International Strategic Marketing Audit - Essay Example

?Strategic Marketing and Communication An Analysis of Pfizer Part Strategic Marketing Planning 1 (i) International Strategic Marketing Audit Pfizer is a New York based company that has a large presence in the UK. Pfizer provides pharmaceuticals for the health and well-being of humans and animals. Pfizer is interesting in providing quality, safety, and value in the development and manufacturing of their products. Their global healthcare includes “human and animal biologic and small molecule medicines and vaccines” (Pfizer 2011) and they also provide nutritional supplements. Environmental Analysis of Pfizer When looking at the challenges for Pfizer, it is important to look at the environment of the entire pharmaceutical industry. In the last few years, this industry has become as competitive as any other. Because of technological advances, the tighter controls that have been place on regulatory compliance and “volatile investor confidence” (Verbigena Consulting, n.d.) the pharmaceutical industry has become very competitive. There are many ways to understand how this has happened and its effect on specific companies in the industry. For this study this researcher has used the PEST (political, economic, social and technological) model. In this model, it is important to identify those issues that are a part of the environment that makes the pharmaceutical company meet the competition as well as meet the environment head on. In this way, they are able to analyse their competition to make sure that they are doing what is needed. Political analysis In looking at the pharmaceutical industry, it has become increasingly competitive because there has been an emphasis on healthcare all over the world. People are living longer and they have more access to alternative modalities of healthcare. Also, healthcare has become more expensive to the average consumer which as meant that there needs to be reform on all levels. Healthcare is not just an economic burden to an economy but it is also a social burden. This means that politics come into play when there needs to be reforms to promote social welfare (In the UK the National Healthcare Service debate over Medicare is one example). Economic Value The pharmaceutical industry is projected to increase in the future. Since 2003, there have been substantial increases because of “high value mergers and acquisitions” (Verbigena Consulting, p. 3.). Many analysts have projected that pharmaceutical stock would increase to 10.5% by 2010 which meant that sales would reach $500 billion. This is not unfathomable because our societies are ones that are dependant on drugs (both over the counter and prescription) for many ailments and to fight disease. Although a large majority of sales originate in the US, Japan and EU, 80% of sales are distributed over nine countries: “US, Japan, France, Germany, UK, Italy, Canada, Brazil and Spain” (Verbigena Consulting, p. 3). Sales are expected to increase as people age and healthcare is reformed. Social Value Everyone is concentrating on good health today. There are many articles across the Internet that tell people how to look better, how to lose weight, how to stop aging and more. Because of this, pharmaceutical companies have an area that is always growing. Global epidemics like AIDS or SARS have helped the pharmaceutical companies push for a cure and their search has created an opportunity in the media to follow their progress. This also means that the pharmaceutical companies have to keep good relations with the media, government and other organizations that can help them keep the world out that they are doing a good job. Technology Technology has improved over the years and science has been one of those improvements. The pharmaceutical companies have to keep up with the technological demands in all of the industries they participate within. Also, these companies have to spend more money on research and development so that their employees will become more innovative in producing their products. Legal The FDA and other legal entities have put more regulations on pharmaceutical companies and they must pay for compliance, regulatory and legal overheads. Because there are more restrictions, the industry has begun to work with the governments to provide ideas on overhead costs so that they can bring innovation back to the industry (Verbigena Consulting). Pfizer is one such company and they are one of the top pharmaceutical companies in the UK. In looking at their business, it is important to understand that they are one of many pharmaceutical companies that must keep pace with the industry as well as the world around them. They must have an understanding of their strengths and weaknesses as they proceed to develop products and they must understand how they fit into the rest of the industry. For this report, it is important to also understand how they are working within this industry and what affects the industry will also affect them. S.W.O. T. Analysis for Pfizer UK There are many positive things that Pfizer has done in order to make sure that they have the market share require. The following is a S.W.O.T Analysis for them: Strengths Pfizer has a strong internal sales and marketing department that has allowed it to continually bring products to the market. They have particularly lead sales because of three products: Lyrica, Sutent and Chantix/Champix. All of these drugs have seen a rise in sales over the past several years. As an example, Lyrica has seen tremendous sales because the FDA approved it for Fibromyalgia. This was important because many physicians do not see Fibromyalgia as a “real” disease, though many people suffer from it (Waichman, 2008). This was a very good move for them because Fibromyalgia patients do not respond to other painkillers. Weaknesses Pfizer tends not to be knowledgeable about what