15 Trang 5 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 strate
FOREIGN TRADE UNIVERSITY SCHOOL OF ECONOMICS AND INTERNATIONAL BUSINESS MID-TERM REPORT INTERNATIONAL BUSINESS STRATEGY OF PFIZER FROM 2014 TO PRESENT Instructor : Dr Nguyen Hong Hanh Group : 16 Credit Class : KDOE307(GD2-HK2-2223).1 Hanoi, June th 2023 MEMBERS CONTRIBUTION Full name Student ID Nguyễn Minh Châu 2113150011 Nguyễn Trung Kiên 2113150035 Nguyễn Anh Minh 2112550031 Đỗ Thị Minh Phúc 2113150056 Vũ Trần Khánh Trang (Leader) 2112150179 Nguyễn Hồng Vân 2113150073 Contribution TABLE OF CONTENTS INTRODUCTION I Overview of Pfizer History development Mission, vision, and core value 2.1 Pfizer’s mission 2.2 Pfizer’s vision 2.3 Pfizer’s core value .7 Current status on the global market & business industry II Analyze the international business strategy of Pfizer in the period of 2014- 2023 .8 Analyzing the value chain model of Pfizer .8 1.1 Primary activities 1.2 Supportive activities 12 Reasons for Pfizer adopting transnational strategy 14 2.1 Business characteristics - VRIO framework analysis .15 2.2 Environment characteristics and pressures 17 Pfizer’s response to cost reduction pressure and local responsiveness pressure 22 3.1 Response to high-cost reduction pressure .22 3.2 Response to high local responsiveness pressure .23 III Evaluate the international business strategy of Pfizer 24 Achievements 24 Factors contributing to the success 25 Challenges of Pfizer in the global market 25 Conclusion 27 Reference 28 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 (Source: Website of Pfizer) 10 Figure VRIO framework 15 Figure Top companies in the pharmaceutical sector according to their revenue in 2022 20 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 Document continues below Discover more from:doanh quốc tế Kinh KDO307 Trường Đại học Ngoại… 839 documents Go to course ÔN TẬP KINH Doanh 27 QUỐC TẾ 081548 Kinh doanh quốc tế 100% (8) QUAN HỆ KINH TẾ QUỐC 43 TẾ - QHKTQT Kinh doanh quốc tế 100% (7) Finalllll VĂN HOÁ - Văn 39 hoá Kinh doanh… Kinh doanh quốc tế 100% (7) Tiểu-luận-KTQT- đề tài 19 AFTA Kinh doanh quốc tế 100% (4) Van-hoa-kinh-doanh cau-hoi-trac-nghiem-… Kinh doanh quốc tế 100% (4) CHIẾN LƯỢC KINH Doanh Mission, vision, and core value 2.1 Pfizer’s mission 29 QUỐC TẾ CỦA TẬP ĐOÀ… Kinh doanh quốc tế 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, 100% (3) 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 cost-effectiveness 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 onesixth 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 Brand awareness Yes Yes No Yes Sustainable Competitive Advantage Talent to Manage Yes No Can be Regulatory and Yes Not critical factor imitated Legal Obligations Vision of the Yes No Yes Can Lead to Strong Leadership Competitive Advantage Intellectual Property Yes Yes Risk of Rights, Copyrights, imitation is and Trademarks low Distribution and Yes No Can be Logistics Costs Not yet utilized Advantage Yes imitated Medium to Long Term Competitive Competitiveness Alignment of Strong Competitive Advantage Yes No Each of the Activities with firm has its Corporate Strategy own strategy Yes Potential to build on The brief analysis using the VRIO framework shows that the sustainable competitive resources of Pfizer include: Track Record of Leadership Team, Track Record of Project Execution, Customer Community, Ability to Attract Talent in Local & Global Markets, Brand awareness, and Intellectual Property Rights, Copyrights, and Trademarks The company resources have a rather sustainable competitive advantage and as a result to a strong competitive position 2.2 Environment characteristics and pressures This report adopts a business analysis framework called Porter's Five Forces, which is frequently used to evaluate a company's corporate strategy as well as its industry structure, to explore the general development direction of the pharmaceutical industry The concept was first introduced in 1979 in a book by a Harvard Business School professor Michael E Porter It identifies and examines five competitive forces that influence every industry and aids in identifying a sector's advantages and disadvantages Through this analysis, Pfizer can deduce the pressure it has to face and choose the most suitable international business strategy 17 2.2.1 Cost- reduction pressure Moderate threat of substitute products In addition to expensive specialized medication and branded drugs that make huge profits for Pfizer, a large part of Pfizer's revenue also comes from other generic medications such as: Lipitor, a medication that lowers cholesterol, and other top-selling drugs for the treatment of cancer and HIV/AIDS These goods are up against intense competition from Pfizer's main rivals Direct competition with Lipitor from Pfizer, including Zetia, a cholesterollowering medication made by Merk & Co Cancer and HIV/AIDS medications from BristolMyers Squibb or Johnson & Johnson are both excellent replacements for comparable Pfizer products Although some drugs can be substituted, the demand for the products as a whole is robust and increasing, thus the overall force of alternative products for the pharmaceutical industry is moderate Additionally, several of the newest medications that generate the greatest profits for Pfizer are patent-protected and not have generic equivalents Alternative medicine might be the only other substitute option, but the customers who prefer it aren't typically those who buy modern pharmaceuticals So long as the company continues to develop new medications, there won't be much of a threat from replacements However, Pfizer still faces some pressure for cost reduction to ensure its price is not largely differentiated from its competitors in order not to be substituted Low potential of new entrants The pharmaceutical industry typically has substantial entry barriers in the form of expensive R&D costs, governmental regulations, and legal impediments Additionally, due to different reasons like purchasing power, sales teams, and advertising costs, smaller manufacturers find it challenging to compete with larger healthcare supply producers (Scribd, 2014) Some businesses have developed strong brand identities centered on quality and innovation, decreasing the possibility that hospitals will choose the product of a different business According to Wipperfurth et al (2010), access to early stage finance for start-up companies in the area is frequently challenging because the majority of businesses have strong technology protection through patents Therefore, the potential of new entrants is very 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 18 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 Hence with a market leader like Pfizer, it has faced intense competition from businesses like: Merck (Germany), Novartis (Switzerland), Johnson & Johnson (USA), Bristol Myers 19