Pfizer Industry Review

Pfizer Corporation: The pharmaceutical industry began in the early 1800’s when several chemical companies were founded in Philadelphia, marking the beginning of our current pharmaceutical manufacturing industry (Pfizer, 2008a). Founded in 1849, Pfizer has grown into a multibillion-dollar corporation by providing many of the highest quality drugs available today (Pfizer, 2007). However, many factors impact the continued success of Pfizer and the pharmaceutical industry in general. After reviewing these factors, it is our recommendation that Pfizer focus on short-term consolidation and long-term global expansion into emerging markets while focusing research and development efforts in the biotech sector.
Market Structure Since the 1950s, the global pharmaceutical industry has evolved from “…a collection of several hundred, small, barely profitable firms to as small group of large, highly profitable firms” (Younkin, 2008, para. 1). This evolution has resulted in an oligopoly market structure with a few large firms, and significant barriers to market entry. In the last 20 years, pharmaceutical consolidation has continued with both vertical and horizontal mergers that have further shrunk the market. Since 1995, Pfizer has merged with five pharmaceutical firms (Industry Brief, 2003) in an attempt to increase its research and development divisions and to offset declines in new product development; increases in generic competition; and the emergence of bio-pharmaceutical firms (BCC Research, 2004). Although pharmaceutical firms no longer view mega mergers as “…a cure-all for [their] innovation drought” (Simons, 2007, para. 1), this trend towards consolidation is expected to continue, with firms focusing “…on targeted acquisitions and alliances with smaller…more innovative drug makers and biotechs” (Simons, 2007, para. 10).
Competition
Competition is somewhat limited in oligopoly market structures due to the barriers to market entry. In the pharmaceutical industry,

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