Pfizer is the world's biggest drug company, with a huge global sales force and a strong portfolio of "blockbuster" prescription drugs. (Rival Johnson & Johnson is larger by total healthcare revenues). The group became a household name in the late 1990s with its development of the break-through erectile dysfunction drug Viagra, which was at the time the world's fastest-selling pharmaceutical product. The company went on to strengthen its position with two ambitious acquisitions, snapping up partners Warner Lambert and Pharmacia to order to tighten its grip on key product Lipitor, which topped Viagra to become, for several years, the world's biggest selling drug. However the market became considerably tougher during 2005 and even Pfizer began to feel the effects of competition and increased scrutiny from regulators. In 2006, it sold its huge non-prescription healthcare division to Johnson & Johnson in order to narrow its focus on higher-margin pharmaceutical products. Yet that deal was subsequently perceived to have been a serious strategic error, removing the benefits of consumer healthcare's steady cash flow. As a result, in 2009, Pfizer boosted its pharma portfolio and re-entered OTC with a $68bn takeover of rival Wyeth. In 2014, its target was British rival AstraZeneca, but that group evaded capture with a vigorous opposition campaign. Instead, Pfizer turned its attention in 2015 to generics developer Hospira and also agreed to acquire Allergan for an astronomical $160bn in cash and debt. However that mammoth deal was eventually abandoned in 2016 as a result of changes in US tax rules. Who will be Pfizer's next target? Many commentators believe it may be Bristol-Myers Squibb. In the mean time, the group announced another deck-clearing exercise with the effective sale - yet again! - of its OTC division into a new joint venture controlled by GlaxoSmithKline.
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Adbrands Daily Update 29th Jul 2019: In another significant alteration of its portfolio, Pfizer has agreed to merge its off-patent "established" drug division, now known as Upjohn, into smaller rival Mylan. The latter is best-known for EpiPen, and a collection of generic products. Under the proposed deal, it will absorb Pfizer's sizeable portfolio of patent-expired household name products including Viagra, Lipitor, Norvasc and Lyrica. Pfizer's shareholders will end up with around 57% of the merged entity, which would be led by Upjohn CEO Michael Goettler. That deal, together with the spin-off of Pfizer's consumer healthcare business into GSK, will reduce Pfizer to its core patent-protected prescription pharmaceutical division. Sales from that business in 2018 were $33.3bn, compared to $53.6bn for the whole group pre-divestments. The new Upjohn/Mylan entity - its name has not yet been confirmed - will have sales of around $20bn.
Adbrands Daily Update 18th Jun 2019: Pfizer is back in the acquisition business, though not quite at the levels of previous deals. In his first purchase since becoming CEO, Albert Bourla agreed to buy oncology drug developer Array BioPharma for around $11.4bn. The smaller company already markets twin drugs Mektovi and Braftovi, which are used to treat melanoma and are also experiencimng positive results for bowel cancer. It also has a revenue stream from royalties for several other drugs which it originally developed but have been licensed to other groups.
Adbrands Daily Update 30th Jan 2019: Pfizer's new CEO Albert Bourla ruled out the possibility of big acquisitions in the near future, and reaffirmed his focus on "innovation for growth". In its favour, the group has no major impending patent expiries and is also sitting on what Bourla called Pfizer's "greatest pipeline ever" of new drugs. "We need to maximize the chances of achieving the potential of those new launches," he said, and the challenges of a big acquisition would "derail us". Yet the forecast for the current year is flat or worse, not least with the expected demerger of consumer healthcare in 3Q. Revenues for 2018 edged up just 2% on an operational basis to $53.6bn and net income almost halved to $11.2bn. That was partly the result of an unfavourable comparison with big tax gains in the year-ago 4Q, but also a substantial impairment charge in the most recent year. Most of Pfizer's main blockbusters notched up modest or better increases in 2018, with the exception of Viagra, sales of which plunged following its switch to OTC. That was countered by welcome rebounds for older products like Lipitor and Norvasc which had been in steady decline, and also newly earned blockbuster status for anti-smoking drug Chantix. As a result, Pfizer finished 2018 with nine $1bn-plus sellers, one more than it had the previous year.
Adbrands Daily Update 19th Dec 2018: It's never too late in the year for a game-changing deal. GlaxoSmithKline will become the biggest player by far in global OTC medicines after agreeing to take control of Pfizer's equivalent business in an arrangement that mirrors GSK's previous partnership with Novartis, which it now wholly owns. A new joint venture is to be created, with ownership split 68/32% between GSK and Pfizer, combine both companies' OTC products. Pfizer had been investigating options for divesting its own consumer health division for some time. An auction earlier this year failed to solicit suitable offers. GSK CEO Emma Walmsley said she intends to spin off the resulting business before 2022 as an entirely separate entity, leaving GlaxoSmithKline itself as a dedicated prescription pharmaceutical and vaccines developer. Following completion, the new business will have sales of around $12.7bn.
