Pfizer pfabricates pfarmaceuticals pfor quite a pfew inpfirmities. The company is one of the world's largest research-based pharmaceuticals firms, producing medicines for ailments in fields including cardiovascular health, metabolism, oncology, immunology, and neurology. Its top prescription products include cholesterol-lowering Lipitor, pain management drugs Celebrex and Lyrica, pneumonia vaccine Prevnar, and erectile dysfunction treatment Viagra, as well as arthritis drug Enbrel, antibiotic Zyvox, and high-blood-pressure therapy Norvasc. Consumer health products include such leading brands as Advil, Centrum, and Robitussin. Pfizer and Allergan have called off their $160 billion merger, citing tax reasons.
In 2014 Pfizer reorganized its business into three operating segments. The Global Established Pharmaceutical segment (or GEP; it accounted for nearly half of Pfizer's total sales in 2015) covers sterile injectable products and the company's biosimilar development portfolio. Collaborations and existing agreements, including those with Mylan Inc. in Japan, Zhejiang Hisun Pharmaceutical Co. Ltd. in China, and Laboratório Teuto Brasileiro S.A. in Brazil, fall under the GEP umbrella.
The Global Innovative Pharmaceutical segment (GIP, accounting for 29% of sales) includes immunology and inflammation, cardiovascular and metabolic, neuroscience and pain, rare diseases, and women’s and men’s health. The Global Vaccines, Oncology, and Consumer Healthcare group (VOC, 26% of sales) works on vaccines and other products for oncology and consumer healthcare.
Pfizer's largest patent expiration -- that of former #1 global top-selling drug Lipitor, which brought in $11 billion to $12 billion in annual sales during its prime -- took effect in the US market in 2011. Pfizer has retained some Lipitor revenues through sales in other markets and through direct-to-consumer programs, but it has lost exclusivity in all major markets.
In more recent patent expirations, Pfizer lost US exclusivity for Rapamune, Detrol LA, and Celebrex (in 2014). In early 2015, versions of Zyvox became subject to generic competition in the US. The company has also recently lost exclusivity for Xalatan, Xalacom, Detrol LA, Viagra, Inspra, Lyrica, and Celebrex in most major European markets. In Canada, it lost exclusivity for Lyrica.
The company is working diligently to launch new blockbusters from its robust R&D pipeline to make up for the off-patent losses and return to revenue growth. The firm has some 90 projects in clinical stages of development, including drugs for Alzheimer's disease, psoriasis, diabetes, lung cancer, epilepsy, pain, and infections.
Revenues from biopharmaceutical products contributed 92% of total revenues in 2015. Pfizer recorded direct product revenues of more than $1 billion for each of 10 biopharmaceutical products: Lyrica, the Prevnar suite of products, Enbrel, Celebrex, Lipitor, Viagra, Zyvox, Sutent, Norvasc, and the Premarin line of products. Combined, these accounted for more than 40% of total biopharmaceutical revenues that year.
While the US remains Pfizer's largest market (accounting for about 45% of revenues), the drugmaker has a strong global presence, with international countries accounting for more than half of sales. The company operates in more than 75 international markets, including Japan (8% of sales), Australia, Canada, Finland, New Zealand, Scandinavia, South Korea, and countries in Western Europe; the company is also growing in emerging markets such as Brazil, China, India, Mexico, Russia, and Turkey.
Pfizer has major manufacturing facilities in Belgium, China, Germany, India, Ireland, Italy, Japan, Puerto Rico, Singapore, and the US.
Sales and Marketing
The company markets its pharmaceuticals directly to doctors, hospitals, nurses, pharmacists, benefit management firms, managed care organizations, employer groups, and patients themselves. Most of its sales are conducted through wholesale distributors including McKesson, Cardinal Health, and AmerisourceBergen, each of which account for around 10% of annual revenues.
The company also markets directly to consumers in the US through direct advertising, including television, print, and digital ads, as well as in-store promotions. It sells its consumer health care products through distributors, pharmacies, retail chains, grocery stores, convenience stores, and other channels.
Advertising expenses totaled some $3.1 billion in 2015 and 2014, up from $3 billion in 2013.
