Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer MARKETING STRATEGY ASSIGNMENT:

MSD:

PFIZER

CHARMI POPAT ROLL NO. 03 MARKETING STRATEGY ASSIGNMENT MBA PHARMA TECH VTH YEAR

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer We are Merck

Merck and Company Inc. was incorporated in New Jersey and trades on the New York Stock Exchange (NYSE: MRK). It is a research-driven pharmaceutical company that discovers,

develops, manufactures and markets a broad range of products used to improve consumer and animal health. We are a leading pharmaceutical, chemical and life science company with four strong and dynamic divisions: Merck Serono (Pharma segement), Consumer Health, Performance Materials and Merck Millipore. The company operates in three segments: the pharmaceutical, animal health and consumer healthcare segments. We have a clear focus on research and development as well as profitable, high-margin specialties for high growth markets. We are committed to living our social, economic and ecological responsibility toward people, toward our partners in the market and toward our shareholders.

We are committed to improving health and well-being around the world. From developing new therapies that treat and prevent disease to helping people in need, we are guided by a rich legacy and inspired by a shared vision.

Our core values are driven by a desire to improve life, achieve scientific excellence, operate with the highest standards of integrity, expand access to our products and employ a diverse workforce that values collaboration.

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer

Key figures of the Merck Group Highlights 2012 1) Sales grow to exceed the 10 billion for the first time driven by solid organic growth rates of the three largest divisions as well as changes from foreign exchange rates 2) Strong operational performance while substantially advancing with the transformation of the company 3) Good profitability and strong working capital management lead to increased free cash flow 4) Merck Serono generates solid top and bottom-line results while implementing major restructuring programs and efficiency initiatives across global administrative functions, R&D operations and country organizations 5) Performance Materials delivers exceptional performance driven by liquid crystal materials, while the Pigments business remains sluggish 6) Sales growth of Merck Millipore driven by all business units, predominantly through biotech manufacturing products in Process Solutions 7) Net financial debt significantly lowered to below 2 billion 8) Proposal to increase dividend by 13% to 1.70 demonstrates the current and future strength of the underlying business
million Total revenues Sales Operating result (EBIT) Margin (% of sales) EBITDA Margin (% of sales) EBITDA pre one-time items Margin (% of sales) EPS pre one-time items (in ) Free cash flow 2012 11,172.9 10,740.8 963.6 9.0 2,360.2 22.0 2,964.9 27.6 7.61 2,039.9 2011 10,276.4 9,905.9 1,132.1 11.4 2,730.9 27.6 2,723.8 27.5 6.79 1,436.4 Change in % 8.7 8.4 14.9 13.6 8.9 12.1 42.0

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer Merck 2012 Fit for 2018 : Our shared ideas connect us. They are changing our company.

Ideas that connect & Ideas that enable change The future is created in the minds and hearts of pioneering thinkers and dynamic entrepreneurs. With expertise, passion and innovative products, Merck provides valuable impetus to improve and enrich everyday life as well as the health and lives of people on both a small and large scale. Yet the future is also being created by the visionary ideas and clear goals of the pharmaceutical, chemical and life science leader of tomorrow. On the road to tomorrow we launched a change process called Fit for 2018. We are streamlining our organizational structure and at the same time aligning it specifically to current and future requirements. We are giving our strong divisions full business accountability. We are increasing our profitability and establishing clear guidelines with centrally steered corporate development targets. We are establishing a performance-oriented culture while promoting objective-driven thinking, engaged teamwork and efficient actions.
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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer

4Ps Product Price Place Promotion STP Segmentation Targeting Positioning

5Cs Customer Company Context Collaborators Competitors

.4Ps:

Product (As per Indian Pharmaceutical Industry)

In Pharma sector MSD operates in diverse segments. Diabetes, Derma, Gynaec., Hormones are the major contributors. Merck sells its products to drug wholesalers, retailers, hospitals, government agencies, and managed care providers. The companys products address drug therapies to treat atherosclerosis (Zocor), hypertension / heart failure (Cozaar, Hyzaar, and Vasotec), anti-inflammatory / analgesics (Vioxx, Arcoxia), osteoporosis (Fosamax), asthma / allergy (Singulair), pediatric vaccines, anti-bacterial / anti-fungal, and HIV.
Anti Diabetic Derma Gynaec. Hormones Respiratory Gastro Intestinal Anti-infectives VACCINES Others CARDIAC Pain / Analgesics HIV Neuro / CNS Blood Related

5% 30% 6% 12% 14% 23%

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer Portfolio of Options:

