1. Introduction
Pfizer, a renowned multinational pharmaceutical company, has thrived in the dynamic and competitive 21st-century business environment. Established in 1849 in New York City, it has become a dominant global pharmaceutical industry player. Pfizer focuses on biopharmaceutical production, research and development, and marketing, offering solutions for immune diseases, inflammation, cancer, women’s health, and more.
The company’s broad reach spans the Americas, Europe, Africa, and Asia, with additional services like contract manufacturing, active pharmaceutical ingredients, biosimilars, and sterile injectable medications (Flores Stenzel, 2021). In 2022, Pfizer achieved remarkable financial success, recording $31.4 billion in profit and breaking previous sales records with $100 billion in revenue, partly due to its involvement in COVID-19 solutions.
However, challenges loom on the horizon. Despite its substantial income, Pfizer anticipated a 30% revenue drop in 2022, potentially falling to $67-71 billion, with a projected 60% decline in revenue for COVID-19-related products in 2023, estimated at around $21.5 billion. Under the leadership of CEO Dr. Albert Bourla, Pfizer remains publicly traded on the New York Stock Exchange, upholding its tradition of medical innovation. The company’s strategic management involves various methodologies, including Porter’s Five Forces analysis, a Competitive Profile Matrix (CPM), External Factor Evaluation (EFE), and elements of SWOT analysis. Pfizer’s ability to adapt, innovate, and navigate evolving market conditions continues to define its success in the pharmaceutical industry.
2. Industry Analysis
Pfizer Porter Five Forces Analysis
The company’s Porter’s Five Forces study thoroughly examines the competitive environment and variables impacting Pfizer’s industry. Threat of new entrants, threat of substitutes, bargaining power of consumers, bargaining power of suppliers, competitive rivalry, and other dynamics are the primary focus of the study. Now we will begin our Porter Five Forces Analysis of Pfizer:
I. Threat of New Entrants:
According to Pfizer’s Porter Five Forces Analysis, new competitors pose the following risks: Due to the very high barrier to entry in the pharmaceutical market, Pfizer can thrive. The investment in infrastructure and the time and energy put into R&D are both enormous (Masinde Indiatsy et al., 2014). The new player must start from scratch when building up its lab infrastructure. Human capital is also relatively high for a prominent pharma business like Pfizer. Thus, the corporation must find out how to recruit the best and brightest in this industry. The corporation must invest more in marketing to gain a reputation among consumers. The company’s reputation is on the line with every dose of life-saving medication it produces, so it must have rigorous quality control measures. Therefore, there is a very high barrier to entrance, which is a feeble force.
II. Threat of Substitutes:
Pfizer’s Porter’s Five Forces research identifies the following competitive pressures posed by alternative products: Pfizer’s offerings are medications for which there is currently no satisfactory replacement. The sole option available is generic medication, which is often believed to be less effective than name-brand alternatives.
Since these drugs are patented, there are no generic alternatives to many of the newest and most lucrative pharmaceuticals for companies like Pfizer. Alternative medicine is the sole other option, but its adherents are unlikely to be regular buyers of conventional drugs. Therefore, it is fair to state that the sector as a whole faces minimal danger from replacements and that this will continue to be the case so long as the firm maintains developing new drugs. Therefore, this is a feeble power (Masinde Indiatsy et al., 2014).
III. Bargaining Power of Customers:
Pfizer’s Porter Five Forces Analysis explains consumer bargaining power: There is not much difference between Pfizer’s products. However, marketing and distribution have made it such that pharmacies only stock and dispense name-brand medications. This implies that the consumer has little to no influence on drug costs. This gives pharmaceutical firms the freedom to set whatever price they choose for their cutting-edge drugs, so long as that price more than makes up for the money spent on R&D and leaves room for profit. In the case of drugs for uncommon disorders, the customer has little leverage to negotiate the price down from what Pfizer has placed it at. This is a feeble force since the client needs more leverage in negotiations.
