Competitive pressure facing Pfizer

 

Even though target market grows the pharmaceutical companies face competitive pressure by losing patents and mergers(Gibson,2002) .According to Grim,Lee and Smith(2005),in order to understand the competitive pressure in a industry , its important to identify industry boundaries .Therefore , Porter(1970) the exert competitive pressure: competitive strategy will help to identify Pfizer competitive pressure(1979).

Five Kinds of Competitive Forces That Exert Competitive Pressure: Competitive Strategy(1979)

In a business atmosphere of an association includes such as   competitive forces along with prospects. Therefore it is important for an organisation to evaluate the design of the organizations concept. Michael Porter (1970)five kind of competitive pressure can help to reduce the pressure or indicate the pressure that company might face.

 Bargaining Power of Buyers

Pfizer's merchandise can be distributed to  wholesalers, sellers, sanatoriums, health centre, government organizations as well as pharmacies. Generally , biggest wholesaler have a important purchaser control while purchasing production of industry down to corporations income reliance on them. Pfizer has got US which is largest market distributed for wholesaler, distributor and managed care organization where 39% of the total revenue comes from in 2013 and also their second largest market in Japan , where 10% of the total revenue come from in 2013 (Pfizer,2013).On the other hand , it seems like  none of the  industry division is reliant on anyone consumer  or group apart from wholesale. What's more , the healthcare transformation in U.S impacts the production. In 2013 the company revenue decreased because of the purchasing the Prevener family products and Enbrel by the Governments(Pfizer,2013).Furthermore, US healthcare legislation has been affecting Pfizer. From 2011 the company has to pay a fee which is not tax related each year in regarding to prescription drug sales to specified governments programme(Pfizer,2011) and this impacted in 2011 ,$648 million deducted form the revenue(Pfizer,2013).The Governments in a straight line bargain the values with pharmaceutical manufactures on behalf of Medicare recipients , which kind of restricted the flexibility .However, Pfizer has got unique drug portfolio like Liptor, Viagra,Aricept , Geodon and so on(Pfizer,2012). As a result it gives a very subordinate control for end consumers along with wholesale production in case of exceptional drugs for which the marketplace command is very high.

 Bargaining Power of Suppliers

According to Gassman,Reepmeyer and Von Zedtwitz(2008), In the pharmaceutical business the supplier provides raw materials, biotechnology firms ,manufacturing plants and labour force .Also pharmaceutical companies may have different supplier .Furthermore, it also to be noted in the pharmaceutical industries it seems that supplier do not have strong bargaining power. Since Pfizer is the biggest pharmaceutical corporation and it has the uppermost purchasing capacity , therefore it gives benefit when it comes to bargain with dealers. Even though, it depends on market condition concerning the acquisition charges of unprocessed resources along with particularly selected undeveloped based resources .Since the largest pharmaceutical company like Pfizer normally depends on the supplier which are based on international marketplace charges, the volumes of buying quantities are far above the ground. However , Pfizer will at a standstill has a benefits when settling with providers. But , it might go to in favour of suppliers if a perpendicular cooperation started for outsized amount of companies(Gotham Global,2007).

 Substitute products

In pharmaceutical industry , threat of substitute  products  are not major but once the patents expires it causes problem. Pfizer main product lane based on patent sheltered drugs which transports exceptional descriptions .For example, Liptor patent protect drugs has been unique for Pfizer for so long and it has been dominated the market(Pfizer,2013).But the problem is Pfizer losing the patent of the cholestorel drug Liptor and therefore the company facing the generic rivals(The New York Times,2011).Furthermore , in emerging market where policies are not that strict , create threat of using substitute products and as a result it lowers the sales volume(Pfizer,2012).Furthermore, because of the expiration of Enbrel ,the company expected to loose more money in upcoming year 2014(Pfizer,2013).Also in upcoming year the company expected to loose some of the products in certain countries such as Detrol La and Rapamure in U.S, Zyvox in Canada and Celebrex in developed countries(Pfizer,2013).Although, patent protection and legal laws strict in some countries where its hard to substitute the products , Pfizer are more concerned about expiring and losing the patent where it will smash on the revenue. The company has been dominated the market so long by the unique product like Liptor and Viagra.