Values MAT (in Crs.) MS (as per TOP BRANDS SUPERGROUP JUN'10 JUN'11 JUN'12 JUN'13 2013) in % Grand total of MSD IPI 394.2 443.5 539.8 629.2 JANUMET JANUVIA QUADRIDERM-RF Anti Diabetic Anti Diabetic Derma 27.8 40.4 57.6 43.2 50.0 67.1 76.2 66.5 73.4 109.8 80.2 74.9 17.5% 12.7% 11.9%

DECA DURABOLIN Hormones DIPSALIC-F Derma NATUROLAX NOVELON FEMILON ELOCON ZIENAM

45.1 17.2

47.3 20.0 17.2 13.4 12.4 13.4 9.7

57.0 22.5 17.5 17.2 16.0 15.1 9.1

67.2 23.6 23.4 21.2 19.4 16.0 12.4

10.7% 3.7% 3.7% 3.4% 3.1% 2.5% 2.0%

Gastro Intestinal 15.0 Gynaec. 12.4 Gynaec. 11.5 Derma 11.1 Anti-infectives 8.7

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer 4Ps: Price Different pricing strategies are adopted by Merck for different countries/regions: 1. Differential Pricing is adopted by Merck for Emerging Markets (EM) like India, China, Russia, Brazil, South Korea, Mexico & Turkey. Eg. Januvia was sold at fraction of cost in India compared to US 2. Value based Pricing is adopted to improve profitability in developed countries. Eg. U.S. 3. Franchisee Pricing: 4. Reimbursement strategy of assigned product portfolio 5. Medicare - Merck medical benefits: It is a insurance co payment system organized by Merck to support the customers and help them increase the access to unaffordable medicines.
.4Ps:

Promotion

1. Co-promotion: To increase the promotion of the products & to increase the reach of the product co-promotion is done by Merck. Eg. Merck announced the tie up with Avanir Pharma to promote Mercks Januvia in U.S. (12th Aug 2013) 2. Patient assistance program: To assist patient with long term diseases. Eg. SPARSH Patient assistance program in India for Januvia & Janumet 3. Product website for every new product introduced in the market 4. Direct to consumer advertising ie. TV commercials Eg. TV commercial for shingles vaccine Zostavax aimed at raising awareness among the patients. They did not mention the name of the drug but encouraged older adults to ask doctors about shingles. 5. Newly published Book: The Merck Manual Go-To Home Guide for Symptoms This book provides information on when to seek medical attention, when it may suffice for consumers to address their ailments at home. It also discusses the possible causes of common symptoms.
.4Ps:

Place

Headquartered in Whitehouse Station, New Jersey, United States. Present in more than 60 countries. Present in Emerging Markets.

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer 5 Cs: Customer, Company, Competition, Collaborators, Context 1st C: Customer Patients, Stakeholders, Retailers, Specialist, General Physician & Consulting Physician 2nd C: Company SWOT ANALYSIS MSD (Global level): Strengths 1. A well- known trusted name in Pharmaceutical industry. Its Brand Image and Awareness 2. A large department of R & D which conducts research regarding different health products & new ways of treating disease (At 1,511 million, R&D spending remained roughly at last years level (2011: 1,514 million). At 14.1%, the ratio of R&D expenses to total sales fell around one percentage point compared to 2011) 3. Global market capture gives strong edge to the company 4. Strong market capture & industry hold. Highest Profit Margin in the industry 5. High volume of product approval by FDA 6. Diversified Product Portfolio 7. Knowledge of benefits of risks offered 8. Sophisticated Online Search Tool (mercksource.com) 9. Transparency 10. Expansion to developing countries (Access) Weaknesses 1. The company has various controversies the biggest being VIOXX Product Liability ($4.85 billion) to be paid to the family members of people who got injured or died because of this drug causing risk of heart attack & strokes 2. Liquidity of company is low & expenditure on R & D is high. Highest R&D with historically increasing expenses 3. High salary of skilled pharmaceutical representatives 4. Weak core portfolio (Overly dependent on joint venture) (Approximately 65% of Mercks 2008 revenue is attributable to alliance products and patents)
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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer 5. Aggressive marketing open to scrutiny by government agencies Opportunities 1. Product diversification. Diversification into biologics, diabetes & infectious market segments 2. Increasing elderly population worldwide 3. Strategic Acquisitions eg. Schering plough 4. Focus on R&D for chronic diseases vs. acute disease 5. Penetration of vaccines and biologics for emerging international markets (Gardasil) 6. Educate staff to promote loyalty through relationships from distribution channels Threats 1. Government regulations & actions may increase the threat of fines & loss of credibility which also have being happening in the past 2. Risk of expensive class action law suits 3. Loss of patent protection 4. Tightening of FDA Regulatory Oversight 5. Increased global competition 6. May pose serious threats from companies like GSK who also making efforts to go global & capture markets. 3rd C: Competition In its drug manufacturer industry, Mercks major competitors are Johnson & Johnson, Pfizer, Novartis, GlaxoSmithKline as well as other smaller companies. 4th C: Collaborators 1) JOINT VENTURE WITH INDIAS SUN PHARMA: To launch Januvia & Janumet in India. 2) MSD entered collaboration with PFIZER 3) Merck licensing strategy results in high-value alliances: 65% of Mercks 2008 revenue is attributable to alliance products and patents eg. GARDASIL, ROTATEQ, FOSAMAX, COZAAR / HYZAAR, NEXIUM etc.