IV. Bargaining Power of Suppliers:
According to Porter’s Five Forces analysis, Pfizer’s suppliers’ negotiating positions are as follows: Suppliers’ negotiation leverage is proportional to the number of suppliers relative to the number of firms actively competing in the market. While there are more pharmaceutical companies than suppliers, the scarcity of certain raw materials gives suppliers considerable leverage in price negotiations (Masinde Indiatsy et al., 2014). Due to the stringent quality standards, only a select few vendors can service Pfizer’s needs, giving the latter a disproportionate amount of leverage. The manufacturers of the equipment used in the production processes are likewise tiny in number, giving them considerable leverage in price negotiations. As a result, pharmaceutical sector suppliers have considerable influence and negotiation power.
V. Competitive Rivalry:
Pfizer, a major pharmaceutical player, maintains a competitive edge through robust research and development, securing patents on innovative drugs that grant pricing power and profitability. This leads to a moderate level of competition in the pharmaceutical industry. However, generic drugs pose a competitive threat once patents expire. Pfizer’s competitive position hinges on its innovation and patent protection, offering an advantage over rivals. While competition exists, especially for patented drugs, it remains relatively moderate. This insight aids in evaluating Pfizer’s ability to navigate external business challenges effectively.
3. Competitive Analysis
Pfizer’s main pharmaceutical competitors are Merck Novartis and Johnson & Johnson, which provide formidable challenges. Since both firms are committed to creating and marketing pharmaceuticals to treat health issues, they are directly competing with one another. Each rival has an extensive catalogue of treatments to win over customers and doctors with novel options.
Merck: Merck is a major player in the pharmaceutical industry and a serious rival. Its medicinal services span several fields, including immunology, cancer, and cardiovascular medicine. Merck’s strengths include the company’s long history, worldwide presence, and cutting-edge research facilities. However, a significant limitation is that a small number of items account for the bulk of sales. Merck’s research efforts and potential breakthroughs in many therapeutic categories continue to underpin the company’s optimistic market outlook.
Novartis: Pfizer also faces stiff competition from Novartis. The firm serves many markets, such as prescription drugs, generics, and eye care. Novartis is ahead of the competition because of the breadth of its product line the intensity of its investment in R&D. Patent expirations and the necessity for reliable blockbuster medications are problems that Novartis and other pharmaceutical businesses confront. Novartis’s continued success in the industry may be attributed to the company’s emphasis on growing markets and intelligent acquisitions.
Johnson & Johnson:
The Johnson & Johnson firm is a pharmaceutical, medical device, and consumer health product powerhouse. Its worldwide reach, history of groundbreaking design, and diverse product catalogue are its greatest assets. However, competing in the pharmaceutical market against specialist pharmaceutical corporations presents a distinct problem. While having a foot in several markets is a plus, it also means facing unique competition and market shifts in each division.
Key Success Factors (Critical Success Factors):
Success in the pharmaceutical industry hinges on numerous critical factors, with the following being of paramount importance:
Research and Development (R&D) Capabilities: The pharmaceutical sector relies heavily on ongoing innovations made possible by research and development. To create effective and safe medications, pharmaceutical giants like Pfizer, Merck, Novartis, and Johnson & Johnson must spend heavily in state-of-the-art research facilities, recruit the best and brightest researchers, and encourage cross-disciplinary teamwork (Flores Stenzel, 2021). In order to maintain this level of commitment, it is essential to monitor changes in disease trends, genetic understanding, and technological developments.
Market Reputation and Brand Recognition: A pharmaceutical company’s competitive position is greatly impacted by its ability to establish and sustain a strong brand identity and reputation. Products and procedures that adhere to the highest ethical standards inspire confidence and loyalty from patients, medical professionals, and other stakeholders. Increased market share and consumer confidence in new product introductions result from a company’s commitment to transparency, safety, and the well-being of its patients.
Product Diversification: A diversified product portfolio covering a wide range of therapeutic areas is essential in a volatile sector like pharmaceuticals, where patents often expire and markets frequently alter. The possibility of losing product exclusivity is reduced with such variety. By developing and marketing treatments for various diseases and disorders, pharmaceutical giants like Pfizer, Merck, Novartis, and Johnson & Johnson can ensure steady income even after their patents have expired (Flores Stenzel, 2021). Allocating resources strategically to create and advertise goods that meet the needs of consumers, healthcare providers, and regulators is essential to the success of this approach.
