SWOT Analysis – Pfizer Korea

Overview

Pfizer Inc. is a multinational pharmaceutical corporation in the United States. First founded in 1849, Pfizer Inc. produces a wide array of medical products ranging from Lipitor, a blood cholesterol drug, Lyrica, an antifungal pill, to Viagra, a drug that treats erectile dysfunction.

In 1969, Pfizer Inc. merged with Chung-ang Pharmaceuticals marking the start of their Korean branch, Pfizer Korea. At the time of the merger, Chung-ang Pharmaceuticals was a newly founded company of 10 years located in Gwangjingu, Seoul. In 1999, Pfizer Korea introduced Viagra into the Korean market. The Viagra market was monopolized by Pfizer Korea until the inevitable patent expiration in 2012. Most of Pfizer Korea’s profits depend heavily on Viagra sales but other products such as Lipitor, and Champix, an anti-smoking pill, are also steady sellers.

Pfizer Korea puts a great emphasis on corporate social responsibility and showing reverence towards humanity. To achieve this goal, Pfizer Korea holds various projects and events such as providing scholarships for financially challenged university students, funding medical research in Korea, and children raised by their grandparents. Pfizer Korea also plays a big role in providing medical and financial aid for worldwide countries suffering from catastrophic natural disasters such as Pakistan in 2005, Haiti in 2010, and Japan in 2011.

Strength

Pfizer Korea has a large range of medicines, as well as medicines which are famous to people such as Viagra, Champix and Lipitor. It is true that the profit share of Pfizer Korea is quite dependent on its representative goods, but profits of other medicines cannot be ignored as well. This can be confirmed by the financial statement of Pfizer Korea which was published by Sam-Jung accounting firm (2014). According to the analyst report about Pfizer Korea’s stock (Shinhan Securities, 2014), patents of Pfizer Korea’s main products had expired leading to decreased competitiveness against generic products. Despite this, the Pfizer Korea’s net income in 2014 increased compared to the previous year. Their financial statement shows that Pfizer Korea’s wide range of products has managed to stable its overall profits. It also means that the Pfizer Korea has a financially firm fundament.

Additionally, Pfizer Inc.’s dominance in the world-wide market is another strength of Pfizer Korea. Pfizer Inc. which is the second biggest medicine company in the world has a various range of medicine from Viagra to Lipitor. Even though Novartis International is the biggest medicine company in the world for now, Pfizer Inc. was the leading company in the field until 2013. Although the asset size of Pfizer Korea has shrunk, it still has a huge amount of patents and R&D results nevertheless.

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Therefore, Pfizer Korea, the subsidiary company of Pfizer Inc., has an abundant supply of high-quality medicine to dominate the domestic market and fulfill the needs of customers.

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Weakness

One of Pfizer Korea’s major weaknesses is its large dependency on its Viagra sales. Korea has multiple steady selling products such as Lipitor, Champix, and Prevana13. But, Viagra is the bread and butter of Pfizer Korea’s sales and no other product of Pfizer Korea comes close to Viagra in terms of sales. Unfortunately, Pfizer Korea’s patent on Viagra pill expired in 2012. Even before, Pfizer Korea’s once matchless status in the field of erectile dysfunctional pills started to be shaken by generic pills which were cheaper yet similarly effective. After the expiration of the patent, generic pills swept the market, forcing Pfizer Korea gave the position of number one Viagra seller to Hanmi Pharmaceutical. Also, Pfizer Korea’s Viagra sales began to plummet forcing them to join hands with Seoul Pharmaceutical, a small scale pharmaceutical specializing in generic Viagra pills. They sold generic pills with Pfizer Korea’s logo stamped on the box as an attempt to make up for decreasing sales. Even with these hardships Pfizer Korea’s Viagra is one of the bestselling erectile dysfunction pills in the market, but it is dangerous for Pfizer Korea to depend so heavily on a single product.

Also, Pfizer Korea has a long history of bad blood with its labor union. Ever since Pfizer Korea’s foundation in 1999, the Pfizer Korea Animal Health Department union has fought against oppression. In a mere few years, the entire members of the union were fired successively. In 2004, there were some movements to revive the labor union. Again, all but two employees were fired as an attempt to oppress the labor union. In 2009, the union joined the National Joint Labor Union and started holding more than a hundred periodical assemblies protesting against Pfizer Korea’s suppression over a span of one year. Even so, neither Pfizer Korea nor the union has managed to reach an agreement. No major outbreaks of dispute have happened since 2010, but Pfizer Korea’s reluctance to hear the voice of its workers is quite noteworthy.

Opportunity

The world’s aging population can be a window of opportunity for Pfizer Korea’s part. The elderly population is growing each day, especially in Korea. It is estimated that in 2020, half the Korean population will be over 65 years of age. As people age they require more frequent and high quality healthcare which means that there will be an increasing demand for medication as well. When in need of medication, it is likely that people, elderly people in particular, will choose familiar certified brands that have proved competent for decades. In other words, it is likely that they will choose Pfizer Korea’s products. It is true that in the past few years Pfizer Korea has gone through some difficulties. Even so, Pfizer Korea is still recognized as a first class pharmaceutical company that has kept up with its reputation for the past decades. Because of this, many people will make an educated guess to choose Pfizer Korea’s products due to its concrete reputation that has been formed for the past few decades.

