Pfizer pfabricates pfarmaceuticals pfor quite a pfew inpfirmities. The company is the world's largest research-based pharmaceuticals firm, 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.
While the US remains Pfizer's largest market (accounting for about 40% of revenues), the drugmaker has a strong global presence, with international countries accounting for more than half of sales. Key international markets include Japan (10% 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 operates about 85 manufacturing sites and 15 R&D sites around the globe.
Pfizer has operations in four segments, including three divisions that handle its pharmaceuticals business: Primary care (covering general medical conditions including cardiovascular, neurological, and respiratory ailments); specialty care and oncology (cancer, hemophilia, inflammation, and other conditions treated by specialist physicians); and established products and emerging markets. Its remaining operations are classified under the consumer health care segment (the animal health segment was divested during 2013). In 2013 the company announced a reorganization that will place its operations into three divisions.
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 on November 30, 2011. As generic drugmakers (including Ranbaxy and Actavis) began selling versions of the product, annual Lipitor sales dipped to $9.6 billion in 2011 and then plummeted to $3.9 billion in 2012. Lipitor also lost protection in Japan and most of Europe that year; it had already lost its exclusivity in other markets such as Canada, Mexico, and Spain in 2010. Pfizer has retained some Lipitor revenues through sales in other markets and through direct-to-consumer programs.
In addition to Lipitor, Pfizer had three drugs topping $3 billion in sales in 2012: Lyrica, Prevnar, and Enbrel. Two more blockbuster drugs pulled in over $2 billion (Celebrex and Viagra), and another four offerings are $1 billion earners including Norvasc and Zyvox, as well as Sutent (cancer) and Premarin (menopause). However, several established blockbusters slid below the billion-dollar mark in 2012 and 2011 due to patent expiration, including Effexor (depression), Geodon (schizophrenia), and Xalatan (glaucoma).
Pfizer 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 80 projects in clinical stages of development, including drugs for Alzheimer's disease, psoriasis, diabetes, lung cancer, epilepsy, pain, and infections. In 2011 Pfizer received approval for biotech lung cancer drug Xalkori and pain medication Oxecta, and carcinoma drug Inlyta was approved in early 2012. Later that year it gained FDA approval for leukemia drug Bosulif.
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.
Patent losses and generic competition (primarily on Lipitor sales) caused Pfizer's overall revenues to drop by 13% in 2012 to some $59 billion. The decline was also partly due to reduced earnings from divested assets. However, lower operating expenses and tax provisions (attributed to the company's cost-cutting efforts and productivity initiatives) caused profits to jump by 46% that year to some $14.6 billion.
Patent difficulties also caused a slight decline in 2011 revenues (from $67.8 billion to $67.4 billion) in 2011, though the company's net income rose 20% to $10 billion that year.
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, as well as to integrate the massive 2009 acquisition of Wyeth. Restructuring measures include layoffs, asset divestitures, and the closure of numerous facilities. (It has closed 12 manufacturing sites since the Wyeth acquisition, and aims to exit eight more; it has also closed a handful of R&D sites.) The company reduced its total workforce by about 30% between 2009 and the end of 2012 through Wyeth integration efforts and other reorganization efforts; it has also cut billions in annual costs.
Signaling the start of a new strategy of non-core asset dispositions, Pfizer sold its capsule manufacturing unit, Capsugel, to KKR for $2.4 billion in 2011 and its nutrition business to Nestlé for about $11.8 billion in cash in 2012. Pfizer then placed all of its animal health operations into its Zoetis subsidiary and raised some $2.2 billion by selling about 17% of Zoetis through an IPO in early 2013; it sold the rest of Zoetis through further share offerings later that year.
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 by the end of 2013. The company reported $7.3 billion in adjusted R&D expenses during 2012 (down from $8.4 billion in 2011). As part of this strategy, the company is focusing on its most promising late-stage drug candidates in five key therapeutic areas: immunology and inflammation; cardiovascular, metabolic, and endocrine disease; oncology; pain and neurology; and vaccines. 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), GlaxoSmithKline (HIV), and Bausch & Lomb (ophthalmic ailments).
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. Its boldest move came with the 2009 acquisition of pharma rival Wyeth for $68 billion, which expanded its therapeutic offerings in a wide variety of areas.
To expand its prescription drug operations in the high-growth market of pain relief treatments, the company purchased and absorbed King Pharmaceuticals for about $3.6 billion in 2010, adding products including muscle relaxant Skelaxin and pain med Avinza. The deal, completed through a cash-for-stock tender offer, also expanded Pfizer's operations in areas including drug delivery technologies (such as King's emergency allergen device EpiPen), pain therapy research, and animal health products.
Pfizer has also expanded its pharmaceutical, consumer health, and animal health through smaller acquisitions in recent years, including purchases of Alacer, Icagen, and Synbiotics.