Pfizer Report
This report has focused on the global pharmaceutical industry, taking Pfizer as the subject of analysis. From the report, it has been revealed that global pharmaceutical industry has witnessed a substantial growth over the last couple of years, which has largely been fuelled by increased globalisation. Taking this into consideration, this report has established that firms in the industry have adopted a wide range of strategies for the purpose of remaining relevant to the industry. As such, strategic alliances and mergers and acquisitions have been found to be among the most effective strategies that have been adopted by most firms in the industry. Among the two strategies, this report has found that Pfizer needs to adopt mergers and acquisition strategy owing to the fact that it will give the company economies of scale. As a result, the company will be in a position of investing more in research and development. Moreover, this report has found that Pfizer has enhanced its cooperate governance, business ethics, and CSR over the last few years. These have played an imperative role in giving the company competitive advantage in the industry.
Table of Contents
2.0 Firm competitiveness in the global pharmaceutical industry. 1
2.1 Merits and demerits of adopting the global convergence perspective. 1
2.2 Merits and demerits of adopting the international diversity perspective. 2
2.3 Recommended perspective that GlaxoSmithKline’s top management should adopt 3
3.0 Strategic alliances, M&A’s and Pfizer’s R&D Strategies. 4
3.1 Merits and demerits of strategic alliances, M&A’s. 4
3.2 Merits and demerits of mergers and acquisitions. 5
3.3 Best approach would enable Pfizer achieve their long-term R&D objectives. 5
4.3 Corporate social responsibility. 8
5.0 Personal reflections on learning. 9
1.0 Introduction
The global pharmaceutical industry has over the last few years witnessed a significant growth. Although the industry has been dominated largely by America and European markers, the last couple of years have seen other regions including China and India growing rapidly (Khanna, 2012). This has been fuelled hugely by potential capital opportunities as well as expanding demand for various pharmaceutical products. Pfizer Inc is regarded as one of the largest pharmaceutical companies in the world. The company, which is headquartered in New York City develops and produces a wide range of medicines and vaccines for various medical disciplines (Pfizer, 2017). Taking this into account, this report is dedicated to analyse Pfizer. The first section analyses firm competitiveness in the global pharmaceutical industry. The second section analyses Strategic alliances, M&As and Pfizer’s R&D Strategies. The third section focuses on Pfizer’s strategic management and leadership for corporate governance, business ethics, and corporate social responsibility. The fourth and last section presents reflection of what I have learnt through this assessment.
2.0 Firm competitiveness in the global pharmaceutical industry
Firms in the global pharmaceutical industry may either consider adopting global convergence perspective or international diversity perspective. Each of these approaches has merits as well as demerits. Therefore, as elucidated by Kose, et al. (2012), there is a substantial need for firms in the industry to consider merits and demerits before deciding on the approach to take into consideration.
2.1 Merits and demerits of adopting the global convergence perspective
According to Gentry and Sparks (2012), the global convergence perspective takes into account the process of homogenisation in regards to various dimensions such as policies, culture, as well as economy across different counties. This is mostly due to internationalisation as well as globalisation. In this light, taking the global pharmaceutical industry into consideration, Roemer-Mahler (2013) has explained that convergence has been witnessed, where the firms in the industry has become more focused on pure as well as research-based pharmaceutical products due to globalisation. With the global convergence strategy, it implies that a company provides the same product to different countries. For instance, GlaxoSmithKline sells Lovaza in various countries across the world including China, USA, German, and Australia (Khanna, 2012). The primary merit of global convergence perspectives is that it helps hugely in managing the healthcare sector owing to the standardised management across all countries. With easier management, Kose, et al. (2012) explain that coordination of activities is enhanced, thus improving the overall health care and pharmaceutical sectors. The use of global convergence perspective has also enhanced competition among firms in the industry, which has made it possible for firms to enhance their quality in a bid to remain competitive. Additionally, as noted by Roemer-Mahler (2013), global convergence perspective helps in marinating consistency when it comes to manufacture and sale of drugs across the world, which in turn plays an imperative role in ensuring consistency in health care. However, one of the major demerits of the global convergence perspective is increased employee conflicts due to difference in cultures. On this, with the convergence perspective, it implies that employees spans from various countries which may result to substantial conflicts.
