GlaxoSmithKline vs Pfizer
UBI Business & Competitive Intelligence
Presentation by :
Aksenov Yuri
Pascal Andrea
Hendricx Chris
Brussels, December 15th 2006
Key Intelligence Topic
The future of pharma:
Prevent or Cure ?
Analysis of key factors
Industry Figures
Players, market shares, evolution
Who are Pfizer and GSK
Performances, products, policies
Investors outlook
In depth analysis
Risks, Opportunities, Capabilities
Implications
Recommendations
Strategies, positioning
Conclusions
Sources
Analysis of key factors
Top 10 Pharmaceuticals companies in the world
*both companies are at the top
Analysis of key factors
Top 10 markets evolution
Analysis of key factors
Market segmentation
Corporate views and values
Company fact sheet
Mission - to improve the
quality of human life
Purpose – dedicated to
better health and greater
access to healthcare.
Research based
pharmaceutical company
Shape a flexible R&D
organisation that can
respond to the challenges
and the opportunities
Mission - become the
world's most valued
company to patients,
customers, colleagues,
investors, business
partners.
Purpose – dedicated to
better health and greater
access to healthcare.
Growth through
innovation
Research based
pharmaceutical company
Corporate views and values
Company fact sheet

Customer

deeply committed to meeting the
needs of our customers, and we
constantly focus on customer
satisfaction
understanding and responding to
their often changing needs.

Stakeholders

Personnel policy
GSK business employs over 100,000
people in 116 countries
Over 15,000 people work in research
teams to discover new medicines
For employees, we create an
environment that allows them to do
their best work by being themselves
Stakeholders
We work with stakeholders to
share knowledge, skills and goals
on how to prevent or manage
diseases, how to get medicine to
the people who need it, and how
to promote good health.
we must provide the right
information in a timely and
effective way.

Customer

Personnel policy
Pfizer employs 122,000 people in 60
countries and has sales in more than
150 countries.
People are the cornerstone of
Pfizer's success, we value our
diversity as a source of strength, and
we are proud of Pfizer's history of
treating people with respect and
dignity
Analysis of key factors
Segment portfolio
1368; 4%
1882.4; 6%
2409.11; 7%
9147.74; 28%
1838.96; 5%
Respiratory
Respiratory
Central nervous system
2514.09; 7%
5763; 15%
Urology
Anti-Bacterials
Ophthalmology
Metabolic
Vaccines
17958; 48%
2633; 7%
Oncology and emesis
5826.39; 17%
2749.39; 8%
1372; 4%
Cardiovascular
Other
4702.38; 14%
Central nervous system
Anti-Virals
Vaccines
2705.95; 8%
3538; 10%
0; 0%
1669; 5%
2434; 7%
Artrithis
Oncology and emesis
Cardiovascular
Other
Analysis of key factors
FINANCIAL PERFORMANCE GSK
FINANCIAL PERFORMANCE PFIZER
group
group
31
%
22
%
2003
2004
2005
21070
19986
21660
Pounds
SALES
EBIT
5954
5779
6732
Pounds
PAT
4308
4022
4816
EPS
0.72
0.68
R&D
2865
SALES
2003
2004
2005
44736
52516
51298
USD
EBIT
3246
14007
11534
USD
Pounds
PAT
3940
11361
8085
USD
0.82
Pounds
EPS
0.22
1.51
1.1
USD
2904
3136
Pounds
R&D
7487
7684
7442
USD
SALES GROWTH
--
-5
8
%
SALES
GROWTH
--
17
-2
%
R&D growth
--
1.3
8
%
R&D growth
--
-2.1
-0.1
%
14.5
14.5
%
R&D as % of
sales
14.6
14.5
%
-3
16
%
EBIT growth
-18
%
R&D as % of sales
EBIT growth
13.6
--
16.7
--
--*
Analysis of key factors
Industry Supplements internal R&D with BD&L/M&A Activity
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Reseach
PFE
NVS
RCH
GSK
LLY
WYE
JNJ
BMS
AVE
MRK
ABT
SGP
AZN
49%
89%
66%
79%
97%
61%
22%
8%
59%
68%
51%
16%
65%
Source: Evaluate, Internal Analysis
Analysis of key factors
Investor outlook
Analysis of key factors
Performance analysis, outlook
• US continued to remain the largest market for pharmaceuticals in the world
•Pfizer, Sanofi-Aventis and GSK remained as the top three companies in terms of pharma
sales
• Three relatively smaller players namely Amgen, Abbott Labs and AstraZeneca, however,
reported a double digit growth during 2005 with Amgen recording the highest growth
rate of 20.5 per cent.
• Pfizer's own sale in the US market fell by 11.8 per cent to 23.44 billion dollars in 2005
from 26.58 billion.
•GSK’s US sales fell by 3.5 per cent during 2005.
•Eli Lilly stood out as the largest spender of R&D in 2005 with its spending of 20.7 per
cent of gross turnover. Amgen, another relatively smaller player among the 15, has spent
18.6 per cent of its turnover on R&D. On the other hand, Pfizer's R&D expenditure
declined by 3.1 per cent to 7.44 billion dollars in 2005 from 7.68 billion.
•The pharma companies are taking this threat from the generic players quite seriously by
spending more on R&D.
Analysis of key factors
Price pressures drive consolidations to maintain earning levels
Sales
Price
Units
Sales
M&S
M&S
R&D
R&D
G&A
G&A
EBIT
EBIT
Price
Price Pressures limits
Industry ability to use
Units
price for growth
Industry continues to
consolidate in order to
cut infrastructure costs:
-Reduce sales reps
- Eliminate TA areas
in Research
-Reduce duplication in
support functions
Consolidations protects
Earnings growth &
Capital value
Future Business Impact Assessment
Overview




