SWOT ANALYSIS – PFIZER KOREA
Pfizer Inc. is a multinational pharmaceutical corporation located 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 medication pill, to Viagra, a drug that treats erectile dysfunction.
In 1969, Pfizer Inc. merged with Chung-ang Pharmaceuticals marking the start of their Korean subsidiary, 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 expressing its 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 providing financial help to children raised by their grandparents. Pfizer Korea also plays a big role in helping worldwide countries suffering from catastrophic natural disasters, especially earthquakes. During the 2005 Kashmir earthquake in Pakistan, 2010 Haiti Earthquake and 2011 Japan Earthquake and Tsunami has shown active support by providing financial and medical aid.
Pfizer Korea has a large range of medicines, other than its well-known best sellers: Viagra, Champix and Lipitor. It is true that the profit share of Pfizer Korea is quite dependent on its best-selling goods, but the financial statement of Pfizer Korea published by Sam-Jung accounting firm (2014) points out that profits made by other products cannot be ignored as well. According to the analyst report regarding Pfizer Korea’s stock drafted by Shin-han Securities ( 2014), the recent patent expiration of Pfizer Korea’s main products has resulted in the decreased competitiveness of Pfizer Korea against generic products. However, despite this fact, Pfizer Korea’s net income in 2014 has increased compared to the previous year. Pfizer Korea’s financial statement shows that Pfizer Korea’s wide range of products has managed to solidify its overall profits. This indicates that Pfizer Korea has a financially firm fundament.
Another noteworthy strength of Pfizer Korea is Pfizer Inc.’s dominance in the world-wide market. Currently, Pfizer Inc is the second biggest pharmaceutical company in the world. 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 overall asset size of Pfizer Korea may have shrunk, it still has a huge amount of patents and research and development results nevertheless.
Therefore, it can be said that as Pfizer Inc’s subsidiary, Pfizer Korea, has enough supply of high-quality medicine necessary to dominate the domestic market and fulfill the needs and demands of Korean customers.
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 ultimate bread and butter of Pfizer Korea’s sales. 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 shake by cheaper yet as effective generic pills. After the patent expiration, generic pills swept the market forcing Pfizer Korea to give the position of number one Viagra seller to Hanmi Pharmaceutical. Also, as Pfizer Korea’s Viagra sales began to plummet, Pfizer Korea was forced to join hands with Seoul Pharmaceutical, a small scale pharmaceutical that specialized in generic Viagra pills. Generic Viagra pills with Pfizer Korea’s logo stamped on the box were now sold to the public 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 for equal wages and fair treatment. 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 but 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.
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 consisted of people 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, especially elderly people in particular, will choose familiar certified brands that have proved its competence for nearly decades. In other words, it is likely that they will choose Pfizer Korea’s products. It is true that Pfizer Korea has experienced some difficulties in the recent years. Even so, Pfizer Korea is still recognized as a first class pharmaceutical company that has kept up with its reputation for nearly a half-century. 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 could work to Pfizer Korea’s favor. This policy, first implemented in February 2015, financially supports people who wish to quit smoking. The government will provide citizens with money to pay for therapy and treatment from designated medical facilities and supply them with anti-smoking medication. Even before this law was passed, Pfizer Korea’s anti-smoking pill, Champix, was already the leading seller in the anti-smoking pill market. Noww, the new anti-smoking policy along with the rise of cigarette prices has boosted the sales of Champix 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 terms of sales. If kept up, it is possible for Champix to monopolize the anti-smoking medication field as it has dominated the Viagra market.
As mentioned numerous times, Viagra is best selling product of Pfizer Korea and takes up the majority of Pfizer Korea’s sales revenue. When Pfizer Korea first introduced Viagra, it became widely popular among men suffering from erectile dysfunction which benefitted Pfizer Korea greatly sales wise. Unfortunately, on May 29th, 2012, the Pfizer Korea’s patent for Sildenafil, the main ingredient required for making Viagra, had expired. This patent expiration can damage Pfizer Korea’s sales fatally. Already, many generic Viagra products have flooded the pharmaceutical market. As an attempt to seal its position, Pfizer Korea had sued several Korean pharmacy companies trying to prevent generic products being released but lost successively. Unless Pfizer Korea comes up with a good solution to secure its Viagra’s competitiveness, it may lose its former glory.