is going on in the industry as a whole. This is marked by the fact that they have very limited work within the biologic markets although they state that this is one of the areas that they work within (YouSigma). Lipitor has been one of its largest moves in the “blockbuster” home remedy market. However, they have had an over reliance on this particular product which may have created more challenges for them in thinking bigger. In fact, Abkowitz (2009) reports that Pfizer CEO, Jeff Kindler had to change the way that they worked so that they could make Pfizer simpler so they could concentrate on a smaller market share. Before Lyrica and the other drugs mentioned, they had a drought of blockbuster drugs between the years of 1999 and 2004. This caused a weakness for a time within their company. Opportunities As reported by Abkowitz, Pfizer restructured under the direction of Kindler which allowed them to move forward with some of their ideas. By cutting costs, working on a smaller market share, and creating a leaner company, they were able to bring Pfizer back into a positive place in the market. They also expanded into the biologics markets in order to balance the company further, and they were able to find funding to assist (YouSigma). Threats Pfizer has had to continually watch the market and attempt to make inroads. They have had exposure to generic competition and they have put a lot of focus on Lipitor, which could have been a detrimental aspect for them since they did not emphasize some of the other areas. If they continue with large scale M&A activity, they may see a further decline in their profitability (YouSigma). Central to the changes that Pfizer has made is also their ability to change their environment. I this aspect of the research, it is important to look at the environmental analysis, especially as it looks at what Pfizer is doing to reduce its environmental footprint. Environmental Footprint Initiative Analysis There are many aspects of the environment that are important in this type of analysis. One of the first ones that come to mind is the climate in which employees work when they are in an organization. The other type of environment is how the business affects the environment in their community as well as in the world. Today, with more concentration on saving the environment and with some countries offering tax cuts for businesses who deal with specific environmental changes, it is important to look at both types in this kind of analysis. Pfizer understands that they have a commitment to the community that begins with their environmental footprint and what they are putting out into the atmosphere to help or hinder the environment. They have taken several precautions to prevent more damage to the environment. They have done the following: Green Building Pfizer has a commitment to “working together for a healthier world” and this is now a trademark for them. In the countries that they are working, they believe in making the buildings as green as possible. This means making sure that they use green materials to better the environment inside and outside the building. All buildings are built to conserve energy and resources, and to help employees engage in green behaviours. They consider waste management, water conservation, nontoxic materials, recycled materials, renewable energy sources and more as they continue to build green (Pfizer “Doing”). Environmental Sustainability Pfizer has a commitment to environmental, health and safety protection. This is necessary in today’s world because both the company and its resources must be sustainable so that everyone wins. They are strategically focused on climate change mitigation, product stewardship and access to clean water. These are the ways that they intent to impact their environmental footprint over time (Tilles 2011). 1.2 Key Strategic Issues Facing Pfizer One of the key issues that Pfizer is facing is the constant regulation of specific drugs. With the current climate of healthcare reform, prescription drug costs are too high for an individual to afford unless they have insurance. Even then, most people have a co-pay that they must use. Doctors are under scrutiny for only using specific drugs, and often the drugs prescribed are very expensive. Pfizer like other pharmaceutical companies will have to find ways to cut drug costs. One very important area that drug companies are facing is the number of counterfeit drugs on the market. These look like real drugs but they can be contaminated or have no active ingredients in them (U.S. Food and Drug Administration, 2011). The Medicines and Healthcare products Regulatory Agency (MHRA) (2011) states that although counterfeit drugs are usually not manufactured in the UK, but it is a “transit point and end user market” (p. 1). Most counterfeiters go after the most lucrative markets (of which Pfizer is a part) and they are often located in online pharmacies. The MHRA states that about 50% of sites that do not disclose their physical address are selling counterfeit drugs. This is a very strong problem for Pfizer and other companies; so much so that Pfizer devotes an entire webpage to educating consumers about the problem. Blockbuster medicines, those medicines that patients must take over time and that yield $1 billion in sales for the pharmaceutical company, are no longer profitable. The challenge is that because of the reform and the restrictions, and those companies that want to be innovative will begin to do research on drugs that can be used for more than one type of illness. Drug companies in the UK have a disadvantage because they only have five years for data exclusivity instead of ten years like the United States. This prevents them from obtaining approval for marketing for some rival products. (EurActiv, 2009). This means that the future of pharmaceuticals will include a variety of drugs that are more specific