CHAPTER FOUR: RESULTS
Case study of Pfizer
The year of 2009 until 2013 has been a time of unprecedented number of patent expirations for the pharmaceutical industry. As per the competition that has been generic, the industry lost 18% of its total sales that is calculated to be $ 137 billion as a whole. After the complete and detailed analysis of the studies and the scenarios going on, the major game players of the pharma industry also known as the BIG Pharma industries had been thought to make key decisions for fighting the patent cliff duration, which is full of losses and financial constraints. The case study provides a detailed analysis of one of the popular company Pfizer. Hire assignment help UK.
After the impending patent cliff in the year 2011 and 2012, the pharmaceutical companies and their upper management launched initiatives for the increment of revenues and reduction in costs for the sake of the huge losses that have been occurred because of the expiring patents. Pfizer is a famous and the oldest Pharma company that has diverse products and services that include Pharmaceutical, and healthcare products. The company also has its own health care insurance and has world leading and renowned veterinary medicines. It has its R&D manufacturing facilities all around the globe with 15000 R&D specialists as personnel. Pfizer is a famous company in Asia pacific, America and Europe. For assistance buy essay writing.
Pfizer unfortunately had the worst year faced in November end of the year 2011. This year it lost $ 10 billion of its revenue a year because of it famous and most selling drug Lipitor had its expiry and Pfizer faced the most unpleasant patent cliff. This as a whole resulted in cutting company’s sales because of cheaper generics. This loss was a great challenge for Pfizer that is common in Pharma industry as observed. Pfizer face this loss in Europe. These struggles were not only faced by Pfizer but mostly all the Big pharma industries of Europe.
As a whole, the calculated cut down of jobs in the pharma industry was of 53000 jobs 2012 and 61000 jobs in 2009 after the hit of patent cliff. Lipitor’s multimillion-dollar loss created an increased issue as mentioned in many of its report. As spending, have been considered through the company wide research and development and has been doubled to a $ 45 billion over the last decade in Europe. R&D work has been considered less after the patent cliffs of many companies.
Pfizer had its basic and most selling product decline in more than one country including Canada, Brazil, Mexico, and Spain including United States. Like many other companies that have been hit by the patent cliff of 2012, Pfizer was also scrambled by it. It tried to restructure its operations as a solution for the patent cliff. This with the combination of M&A helped it to be successful in sustaining what was left. Many companies including Pfizer took merger as a solution and focused on M&A activity with an attempt to produce synergies of costs and for the sake of diversification production. However, with an increased loss of pharma industry the loss of shares and revenues was necessary. Many of the drugs of the pharma industry and famous Big Pharma companies faced decline after patent cliff. For this purpose, many companies including Pfizer implemented the strategies of M&A for the diversification of outcomes. Get coursework writing help from professionals.
The company in its second quarter after the strike observed a rise of 5% of $ 2.6%billion from the decline in its total earning of $ 17.1 billion. The revenue was seen to drop at a 1% of overall percentage in the year 2010. The company expected to have EPS fall between $2.16 and $2.26.
Initially in the year 2009, it reduced its R&D expenditures in between 8 and 8.5 $. However, it increased it to $ 9.4 in the year 2010. After the strike, even though compared to its previous investment in R&D, Pfizer investment was less but when observed the amount was considerably better after the patent cliff had occurred. The activity of M&A was seen as benefiting for Pfizer as its investment of $ 68 million for King Pharma and Wyeth paid it its outcomes of what was lost in the Pfizer.
Pfizer is one of a largest company of the Pharma industry that is also known as the Big Pharma Company. Pfizer lost around 32% of its revenues because of its expiration of its famous drug. For this, purpose Pfizer’s management had to focus on solutions. Pfizer as a company focused on solutions that were inorganic which could help them reduce their losses and increase their revenues. This involved turning directions towards M&A activity as Pfizer used M&A and merged with King Pharmaceuticals and Wyeth for cost cutting initiative. For this purpose, the company focused on more of its long-term goals rather than short term. The company majorly focused on working and increasing its R&D approaches and expenditures for the sake of having less affect of patent cliffs in future as well. Long-term goals also included the company’s merger with King Pharmaceuticals as the company focused on diversification as a method of solution through M&A.
Case study of Bristol Meyers Squib
The sober reversal that was known for the industry of Pharmaceuticals was changed as the major profit making industry was now in under pressure for reinventing itself and wanted independence of the blockbuster drugs that had been patent. The paten cliff casted a highlight on the problems of the industry that included the big breakthroughs of drugs had now a drought and the industry was in need of more research discoveries. It was necessary that the pressure from the industries should be reduced for the sake of increasing prices and the layoff of research should be minimised. Experienced uk thesis help is available online.