Methodology
Risks
Opportunities
Implications
Future Business Impact Assessment
The PHA® Model


Exclusively developed to study the two companies in their
competitive environment, understanding the impact of future
events for their future business strategy.
Each risk and opportunity assessed in its magnitude, considering
two additional company dimensions:
Risk
Opportunity
Likelihood
Likelihood
Preparedness
Capabilities
Exposure
Attractiveness
Future Business Impact Assessment
Events (risks)





Product Recall & Litigations
Patent Expiration
BRIC Competition & Generics
Free Access & Price Dumping
Public opinion pressure
Future Business Impact Assessment
Risk assessment
Glaxo
6
“Safe Zone”
Preparedness
5
4
Product Recall & Litigations
Patent Expiration
3
Free Access & Price Dumping
BRIC Competition & Generics
Public Opinion Pressure
2
Bubble size denotes
event likelihood
1
“Danger Zone”
0
0
1
2
3
Risk Exposure
4
5
6
Future Business Impact Assessment
Risk assessment
Pfizer
6
“Safe Zone”
Preparedness
5
4
Product Recall & Litigations
Patent Expiration
3
Free Access & Price Dumping
BRIC Competition & Generics
Public Opinion Pressure
2
Bubble size denotes
event likelihood
1
“Danger Zone”
0
0
1
2
3
Risk Exposure
4
5
6
Future Business Impact Assessment
Markets (opportunities)





Cancer Treatment
Pandemic & Bioterrorism
Healthcare & Animal
Online Pharmacy
Developing World
Future Business Impact Assessment
Opportunity assessment
Glaxo
6
“Addressable”
5
Capabilities
4
Cancer Treatment
Healthcare & Animal
3
Pandemic & Bioterrorism
Online Pharmacy
Developing World
2
Bubble size denotes
market likelihood
1
“Missed”
0
0
1
2
3
4
Opportunity Attractiveness
5
6
Future Business Impact Assessment
Opportunity assessment
Pfizer
6
“Addressable”
5
Capabilities
4
Cancer Treatment
Healthcare & Animal
3
Pandemic & Bioterrorism
Online Pharmacy
2
Developing World
Bubble size denotes
market likelihood
1
“Missed”
0
0
1
2
3
4
Opportunity Attractiveness
5
6
Future Business Impact Assessment
Implications


Exposed to animal rights
activists and public opinion
pressure.
Betting on pandemic flu
vaccine as next large pharma
opportunity.


Reliant on blockbusters and
over-the-counter
medicaments.
Heavily exposed to product
recall and BRIC competition
on generics.
Future Business Impact Assessment
Summary


In the near future, risks for pharma seem higher than the
opportunities.
The best equiped to face the new challenges will win.
Recommendations
Pfizer : 1st Recommendation
Pfizer

Big company

Loose pieces

No course of action
Align the business
Be clear :
Get smaller and
align the business

Vision

Mission

Strategy
Be manageable
Recommendations
Pfizer : 2nd recommendation
Co-marketing with generic drug manufacturers
Recommendations
Pfizer : 3rd recommendation
Go on-line
e-business
Recommendations
Pfizer : 4th recommendation
Promotion : Brand or efficacy of product
Recommendations
Pfizer : 5th recommendation
Research & Development : Better focus


Improve OTC portfolio
Avoid entering areas where excellence is reached
Recommendations
Glaxosmithkline : 1st Recommendation
Research & Development : CONTINUE
Recommendations
Glaxosmithkline : 2nd recommendation
Vaccination
Continu efforts
Recommendations
Glaxosmithkline : 3rd recommendation
Go for prevention
Less sofisticated
drugs needed.
Competition ?
Recommendations
Glaxosmithkline : 4th recommendation
Focus on neglected diseases
Enhance participation in
community programmes

HIV/AIDS

Tuberculosis

Animal testing

Malaria

Human testing

Obesitas – Cholesterol

etc …

Image building

PR
Recommendations
Glaxosmithkline : 5th recommendation
Acquisition OTC
Candidate good prospect for product diversification
Opportunities
General for the pharmaceutical market

Entering new markets : China, East-Europe, Latin-America, Vietnam

Alliance with BioTech companies : Technology, innovation
Conclusion
Distinguishing markets
“Cure” market
“Prevent” market
Future key players:
Generics manufacturers
Future Key Players:
Pharma innovators
Conclusion
R&D
Focus
Distinguishing markets
Prevent
Sales
Focus
Cure
past
present
future
Questions
Secondary sources

Annual report Pfizer 2005

Annual report GSK 2006

IMS Health Global Pharma forecast Feb. 2006

NYSE, sept.2006

MIDAS, new market segmentation Feature Dec. 2005

Neil Mahoney - Global Business Management Concepts, presentation

PharmaBiz, "Struggle of the giants", May. 2006

Wood McKenzie

www.imshealth.com

www.pharmaexec.com

www.chartsbank.com

BCG e-Health Reports

Wall Street Journal