strategic-management

25
Pfizer, Inc. — 2009
Vijaya Narapareddy
University of Denver
PFE
www.pfizer.com
On May 9, 2009, Japanese pharmaceutical manufacturer Eisai threatened Pfizer to terminate
its long-standing partnership on the news of Pfizer’s proposed acquisition of Wyeth.
Eisai’s venture with Pfizer dates back to the mid-1990s when Pfizer entered into an
alliance to sell Eisai’s Aricept, the world’s leading medicine for the treatment of
Alzheimer’s disease. Headquartered in New York City, Pfizer generated about $482 million
in 2008 from the sale of Aricept, an increase of 20 percent from 2007, as shown in
Exhibit 1. Pfizer vows to fight back, claiming that Eisai lacks any legal basis for termination
of their alliance.
Pfizer engages in the discovery, development, manufacture, and marketing of prescription
medicines for humans and animals worldwide. Some of its well-known drugs are Lipitor,
Viagra, Lyrica, Zeldox, and Aricept used for people, as well as Draxxin used for cattle.
The Wyeth Acquisition
The proposed Pfizer acquisition of Wyeth, a company based in Madison, New Jersey, for a
cash and stock purchase of $68 billion would enable Pfizer to diversify its product offerings
and make further inroads into emerging markets. Exhibit 2 provides details of the benefits
of the proposed Wyeth acquisition.
Pfizer’s Business Segments
Pfizer operates from three business segments, Pharmaceuticals, Animal Health, and a third
one that contains “Corporate & Other.” The Pharmaceuticals business offers human health
products for the treatment of cardiovascular diseases, central nervous system disorders,
arthritis and pain, infectious and respiratory diseases, urogenital conditions, cancer, eye
disease, endocrine disorders, and allergies, among others. Pfizer is well known for its prescription
medicines and the many over-the-counter medical products it offers. The overthe-counter
self-medications range from oral care, upper respiratory health to tobacco
dependence, skin and eye care, and hair growth. The Animal Health division offers medicines
for livestock and pets. The company also manufactures empty gelatin capsules and
engages in producing contract and bulk pharmaceuticals/chemicals, which it classifies
under “Corporate/other” business.
The company’s revenues by segment are provided in Exhibit 3 and reveal that the
Pharmaceuticals business dominates the portfolio with over 90 percent of the revenues generated
each year, whereas the Animal Health division accounts for only 5 percent each year.
The “Corporate/other” segment is the smallest of all, with less than 3 percent of total sales.
Global Operations
Pfizer’s international operations contributed $27.9 billion in revenues in 2008 as opposed
to the $20.4 billion generated in the United States. Exhibit 4 provides detailed statistics of
revenues by business segment and geographic region. This exhibit indicates that the double-digit
declines in U.S. sales of Pharmaceuticals have been offset by double-digit growth
in international sales.