to several conditions instead of having a blockbuster drug that is exclusively used for only one condition. New drugs are still a force that is driving the pharmaceutical companies which means that companies must continually do research. This is one of the areas where Pfizer must work in the next three years. According to Klein, Kime, Jimenez, and Johnson (2005) Pfizer will continue to increase funding for research and development so that they can stay on top of finding new drugs. Currently Pfizer is the industry leader but they are not content with only being the best; they want to continue to produce drugs that are reasonably priced so that consumers can continue to use them. Pfizer has also acquired two other companies: Warner-Lambert in 2001 and Pharmacia in 2003 and they continue to compete in more than one industry. As stated previously, the three areas that they compete in are pharmaceuticals, consumer health, and animal health (Klein et al., 2005). 1.2.1 Strategic Imperatives In the next three years, it will be important for Pfizer to keep an eye on their competition and promote a better understanding of consumer health. In order to understand how this will happen, the use of a Five Forces evaluation will be done. Current Competitors The major competitors for Pfizer include “Johnson & Johnson, Glaxo SmithKline, and Merck Co (Klein et al., p. 8). The largest problem for all competitors, including Pfizer is that there can be a variety of generic drugs that can undercut the profit for the industry leaders. The way to circumvent this as a risk or a challenge is to be the first one to bring a drug to market. In so doing, the pharmaceutical company creates a patent for the drug and has it out on the market for several months before the competition. New Entrants Generally speaking, there is no threat to a large pharmaceutical company by new entrants. The reason for this is because smaller companies are often bought out by larger companies which will protect the larger companies from competition. Also, because there are so many FDA regulations and lawsuits that are possible, many pharmaceutical companies do not enter the market. In looking at this area, Pfizer in the next three years will keep an eye on the competition while making sure that they also keep an eye open for those smaller companies that may be a good risk for buyout. Substitute Products One of the areas that Pfizer might pursue later would be the area of herbal remedies. This is increasing as an alternative to standard medicines and it may be something to pursue in the future. Although the FDA is not regulating these remedies quickly because they cannot be seen as medicines, it may be an important area to understand. Generic medicines are already giving consumers a break on the price over name brand drugs and this could be an area to investigate for the future. Consumer Bargaining Power Consumers have low buying power because name brand drugs are made to meet the needs of specific conditions and generic drugs are often unavailable to consumers for certain periods of time because they are under patent restrictions. This means that the company with the patent is able to determine the price that they will charge until the patent is expired. Supplier Bargaining Power Suppliers have low bargaining power because pharmaceutical companies can change suppliers at any given time. Companies also have the ability to dictate the types of drugs that can be made. In looking at all of these measures, we can state that Pfizer will have three key success factors: 1. Global research and development – Pfizer has always done global research and development and they “operate world wide with a multi-domestic strategy” (Klein, et al. 2005). This allows them to continue to generate large amounts of revenue: $17.6 billion in fourth quarter of 2010 and $67.8 billion for the full year of 2010 (Pfizer, 2010). 2. Pfizer will continue to accept drug prescription refills online and will continue to accept drug discount cards. Pfizer knows that those companies that cater to the baby boomers do well because people over 65 tend to use more drugs. This has continued to be a success point and will continue to be used in the next three years. 3. Pfizer will continue to be managed by a strong board and strong CEO. The management has allowed them to focus on “maintaining performance while creating an inclusive environment” (Klein, et al., 2005). These three areas of strength will continue to lead the company for the next there years. Part 2: Strategic Marketing Communication Strategic marketing is important especially when your company is at the head of the competition. One of the ways that Pfizer has stayed out in front is to be aware of what the competition is doing. They are also able to stay in front of the competition with products that are competitively priced, but that are made for specific ailments. They also make sure that their discount drug cards are available to consumers and to doctors so that they can recommend them to those in need. 2.1 (i) Marketing Communications and Current Marketing and Business Strategy Currently, Pfizer spends time marketing information because the FDA is very clear on what it can and cannot do to market their specific products. One of the major ways that Pfizer will try in the next three years is to make sure that they are taking advantage of social media. Although social media has created an opportunity for most businesses to sell products, Pfizer can use it to promote education about what they do and how they do it. Currently a Twitter page and a Facebook page allows customers to make comments and give ideas to Pfizer about whatever is on their minds (Neves, 2009, “”Pfizer’s” ). This allows Pfizer to keep pace with their consumers and to understand what other issues they are thinking about beyond pharmaceuticals. Pfizer is currently using the slogan, “engage