Global Distribution Network: The timely and effective delivery of pharmaceutical medications to patients throughout the globe depends on a well-managed and extensive distribution network. Pharmaceuticals and treatments must be easily available across borders, necessitating effective logistics, supply chain management, and local healthcare systems. A company’s ability to compete increases when drugs are readily accessible, when and when they are required.
Regulatory Compliance: Product approvals and the pharmaceutical industry’s reputation rely on strict adherence to regulatory regulations. For example, the FDA in the United States is quite particular about how drugs must be made and tested. Meeting these standards demonstrates a company’s dedication to patient care and makes it easier to go through the complicated clearance processes necessary to bring a product to market faster.
Clinical Trials Expertise: Clinical studies must be carefully planned and carried out to prove a drug’s effectiveness and safety and win over regulators. In order to reassure regulators, healthcare providers, and patients about the benefits of a product, clinical trial companies apply rigorous scientific methodologies while organizing and conducting trials.
Marketing and Sales Strategy: Communicating the value and advantages of pharmaceutical medicines in a competitive market requires an effective marketing and sales strategy. Market share may be increased by focusing on certain consumer subsets and emphasizing the product’s USPs. This includes creating patient education programs that enable people to make educated healthcare choices and offering relevant and persuasive information for healthcare practitioners.
Research Collaboration and Partnerships: Innovation and drug discovery both benefit from collaboration. Pharmaceutical firms, including Pfizer, Merck, Novartis, and Johnson & Johnson, collaborate with academic institutions, research organizations, and other industry players to use complementary talents, resources, and insights. These collaborations speed up the development of revolutionary medicines by providing access to cutting-edge research tools and data.
Competitor Profile Matrix (CPM):
Pfizer’s performance may be compared to rivals using the Competitor Profile Matrix (CPM). In this matrix, essential success variables weighted for relevance compare Pfizer’s performance against Merck and Novartis. Pfizer’s CPM strengths include market capitalization, net income, and operational margins (Washington, 2021). Merck dominates market capitalization and net income, whereas Novartis excels in gross margins. The matrix compares Pfizer to its top competitors and shows its success in essential categories. The CPM analysis compares and critically profiles a company against its competitors. The following is the CPM of Pfizer
| PFIZER | MERK | NOVARTIS | Johnson & Johnson | ||||||
| Critical Factors
Of success |
Weight | Rating | Weighted Score | Rating | Weighted score | Rating | Weighted score | Rating | Weighted score |
| Market cap | 0.20 | 1 | 0.20 | 3 | 0.60 | 2 | 0.40 | 2 | 0.40 |
| Employees | 0.10 | 2 | 0.20 | 3 | 0.30 | 1 | 0.10 | 2 | 0.20 |
| Revenue | 0.15 | 1 | 0.15 | 3 | 0.45 | 2 | 0.30 | 2 | 0.24 |
| Gross margin | 0.10 | 1 | 0.10 | 2 | 0.20 | 3 | 0.30 | 2 | 0.36 |
| Operational margins | 0.15 | 1 | 0.15 | 2 | 0.30 | 3 | 0.30 | 3 | 0.24 |
| Net income | 0.20 | 2 | 0.20 | 3 | 0.60 | 2 | 0.40 | 3 | 0.26 |
| EPS | 0.10 | 3 | 0.30 | 2 | 0.20 | 1 | 0.10 | 3 | 0.30 |
| Totals | 1.00 | 1.30 | 2.65 | 2.05 | 2.00 | ||||
The Competitor Profile Matrix (CPM) compares Pfizer to its three main rivals in the pharmaceutical industry, Merck, Novartis, and Johnson & Johnson, across a wide range of crucial success characteristics.
A firm’s market capitalization is a key metric since it reflects the market’s business valuation. Pfizer is rated rather lowly at 1, whereas Merck excels at 3 because of its larger market capitalization. The high ranking of 2 for Novartis in this area reflects the company’s pervasiveness in the industry. Comparing Johnson & Johnson to Pfizer, it fares similarly. Having a solid team and a steady stream of income are also crucial. With an employee rating of 2, Pfizer employs many people. However, both Merck and Novartis scored an impressive 3. Pfizer gets a 1 for revenue, but Merck and Novartis display 3s, indicating more financial clout. Johnson & Johnson and Pfizer are major competitors in these markets.
