Competitive products
Competition from manufacturers of generic drugs is a major challenge for Pfizer’s branded products, and the loss or expiration of intellectual property rights can have a significant adverse effect on their revenues. If the patent protection for one of the products expires, they can lose a major portion of revenues for that product in a very short time period, which can adversely affect their business. It is expected that over the next few years a number of the company’s current innovative products are going to face significantly increased generic competition. Also, the patents covering several of their medicines are being challenged by generic manufacturers.
The timing or impact of the introduction of competitive products
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It affects or is created by business strategy decisions. It´s critical to the growth and performance of certain firm. These risks may be triggered from inside or outside of the organisation. Once they are understood, the firm can develop effective, integrated, strategic risk mitigation.
Pfizer growing strategy for the last decade is by mergers, such as Warner–Lambert (2000), Pharmacia (2003), and Wyeth (2009). The firm strategy to grow by mergers can cause even greater potentially additional risks, not just strategic risk. Some people believe when firm is not growing organically, thus cannot sustain its competitive advantage in the long-term. In pharmaceutical industry we believe M&A are crucial to exploit economies of scope (R&D synergies) and importantly, not causing trademark infringement with potentially similar new drugs. On the other side, Pfizer experiences with numerous mergers are seen as an “asset” to reducing risk to minimum. Simply they know where and how can they create
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Recent example show how can poorly managed political risk leading to have an enormous impact on firm. Pfizer was trying to merge with Irish pharmaceutical firm Allergan Plc in $150 billion worth merger, specifically for the lowering tax reasons. Pfizer as one of the biggest drug player in the world is too important for USA, that Obama administration took actions to prevent merger between two firms. The result was on 5th of April 2016, Pfizer Inc. and Allergan PLC officially terminated their planned $150 billion merger after the Obama administration took aim at the deal that would have moved the biggest drug company in the US to Ireland to lower its taxes. Pfizer will pay Allergan a breakup fee of $150 million. The breakup fee can be considered as a price for not managing political risk properly. Of course there were so other costs (consulting contracts, lawyers, opportunity cost etc.) concerning merger. Share price of Allergan Plc was on the day of announcement that merger is terminated fell from $277.55 to $236.55, resulting in 14.8% daily loss. Pfizer share price rose from $30.95 to $31.70, resulting in 2.4% daily
...s: each was licensed to a much larger firm because the originator firm lacked the capability to market the drug. the larger analysis of blockbuster drugs showed that this thread is common across blockbusters that originated with smaller firms. The largest firms appear to hold a significant advantage in commercialization—they are highly effective at extracting the value of innovative drugs . The study suggests some qualified reasons for skepticism that the end of the blockbuster era will bring a major upheaval in the industry. Large firms’ advantage in commercialization suggests that they may maintain their dominant position. Marketing of pharmaceuticals may move from broad-based to targeted approaches, but a company with a broad reach may still have an advantage in identifying markets for niche drugs and commercializing the drugs within those more narrow market
A merger is a partial or total combination of two separate business firms and forming of a new one. There are predominantly two kinds of mergers: partial and complete. Partial merger usually involves the combination of joint ventures and inter-corporate stock purchases. Complete mergers are results in blending of identities and the creation of a single succeeding firm. (Hicks, 2012, p 491). Mergers in the healthcare sector, particularly horizontal hospital mergers wherein two or more hospitals merge into a single corporation, are increasing both in frequency and importance. (Gaughan, 2002). This paper is an attempt to study the impact of the merger of two competing healthcare organization and will also attempt to propose appropriate clinical and managerial interventions.
Lehman, Bruce. 2003. “The Pharmaceutical Industry and the Patent System”. International Intellectual Property Institute. Pages 1-14.
Threat of new entrants is relatively high. Companies forming alliances are potential rivals. Even if earlier such company was not considered to be a threat, after merging with some research and development company or forming alliance with another pharmaceutical company it would become a rival to Eli Lilly. The threat is however weakened by significant research and development costs necessary to successfully enter the business. Eli Lilly’s focus on a relatively narrow market of sedatives and antidepressants weakens the threat of new entrants, but other products that form lesser part of company’s sales such as insulin and others are exposed to high threat of new entrants. The need of obtaining certificates and licenses also weakens the threat of new entrants. Discussed above leads to the conclusion that threat of new entrants is medium.