BMS commonly known as Bristol-Myers Squibb is a pharmaceutical company, which is American, form its origin and has it’s headquarter in New York. It is a known manufacturer of pharmaceutical companies in numerous therapeutically areas and healthcare sectors. BMS prepare drugs for diseases of cardiovascular disease, diabetes, cancer, HIV/AIDS, rheumatoid arthritis, hepatitis, and psychiatric disorders. BMS aims to discover, develop, and deliver its new and advanced medicines that would help many seriously prevailing disorders.
Bristol‐Myers Squibb is a known and leading company that works globally and focuses on the development of health care sectors with selling its famous brand name. It has 51 drugs with an above average pipeline facility that develop blockbuster compounds and potentials in the key therapeutic areas. It has tried and maintained it efforts and offer dividend payment every year for about 39 years even in the periods of share and sales decline. Bristol Meyers Squibb has kept a solid track of cutting cost with proven tracks of maintaining it space on achieving $ 2.5 billion as an annual costs savings by the year 2012. It has considered taking a step of cutting out of all the non-biopharma products in the urge of transforming into Next generation of Pharma Company. However, this plan faced some obstructions in the middle after the company was hit by patent cliff. Company’s two major and most selling drugs of Plavix and Avapro were struck of patent cliff with pulling down revenues by 30%.
The sudden arrival of the patent cliff at BMS haunted the company and the Pharma industry for the year 2011, 2012 and further years. As a whole, it was observed that overall the pharma industry could have faced $ 25 billion decline in its sales. It was seen that as soon as the drugs fall off its patent protection, lower generic prices of the companies fall off as much as the 90% sales. BMS lost revenue of its most leading and sold drug Avapro (irbesartan), in the year 2011 which was used for hypertension and was an angiotensin II receptor antagonist. This drug was famous for having the largest sale present in BMS compared to other drugs. This drug had a global sale of $ 1.2 billion alone in the year 2010. Similarly, Plavix was another drug that had been famous and the most revenue e producing drug. The company gained much from it compared to other 50 drugs that it produced. The company had revenue of around $ 2.6 billion in 2010 due to this medicine solely .buy research papers online from qualified writers
The company used M&A as a solution to gain back its revenues for getting and recovering from the damages of patent cliff. Most notably the loss the company faced because of the two drugs Plavix and Avapro/Avalide were exclusive. The company because knew that patent would affect its revenues overall planned accordingly. The company was hit by the loss of its famous drug, which was known as the second best selling drug worldwide. This impacted the company’s revenue to decline to $ 3.83 billion from $ 5.5 billion and with net income reduction to $ 609 million from $ 1.1 billion. The diversified portfolio was thought to be strengthened by combining its company with Elli Lilly. This helped the company in getting clinical advances, renewed, and increased its commitment to productivity.
After the patent cliff, the company started to work day and night for the recovery of losses that the company faced after the offset of Plavix and Avapro. However, this effort was hampered when the company’s potential hepatitis C medicine was suspended in the month of August. In conjunction with Pfizer, BMS confronted issues when the regulators set Eliquis a blood-thinning drug back. However, still the company did not left its track and worked hard. The company’s shares were reported to decline from 5% to 2.2% that means that the revenues fell from $ 3.83 billion from $ 5.5 billion. In 2006, the drug maker marketed Plavix and observed increasing market shares in its company. The company made full revenues and had positive experiences with Plavix until November 2011.
BMS has been facing experiences of patent expirations from the year 2012 with two of its famous medicines of Plavix and Avapro that had global sales of $ 1.1 billion and $ 2.6 billion. BMS posted about its declined revenues in the fourt hquarter of its 2012 year after the expiry of Plavix. Solely plavix created a decline of 23% of the revenues to around $ 4.2 billion. However, the company was benefitted of it tax benefits and reduction of tax and gained $ 411 million as a capital loss deduction. The earnings were increasing after M&A to 0.56 from 0.50 to the year ago.
Due to patent expiry revenues and earnings of BMS for full year 2012 declined because of Avapro in March and of Plavix in May of the year 2012. Revenues declined to amajor interest with major decline in shares as well.] However, the company’s overall outlook was stable because of several fast-growing drugs for instance Orencia, Sprycel, Onglyza and Yervoy in its portfolio after M&A activity. The approvals of regulatory for Eliquis and Forxiga added earnings growth and sales of the company.