Profitability and efficiency may be measured by looking at the gross and operating margins. Gross margin is where Pfizer falls short of both Merck and Novartis, which get ratings of 2 and 3, respectively (Washington, 2021). Pfizer is ranked first for operating margins, while Merck and Novartis are ranked second and third for their operational efficiency.
Profitability is shown by net income and profits per share (EPS). Pfizer’s net income rating 2 indicates its superior performance (Washington, 2021). On the other hand, Merck and Novartis stand out with 4-star ratings. Pfizer’s EPS rating of 3 reflects its industry-leading profitability. When it comes to money, Johnson & Johnson is right up there with Pfizer. In summary, the CPM shows that Pfizer confronts stiff competition from Merck and Novartis regarding financial metrics and personnel strength, among other crucial success elements. The ever-changing pharmaceutical market is reflected in Pfizer’s strategy of maintaining a lead in certain areas while pushing to surpass competitors in others.
4. Partial SWOT analysis
| Opportunities (O) | Threats (T) |
| 1. Development of new pharmaceutical products | 1. Risk of unsuccessful new product launches |
| 2. Strategic collaborations with other pharmaceutical firms | 2. Stringent regulatory environment |
| 3. Increasing awareness of healthcare needs | 3. Economic challenges in the European market |
| 4. International expansion through mergers and acquisitions | 4. Dependency on a single product with patent expiry |
| 5. Growing demand for high-quality healthcare solutions | 5. Intensifying competition |
| 6. Strategic cost reduction and leaner operations | 6. Loss of patent protection for major products |
| 7. Acquisition of Wyeth | 7. Impact of healthcare reform in the US |
| 8. Expansion into the field of biologics | 8. Negative publicity and legal challenges |
| 9. E-commerce growth | 9. Intense competition in regional markets, especially in emerging markets like India and China |
| 10. Increased funding, revenue, and profits | 10. Risk of termination of the partnership with Eisai |
The pharmaceutical sector in which Pfizer Inc. participates is fraught with both benefits and dangers. Pfizer has great potential to create new pharmaceutical medicines, which is an opportunity. The firm has the research and development resources to build on its legacy of innovation and meet growing medical requirements. Strategic partnerships with other pharmaceutical companies provide an opportunity to strengthen research capacity and speed up medication development, both essential in today’s cutthroat pharmaceutical industry (Xing, 2023). Pfizer has a large potential customer base because of the growing awareness of healthcare requirements throughout the world, and the company’s worldwide development via mergers and acquisitions may help it tap into new markets and diversify its income streams.
Pfizer, however, is also subject to several risks. Due to the unpredictability of both regulatory approvals and market acceptability, the pharmaceutical business faces a constant danger of new product introductions that fail. The company’s capacity to bring innovative goods to market may need to be improved by an increasingly strict regulatory environment, which may cause delays and compliance problems (Xing, 2023). Pfizer’s sales and income are vulnerable to economic instability in Europe because of the continent’s high healthcare costs. The corporation is vulnerable to generic competition and revenue loss since it relies on several blockbuster pharmaceuticals whose patents are about to expire. Pfizer’s market dominance and pricing power might also be threatened by the ferocity of competition from established pharmaceutical corporations, generic medicine makers, and new biotech entrants.
5. External Factor Evaluation (EFE) Analysis
A strategic management tool, the EFE matrix illustrates the state of the organization, ranks dangers and opportunities, and provides a graphical representation of the situation. Pfizer Inc.’s assessment matrix of external factors is as follows.