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer 5th C: Context: PEST ANALYSIS Indian Political & Economic Environment Consumer Price Index (CPI):

Chart - CPI inflation India 2012 (yearly basis) - The average inflation of India in 2012: 9.30

Wholesale price inflation pressure are on ebb, but retail inflation remains high.

Number of policy initiatives by UPA government to arrest the downward slide of economy

Direct Benefit Transfers

Food security ordinance

Bifurcating the state of Andhra Pradesh and creating Indias 29th state Telengana

Welfare schemes like MGNREGA subsidy bills of the farmers (poverty figures are going down)

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer Slow economic growth & subdued Industrial activity India is a 3rd largest economy in PPP terms & lowest per capita GDP in the world. Slower recovery of domestic demand and weak export activity. Industrial activity expected to remain subdued & growth in service & exports was expected to stay sluggish due to Depressed global condition. Steering Group to accelerate Infrastructure investment GDP grew at 4.9% in FY13 CAGR over past decade still stands at 7.68% Currency depreciated by >10% (expected INR 58 & 63 against USD $)

STP SEGMENTATION: With an enduring focus on innovation and sound science, we work to deliver vaccines, medications, and consumer and animal health products that can help millions around the world. Products: Pharmaceutical products, vaccines, prescription products, consumer products, animal health & chemicals TARGETING: Large business owners & operators Developed & Emerging Pharmaceutical nations like India, China, Brazil, Russia etc.

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer POSITIONING:

Mission Statement, Values, Strategy

"Our aspiration is to make great things happen." The first sentence of our Mission Statement also applies to our values and shapes theway the company is managed. In order for the Mission Statement to be reliably implemented, we have created globally consistent tools and control systems. This enables us to actively shape our corporate culture and measure ourselves even better against our own principles. The corporate strategy is targeted to success, but equally respects the interests of employees, customers, providers of capital, and society. Our values and strategy give our employees clear orientation for their daily work. A global research-driven pharmaceutical company that discovers, develops, manufactures and markets a broad range of innovative products to improve human and animal health, directly and through its joint ventures

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer PFIZER Pfizer, Inc. is an American multinational pharmaceutical corporation headquartered in New York City, and with its research headquarters in Groton, Connecticut, United States. It is one of the world's largest pharmaceutical companies by revenues. A Pioneering Spirit on the Frontiers of Medicine: History of Pfizer

.4Ps:

Product (As per Indian Pharmaceutical Industry)

Pfizer develops and produces medicines and vaccines for a wide range of conditions including in the areas of immunology and inflammation, oncology, cardiovascular and metabolic diseases, neuroscience and pain. Pfizer's products include Lipitor (atorvastatin, used to lower LDL blood cholesterol); Lyrica (pregabalin, for neuropathic pain/fibromyalgia); Diflucan (fluconazole, an oral antifungal medication); Zithromax (azithromycin, an antibiotic); Viagra (sildenafil, forerectile dysfunction); and Celebrex/Celebra (celecoxib, an anti-inflammatory drug).

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer

Respiratory Anti-infectives Vitamins / Minerals / Nutrients

4% 6% 7% 8% 8% 9% 10%

17%

Gastro Intestinal CARDIAC Gynaec. Neuro / CNS

13%

Pain / Analgesics Hormones Blood Related

11%

Derma VACCINES Others Anti-Parasitic Sex stimulants / Rejuvenators Ophthal / Otologicals

Diversified global health care portfolio: human, animal biologic, small molecule medicines and vaccines

Six Pfizer brands feature among the Top 100 pharmaceutical brands in India. Few of Pfizer brands - Lipitor, Viagra, Corex and Becosules etc

Marketing Powerhouse in the Pharmaceutical Sector Pfizer India is recognised for its marketing strength. Pfizer was awarded the prestigious Express Pharmaceutical Pulse 2002 award for overall excellence in the Indian pharmaceutical industry

TOP 10 BRANDS COREX BECOSULES DOLONEX MINIPRESS-XL GELUSIL-MPS FOLVITE MUCAINE MAGNEX WYSOLONE OVRAL-L

VALUE as per in crs. (2013) 278.1 159.9 97.2 92.1 91.6 77.5 68.2 59.8 58.5 51.7

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer

Pfizer is committed to applying science and global resources to improve health and well-being at every stage of life. They strive to provide access to safe, effective and affordable medicines and related health care services to the people who need them.

