Pfizer Inc

Pfizer is a research-based global pharmaceutical company. The company discovers, develops, manufactures and markets medicines for humans and animals, as well as consumer products.

Pfizer is the largest and richest pharmaceutical enterprise in the world. Fortune® named Pfizer as the fifth-best ‘wealth-creator’ in America. The company is a global leader in human pharmaceuticals, and also has a large array of consumer health care, confectionery, and animal health care products. In 2000, its revenues equalled $29,6 billion (£20,14bn), eight of Pfizer’s pharmaceutical products attained sales of at least $1 billion (£680,4 million) each. Pfizer’s main competitors are Merck, Glaxo SmithKline, Novartis, Brystol Myers Squibb and AstraZeneca.

In 2001, Pfizer has budgeted approximately $5 billion (£3,402 bn) for research and development -more than any other drug company in the world. However, the company is likely to spend even more money on marketing. Extensive marketing practices (e.g. huge TV advertising campaigns) have turned some drugs, like Claritin and Viagra, into household names. According to the Financial Times (26 April 2001), ‘Pfizer has powered its way up the global ranking list to its unassailable position thanks mainly to its marketing prowess.’

History:

The company was incorporated as Charles Pfizer & Co in the US in 1942 but the original business dates back to a partnership founded in 1849. Until the turn of the century this partnership produced only citric acid but then began to expand into other chemicals and pharmaceutical products. A phase of rapid growth began with the production of penicillin in World War II (it was Pfizer penicillin that arrived with the Allied forces on the beaches of Normandy in 1944) and the development of the company’s most famous product, the antibiotic Terramycin in 1949. Based on this strength, Pfizer grew in the 40s and 50s through horizontal integration in the US as well as through internal development.

Under the methodical directive of John Powers, head of international operations and future president and chief executive officer, Pfizer’s foreign market expanded into 100 countries and accounted for $175 million (£199 million) in sales by 1965. It would be years before any competitor came close to commanding a similar share of the foreign market. Pfizer’s 1965 worldwide sales figures of $220 million (£149,7 million) indicated that the company might possibly be the largest pharmaceutical manufacturer in the US. By 1980 Pfizer was one of the two US companies among the top ten pharmaceutical companies in Europe, and the largest foreign health care and agricultural product manufacturer in Asia. Powers guided the company in a new direction with an emphasis on research and development.

By 1989, Pfizer operated in more than 140 countries. Pfizer entered the 90s facing controversy about heart valves produced by Shiley, a Pfizer subsidiary. In 1990, 38 fractures of implanted valves were reported (see also crime section). Pfizer became a household name in the late 90s with its development of the break-through male impotence drug Viagra, which became the world’s fastest-selling pharmaceutical product (until overtaken by another Pfizer brand).

It appears Viagra also had an effect on the company’s senior executives; in 1999 they began forcing their intentions on rival Warner-Lambert, finally harassing the smaller company into a shotgun marriage in the first ever-hostile take-over in the pharma sector. This take-over turned Pfizer into the largest and richest pharmaceutical enterprise in the world.

Pfizer has worked its way up the global ranking list by way of internal growth and development, acquisitions, the licensing of products from competitors (Pfizer generously borrowed research from its competitors and released variants of these drugs. While all companies participated in this process of ‘molecular manipulation’, whereby a slight variance is produced in a given molecule to develop greater potency and decreased side effects in a drug, Pfizer was particularly adept at developing these drugs and aggressively seizing a share of the market), research & development, and by way of comprehensive marketing efforts.

Pfizer’s successful marketing efforts impinged on other companies in the pharma sector. (Pfizer’s modern market campaigns broke tradition in the pharma industry. Pfizer’s Terramycin campaign turned the company –a relative newcomer to the industry—into the largest advertiser in the American Medical Association’s journal. Some companies did not appreciate Pfizer’s ‘hard sell’ tactics and attacked Pfizer. However, after Pfizer’s campaign proved to be highly effective, other companies took a similar lead) It is manifested in the "arms race" of escalating numbers of sales representatives, particularly in the US; the huge pre-launch marketing budgets when companies try to make as big a splash as possible; and aggressive TV advertising campaigns in which drugs are seemingly being treated and presented to the consumer audience as any other consumer product.

Pfizer recently announced a new mission: to become the world’s ‘most valued’ company. Pfizer CEO McKinnell declared that the new mission came about because the old mission set in the 1990s (to lead the pharmaceutical industry) had been achieved. He explains: ‘Becoming most values simply means that we emerge as the company recognised as the best by patients, customers, business partners, and the communities where we live and work. It’s a long term mission focused on making Pfizer’s success a winning proposition for everyone.’

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5 undeniable reasons your prescription drug costs are so ridiculously high

Americans spend a little less than $1,000 annually per person on average for prescription drugs. That's the average, which means that many spend a lot more. Why are prescription costs so ridiculously high? You might not like the answers, but here they are.