and educate” (Neves, 2009, “How”). This slogan is used to have their media communication team talk to the media. They are inviting the media to talk with them about what is on their minds. This is not a time to sell a product or sell the company, but to bring the media together, give them lunch, and help them get to know Pfizer. In the last year, this “engage and educate” program has allowed them to have conversations with 115 journalists so they would get to know Pfizer and be able to write intelligently about them (Neves, 2009, “How”). The challenge for all pharmaceutical companies in using social networking is that there are no specific guidelines about how they can use it. Because of this, Pfizer has used their social networking to give the public information about them and educate the public about drugs in general (Neves, 2009, “Pfizer’s”). They cannot speak about specific products, but they find that the better educated people are about their health, the better educated they are when they talk to their doctors about their needs. These educational programs that Pfizer has used are directly linked to their image and brand. They are the number one pharmaceutical country in the US and in the UK and they want to also be leaders in giving information. This provides them an advantage over other companies because when people use information, they will remember where it came from. This will keep Pfizer out in front. ii. How Current Communications are Integrated Pfizer uses a variety of ways to integrate their communication strategies. They use the Internet and they are a regular feature on YouTube on the 3 Minute Ad Age program. There are several videos that feature the CEO of the company as well as those in marketing. Each of these videos are to educate the public. In addition, they have a Facebook page where they have over 4,000 people who “like” their page. This is generally consumers who like their products and who talk about various issues around healthcare. This was a very good move for them. They use this as a regular way to understand their consumers. The Twitter page has lots of information and allows consumers to follow all of the things that Pfizer is doing. This integrates into their “engage and educate” theme very nicely. Pfizer also keeps its name in the news through press releases, YouTube and through a variety of articles written in newspapers. They are able to integrate their education piece in each of these and help people know who they are and what they are about. Although they have had some controversial situations happen that had to do with some of their drugs, they have been able to survive lawsuits and other negative press. Talking to the media has allowed them to stay on top of the controversy. iii. Recommendations There are many market trends in the pharmaceutical industry that Pfizer must take advantage of to stay out in front of their competition. One area that has been mentioned previously is that of finding drugs that are more suited to individual disease. This will require them to continue to put money into research and development. Pfizer will need to change their way of manufacturing and distribution which means that they will need to change their supply chain to accommodate the change in pharmaceuticals. Price Waterhouse (2011) states that by 2020, many drugs that are currently being made will disappear and will be replaced by “specialist therapies” (p. 2) which will require different ways of distribution and manufacturing. New drugs will give way to new devices as well. Many pharma analysts predict that by 2016, there will be new bioengineered vaccines and biologics that will provide about 23% of the global market. There will be a diversity of products that have been invented by advances in nanotechnology, stem cell research and tissue re-engineering (Price Waterhouse, 2011). These are fields that Pfizer will need to look into so they can decide whether any of these changes will be worth research and development monies. If they want to stay in front of their competition, they will need to be working in these areas in the near future. There will be a new way of licensing happening. The concept of “live licenses” will be important because they will change the amount of time it takes to receive a license for a specific drug. The US Food and Drug Administration (FDA) and the European Medicines Agency (EMA) are spotlighting these licenses that will allow the drug to go to the market contingent on continued testing to make sure that the drugs continue to be safe (Price Waterhouse, 2011). Pfizer is aware of these and will look for ways to obtain live licenses for future products so that they can continue to be first in the market. Pfizer will also need to be savvy about the Internet and search engine marketing in order to take better advantage of social networking. According to Makis (2009) this search engine marketing is driving consumer content and allowing businesses to create videos directly to consumers as well as creating blogs. This allows the business to create a “multichannel digital presence” for various drug brands (Makis, 2009). This also allows consumers to see the ads and information from various pharmaceutical companies as they search for information on healthcare and drugs. This would be in Pfizer’s best interest in order to stay out in front of the completion. These recommendations will continue to allow Pfizer to stay out front if they begin working on these now. Some of the recommendations have started but others need to be References Abkowitz, A. (18 August 2009). Pfizer’s home remedy. CNN Money. [11 June 2011]. Available from http://money.cnn.com/2009/08/18/news/companies/ pfizer_drugs_reorganizing.fortune/index.htm EurActiv. (03 December 2009). Pharma industry prepares for end of 'blockbuster medicines'. [13 June 2011]. 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