| Opportunities | Weight | Rating | Weighted Score |
| funding is available to facilitate the company | 0.02 | 3 | 0.06 |
| Strategic agreement with other pharmaceutical firms to improve the company’s research | 0.9 | 3 | 0.27 |
| Improving awareness of the need for healthcare | 0.06 | 3 | 0.18 |
| International penetration in the market through acquisition and mergers | 0.07 | 3 | 0.18 |
| Increasing demand for healthcare solutions of high-quality | 0.07 | 3 | 0.21 |
| Restructure of its strategies created to reduce costs and make a leaner firm | 0.03 | 3 | 0.09 |
| Acquisition of Wyeth | 0.02 | 3 | 0.09 |
| Expansion of the market of biology | 0.05 | 3 | 0.15 |
| E-Commerce | 0.03 | 2 | 0.06 |
| Increases funds, revenue, and profits that help in uplifting the company’s progress | 0.04 | 4 | 0.16 |
| Threats | Weight | Rating | Weighted Score |
| Unsuccessful new products risk | 0.04 | 2 | 0.08 |
| A stringent regulatory environment that is becoming more stringent | 0.05 | 3 | 0.15 |
| European market’s economic showdowns | 0.03 | 2 | 0.06 |
| Focusing on one product, hence losing the patent | 0.08 | 3 | 0.24 |
| Increased competition in the market | 0.06 | 3 | 0.18 |
| Loss of protection of patent major products | 0.07 | 4 | 0.27 |
| Healthcare reform in the Ushas affected revenue growth | 0.03 | 3 | 0.09 |
| Negatively publicized by their customers due to suing | 0.04 | 4 | 0.16 |
| Regional market’s outstanding competition, along with India and China’s emerging markets | 0.03 | 2 | 0.06 |
| Risk of Eisai’s long-term partnership termination | 0.04 | 3 | 0.12 |
| Totals | 1.00 | 2.88 |
Pfizer’s external environment, including opportunities and dangers, is thoroughly evaluated using the EFE matrix. With a weighted opportunities score of 0.91, Pfizer can use growth-promoting external variables (Sridharan, 2018). Strategic partnerships, worldwide growth, rising demand for healthcare solutions, cutting costs, acquiring new businesses, branching out into biologics, e-commerce development, and better financial results are all examples. Pfizer’s expertise and market dominance make it well-suited to take advantage of these prospects.
On the other hand, Pfizer has a weighted score for threats of 0.97, highlighting the dangers and difficulties it confronts from the outside. This list of dangers includes things like governmental restrictions, economic unpredictability, patent expirations, intense rivalry, shifting healthcare policies, the possibility of legal complications, regional rivalry in new markets, and the chance of a dissolved partnership (Sridharan, 2018). Pfizer must aggressively manage and neutralize these dangers to keep its competitive edge.
Conclusion
In conclusion, the pharmaceutical sector is extremely competitive and regulated, making it crucial for companies like Pfizer Inc. to recognize and capitalize on possibilities while protecting themselves from dangers. Despite its impressive track record of innovation and research skills, Pfizer must stay alert to the threats presented by shifting regulations, patent expirations, and fierce competition. The company’s top goals should be to increase operational efficiency, expand worldwide via smart acquisitions, capitalize on the rising demand for healthcare solutions, and form strategic partnerships. Pfizer’s dedication to innovation and flexibility will be critical to sustaining its market leadership and responding to changing market circumstances. Pfizer’s strategy initiatives should play to the company’s strengths and capitalize on opportunities while actively managing and minimizing challenges.
References
Flores Stenzel, A. (2021). Pfizer Inc. Valuation. Docta.ucm.es. https://hdl.handle.net/20.500.14352/10430
Masinde Indiatsy, C., Mwangi, M., Mandere, E., Miroga Bichanga, J., Gongera, E., & George. (2014). The Application of Porter’s Five Forces Model on Organization Performance: A Case of Cooperative Bank of Kenya Ltd. Online), 6(16). https://core.ac.uk/download/pdf/234625548.pdf
Mikulic, M. (2023). Earnings per Pfizer share from 2008 to 2022. Statista. Retrieved from: https://www-statista-com.ezproxy.umgc.edu/statistics/254358/net-earnings-per-pfizer-share-since-2008/
Saul, D. (2023). Pfizer Expects Covid Vaccine and Pill Revenues Will Fall 60% In 2023. Forbes.Com, N.PAG
Sridharan, M. (2018, January 3). External Factor Evaluation (EFE) for competitive analysis. Think Insights. https://thinkinsights.net/strategy/efe-analysis
Washington, D. (2021). UNITED STATES SECURITIES AND EXCHANGE COMMISSION. https://s28.q4cdn.com/781576035/files/doc_financials/2021/ar/PFE-2021-Form-10K-FINAL.pdf
Xing, K. (2023). Pfizer SWOT Analysis. Highlights in Business, Economics and Management, pp. 10, 449–458. https://doi.org/10.54097/hbem.v10i.8138
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