Pharmaceutical Industry: Structure and Government Regulations
Fairleigh Dickinson University- College at Florham
Shivanshu Kharia
9/29/2013
Foundation: Pfizer is one of the world’s largest pharmaceutical companies by revenues, established in 1849, headquartered in New york, U.S.A. Pfizer started as a manufacturer of fine chemicals such as camphor, iodine, borax, citric acid and cream of tartar. The development of deep tank fermentation technique increased the production rate of citric acid by five fold and unlocked secrets to mass production of penicillin to meet high demand of this antibiotic during World War II. Further development of the fermentation techniques helped in reduction of cost of penicillin, which in turn aroused a need to research a new product with greater profit potential. Although citric acid became main product and launching pad of its growth in decades to follow, it was the discovery of Teramycin in 1950 that opened the doors to research based pharmaceutical company and a leading manufacturer of vitamins. Pfizer’s portfolio includes a wide array of medicines and vaccines for a wide range of conditions including areas of oncology, cardiovascular and metabolic diseases, immunology and inflammation, neuroscience and pain. Pfizer “A pioneering spirit on the frontier of medicine” continues to focus on applying science and global resources to improve health and well-being at every stage of life. Pfizer increases its global presence through strategic partnership and acquisition of diversified business such as Warner-Lambert in 2000, Pharmacia in 2003, Wyeth in 2009 and King Pharmaceutical in 2010. Listed subsidiaries of Pfizer are Agouron pharmaceuticals, Greenstone, G. D. Searle and Company, Parke-Davis, Pfizer UK, Warner Lambert, Wyeth and Zoetis.
Leadership: Pfizer manages operations through five operating segments - Primary Care; Specialty Care and Oncology; Established Products and Emerging Markets; Animal Health; and Consumer Healthcare. Each of these segments is led by an executive with clear accountability for results - from product development following proof of concept to providing access to patients and through to the end of the product's life cycle. (1)
➢ CEO & Chairman: Ian Read ➢ CFO Finance & Executive Vice President: Frank A D’amelio ➢ President of Global R&D: Mikael Dolsten ➢ President: Pfizer Global Manufacturing: Anthony Moddaluna ➢ Executive VP: Worldwide Human Resources: Chuck Hill
Strategic Thinking: Pfizer is enjoying patent over lots of brands and branded generic for the honey-moon period of the drug, in addition to this the company is also involved in manufacture and sale of generics through it’s Greenstone and Aurbindo subsidiary. Research collaborations are an integral element of Pfizer’s pharmaceutical strategy, and collaborates with multiple other pharmaceutical companies to make drugs easily accessible to patients who cannot afford the medication and for boundless innovative vaccines and medication to prevent and treat disease conditions. Pfizer is organized into nine principal operating divisions: Primary Care, Specialty Care, Oncology, Emerging Markets, Established Products, Consumer Healthcare, Nutrition, Animal Health and Capsugel. Pfizer is one of the leading companies that focuses on innovations of investigational new drug approval and research for betterment and well-being of patients. • Pfizer has adapted several tactics over years to stay as a leading pharmaceutical company. Lipitor Is one of the best example illustrating how Pfizer manages to sale more branded during its patent and continues the same even after it lost its patent in December 2011.
• Advertising directly to consumers during patent years to boost the usage from 2000 to 2010.
• Pfizer introduced coupons for patients and paid good rebates to insurer and PBM’s as an incentive for continuous use of branded drug even after the launch of generic. Thereby continuing sales roughly 3 times more than expected when a drug loses patent protection.
• During the last year of patent protection Pfizer increased the drug price while it was still under patent from $1,290 per patient/year in 2006 to $1,939 in 2011.
• Pfizer not only paid Ranbaxy to delay its launch of initial generic for Lipitor but also launched a generic via Watson, sharing 70% of its Lipitor related profits (1).
Ethics: Pfizer aims for success by operating in a fair and ethical manner. Pfizer emphasizes ethical behavior in all of their affairs, and language associated with ethical behaviors is part of the company’s overall culture. All of the company’s dealings are to be conducted with honesty and integrity.
Code of Conduct: It’s foremost responsibility of an employee to abide by the company’s policy on code of conduct. Pfizer’s policies on business conduct, first written more than 20 years ago, are reviewed annually to ensure they meet or exceed evolving legal standards and societal expectations. Employees receive the Summary of Pfizer Policies on Business Conduct, known as "The Blue Book," which has been translated into 28 languages (1).