1. You're paying for other drugs that you don't use.
When you put your money down at the pharmacy for Lyrica, the nerve and muscle pain drug from Pfizer , you're really paying for your Lyrica prescription plus a whole host of other drugs. How's that possible? The answer lies in the realities of the drug development process.

Dr. Josh Bloom with the American Council on Science and Health estimates that it takes a drugmaker an average of 14 years to bring a drug to market -- at a total cost of around $1.3 billion. However, only one out of every 50 drugs that start down the development path actually make it to market. And, of those that do, typically only two out of 10 will make a profit.

Pfizer spent around $890 million on cholesterol drug torcetrapib, only to cancel the drug's development program in 2006 after serious safety concerns. The big pharmaceutical company wrote off $2.8 billion on inhalable insulin Exubera after consumers simply didn't like it.

How did Pfizer make up for those and other losses? Like all the other drugmakers, it added to the cost of the drugs that did succeed -- so Lyrica and others cost more than they would have otherwise.

2. You're paying for the world.
The weight of the world might not be on your shoulders, but the weight of subsidizing the world's drugs is. Prescription drug costs are higher in the U.S. than in any other country. Per-capita pharmaceutical spending in Canada, the second-highest nation, is a whopping 33% lower than in the U.S.

Two words explain why: price controls. Most other countries establish fixed price limits that they will pay for prescription drugs. What this means, though, is that pharmaceutical companies raise their prices for prescription drugs sold in the U.S. to make up for charging lower prices throughout the rest of the world.

You might think the simple solution is to implement price controls in the U.S., too. Such a move probably would lower prices for the drugs currently available.

The problem, though, is that it would provide financial disincentives for pharmaceutical companies to develop as many new drugs as they do now. If that happened, it could end up actually increasing overall health care costs, since taking prescription drugs is frequently much less expensive than other medical treatments.

3. You're paying for others to find out about the drug you use.
Marketing is king in the world of pharmaceuticals. And it demands a king's ransom. Unfortunately, you ultimately pay that ransom every time you buy a prescription drug.

Pfizer's advertising budget last year totaled more than $622 million. Over half of that budget was spent promoting three drugs -- Celebrex, Viagra, and Lyrica.Eli Lilly wasn't far behind with an ad budget topping $433 million. Nearly 94% of that amount was spent on only two drugs, in this case Cymbalta and Cialis.

Nielsen's tracking found that the top 10 pharmaceutical companies spent $2.7 billion last year on direct-to-consumer advertising. However, that figure doesn't include online advertising or physician promotions, so the actual marketing budgets for the big pharma companies is even larger. Research firm Cegedim estimates that total pharmaceutical industry spending on promoting drugs was around $28 billion in 2010.

You're also likely picking up part of the tab for the companies mistakes in how they promote their products. For example, Abbott Labs settled federal and state lawsuits accusing the company of inappropriate promotion practices for epilepsy drug Depakote for a cool $1.6 billion last year.

At the time of the settlement, the Justice Department said that the case demonstrated that "those who put profits ahead of patients will pay a hefty price." A hefty price was surely paid, but Abbott's profits for 2012 were more than 26% higher than either of the previous two years.

4. You're paying Uncle Sam.
Don't forget your good friends at the IRS. The passage of the Affordable Care Act brought new fees for large drugmakers totaling $80 billion. That amount is spread over multiple years, though. "Only" $2.8 billion was paid by pharmaceutical companies last year.

Technically, the big pharma companies pay these fees, which basically are excise taxes. However, those companies can't pay the IRS unless it first gets the money from its customers. Ultimately, you're paying Uncle Sam.

5. You're paying for profits.
Regardless of what product you purchase, you're paying for the maker of those products to make money. It's no different with prescription drugs. The concern is over whether prices paid by consumers contribute to excessive profits.

Most pharmaceutical companies generate nice profits. Despite Lilly's woes from losing patent protection for some of its big drugs, the company still had a profit margin of over 20%. Even though Abbott paid a steep fine last year for a legal settlement, its profit margin was 13% -- better than a lot of companies.

Pfizer ranks first among all Dow index stocks in terms of profit margin, with a margin of nearly 27%. The other two pharmaceutical companies in the Dow have profit margins higher than the average Dow company. However, of the top 10 Dow stocks ranked by profit margin, four are technology firms. Pharmaceutical companies generate high profit margins, but they're not always the highest among all industries.

A little good news
You're paying ridiculously high prices for prescriptions, but there is a little bit of good news. In 2012, Americans actually spent less on prescription drugs than the prior year for the first time on record. It was only 1% less -- but that's still better than spending more.

I figure this improvement amounts to maybe having an extra $10 in the wallet for the average American. You might want to hold on to that money. You'll probably need it soon enough.

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