a massive customer base worldwide d Vaccine manufacturing for COVID The pandemic gave Pfizer a fair opportunity to manufacture a new vaccine, which had a good run and increased its brand name in the global market For instance: Following the outbreak of COVID-19, Pfizer formed a partnership with BioNTech in April 2020 to produce a vaccine against the virus The vaccine, BNT162b2, developed by the two businesses, was granted the world’s first temporary authorization in the United Kingdom in December 2020 The Food and Drug Administration (FDA) approved the license for the vaccine’s distribution in the United States a week later Threats a High Demand Pfizer is facing severe mass production and mass distribution of the vaccine since it has a great demand in the market Many countries are facing shortages in vaccines and their accessibility As of November 2021, it is estimated that 7.3 billion doses of the Covid-19 vaccine have been 21 used worldwide, but the proportion of the world population that has used at least one dose is only 52% This vaccine shortage is concentrated mainly in underdeveloped and developing countries, including Vietnam b Intense Competition Even if Pfizer is one of the top companies in the world, it still cannot be denied that the competition Pfizer faces is anything less than any other Pharma company For example: ❖ Merck: The cholesterol-lowering drug branded Zetia, which is Merck’s 2nd largest revenue generator, is a direct competitor to Pfizer’s drug Lipitor Zetia is selling at a rate of nearly $3 billion a year whereas Lipitor is generating $1.86 billion ❖ Novartis: Novartis AG is the pharmaceutical industry's world leader in sales, generating $50.4 billion in 2015 revenues Novartis has several oncology products in the pipeline that will directly compete with Pfizer pharmaceuticals c Failure Of New Products Pfizer has been facing some issues when it comes to the manufacturing of new products, leading to a threat to its business's future For example: Pfizer’s failed pill - Torcetrapib, was designed to prevent heart attacks and strokes by raising the "good cholesterol," HDL On December 2006, Pfizer was faced with a devastating finding: the biggest prospect in their near-term pipeline — the lipid-modulating agent Torcetrapib — had raised the risk of death and heart problems in the pivotal ILLUMINATE trial The company promptly halted the development of its cholesteryl ester transfer protein (CETP) inhibitor, into which it had already invested US$800 million, and watched its share price plummet 22 REFERENCES https://www.drugwatch.com/manufacturers/pfizer/? fbclid=IwAR0oUjuvE5ZLFd4zD_FJhDUaKqR69m hYzyKtnTIm2uskYb1C-6bCkGRQ https://www.pfizer.com/about/history https://ecampusontario.pressbooks.pub/globalmarketing/chapter/6-1international-entry-modes/?fbclid=IwAR0C2DbTPE_1SOFMC6JliLYSRRD5VS3w37PlmdpCOq7DPurbnM9DWLaU6g https://www.statista.com/statistics/990683/zoetis-global-revenue-byproduct/ https://www.superheuristics.com/5-modes-of-entry-into-internationalmarkets/ https://www.pfizer.com/sites/default/files/investors/financial_reports/annual _reports/2015/assets/pdfs/pfi2015ar-section-our-business.pdf https://www.washingtonpost.com/archive/business/2000/02/08/pfizer-tobuy-warner-lambert-ending-takeover-battle/a7b0d68f-d9bc-40cb-9e92385c1d7d5fe6/ https://www.nytimes.com/2000/02/08/business/pfizer-gets-its-deal-to-buywarner-lambert-for-90.2-billion.html https://www.wsj.com/articles/SB1026684057282753560 10 https://www.pharmaceutical-technology.com/news/newspfizer-completes17bn-acquisition-of-hospira-4663440/ 11 https://www.pfizer.com/news/press-release/press-release-detail/pfizercompletes-acquisition-hospira 12 https://www.hmpgloballearningnetwork.com/site/frmc/articles/pfizer-gskenter-joint-venture-creating-global-health-care-business 13 https://www.gsk.com/en-gb/investors/corporate-actions/consumerhealthcare-joint-venture/ 14 https://swotandpestleanalysis.com/swot-analysis-of-covid-19/ 15 https://www.ft.com/content/a4678b48-850e-4275-bf47-02d78c8756dc 23 16 https://companiesmarketcap.com/pfizer/marketcap/ 17 https://brandirectory.com/rankings/pharma/table 18 https://www.ft.com/content/a4678b48-850e-4275-bf47-02d78c8756dc 19 https://www.reuters.com/article/us-astrazeneca-pfizeridUSBREA3R0H520140526 20 https://www.theguardian.com/business/2016/apr/05/pfizer-allergan-mergertax-avoidance-rules 21 https://www.forbes.com/2006/12/03/pfizer-heartdisease-drug-bizcx_mh_1204torcetrapib.html?sh=458b85a46f38 24