After taking the step for M&A the company heavily invested in R&D. Bristol-Myers Squibb invested about 19 percent of their annual sales of approximately $3.6 billion in 2009. The Full Development and number of compounds in Exploratory increased in 2009 by 40% approximately. The company is aggressively leveraging tools to discover a broad range of strategies and characterize new compounds with establishment of biologics drug development and a centre of excellence in manufacturing. Along with this, the company increased M&A activities with other research departments as well for responding to new opportunities and increase the success rate. Sharply and significantly, Sales of the drug cut down due to competition from cheaper generics after patent expiry. Sales of Plavix declined completely declined to 97% that become $ 49 million from $1.1 billion for full year 2012.order dissertation service.
Case study of GlaxoSmithKline
The second largest pharmaceutical company, GlaxoSmithKline is known around the globe because of revenue. Prescription medication, consumer health products, and vaccines are the company's products that are sold and manufactured as products. GlaxoSmithKline for many vast and distinct therapeutic categories manufactures products within these broad spaces. The company also has a pipeline with multiple drugs that are known as potential in their work environment. Like its nearest competitor, the company includes numerous and as many late stage drugs as possible. Its significant number of new products should help them to offset these losses while the company dealt with major loses in patent protection. GSK had revenues of in 2010£ 28.4 billion and had net earnings of£1.85 billion in 2012 after taxes.
Through numerous domestic and global demographics, the fortune of GSK was sustained. Demand for medicines was increasing because of growing diseases and population increase of older ages. Similar to this the obesity increase and demand for treatments and medications that are effective continued to increase the demand for medicines and drugs. The pharmaceutical industry, beginning in 2010 faced one of the drug patent expirations’ biggest waves a phenomenon referred to as the“patent cliff”. In the last 5 years, in the history of the pharmaceutical industry a significant number of leading selling drugs experienced expirations of drugs confronted patent expirations making way for lower-priced generics. Lipitor (atorvastatin), Caduet (amlodipine/atorvastatin), Combivir (lami vudine/zidovudine), and Solodyn (minocycline extended release tablet) are the four primary drugs that lost expiration of patent in 2011.
More than 7 billion in sales, these four drugs combined made for drug revenues. By the end of 2011 and 2012, patent drugs worth $ 12 billion was expired and that figure increased to $ 30 billion in annual sales of these companies. It was estimated that the competition of generic has eroded to $ 67 billion from most of the top companies that had this much of annual sales in the year 2007 and 2012 solely because 3 dozen and more products have been declined during this time. Glaxo has been known to make up the after years of 2009 more than its rivals because of the diverse revenues that the industry and the company had in vaccines and consumer products. For about one-third of the company's revenue, is accounted for consumers products. Glaxo’s situation has been clouded because the company has the best selling drugs that faced patent loss and was effective as respiratory inhaler known as Advair. Out of overall sales of Glaxo’s over 20% had been because of Advair that was lost after the company hit patent. Advair was extremely difficult for the generic competitors because of unique composition which was the reason the market has not concerned itself with Advair because it went patent. The technology that Glaxo used did not help others in selling their products and was an impossible medicine to be duplicated. Hire the Best academic writing service.
As a result, its cash flows reduced from 42% to -4.65% per year, where operating cash flows’ percentage became -30% from 8.05%. However, there was not a sharp decline in the revenues as it was only 0.7 percent. Company’s senior management agreed that the company had lost its most revenue generating drug in the conference but assured that the company definitely would not shut. The company investors started considering invested in the right place and monitoring to obtain what they want. Among the famous drugs of GSK, Advair was an important and significant drug. GSK lost its diabetes drug Avandia (rosiglitazone) and then combined with famous company.
GSK decided to solve its problem by not breaking up with the bigger giants of the industry. Highly focused groups headed by people decided to return power to the specialists of R&D by reorganizing it in their scientific fields to help them inspire and guide their team to be successful. The reason is that GSK was already investing on R&D. Therefore, the negative effects of patent cliff were not significant for this company.
There are several other specific strategies such as re-innovation and price-focused approaches that the company used. However, still the basic philosophy was to work for modern R&D and morph the company into a big change by seeking the best scientific advice inside and outside the company. It helped in breaking up into the promise of excellence by promoting a string culture in the company. Glaxo Smith Kline form its early days in 2009 had engineered the efforts of R&D and tried to fixed the broken paths. The company efforted to two products in late-stage development the one had the smallest number of industries and the second had the highest R&D spending.