Pfizer has seen a slow revenue decline since 2011 and 2015 was no exception. That year revenue dropped 2% to $48.8 billion due to the expiration of the co-promotion agreement for Spiriva. It also lost exclusivity for Celebrex, Rapamune, BeneFIX, and Zyvox in the US and Lyrica in Europe. Meanwhile, sales of Lipitor and Norvasc continued to slip, and several other products experienced declines. Those declines were partially offset by growing sales of Prevnar 13, Ibrance, Eliquis, Lyrica, Xeljanz, Viagra (GIP), and Nexium 24HR, particularly in the US.
As the company continues to invest in research and development to find new blockbusters, its expenses have risen. After peaking in 2013, net income fell in both 2014 and 2015. In the latter year, it dropped 24% to $6.9 billion as a result of higher restructuring charges (including employee termination costs), acquisition-related expenses, and cost-cutting initiatives. Cash flow from operations has generally been on the decline for the past five years; in 2015, it fell 14% to $14.5 billion.
Though it continues to grow through R&D efforts and acquisitions, Pfizer has been conducting extensive cost-cutting programs in recent years to counteract losses from patent expiration. It has also been selling non-core assets.
Over the past few years Pfizer has been streamlining operations at its research facilities with the overall goal of reducing its adjusted R&D spend to between $6.5 billion and $7 billion. (However, in 2014 R&D expenses topped the $8 billion mark, largely due to an arrangement with Merck to develop potential cancer treatments; those expenses dropped back down in 2015.) As part of this strategy, the company is focusing on its most promising late-stage drug candidates in six key therapeutic areas: immunology and inflammation; cardiovascular and metabolic; oncology; pain and neurology; vaccines; and rare diseases. Pfizer has also increasingly relied on partnerships to build its R&D activities, including some team-ups with fellow top pharma companies such as Bristol-Myers Squibb (cardiovascular and metabolic candidates), and GlaxoSmithKline (HIV).
In addition to partnering with Merck on the development of a cancer antibody in 2014, Pfizer entered into a collaborative agreement OPKO to develop and commercialize that company's long-acting human growth hormone for the treatment of growth hormone deficiency. In 2015 it paid OPKO $295 million and received the exclusive license to commercialize the hormone worldwide.
Recent regulatory approvals include US FDA approvals for Xeljanz (for the treatment of rheumatoid arthritis) and Ibrance (for breast cancer treatment), both received in 2016.
In 2015, Pfizer agreed to grant licenses to the method-of-use patent for Viagra to Mylan, Watson, and Apotex, allowing those firms to provide generic versions of the drug beginning in late 2017. Teva has also been approved to manufacture the drug at that time.
No stranger to large acquisitions, Pfizer in 2014 made a $100 billion offer for fellow pharma firm AstraZeneca. The deal, which was repeatedly rebuffed, would have boosted Pfizer's R&D efforts, moved its headquarters to tax-friendly England, and delivered promising oncology drug candidates. Pfizer eventually gave up on the deal, but took a stab at another large merger, this time with Allergan.
In 2016 Pfizer and Ireland-based Allergan terminated their planned megamerger, which would have been the largest-ever health care deal. The $160 billion deal would have created the world's largest drug maker, surpassing Johnson & Johnson. The failed transaction was structured as an inversion merger, through which Pfizer would have adopted Allergan's home in tax-friendly Ireland. However, pushback from the US government (seeking to prevent losing corporate taxes) ultimately proved too much for the two companies, and the deal was canceled. Pfizer is still exploring selling off parts of itself.
Mergers and Acquisitions
Pfizer has made a number of acquisitions to beef up its development-stage and commercialized offerings and ward off losses from patent expiration. In 2014 Pfizer acquired Baxter International’s vaccine portfolio and manufacturing facility in Austria for about $635 million. It also bought InnoPharma, a pharmaceutical development company with a focus on sterile injectables for the treatment of tumors and central nervous disorders. In early 2015 Pfizer acquired a controlling stake in startup Redvax, a spinoff of Swiss biotech firm Redbiotec; the acquisition provides Pfizer with access to a preclinical human cytomegalovirus (CMV) vaccine candidate.
Also in 2015, Pfizer bought Hospira, which provides specialty injectable drugs and infusion technologies, for approximately $17 billion. The acquisition boosts Pfizer's GEP segment by expanding its portfolio, adding among other products several marketed biosimilars and sterile injectables from Hospira's portolio.
Pfizer was founded by cousins Charles Pfizer and Charles Erhart in 1849.