To add on, the Korean government’s new anti-smoking policy which was first launched in 2015 February could work to Pfizer Korea’s favor. This policy financially supports people who wish to quit smoking to receive therapy and treatment from medical facilities and provides them with anti-smoking medication. Prior before this policy, Pfizer Korea’s anti-smoking pill, Champix, was already the leading seller in the anti-smoking pill market. The new anti-smoking policy along with the rise of cigarette prices has boosted the sales of Champix greatly by two billion won. There a few other contenders attempting to compete with Champix but none are big enough to become a threat to Champix in sales wise. If this is kept up, it is possible for Champix to monopolize the anti-smoking medication field as it has dominated the Viagra market.

Threats

As known by many, Viagra is the most the most representative products that takes majority of Pfizer Korea’s sales revenue is Viagra. When Pfizer Korea first developed Viagra, erectile dysfunction treatment, it became explosively popular among men who had problems with their sexual lives. It would not be wrong to say that Pfizer Korea became popular among people by Viagra. So Pfizer Korea made lots of profits by selling this pill. But the problem occurred in May, 2012. On May 29th, 2012, the Pfizer Korea’s patent for sildenafil has expired. Sildenafil is the main component for making Viagra. Lots of generics for Viagra has been launched from other companies. Since sales of Viagra was the one of the main sales sources for Pfizer Korea, this expiration of patent for Viagra can threaten future sales amount of Pfizer Korea. To overcome this threat, Pfizer Korea sued several Korean pharmacy companies over issue related to patent of Viagra. But on April, 2015, the judge did not take Pfizer Korea’s side. They declared defeat of Pfizer Korea, which now means it is officially permitted to sell generic drugs for Viagra. If Pfizer Korea does not come up with good solution, this expiration can be a big threat.

Also Champix, the anti-smoking assistant pill is also a popular product of Pfizer Korea. But recently there was a news article that says Champix can cause people to have seizures. Besides having seizures, there was also research that there can be some side effects for these kinds of pills, such as causing depression. If it gets worse, some people even end up committing suicide. Although there is not any concrete evidence of this yet, since people nowadays are very concerned about their health, the spreading of these kinds of news articles is not preferred in view of Pfizer Korea. If some bad beliefs are spread among people, it will be directly reflected to their sales, and it can be another threat. So it is important for Pfizer Korea to conduct research to prove that their medicines are safe enough to take. In fact there has been lots of news articles announced which says the research has been thoroughly conducted and it is safe.

Sources

Ban, K.U. (2015). Korea’s anti-smoking policy starts in earnest- a green light for pharmaceuticals. Retrieved from http://news.mtn.co.kr/newscenter/news_viewer.mtn?gidx=2015022509094895118.

Davis, Christopher F. (2014). Pfizer’s Pipeline: 2 Drugs That May Drive Future Revenue. BUSINESS Cheat Sheet. Retrieved from http://www.cheatsheet.com/business/pfizers-pipeline-2-drugs-that-may-drive-future-revenues.html/?a=viewall.

Financial Times. (2015). PFE:NYQ Summary. Retrieved 22, May 2015 from http://markets.ft.com/research/Markets/Tearsheets/Summary?s=PFE:NYQ.

Kang, S.C. (2010). Pfizer Korea collides with union workers. Retrieved from http://www.newscham.net/news/view.php?board=news&nid=56718.

Kim, K.W. (2015). Materials detected that can cause potential disease from drugs of Pfizer. Retrieved from http://www.yonhapnews.co.kr/bulletin/2015/02/13/0200000000AKR20150213182400017.HTML?from=search.

Ko, M.H. (2015). Seizure possibility of Champix, the anti-smoking pill of Pfizer. Retrieved from http://www.yonhapnews.co.kr/bulletin/2015/03/12/0200000000AKR20150312161400017.HTML?from=search.

Lee, J.H. (2015). Pfizer lost the trial for patent of Viagra. Retrieved from http://dailymedi.com/news/view.html?section=1&category=7&no=792483.

Lee, S.K. (2012). Pfizer Korea schedules meeting with union workers – Will tensions finally melt down? Retrieved from  http://dailymedi.com/news/view.html?section=1&category=7&no=761433.

Pfizer International. (2014). 2014 Pfizer Annual Financial Report to Shareholders. Retrieved 22, May 2015 from http://www.pfizer.com/investors/financial_reports/financial_reports.

Pfizer International. (2015). Specificity of the Pfizer. The Pfizer Korea. Retrieved from http://pfizercareers.com/ko/making-a-difference.

Samjung Accounting Firm. (2014). Audit Report of Pfizer Pharmaceuticals Korea. Retrieved 22, May 2015 from http://dart.fss.or.kr/dsab001/main.do?autoSearch=true.

Shin, B.S. (2012). Pfizer dismayed at decreasing sales of Pfizer Korea. Retrieved from http://www.asiae.co.kr/news/view.htm?idxno=2012112110473455642.

Shin, B.S. (2012). How could such things happened to The leading company, Pfizer.  Asia-economy.  Retrieved from http://www.asiae.co.kr/news/view.htm?idxno=2012112110473455642.

Shinhan Securities. (2015). Biosimilar markets that being changed. Retrieved 22, May 2015 from http://finance.naver.com/research/industry_read.nhn?nid=15175&page=1&searchType=keyword&keyword=%C8%AD%C0%CC%C0%DA.

Webmaster. (2011). The interview from the CEO of Pfizer. JoongAng Daily. Retrieved from http://jhealthmedia.joins.com/news/articleView.html?idxno=2307.

Yang, B.H. (2015). Pfizer Korea’s patent for Viagra is invalid. Retrieved from http://www.hankyung.com/news/app/newsview.php?aid=2015042845081.

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