Existing industry rivalry

The biopharmaceutical industry is highly competitive and highly regulated and therefore the company  features a number of industry-specific tests which can considerably blow on their outcomes. These issues consist of such as  the failure or finishing of intellectual property rights with the expiration of co-promotion plus licensing privileges, healthcare legislation, regulatory atmosphere and pricing along with admittance stress, pipeline efficiency and rivalry in the midst of branded products(Pfizer,2013). The company also features tests as a result of the international financial atmosphere. The company may be impacted by the technological advances of challengers, competitive amalgamation goods , new commodities of participants and of course generic competition as the company's product mature. Generally, industry competitors challenge the current patent position. As a result, even though Pfizer has the blockbuster like Liptors and Viagra , Astrazenca has the tipple attraction by replacing them(FT,2014).Also there are tough competition coming by producing similar drugs from Navatris and Eliy Lily(FT,2014) .The important factors are that in pharmaceutical competitive market , are technological innovation and a ability to market them perfectly. However, Pfizer managed to market them well by creating license and joint venture. The company has done R&D portion internally by spending $6.6m in 2013 (Pfizer,2013), in order to expand the pipeline by seeking agreement with new companies and licensing. In 2012 the company complete alliance with Biocon Alliance to commercialised its product and also they acquire Alacer corp for marketing and manufacturing purpose(Pfizer,2012).Furthermore, In 2011 the company completed licensing GMI-1070,by completing agreement with GlycoMimetics, Inc. (GlycoMimetics)(Pfizer,2011).As the company in one of the larges biopharmaceuticals contains larger units, the most important technique of the competition depends on the meticulous commodities(Pfizer,2012).The other competitors find it hard to compete because of the economic scale and product innovation .Although the company face strong completion from Astrazeneca ,Navatris and Eli lilly (Pfizer,2011).And also if any company fine new unique drugs that could effect the company.

 Threat of new entrants

Generally ,  pharmaceutical industry  dominate the market since it has few large scale .Therefore , threat of entrants are comparatively low and also it is more dependent relative on possible planned agreements along with merger linking the companies. But it seems most of the companies merge because of the new market or reduce the risk or taxation. And exactly Pfizer trying to merge with Astrazeneca do the same reason, shifting the tax(CBSNews,2014). On the other hand, Mr Wicky at Glaxo mentioned that , in terms of acquiring large portion, it can distract the structure of the company's strategy (The Telegraph,2009).In terms of that comments, Pfizer tried to merge with Astrazenca one of the biggest firm in UK ,But it refused to merge with Pfizer because of its go-alone strategy to take the drug line pipe(FT,2014).Moreover, Merging with Wyth in 2009 was a good call for Pfizer(Bloomberge Businessweek,2009) and It has been successful by creating a broader along with more diverse portfolio and also strengthen company's position .It also created existing and possible position in new markets. Furthermore, the collaboration with Eli Lilly will help Pfizer to share the costs of product development, potential revenue and product related costs(Pfizer,2013).Also, it is important to be noted that parallel mergers could be expected by participant s and also small scale companies could make exceptional drugs , with the help of mergers ,they can sell in explicit market.

The Economic Environment

According to Ganguin and Billaredelo(2005) , Pharmaceutical companies have  high price bargaining power because of the drugs which indicates strong business fundamental elements along with other healthcare products .But on the other hand , this paradigm shifts because economic development in certain countries. From the company prescriptive , the consumers are facing the challenge of economic development along with high unemployment levels(Pfizer,2013).Therefore, consumers delay their treatment , use other drugs which is similar to Pfizer and try to avoid expensive drugs. As a result, it effects on the revenue of the company. On the other hand , other competitors take advantage by reducing the costs. Also the company face pricing pressure from emerging markets and European market and also Japan(Pfizer,2013).Moreover, government -mandated reduction prices and government -impose accessed in some biopharmaceutical products in certain countries put pressure on Pfizer(Pfizer,2013).

Intellectual property rights

According to Food and Drugs Administrations(FDA),Pharmaceutical patents only last 10 years and also the company can manufacture can produce or sell this particular product(Wikinvest,2010) .But after the expiration , this product goes out of hand , by meaning other competitors can produce this product and they can sell a cheaper price. As a result ,Pfizer can have a adverse effect on revenue by losing or expiring the intellectual property rights(Pfizer,2013).In the case of losing the patent , the company loose those products and as a result manufactures produces similar products and they sell those products in lower prices. The company has an adverse effect by losing the patent of Liptor which is tope exchanging drugs and value $12.7Bn a year on transactions(The Telegraph,2009) and Viagra(Forbes,2014). Furthermore , the company face competitive pressure from biosimilars.For example, the company's product such as Refacta,Enbrel,Xyntha and the Prevner family seems like will face competitive pressure from biosimilars(Pfizer,2013).The company's growth driven by the sales Prevener .The company’s revenue in 2012 $51.3milliomn which down roughly13% from 2012(Forbes,2014).As a result , by losing the patent could trigger the strong competitive pressure on Pfizer. In 2013,The company have already lost exclusive products in certain markets and also it expected to loose some more(Pfizer,2013).

Pfizer has been successful for so long with unique product like Liptor and Viagra .But the company is facing competitive pressure by losing the patent of Liptor and other drugs as well . After analysing Porter competitive strategy on Pfizer , it seems even though the company are some hard time , they still can come back. The company acquire and signing into new  agreement and also merge with new companies .The main problem is in the pharmaceutical company is patent protection  and once its expired , it is hard to compete. Because of the generic competition and the competitors like Astrazeneca and Elli Lilly find a way make unique drugs which affects Pfizer. Furthermore, Economy is also effecting the company and not to forget government policy as also putting pressure on Pfizer.