This paper is a Macroeconomic Forecast Outline of Pfizer, Inc. This outline will identify main economic indicators for Pfizer as a business entity and as a representative of pharmaceutical industry. This paper will identify sources of various data collected based on economical activity and relationships between different economical indicators.
Due to patents, Pfizer and other companies in the pharmaceutical industry are not always competing in a monopolist’s competition. When a business has a patent, they are the only manufacturer who can produce the product until the product expires, so it is clear that the firm can act as a monopoly while in control of the patent. As a monopolistic company, the company has market power, giving it the capability to adjust the market price of a good. The main goal for a monopolist and business owner is to maximize their profits, however, there are rules they have to abide by. Monopoly companies still have to keep up with the market demand curve.
Merck & Co. has to be aware of the economy as with any industry. Within the recession, more and more were looking towards generic substitutes. This can at times not be a problem with patents. However, once a patent is up, a competitor who develops generic versions of Merck’s products becomes a low-cost competitor. However, during the recession from 2008 – 2009, Merck didn’t see any drop in sales. Actually, they were able to keep a continual increase in sales and net income.
Pfizer's primary weakness is its lack of drugs in its pipeline and its inability to have new drugs approved for use. The company does not have significant drugs coming through the development process, at least not that will be ready for the market in the next few years. This puts the company in a weak position as it struggles with drugs that are already facing competition from generic alternatives. The highly successful epilepsy drug Neurontin lost patent ...
Maris, D. (2012) ‘What’s Really Driving the Pharma M&A Frenzy’, Forbes, 27 April [Online]. Available at: http://www.forbes.com/sites/davidmaris/2012/04/27/pharma-feeding-frenzy/ (Accessed at: 15 December 2013)
10. Collis, David, and Troy Smith. "Strategy in the Twenty-First Century Pharmaceutical Industry:Merck&Co. and Pfizer Inc." Harvard Business School, 2007: 8-12.
The original case was about Chiron, a biotechnology company, in the United States. Chiron was acquired in 2006 by Novartis, a Swedish company formed by the merger of Ciba-Geigy and Sandoz Laborites. Since Chiron itself no longer exists, we have focused our case around Novartis as of 2013. Novartis specializes in diagnostic services, generic and name brand medications, ophthalmological tools, as well as a small segment in pet health. The business prides itself in producing the latest drugs, hiring the best talent, and being a global leader in the pharmaceutical industry. Over the years the company has survived by focusing on its internal development in addition to a series of mergers, acquisitions, and corporate restructurings. Being a pharmaceutical company, the entire population is impacted: patients, physicians, employees, hospitals, and investors are some of the most important stakeholders.
PROBLEM STATEMENT Teva Pharmaceuticals, the first multinational pharmaceutical company in Israel, has become a successful global giant in the industry of generic drugs. After experiencing a long period of success and growth in the generic drug industry against some big western pharmaceuticals, the company had acquired many well known pharmaceutical companies and had achieved its goal of $1 billion. theory seemed to be in trouble in building a new strategy and vision to compete with the rapidly growing generic industry. They confronted two big issues as key hurdles in their way.
When two companies decide to combine forces and become one bigger, richer mega company, it is called merging. This process forms a new company, combining the money and ideas of what used to be two different entities into one. This, however, is not the only thing that results from merging two different companies, and since we will be discussing the merging of two companies in the pharmaceutical industry, the impact will be incredible. Of course, the merging of two companies will not only have positive impacts but it will have many negative side effects as well. Furthermore, depending on the size of the merging companies and the goals of the people leading these companies there will always be contradictions according to the long-term goals or short-term goals depending on what both parties’ interests are. Our company, Verduga Inc. is contemplating to merge with Coronado-Salinas Inc., so before we rush into such a merger we must contemplate the positive and negative aspects of such a move. When it comes to mergers there are always many possible positive and negative impacts due to the effects of merging; these effects more widely impact the fields on research and development, on employment and management, stocks and shareholders, monopolization, and ingenuity.
Mergers and acquisitions immediately impact organizations with changes in ownership, in ideology, and eventually, in practice. There are multiple reasons, motives, economic forces and institutional factors that can, taken together or in isolation, influence corporate decisions to engage in mergers or acquisitions. The financial risks of merging with or acquiring an organization in another country and how those risks can be mitigated are important issues for corporations to conduct research on. This paper will examine the sensible and dubious reasons for mergers and acquisitions and the benefits and costs of the cash and stock transactions.
Identify the potential risks which affect the company and manage these risks within its risk appetite;