Outsourcing Contributing To Resources Of Pfizer Commerce Essay


In 1942 Pfizer Inc came to existence, is now a research based pharmaceutical company in the global market. The company brings to affect global resources to achieve the position of world largest pharmaceutical. It has a wide and diversified portfolio comprises of nutritional products, vaccines, small molecule medicines and human and animal and numerous consumer health care products.

Pfizer Business Strategy "Strategy that Delivers"

In June 2001 Pfizer revealed a new mission for the company "to become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live".

While working on the mission, the company aimed to transform its business model and structure of get maximum benefits from emerging trend of outsourcing and to concentrate on its brand identity and core competencies. Pfizer unite operations with Pharmacia Corporation to take advantage of each other growth in 2003. 2008 was the year in which Pfizer took forward steps in evolution and sketched the company's plan to launch small size operating units intended to improve innovation and responsibility, to gain benefit of Pfizer's scale and resources. Through this restructuring Pfizer could be able to respond effectively to the continual evolvement of marketplace by anticipating customers and patient's needs.

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Diversified R&D strategy tagged by Pfizer as "Worldwide Research and Development" is initiated in 2010 and the company started licensing agreements with two Indian-based pharmaceutical companies. As the result Pfizer geared the momentum in R&D resulting into sustained product pipeline and delivering numerous new products in reduced time.

New Organizational Structure: Pfizer formed two separate research organizations which are meant to exploit new prospects and to stand out as innovative and to deliver research into products more quickly. These are the Pharma Therapeutics Research & Development Group and The BioTherapeutics Research & Development Group. Moreover Pfizer evolve its commercial operating structure into an enhanced and efficient system to deliver expected results. Pfizer nine assorted health care holdings are bestowed with the resources by the company and partners to track desirable growth prospects and to fabricate benefits to all parties involved all around the world.

PFE is improving and managing supply chain of the company through outsourcing and taking all opportunities to add value and reduce cost. Pfizer Global Manufacturing (PGM) supplies products to Pfizer's businesses. The company shrinking its internal network (from 2003 to 2008) reduced manufacturing plants from 93 to 46 further to 41 in 2010. Many of these plants are striped off and sold to other companies with the supply agreements of several years. Through this strategic plan both companies gain benefits as the PFE can be supplied the same quality without spending capital on operations, maintenance and development of the plant and the buying company would be able to gain business from PFE to make the plant sustainable. Due to the speed and effectiveness of that integration, Pfizer progresses to this new model while maintaining the same breadth and research programs.

PFE established competitive "make or buy" supply network through PGM. This network was established to increase outsourced manufacturing of products from about 17% to 30% from 2008 to 2010. This decision was taken to increase ability to supply, capacity flexibility, cost competitiveness, and technology. PGM's sub organization is Global Contract Manufacturing (GCM). This organization deals with the business with almost 150 contract manufacturers from whole world. This strategic outsourcing of PFE furnished the company with upgrading different projects with substantial performance advantages, as cutting down packaging and transportation expenses, and removal of discarding chemicals through process advancement. The outsourcing strategy remained successful by reducing 40% costs of in making time and shipment as products are manufactured at the country of nearby the supply market. This process also reduced inventory which gave the company a positive lift in business.

Research Outsourcing at Pfizer: PFE initiated R&D outsourcing in few areas fro late 90s. During 90s Pfizer followed its goal to expand its compound collection (PMC). The technology at was considered as the core competence for any pharmaceuticals for platform-centric, IT-intensive and capital-intensive. PFE employed strategic partnerships to acquire the technology. Pfizer's Research and development immense expenditures during 2000-2004 ($32,752,000) were able to obtain only four NME approvals from FDA and average research productivity was very low as RP value (12.2). Around the end of 2006 changed its strategy of R&D and started new progress. The outsourcing of the PMC technology continued with 4 providers and finished its drug-library contract in 2005 with three organizations (Arqule, DPI, and Tripos) but continued with ChemBridge. Business environment of 2000s evolved into outsourcing drug-discovery to contract research organizations (CROs) and most of PFE's collaborators either developed into independent organizations or outsourced the discovery stage to small CROs.

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In 2005 PFE launched an R&D center in Shanghai to consider the capability of India and China's CROs. Pfizer have established subsidiaries in India due to low cost drug discovery, development and manufacturing. Pfizer has contracts with Indian companies for data operations, clinical research, and formulation development. Certain services were considered to be well suited to outsource to these organizations in Asia. Pfizer created three probable operating models for outsourcing R&D as outlined to CRO's of India and china to take full advantage of their capabilities and low cost.

An integrated model makes one CRO responsible or all actions included discovery, examination, screening, testing, and absorption, distribution, metabolism, and excretion testing. The model gives logistical advantages, reduce developing period, and the capability to cultivate correlation with an recognized CRO.

A rationalized model which take numerous CROs o provide he solutions for biology R&D and chemistry R&D. the advantage of using the model enhanced Pfizer's power to administer IP. Working with multiple CROs risk can be distributed and more competitive business emerges.

A diffused model in which three different CROs are contracted to provide to conduct research on different stages of R&D of drugs. The advantages include minimum investments and provide PFE to choose the best CRO in each task.

Late 2006 marked with the changing profile of Pfizer not only in structure but also in culture. In 2008 PFE became a flexible entrepreneurial after dramatic steps of reshape the organization. The new approach of organization enables it to move ahead with the entrepreneurial zeal inherent in small businesses, backed by the scope and strength of a global enterprise.

Pfizer believes in collaborating with outside companies to multiply the efforts of in house scientists. From 2008 the company progressed in an outstanding manner through outsourcing R&D like for compound development Medivation was chosen and for Alzheimer's treatment Dimebon. Now company is working of new outsourcing strategy of getting best wherever available. Under this new strategy PFE started partnerships with outstanding academic institutions, among them the University of Pennsylvania, the University of California, San Francisco, Washington University in St. Louis and the Broad Institute of MIT and Harvard University.

Reducing the company's Adjusted Total Costs: PFE accomplished the cost-reduction strategy initiated in 2006 even above the expected target. As compared to 2006 adjusted total costs decreased by $2.8 billion. PFE continued it's restructuring to gain more and more out of this strategy.

Achieving Adjusted Diluted Earnings Per Share Target: the new approach delivered $2.42 in adjusted diluted earnings per share which indicated an improvement of 11% in relation to 2007.

Improving R&D Productivity: We are on track to achieve the R&D objectives we shared with you in March 2008. These are:

15 to 20 Phase III starts in 2008-2009.

15 to 20 regulatory submissions from 2010 to 2012.

24 to 28 new molecular entities or new indications in the Phase III pipeline by the end of 2009.

Pfizer Phase III pipeline includes 12 programs which is the largest in company's history.

This new policy and structure allowed PFE to instantly capitalize on prospects to expand their business. The PFE gains endorsement and licensing agreements with other small and large companies, able to escalate assistance for thriving Drugs, allocating capital for advance technologies which add value to core products o the company, creating valuable partnerships through outsourcing and acquiring new products and services to create a sustainable position in extreme competition of global pharmaceutical market. In last four years the company's experience of outsourcing R&D in Asia generated explosive progress in capabilities and competence. In future the company is sticking to the strategy to move forward the boundaries of activities related to strategic outsourcing to help the company to deliver medicines even at better time and cost.