Business model of Pfizer

Customer Segments

Pfizer sells its products to a range of customers active within the healthcare and medical sector. The Company’s prescription pharmaceutical products and consumer health products are sold principally to wholesalers and distributors, as well as to retailers, hospitals, clinics, government agencies and pharmacies. Pfizer also sells its vaccines products in the US directly to individual provider offices, the Centre for Disease Control and Prevention and wholesalers.

In 2015, Pfizer’s top three biopharmaceutical wholesaler customers – McKesson, AmerisourceBergen and Cardinal Health – accounted for approximately 34% of the Company’s total revenues, and around 74% of its total US revenues.

Pfizer serves customers across four geographic segments: the US, Developed Europe, Developed Rest of the World, and Emerging Markets. The US remains the Company’s most significant market, which accounts for almost half the Company’s total revenue.

Value Propositions

Pfizer provides value to its customers in the following ways:

• Its brand reputation and industry standing, with the Company being one of the largest and most well-established pharmaceutical groups in the world, with a track-records for providing quality products;
• Its broad portfolio of products, with the Company delivering medications and products that target a broad spectrum of customers and cover a range of ailments and conditions;
• Its international sales and marketing reach, with the Company serving customers across developed markets including in Europe, North America and Asia, as well as emerging markets across Latin America, Africa and the Middle East; and
• Its commitment to innovation, with the Company devoting a substantial portion of its revenue to research and development activities, with a view to providing new and unique products.

Channels

Pfizer operates a website at www.pfizer.com, through which it provides information to customers on its various products, services and business activities. The Company also operates regional websites in various languages for its international customers. Pfizer does not operate an online sales channel.

Pfizer makes the majority of its sales through its own in-house sales and marketing organisations. The Company’s sales and marketing teams are organised by segment and by geographic region, with Pfizer maintaining a sales presence across countries in Europe, North America, Asia Pacific, Latin America, and Africa. The Company’s consumer products are also sold through pharmacies, retail chains and grocery and convenience stores.

Pfizer’s direct sales force is supported by a network of channel partners, primarily distributors, in smaller markets where it does not have a significant presence.

Customer Relationships

While Pfizer does maintain an online presence, the Company does not make its products available online on a self-service. Consumers are able to purchase products on a self-service basis from retail chains and pharmacies, but not directly from Pfizer.

Pfizer’s customers must interact directly with the Company’s sales teams, typically agreeing long-term, multi-year contracts. Consulting directly with customers enables Pfizer to provide a bespoke service that covers the specific needs of each individual client.

Pfizer provides worldwide contact information, enabling customers to get in touch with the relevant company department in the correct jurisdiction in order to get real-time assistance from Pfizer representatives. This includes email and telephone support. The Company also provides online information and FAQs through its website.

Customers can also interact directly with Pfizer through its social media accounts, including with YouTube, Facebook, Twitter, Sina Weibo, LinkedIn and SlideShare.

Key Activities

Pfizer is a research-based multinational biopharmaceutical group. The Company is engaged in the developing, production and sale of prescription and over-the-counter medications and healthcare products. Pfizer’s product portfolio spans medicines, vaccines and medical devices, as well as consumer healthcare products.

The Company’s commercial operations comprise two businesses: Innovative Products business and Established Products business. The Innovative Products business is further segregated into of two segments: the Global Innovative Pharmaceutical segment – which covers the development of new medications and treatments – and the Global Vaccines, Oncology and Consumer Healthcare segment, which focuses on consumer health and cancer treatment. Pfizer’s research activities focus on six areas, including immunology and inflammation, cardiovascular and metabolic diseases, oncology, vaccines, neuroscience and pain, and rare diseases.

Key Partners

Pfizer partners with a range of international partners throughout the development, production and sale of its products. These partners can broadly be categorised as follows:

• Research and Development Partners, comprising academic and healthcare institutions which assist in the development of the Company’s various products by providing expertise, resources and technology;
• Manufacturing and Supply Chain Partners, comprising manufacturing and pharmaceutical companies that assist the Company in producing its products by providing supplies, facilities and expertise;
• Channel Partners, comprising distributers and independent sales agents that extend the Company’s own in-house sales and marketing reach;
• Strategic and Alliance Partners, comprising pharmaceutical and technology companies with which the Company collaborates on joint venture projects and shares resources; and
• Corporate Responsibility Partners, comprising non-profits, non-governmental organisations and public bodies with which the Company cooperates on social projects.

Pfizer includes Parexel, Icon, PPD, Merck, IndieGoGo, Rexall and NovaMedica among its partners.

Key Resources

Pfizer’s key resources are its technologies and intellectual properties, its research and development facilities, its manufacturing and supply chain networks, its sales and distribution channels, and its personnel.

Pfizer uses a range of patents and trademarks to protect its intellectual properties, which it considers to be material to its ongoing business activities.

Searches of records published by the US Patent and Trademark Office identified a number of patent applications filed in Pfizer’s name, including applications entitled ‘Diacylglycerol acyltransferase 2 inhibitors’, ‘Substituted amide compounds’ and ‘Cytotoxic peptides and antibody drug conjugates thereof’.

Cost Structure

Pfizer incurs costs in relation to the development of its products, the management of its supply chain, the production of its products, the sale and marketing of its products, the management of its partnerships, and the retention of its personnel.

Pfizer accrues substantial research and development costs. In 2015 these expenses to $7.7 billion, compared to $8.4 billion in 2014. The Company also accrues significant general and administrative costs, comprising the payment of salaries and benefits to its international workforce of around 98,000 and the payment of rental and utility fees for its network of international offices and facilities.

Revenue Streams

Pfizer generates revenue through the development and sale of pharmaceutical products – including prescription medicines, over-the-counter medications, consumer healthcare products and specialist oncology solutions. The Company also derives a small amount of revenue from various alliance agreements, under which it co-promotes products created by third-party companies.

In 2015, Pfizer generated $48.85 billion in total annual revenue, down slightly on the $49.61 billion recorded by the Company in 2014. The Company’s Global Established Pharmaceutical segment is its largest revenue generator, accounting in 2015 for $21.59 billion in revenue. Pfizer’s Global Innovative Pharmaceutical segment and Global Vaccines, Oncology and Consumer Healthcare segment generated $13.95 billion and $12.80 billion respectively.