2.2 Merits and demerits of adopting the international diversity perspective
As explained by Kose, et al. (2012) the international diversity perspective takes into account the tendency of groups to become less like other groups over time. In this view, when it comes to the global pharmaceutical industry, international diversity perspective typically stresses local responsiveness or adaptation, autonomy, decentralization. One of the main merits that come with international diversity perspective is that there is differentiation of drug, which gives firms in the industry competitive edges in the industry. This mostly attributed to increased creativity that comes with this perspective. Therefore, firms in the industry can leverage on their brand, which can result to increased sales as well as profit margins. With international diversity perspective, a firm offers different products for different markets. For instance, for the case of Pfizer, the company has offers Nexium 24HR in US and Nexium Control in Italy (Pfizer, 2017). Both of these drugs are used in the treatment of heartburn and stomach acid. These products have given a competitive edge in the global pharmaceutical industry. Additionally, with international diversity perspective it means that consumers can have a wide range of products to choose from. Nonetheless, international diversity perspective has its own demerits. Precisely, there is no consistency in manufacture and sale of drugs, which effect health systems adversely (Gentry & Sparks, 2012).
2.3 Recommended perspective that GlaxoSmithKline’s top management should adopt
From the above analysis, it can be argued that GlaxoSmithKline’s top management should adopt need to adopt international diversity perspective for the purpose of achieving its key performance indicators including sales revenue as well as profit margins. In this view, through adopting, international diversity perspective, GlaxoSmithKline will be in a position of manufacturing pharmaceutical products that are unique to the creativity as well as innovativeness that comes with this perspective. Through this, the company will have a competitive edge in the global pharmaceutical industry. Moreover, in view of Roemer-Mahler (2013), through the use of the international diversity perspective, it will hard for other firms of in the industry to counterfeit the product as well as production process of GlaxoSmithKline, further giving the company an edge in the industry. As such, GlaxoSmithKline will be able to continue growing in the industry due to increased sales as well as profit margins.
3.0 Strategic alliances and M&A’s
3.1 Merits and demerits of strategic alliances
According to Albers et al. (2013) strategic alliance takes into account an agreement between two or more firms for the purpose of pursuing mutual benefits. In this consideration, in strategic alliance, firms come together and set agreed objectives that would benefit the involved firms. As explained by Cartwright and Cooper (2012), strategic partners typically maintain their status as well as separate entities, share the control and benefits over the partnership. Besides, they continue making agreed contributions until the strategic alliance is terminated. In most situations, Galpin (2014) has argued that strategic alliances are formed in the global market place between organisations that are based in different countries across the world. There are various merits and demerits that come with strategic alliances. When it comes to merits, one of the main ones is that its helps involved organisations in learning necessary skills as well as obtaining certain capabilities. This as a result plays a vital role in enhancing productive capacity, effectiveness, and efficient. Consequently, the involved organisations are able to achieve a competitive edge in the industry. For instance, in 2012, Pfizer formed a strategic alliance with Humedica for the aim of advancing capabilities in order to derive insights from real world data. Given the fact that Humedica is clinical intelligence company, the strategic alliance helped in bringing together clinical informatics and life sciences expertise for the aim of understanding the needs of the patients (Khanna, 2012). Another merit of strategic alliance is that it considerably reduces costs as well as risks through distributing them across members of the alliance. For instance, through forming a strategic alliance with CliniWorks in 2011, Pfizer was able to reduce the costs of developing a Population Health Management Platform (Pandya, 2012). This is because both the firms shared the costs of developing this system, implying it would have been more expensive if Pfizer could have considered developing it alone.
However, strategic alliances have been seen to have potential for conflicts as result of various factors including differences in leadership styles, language and cultural barriers, as well as lack of trust. For instance, the strategic alliance between Pfizer and the German Merck in 2014 could have resulted in conflicts due to cultural and language differences between the US and Germany. Additionally, strategic alliances are typically affected by exchange rates, which may have detrimental impacts on firm’s profit margins.
3.2 Merits and demerits of mergers and acquisitions
According to Bena and Li (2014), mergers and acquisitions are considered to be transactions where the business ownerships are combined or transferred. From a legal point of view, Albers et al. (2013) have explained that a merger can be described as a legal consolidation of two forms into a single entity, with one management. On the other hand, when it comes to acquisitions, Cartwright and Cooper (2012) have asserted that it takes into account a situation where one firm takes control over the leadership of another firm. In normal cases, this is in terms of equity interests, stock, as well as well as asset. There are various merits and demerits associated with mergers and acquisitions. In regards to merits, one of the main ones is that it helps firms in achieving economies of scale. As a result, increased sales as well as profits margins is realised considerably. For instance, acquisition of Pharmacia by Pfizer in 2003 at 60 billion US dollars helped Pfizer in maintaining its status as the leading firm in the global pharmaceutical industry. As such, Pfizer increased its newt revenue by 6.3% after one year (Pandya, 2012). Another key merit of mergers and acquisitions is that it helps firms in investing more in research and development (R&D) due to increased profits. This helps the acquiring organisation to discover new products as well as technology, which can give it a competitive edge over other firms in the industry. Through mergers and acquisitions, Bena and Li (2014) have explained that struggling firms can benefit greatly from technological resources. For example, through acquiring struggling AstraZeneca in 2014, Pfizer was able to help the firm in gaining access to new technology.