Adbrands Weekly Update 4th Oct 2018: Ian Read, CEO of drug group Pfizer, will pass over that role at the end of this year to current COO Albert Bourla, a 25-year veteran of the company. Read has been CEO since the end of 2010; he will remain executive chairman.
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Free for all users | see full profile for current activities: Cousins Charles Pfizer and Charles Erhart arrived in America from Germany in the 1840s. Pfizer had studied chemistry back home, and in 1849 the two formed chemical firm Charles Pfizer & Company in New York. Erhart's training was in confectionery, and their first product was a new formula for the foul-tasting worm treatment santonin, flavoured with toffee to improve its palatability. Following the success of this initial venture, the business expanded rapidly, beginning the manufacture of tartaric acid and cream of tartar for use in the food and chemical industries in 1862.
By the end of the century, Pfizer's most important product was citric acid, used primarily for medicinal purposes, as well as for foods, soft drinks, cleaning fluids and industrial processes. Traditionally, this was processed from sour citrus fruits, imported at some expense from Italy. When supply of the raw material stopped as a result of World War I, Pfizer faced a serious problem. In 1917, the company recruited government food chemist Dr James Currie, who had discovered that citric acid was also created naturally during the fermentation of cheese. At Pfizer he developed a system for creating the acid from sugar. After several years of testing, the process (known as SUCIAC, or Sugar Under Conversion Into Acid Citric), was perfected. By 1929, Pfizer was able to generate its entire production run of citric acid from cheap molasses, using huge fermentation vats, and at a fraction of the original cost.
This breakthrough was to have far more significant results a decade later. At the same time that Currie was perfecting his SUCIAC process, Scottish bacteriologist Alexander Fleming was discovering that a comparatively ordinary green mould produced a substance capable of killing many of the common bacteria that infect humans. Fleming did not have the resources to isolate the substance, which he named penicillin, and his research was effectively shelved for more than a decade. The outbreak of World War II in 1939 created an immediate and urgent need for anti-infection agents. The British government reopened the project, calling on the US for assistance in mass-producing the drug. In 1941, Pfizer was one of 20 companies which began the race to find a way of creating penicillin in the quantities required for what had now become a global conflict. In 1942 the company discovered that the deep-tank fermentation units used for citric acid production were also ideal for penicillin, and Pfizer turned over most of its production facility to the new wonder-drug. That same year the company went public. All 20 companies began production using the same process, but few others could match Pfizer's supply. The company claims that 90% of the penicillin used at the D-Day landings in 1944 was manufactured by Pfizer, as well as half of the entire supply used for the remaining two years of the war.
Until this point, Pfizer had been primarily a manufacturing facility, mass-producing substances developed by other companies under contract and selling them. After the war, Pfizer chairman John Smith drew up the blueprint for the transformation of the company into a pharmaceutical business in its own right, ordering his successor, John McKeen, to search for drugs which Pfizer would own as well as manufacture. The first product to be developed exclusively by Pfizer scientists was named Terramycin, a powerful antibiotic extracted from soil. In 1950, the company formed a large and aggressive salesforce to market this new drug under the Pfizer name not just in the US but globally. This campaign also effectively marked the beginning of medical advertising in the US. Pfizer hired long-established agency William Douglas McAdams to advertise the product commercially, and they introduced many of the strategies now taken for granted, such as direct mail and sampling units, and above all print ads in medical journals. In 1952, McAdams paid to insert an entire issue of Pfizer's house magazine Spectrum into the Journal of the American Medical Association, an unprecedented move. The same aggressive approach was adopted outside the US, with the result that within seven years, Pfizer's international division had grown sales from virtually nothing to over $60m annually.
In 1952 the company opened an agricultural division, devoted to animal health research. A year later Pfizer acquired Roerig & Company, makers of nutritional supplements, and formed a partnership with Japanese company Taito in 1955 (they took control of the joint venture forty years later). In 1963, consumer skincare and medicine business Desitin joined the portfolio, along with Coty, one of the world's oldest perfume companies, and a number of medical device manufacturers. Expansion of the company's hard-nosed sales force and new manufacturing and research facilities worldwide had pushed sales over $200m by 1966.