Furthermore, Champix, Pfizer Korea’s anti-smoking medication, has been charged with allegations of causing seizures. On top of that, Champix is also accused of causing deep suicidal depression among users. Although there is not any concrete evidence proving this, this will definitely target sales if this news becomes widely known to the public. So, it is absolutely necessary for Pfizer Korea to conduct research to refute these accusations and prove to the public that Champix is safe to take.
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We understand that you want to know about the details regarding the newly imposed tax law and whether Pfizer Korea is applicable to this law.
The new tax law, also known as the Corporate Income Tax Law (CITL), requires companies with a total equity capital over KRW 50 billion to with this law. Companies that are classified as SMEs under the enforcement of the presidential decree are exempt from this law.
Being a presidential decree, the CITL will be effective until December 31th 2017, the end of the current President Park’s presidential term.
The CITL can be computed in two ways. The first option requires the company to spend as much as 80% of its annual earnings on wage payment, investment and dividend payment. By doing this, Pfizer Korea only has to pay a 10% taxation on the remaining factors. The second option is to spend 30% of Pfizer Korea’s annual earnings on wage payment and dividend payment. However, in this case, the company must be aware that overseas investment and M&A do not fit the definition of investment according to the CITL.
As the total equity of Pfizer Korea amounts to the sum of KRW 350 billion, this means Pfizer Korea has to follow the new tax computation.
We hope that our e-mail has cleared any confusion.
Personally, I believe that taxation itself is not a bad thing. When weighing the pros and cons I believe that the positive aspects of taxation outweigh the negatives overwhelmingly. Through taxation, a large part of government spending can be supported and that money could be used to benefit the nation in many ways ranging from constructing bridges, building schools, and providing social security to those in dire need of governmental help.
I support paying taxes because the purpose of it is pure and positive in its original state. Sadly, often taxation is not executed in a manner that best fulfills its original purpose. Sometimes, loopholes in tax laws allow the rich to pay a only a fraction of what they own to taxes while the poor try to make ends meet with a few pennies left from paying taxes. For example, there has been recent movement to pass an inheritance tax law where if a company owner bequeaths his or her company to an heir, the heir will be exempt from paying inheritance tax up to 50billion KRW. This law was accused by many for being designed to benefit the wealthy and the wealthy only and their allegations are far from farfetched.
Also, in some cases, tax money could be used in a way that goes against one’s personal belief system. Last year, there was much debate within Korea whether to provide free lunches for high school students in Seoul. The people supporting the idea and opposing the idea both had some valid points in the argument but in the end Seoul city decided to provide free meals for students. The thing about paying taxes is that one cannot specifically choose in what sectors the paid tax money could be used to fund which is something that cannot be done about.
Even so, I believe in paying taxes despite the negative aspects of it. As mentioned before, the purpose of taxation itself is positive and has the potential for the nation to grow and improve itself. Loopholes in taxation laws should be abolished and fixed so the burden of paying taxes is not dumped on the poor. If one’s tax dollars are paid in laws and policies against one’s political belief, attempts to change it should occur in the form of votes not denouncing taxation entirely.
Being an English Literature student, I had the problem of having a writing style that was too flowery. Sometime that was a good thing but sometimes it was not at a good thing at all. My mother is a realtor that deals mostly with foreigners and US military soldiers looking for a house in Korea so she has to write formal E-mails in English all the time. A lot of the times she asks me to help her writing seem more professional and well-written. Most of the times I would only worsen the situation by turning a simple description of a possible apartment candidate into an extravagant three page letter or somehow turning a quick invitation to lunch into an open declaration of love for the client. Through this class I feel that I have learned how to write business letters in a short and concise form while providing all the necessary information in a formal format.
Unfortunately, I do not think my understanding of business has increased in any way. As someone who has not had any sort of prior business education, the latter half of this course was quite confusing. I was suddenly expected to not only understand business administration concepts, but actually use that knowledge to analyze existing tax laws and companies. It felt that instead of being a English Interpretation and Translation class talking about Business English Writing, it was a Business class with some writing activity components in it. Overall, I do not believe the class helped me deepen my knowledge regarding business.