When it comes to demerits, the main one includes increased operational costs that come from the processes of merging and acquiring and putting the right management into place. For instance, acquiation of AstraZeneca cost Pfizer 100 billion dollars. Besides, employees of the small merging firm may need re-skilling, which may increase operational cost of the company significantly.
3.3 Best approach would enable Pfizer achieve their long-term R&D objectives
According to Galpin (2014), research and development (R&D) is considered to be one of the most fundamental components in the pharmaceutical industry. This is due to the fact that firms need to keep assessing the needs of the customers for the aim of remaining relevant to the industry. This, as espoused by Pandya (2012), explains why some pharmaceutical companies invest 20 percent and more of their revenues in R&D measures. This is no different when it comes to Pfizer. Taking this into consideration, in 2016, Pfizer invested about 7.87 billion US dollars in research and development. From the above, it can be argued that the best approach that would enable Pfizer achieve their long-term R&D objectives is through mergers and acquisitions. Precisely, Pfizer should consider acquiring other pharmaceutical firms around the world. As aforementioned, through acquiring other pharmaceutical firms, Pfizer will be in a position of gaining access technological resources. Besides, the company will be in a position of acquiring various talents, which will help the company to become innovative.
4.0 Pfizer’s Strategic Management and Leadership for Corporate Governance, Business Ethics, and Corporate Social Responsibility
4.1 Corporate governance
According to Harford et al. (2012), corporate governance refers to the system of rules, practices, as well as processes by which an organisation is directed and control. In view of this, corporate governance fundamentally entails balancing the various stakeholders of the organisation including shareholders, customers, management, suppliers, government, financiers, and the community. Additionally, owing to the fact that corporate governance usually provides a framework for attaining organisational objectives, it normally encompasses every sphere of management pragmatically. This, as noted by Wintoki et al. (2012), ranges from internal controls and action plans to performance measurement as well as corporate disclosure. From the above statement, it can be deduced that Pfizer has to a huge extent enhanced its corporate governance. Precisely, through its shareholder outreach program, the company has been able to engage with investors as well as stakeholders across the world. This has enabled the company to gain insights in regards to various issues affecting the company. Through engaging with the shareholders, the company has been able to drive innovations, which have seen the company move to substantial heights over the last couple of years (Pfizer, 2017). As such, it can be deduced that through corporate governance of the company, the chairman as well as senior management has been able to drive change in the dynamic business world of the 21st century in the global health care environment.
4.2 Business ethics
Business ethics has been regarded as a form of professional ethics or applied ethics that examines various ethical principles and moral issues that arise in a business environment. Taking this into account, Brammer et al. (2012) have espoused that business ethics typically apply to all aspects of business conduct, and it has been considered imperative to the conduct of individuals together with the entire organisation. According to Ferrell et al. (2013), business ethics entails contemporary organisations principles, standards, and values that govern actions and behaviour of individuals within an organisation. When business ethics is taken into account by an organisation, productivity is enhanced, which translates to increased sales and profits. When it comes to the above statement, it can be noted that Pfizer has enhanced business ethics through disclosures on corporate activities as well as other key governance areas (Pfizer, 2017). This as a result has ensured transparency to the shareholders, which has as a result has made it possible for the management to work together with the shareholders productively. This notwithstanding, Pfizer has been accused of various unethical practices. For instance, the company caused the deaths of 11 children in Nigeria after administering Trovan and ceftriaxone in a drug experiment (Roemer-Mahler, 2013). The company was accused of having not obtained proper consent from the parents before the experiment. As such, the company lost the legal battle, where it had to compensate the affected families.