Governance • The Board of Directors, which is elected by the shareholders, is the ultimate decision-making body of the Company, except with respect to those matters reserved to the shareholders. It selects the Chief Executive Officer and other members of the senior management team, which is charged with the conduct of the Company’s business. Having selected the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance. A board of directors is also responsible for setting the mission and strategic direction of the organization and for overseeing its finances, operations, and policies. The board ensures that its own members understand and fulfill their governance responsibilities in acting for the benefit of the organization and its public purpose.
• The Corporate Governance Committee considers and makes recommendations to the Board concerning the appropriate size and needs of the Board. The Corporate Governance Committee considers candidates to fill new positions created by expansion and vacancies that occur by resignation, by retirement or for any other reason. The candidate is selected based on the selection criteria designed by the board.
• The board approves an annual budget for its current fiscal year, and outlines projected expenses for the future (1).
Quality Compliance: Pfizer follows both company-specific and federal statutory regulations. The company has developed their own Corporate Compliance Policy and Governance Code that all employees must follow. Employees are regularly enrolled in and are required to complete compliance related training modules. Employees receive the Summary of Pfizer Policies on Business Conduct, known as "The Blue Book," which has been translated into 28 languages. Pfizer also provides training modules protecting intellectual property rights, and maintaining fair and respectful working conditions. However, multiple litigations reported are: Kelo case, Nigeria, GMO Virus, BCBS, Wyeth’s Rapamune (a whistle bllower) and Bringham young university (2).
Communication: Pfizer runs extensive health and wellness programs like Patient Assistance program (that supports the broadest access possible to medicines, to help patients who need but cannot afford our drugs), Medicare and Medicaid coverage Assistance programs, etc. Pfizer also continues to push the boundaries of innovative vaccines- both to prevent and treat diseases. The various patient adherence programs run by Pfizer shows company’s commitment in bringing new age of senior health to life.
Future Research and Development: Several collaborations with other pharmaceutical companies were made to help patient safety and well-being. Pfizer and Astrazeneca entered into agreement for OTC Nexium. NEXIUM 20mg Retail Launch in the U.S. Targeted for 2014, subject to Regulatory Approval (3). Merck and Pfizer enter world-wide collaboration to develop and commercialize Ertuglifozin, an investigational Medicine for type 2 diabetes (4). Cystic fibrosis foundation therapeutics announces $58 million CF drug discovery agreement with Pfizer (5). The patent expiration or lost exclusivity of Pfizer's best-selling drugs such as Lipitor and Effexor have caused a decline of over $7B (or -40%) in revenues in 2012. They estimate that the revenue from these drugs will continue declining to $5.6B in 2016. Newly approved drugs, such as Prevnar-13, Sutent, Inlyta, Xalkori, Xeljanz (Tofacitinib), Eliquis, Bosutinib, and Tafamidis will contribute the majority of revenue growth going forward. The estimated total revenues for Pfizer are $60B, $61.4B, $62.8B, and $64.3B from 2013 to 2016. Based on our revenue projections, PFE's revenue compound annual growth rate (CAGR) is less than 3%.
Products:
Consumer healthcare products include: • Chap stick, a lip balm • Dimetapp for common cold • Robitussin for cold and coughs.
Blockbuster drugs include: • Celebrex, a pain killer • Viagra (also referred to as Diamond pill), ED drug • Xalatan eye drops • Norvasc, a blood pressure pill • Lipitor, helps lowering cholesterol
Brands include: • Chantiix for smoking cessation • Aromasin for preventing osteoporosis, breast cancer and menopause • Lyrica for neuropathic pain • Vfend, an antifungal agent
Pipeline products: Along with research and development in several states and disease condition, Pfizer puts efforts across multiple modalities- small molecules, biologics and vaccines. The company also develops medical solutions that will help serve lot of people. There are several drugs at different phases of clinical trials. However, there are few drugs that are at registration level waiting for FDA approval: Eliquis for Venous thromboembolism prevention, Remoxy for moderate to severe pain, bazedoxifene for menopausal vasomotor symptoms, Viviant for Osteoporosis treatment and prevention,etc (1).
Achievements: • 2009 A best diversity company and World’s top 50 Most attractive Employers • Pfizer’s pipeline ranked among industry’s top 10 pipelines in February 2010 Ranked 1st in medicine and health care industry annual ranking conducted by Antal International 2011 • In November 2011, Pfizer ranked 21st of top 500 US and 20th of top 100 Global Green companies by Newsweek. (7)
Manufacturing: Pfizer HealthCare’s products are marketed across the world through regional and national distribution companies. Pfizer operates in more than 45 countries. (8)
