The Competitive Forces and Value Chain Models
Pfizer as an investor in the pharmaceutical has made great advances that will help it continue to lead in supplying medicine over a long period of time despite competition. Industry attractiveness and the profitability of long-run industry are determined by five competitive forces as described by Porter (tutor2u, n.d.). Pfizer’s business is faced with a wide range of threat that can be grouped in the above five groups. The medicine industry is attracting more and more people for investments. As the government continues to support efforts to have more participants in the provision of health for the people, the barriers to enter the industry are being minimized and this is exposing Pfizer to more dangers of competition. The access to the distribution channels and the market itself is becoming easier on a daily basis, making it favorable for new players to enter the industry. Some of the competitive advantages that Pfizer may continue enjoying include the already established channels of distribution. It is already marketing eight of the world’s top 25 medicines (Barry, 2003). With that, new entrants may find it harder to compete with Pfizer where they have already gained grounds. The rivalry between the competing players is set to increase with the rise of population, among other favorable factors. However, Pfizer is set to encounter the competition challenge with an already established strategy of acquiring leading competitors. One of the companies it has acquired include Wyeth, whose acquisition was completed in 2009 (Pfizer, 2009).
The acceptance of over-the-counter drugs has been instrumental in the business of the pharmaceutical companies over the years. Therefore, each and every player is set to gain from such moves. Pfizer has been a strong bargainer for policies that will favor the pharmaceutical industry and has sought to take advantage of them after adoption. Having already taken over distribution of a substantial amount of drugs in the market such as huge chunks of over-the-counter (OTC) drugs market, existing competitors may find it difficult to eliminate Pfizer in the market.
Of course, it has taken advantage in the provision of the most wanted drugs in terms of demand, such as antidepressants and pain killers. On a consumer perspective, usage of these drugs is high as compared to the past, following favorable factors such as increasing population, increase of complications from illnesses and increase of illnesses themselves-for example cancer and mental disorders among others. Customers in the pharmaceutical industry have been won through advertisement with every $1 spent on direct-to-customer advertising gains $4.20 in sales (Barry, 2003). On the side of suppliers, there has been an increase in investment of suppliers in the field of over-the-counter drugs in the market.
The drug market has always been faced with the probability of customers shifting to using substitutes. Substitutes in the case of over-the-counter drugs are very conspicuous. Pfizer has invested in a wide range of drugs that may provide a shock absorber incase some of its drugs fail to sell because of increased competition from the substitutes. In particular, the OTC market is always faced with a threat of having people going to hospital, and there is always a call for people to have medical attention before using these drugs. However, the possibility to have customers access these drugs even after medical check-up may assist the company to continue gaining more market for its products. Diversity has been ensured by investment into the area of consumer health care products.
Knowledge Management Systems
Any faster, efficient mechanism that allows production of better quality and more products may be perceived as supporting the company’s strategies. There is a substantial interest in investing in management systems that support research and documentation. Knowledge management systems have been applied to assist in the compliance with internal/regulatory standards as well as managing internal resources (New Information Paradigms, 2010). Embracing these systems in the pharmaceutical industry is important because it represents a modern way of handling the processes in the industry. These systems are increasing the efficiency and speed of handling information and data in the various processes. Companies are also realizing easier or simplified processes in the handling of information. Production efficiency and product quality are also emanating to be of paramount importance in the industry and usage of and investment in systems that improve on these factors is becoming important. Even governments are changing or adopting regulations that once resisted the usage of electronic documentation for signature validation and audit, for instance. However, there are changes expected because such regulations are still to cover all aspects of electronic knowledge management (Zimmerman, 2003).
Research and documentation is of paramount importance in the pharmaceutical industry. This is because it can help in replicating past success and learning from the past projects, even failures. The documentation is important to be able to spot patterns and trends. Pfizer is a company that is involved in the development of new drugs as well as research for new solutions. Knowledge management may be utilized to deal with the problem of staff turn-over, because the drug development process can take up to 15 years and few researchers may be involved from start to the stop of this process. Another important aspect of knowledge management systems is that they make data available at all times, and the data is reliable and trustworthy to some level since it is subject to less human error. The gathering of information for research is also important, but there is need to ensure that the information is sourced from a wide range of sources such as newswire, websites and peer-reviewed literature. Knowledge management systems simplify the process because the information will need not be read by human, and that they are able to categorize this information intelligently and make it relevant for individual use (Zimmerman, 2003). Knowledge management systems end up with providing essential information for product adjustment and improvement, quick supply for pharmaceutical, and taking more care during production processes among other things. Adopting knowledge management systems allow the integration of various processes in the handling of pharmaceuticals. Sharing of information is becoming an important aspect of every industry. Pfizer can benefit by sharing information on processing and research, with its suppliers and partners. In addition, provision of accurate information is of importance to any investor and customer in the industry, as well as for making important managerial decisions.
An automatic way of handling the process of drug development is very important because it is prone to errors. Knowledge management systems may be applied to detect unexpected results and allow rectification of the process to give better results. This is, for example, because they can be applied in the monitoring of chemical processes and reactions (Russell, 2006). At the same time, knowledge management systems at Pfizer may help save time because they are faster than normal ways of handling information and data. Usually, if the information being handled is bulky and very complicated, or undergoing through several processes, crucial information may be omitted or overlooked, and this can only be detected through knowledge management.
Ambiguous and endless federal regulations may be tracked and there adherence enhanced by the utilization of knowledge management systems.
References
Barry, C. (2003). Pfizer’s strategy is good medicine: Drug Packager of the Year. Web.
New Information Paradigms. (2010). New information paradigms-transformative metasystems for collaborative teams. Web.
Pfizer. Pfizer reports fourth-quarter and full-year 2009 results. Web.
Russell, J. (2006). Pfizer’s pursuit of technology. Web.
Tutor2u. (n.d.). Strategy-analyzing competitive industry structure. 2010. Web.
Zimmerman, K. (2003). Learning from success…and failure: Pharmaceuticals make the most of knowledge management. Web.