The Pfizer Company Business Model

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Table of Contents

Customer value
Capabilities
Sustainability
Conclusion
Works Cited

Customer value

The value the company attaches to its customers contributed to its thriving into limelight of drug business in the year 1941. This was due to the mass production of penicillin which saved many lives during the World War II. This was then later followed by the manufacture of Viagra.

Before the firm developed Viagra, it had to create around 1,500 chemicals, tested their effectiveness as compared to previous drugs and finally screened them to come up with the best quality for the consumers (Magretta 3-8). The firm also went as far as researching to find out which of the age groups suffered most from the erectile dysfunction (Hedman).

The Viagra invention had the ability to cause erections only during sexual stimulation. This was contrary to other injection therapies provided by other companies which at times induced the patient to prolonged erections, making the patient uncomfortable. Hence, the invention of Viagra was so much encouraging to the consumers who expressed their willingness to continue with the treatment as it satisfied their expectations.

The firm had a stated maximum prescription for each patient diagnosed with erectile dysfunction, this ensured reimbursement of up to 6 tablets per month for each patient 18 years and above. The plan ensured that consumers were protected from any form of misuse of the drugs and danger (Mahadavan 4).The use of Viagra was dropped from the formularies since it became one of the lifestyle drugs. This helped majority to cut on Medicaid expenses.

The introduction of online sales made it possible for the company to reach so many customers within the shortest time possible. This helped in increasing the revenues of the firm; this included the consultation and the shipping fee offered by the company which was averagely $ 715 for one year supply (Magretta 3-8).

Capabilities

The Pfizer firm recorded the highest earnings growth in the Pharmaceutical industry, which was rated at 25% between 2000 and 2002. This growth rate was attributed to the strong drug pipeline and its stability in blockbuster drugs. The firm also had the lowest risk when it came to the market share loss from the drugs as compared to other pharmaceutical firms.

This was due to the fact that most of its pharmaceutical sales were given to generic cannibalization before 2005. The firm’s capability to increase its research and development expenses saw it venture into new field of medicine. This enabled the firm to invent new pharmaceutical drugs and also open many operational facilities all over the world (Army).

For the Pfizer firm to overcome the competitors they embarked on continuous launching of new products and aggressively acquiring the best possible strategies. They bought drug maker companies and also ventured into the consumer products, bought companies that produced hospital related products.

The company also extended an invitation hand to other related companies which saw it merge with some popular companies like Warner-Lambert. The company ventured in the sale of the brand name from its operating groups to the consumers. The brand name groups included Animal Health Group and Consumer Health care. These brand names made the company to be known as one which improved the health not only of human beings but also of livestock, hence became very popular to the consumers (Porter 62-78).

The introduction of the internet enables the firm to reach so many companies at any given time. It also enhances the devising of the strategies since the progress of other firms can easily be monitored from the internet. It has enabled international expansion of the company (Stabell 413).

Sustainability

For sustenance purposes the firm invested heavily on the research and development, half of the employees of the company taken to the section dealing with research and development. The mixture on the labor force was also a contributing factor, which comprises the British and the Americans (Sandberg 3).

The firm strategizes on conducting more clinical trials on Viagra as compared to its competitors. This made it to enlarge its market base since most of the patients came back with positive results. The firm also deployed a good number of sales representatives to that went direct to the doctors, who eventually prescribed the drug to the patients (Army).

The firm uses the Direct-to-Consumer Advertising which ensures that patients are updated on new medical treatments, right prescriptions and also allows them to discuss their health conditions with their physicians. The company also focused on raising awareness on how important men’s health was to them (Porter 62).

They used the brand name that made so many identify themselves with the brand i.e. so many became brand loyal to the company. The firm spent so much money in advertisement on medical journals, meetings and events that were mostly attended by the physicians. These promotional activities ensured some increase in revenue with the Direct-to-customer contributing around 16% in the year 2000. The use of the internet exposes the firms secrets to the competitors hence considered not safe at all for sustainability purposes (Porter 78).

Conclusion

The business model shows clearly the level of competition of the company, it reveals whether the company is the most cost-efficient company in the industry or not. The business model should be understood because it provides vivid information about the market and can be used by investors and financial analysts.

Works Cited

Army, Barret. “The formula at Pfizer. Don’t run with the crowd”. Business week, 1998.

Hedman, Thomas. “The Business Model: A Means to Understand the Business Context of Information and Communication Technology”. Institute of Economic Research Working Paper Series, School of Economics and Management, Lund University 2001.

Magretta, Joan. “Why Business Models Matter,” Harvard Business Review, 2002: 3-8.

Mahadevan. “Business Models for Internet-Based E-Commerce,” California Management Review, Vol. 42, summer 2000: 4 Porter, Michael. “Strategy and the Internet,” Harvard Business Review, 2001: 62-78.

Sandberg. Is it time to trade in your business model? Harvard Management Update, 2002: 3-5.

Stabell, Fjeldstad. “Configuring value for competitive advantage: On chains, shops and networks”. Strategic Management Journal, Vol. 19, 1998: 413–437.

Timmers, Paul. “Business Models for Electronic Markets,” Electronic Markets, ol. 8, No. 2, 1998: 3-8

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