4.3 Corporate social responsibility
According to Brammer et al. (2012), corporate social responsibility takes into account organisational initiative to assess as well as take responsibility of the company’s impact on environment and social wellbeing. This sentiment has been echoed by Cheng et al. (2014), who have explained that corporate social responsibility usually entails going beyond what an organisation is required by environmental protection groups and regulators. As corporate citizenship, corporate social responsibility has been regarded as the act of incurring short-term costs, that to not have immediate financial benefit to the organisation, but promote positive environmental and social change. Taking the above statement into consideration, it can be seen that Pfizer has sought a more collaborative approach to specific issues of importance to the company and the industry. In this view, CSR has been one of the main issues of importance to the company. On this, Pfizer has over the last many years embarked in conducting a wide range of CSR activities across the world. The CSR of Pfizer believes that all individuals across the world deserve access to quality healthcare. This explains why most of the CSR activities of the company involve enhancing access to quality healthcare. For instance, between 2010 and 2014, Pfizer helped about 2.5 million patients to get access to more than 31 million Pfizer prescriptions valued at about 7.9 billion US dollars (Pfizer, 2017). The company has also put in place 14 programs that have been designed to increase access to medicines in emerging markets including the Advance Market Commitment (AMC) and International Trachoma Initiative. It is through such that the company has been to become more relevant in the industry. This as a result has made it easier for the senior management of the company in the fast-changing and complex 21st century global healthcare environment.
4.4 Differences between what managers and leaders actually do in practice
In practice, the difference between managers and leaders is significantly huge. Taking this into account, Wintoki et al. (2012) have explained that while managers typically manage tasks at hand, leaders typically lead towards the future. Precisely, managers are usually focused on getting jobs done. Although this is considered critical in any organisation, Harford et al. (2012) has emphasised that leaders looks at a relatively bigger pictures. For instance, a leader may be concerned whether the tasks being accomplished I line with the set organisational goals. Taking these into account, it is argued that leadership is highly valued in organisation. As such, in light of the above statement, it can be noted that Pfizer has enhanced its leadership through engaging stakeholders as well as well investors in an attempt to gain various insights. This as a result has helped the company in realising its set goals and objectives.
5.0 Personal reflections on learning
This assessment has played a profound role in enhancing my understanding of the global pharmaceutical industry. Precisely, from this assessment, I have learnt that the global pharmaceutical industry has witnessed a substantial growth over the last couple of years. Although they are many firms in the industry Pfizer has dominated the global pharmaceutical industry over the last few years.
I have learnt that a firm in the industry can ether take a convergence or international diversity perspective. On this, I have learnt that convergence perspective typically results to increased consistency in health care. Additionally, it typically leads to easier management. However, convergence perspective normally results to conflicts among employees owing to their different cultural backgrounds. When it comes to international diversity perspective, I have learnt that it helps organisation in leveraging on their brands due to differentiation due to increased creativity. However, it reduces consistency in the healthcare sector.
I have come to learn firms in the global pharmaceutical industry have come up with various strategies. Such strategies include strategic alliances as well as mergers and acquisitions. As for strategic alliances, I have learnt that they greatly help in enhancing organisation capabilities. This is due to the fact that involved organisations are able to pull together resources. Consequently, they are able to gain a competitive edge in the industry. However, I have learnt that strategic alliance have potential for conflicts as result of various factors including differences in leadership styles, language and cultural barriers, as well as lack of trust. When it comes to mergers and acquisitions, I have learnt from the assessment that it plays a fundamental role in assisting organisation have economies of scale. Through such, an organisation is able to generate more profits, which can help in invest more in research and development. Taking this into account, I have learnt that Pfizer should consider adopting acquisition strategies, where it should focus on potential firms in the industry. Through this, Pfizer can be able to invest more in research and development, thus giving the company an edge in the industry.
From the assessment, I have also learnt that corporate governance, business ethics, as well as corporate social responsibility are important to the success of organisation. Pfizer have been in the frontline in enhancing these concepts, which have significantly prepared the company in adopting the dynamic nature of the business world in the global pharmaceutical industry. This explains why the company has been able to remain the market leader in the industry over the last couple of years.
6.0 Conclusion
In conclusion, it has been established from this report that that the global pharmaceutical industry has witnessed a significant growth over the last couple of years. In this regard, firms in the industry have adopted a wide range of strategies for the aim of remaining relevant to the industry. Strategic alliances as well as mergers and acquisitions have been found to be among the most effective strategies that have been adopted by most firms in the industry. Among the two strategies, this report has found that Pfizer needs to adopt mergers and acquisition strategy as it will give the company economies of scale. Consequently, the firm will be in a position of investing more in research and development. Besides, this report has found that Pfizer has enhanced its cooperate governance, business ethics, and CSR. These have given the company an edge in the global pharmaceutical industry.
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