PRICE: Pricing Strategy Is Based on Local Market and Competitive Dynamics 55% average price differential between US and emerging markets 60% price reduction to make available at $1 per dose in developing countries

5 CS: 1st C: Customer Patients, Stakeholders, Retailers, Specialist, General Physician & Consulting Physician 2nd C: Company SWOT ANALYSIS PFIZER: Strengths 1. Industry leaders. One of the largest pharmaceutical companies in the world and spread over more than 50 countries. Strong brand name and recall globally 2. Excellent research and development (R&D) creating innovative and breakthrough products. R&D innovation with a broad therapeutic coverage
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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer 3. Mergers and acquisitions with big pharma brands increasing brand reputation 4. Has over 100,000 employees as a part of the organization 5. Strong sales and marketing infrastructure. Marketing strength in major geographical and therapeutic areas 6. Revived blockbuster credentials in recent years - Lyrica, Sutent and Chantix/Champix Weaknesses 1. Tough competition from other major pharma brands means limited scope for market share growth 2. Negative brand image due to involvement in largest healthcare fraud of marketing its drug illegally. Law Suit Infringements 3. Low Investment into R&D compared to competition Opportunities 1. Strategic agreements with other pharmaceutical companies and organizations to boost its research. 2. Increasing awareness about healthcare needs & Increasing demand for quality healthcare solutions 3. Global penetration through mergers and acquisitions 4. Restructuring strategy designed to cut costs and create a leaner company 5. Acquisitions and in-licensing/co- development opportunities 6. Biologic market expansion 7. Emergence of integrated global markets and globalisation for new products 8. Co-marketing agreements with companies wishing to capitalize on Pfizer's marketing Threats
1.

Considerable exposure to generic competition, focal point of which is Lipitor, due to lose patent exclusivity in 2011

2.

Further large scale M&A activity could further decline Pfizer's profitability
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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer

3.

Increased competition for core products like Viagra as its high cost encourages use of cheaper alternative treatments& An increase in the number of safety issues surrounding Viagra

4.

Competition from products similar to Pfizer's in R&D that reach the market close to or before Pfizer's products

5.

The new economic potential of emergent China, India and competition in diverse regional markets.

6. 7. 8.

Economic downturn influencing consumers' purchasing power Negative publicity. Losing the quality of their drugs and being sued by more consumers. Regulatory environment is becoming more & more stringent

3rd C: Competition In its drug manufacturer industry, Pfizer major competitors are Johnson & Johnson, Merck, Novartis, GlaxoSmithKline as well as other smaller companies. 4th C: Collaborators 1. Developing Viable Business Models to Serve the Underserved 2. Providing Important Medicines Through Institutional Buyers (For example, Pfizer has long-standing business partnerships with both the U.S. Agency for International 3. Development and the United Nations Population Fund to make our injectable contraceptive, Depo-Provera, available to women all across the globe, from sub- Saharan Africa to Southeast Asia to Latin America. 4. We are working to expand our relationship with such institutional buyers to make a broad portfolio of our medicines accessible to as many low income patients (as possible)

STP

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Marketing Strategy: Merck, Sharp & Dohme (MSD) & Pfizer SEGMENTATION: Heart disease, Obesity, psychiatric disorders, cognitive enhancers, oncology & animal health segment, dysfunction. TARGETING: Large business owners & operators POSITIONING: Pfizer Slogan A slogan is a short, memorable catch phrase, tagline or motto used to to identify a product or company in advertisements. The advertising slogan, or business slogan most associated with Pfizer, is:

"Pfizer Quality."
Pfizer Mission Statement:

"We will become the world's most valued company to patients, customers, colleagues, investors, business partners, and the communities where we work and live."
Pfizer Vision:

At Pfizer, we're inspired by a single goal: your health. That's why we're dedicated to developing new, safe medicines to prevent and treat the world's most serious diseases. And why we are making them available to the people who need them most. We believe that from progress comes hope and the promise of a healthier world

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