The company's different research departments unveiled a series of new products over the coming years. For example, in 1954, Tetracyn was Pfizer's first entirely synthetic antibiotic. However few products in this increasingly global company had the international impact of Terramycin. In 1971, all the group's chemical, pharmaceutical and agricultural research facilities were combined as the Central Research Division to coordinate on the development of "blockbuster" substances. Feldene, launched in 1982, became the world's largest-selling prescription anti-inflammatory medication, and went on to be the first Pfizer product to achieve sales of $1bn. Cardiovascular treatment Norvasc was introduced in 1989.
In the 1990s, Pfizer refocused on its pharmaceutical business, then ranking around #14 worldwide. In 1992 the company sold off Coty - by then North America's leading mass-market fragrance company - to the Benckiser family, as well as heart-valve maker Shiley. The rest of the group's various medical products businesses followed over the course of the decade. In 1995 the group acquired SmithKline Beecham's animal health division, merging it with its own to create the world's leading animal health company. The same year, the group bought the Bain de Soleil skincare brand from Procter & Gamble (but sold it again in 1999).
At the same time, as most drugmakers worldwide began cutting their sales forces and marketing budgets, Pfizer took the opposite approach, beefing up its marketing departments and sales network. As a result, Pfizer's next pharmaceutical launch received the full benefit of the company's uniquely aggressive marketing skills. Introduced in 1998, Viagra achieved an unprecedented level of success, grabbing headlines around the world and breaking records at the time as the world's fastest-selling drug. Equally important was the marketing alliance formed a year earlier with smaller rival Warner-Lambert. The latter had developed a ground-breaking cholesterol lowering drug, marketed under the name Lipitor. Aware of the drug's huge potential, but lacking a global sales force to do it justice, Warner agreed a marketing alliance with Pfizer's renowned sales division. Lipitor was another massive success, the first pharmaceutical product to achieve sales of $1bn in its first year on the market. The following year sales more than doubled to $2.1bn.
In 1999 Warner-Lambert surprised the industry as a whole, but Pfizer in particular, with the announcement that it had agreed to merge with US rival American Home Products (now Wyeth) to create the world's biggest drug company, to be called American Warner. [See Warner-Lambert profile for more]. Concerned about the inevitable damage to the Lipitor partnership, and keen to build its own business, Pfizer launched an unprecedented hostile bid for Warner. Hostile takeovers are very rare indeed in the pharmaceutical world, where it is essential to retain the goodwill of the core asset, the research scientists. Pfizer, however, argued it was the better partner, backing that claim with a handsome premium to Warner shareholders, as well as the promise of substantially increased R&D budgets. Despite Warner's attempts to escape a hostile takeover, Pfizer finally clinched the deal in February 2000, paying $90bn in stock. Pfizer inherited several non-core businesses in the takeover of Warner-Lambert, but was barred from making any disposals for two years following completion of that deal. The group began the process of soliciting bids for three business units in 2002. The biggest of these was gum and mints manufacturer Adams, sold to Cadbury Schweppes at the end of 2002 for $4.2bn. Tetra, the world's leading specialist in fishkeeping and reptile-care products, was also sold at the end of 2002, and shaving products division Schick-Wilkinson Sword was sold to battery manufacturer Energizer for $930m.
In 2003, Pfizer was back on the acquisition trail again in order to consolidate its hold on another blockbuster drug. Celebrex had been discovered by Searle, a division of Pharmacia Corporation. Like Lipitor, it was launched through a marketing partnership with Pfizer, and set a new record in 1999 for the most successful pharmaceutical product launch in the US, overtaking Viagra. In 2003, Pfizer negotiated a $60bn takeover of Pharmacia to seize full control of the drug and its follow-up Bextra. Both products were badly dented however by the controversy over COX-2 inhibitors that surfaced towards the end of 2004.
There were a number of additional deals over the period. The group acquired biotechnology groups Eyetech (in 2002 for $745m) and Esperion Therapeutics (in 2003 for $1.3bn). In 2004 the group paid $125m for Meridica, a British company which had developed a new form of asthma inhaler. Pfizer also sold off several products to comply with regulators' conditions for the Pharmacia merger. Oral contraceptives Estrostep and Loestrin and the hormone replacement therapy, FemHRT were transferred to Irish pharma business Galen for $484m in 2003, and an experimental urinary incontinence drug was sold to Swiss drugmaker Novartis for $225m.
However the combined effects of fierce generic competition, looming patent expirations, a slowing development pipeline and far tighter regulatory curbs began to bite from 2005 onwards. In 2006 the group took the decision to divest its large but comparatively low margin consumer healthcare division, and launched a major restructuring programme. During 2007 alone, Pfizer reduced headcount by more than 11,000 people, and exited six manufacturing sites and two R&D sites. See full profile for current activities
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