Presented By:
Brian Hennessy
Matt Socha
Jamie Harper
Adam Ravenstahl
Lindsey Rodgers
http://www.pfizer.com.html
Brian:
History
Factors of production
Lindsey:
Input Prices
Subsidies
Jamie:
Substitutes
Implicit/Explicit Costs
Adam:
Pric...
HISTOR
YBegan in 1849 as Charles Pfizer and Company Fine
Chemicals
In Brooklyn, New York
New factory and headquarters move...
HISTOR
YIn 1971 Pfizer Central Research was established
Major breakthrough medication Celebrex released in 1997
Pfizer was...
Factors of Production
Land: The physical space of production and natural supplies involved
Uses nearly 2,500 separate natu...
Derived
DemandThe demand for an input arises from
And fluctuates according to the demand for the
Product it helps to produ...
Input PricesInput Prices
 Research andResearch and
DevelopmentDevelopment
 In 2003 PfizerIn 2003 Pfizer
budgeted $7.1 bi...
 On average it costs $500 million and 14 years to bring 1On average it costs $500 million and 14 years to bring 1
new med...
SubsidiesSubsidies
 Main focus: low-income elderlyMain focus: low-income elderly
 Pfizer Patient Assistance ProgramsPfiz...
 30 states’ laws provide for a direct subsidy30 states’ laws provide for a direct subsidy
using state fundsusing state fu...
Over The
Counter BenedrylBenedryl
 ListerineListerine
 NeosporinNeosporin
Generic DiphenhudramineGeneric Diphenhudramin...
Prescription DrugsPrescription Drugs
ViagraViagra
CelebrexCelebrex
ZoloftZoloft
 LevitraLevitra
 VioxxVioxx
 PaxilPaxil...
Explicit CostExplicit Cost
Out-of-pocket expensesOut-of-pocket expenses
Machinery, lab materials, and purchasing outsideMa...
Implicit CostImplicit Cost
 Opportunity costs associated with a firm’s useOpportunity costs associated with a firm’s use
...
Minimizing Costs
Mergers lower production costs
Pfizer is constantly working to
become more efficient in
production
Repeti...
Minimizing costs contd.
Greater volume produced decreases production cost
Law of Diminishing Marginal Utility
Specializati...
Profit Maximization
In 2002, nearly all of
Pfizer’s major products
outpaced competitors
Acquisition of
Pharmacia will brin...
In Monopolistic competition
Aside from High Start-Up costs, R&D, no real barriers to
entry/exit
Government patents
Price D...
Price DiscriminationPrice Discrimination
When customers get reduced pricesWhen customers get reduced prices
Those paying f...
Purpose of AdvertisementPurpose of Advertisement
Reduce search and opportunity costsReduce search and opportunity costs
Pr...
Types of Pfizer AdvertisementsTypes of Pfizer Advertisements
TV commercialsTV commercials
Magazine articlesMagazine articl...
TOP 10 NETWORK TV ADVERTISERS
2002 2001
1 General Motors Corp.$ 777.8 661.8
2 Procter & Gamble Co. 723.7 586.4
3 Johnson &...
QUESTIONS ??QUESTIONS ??
http://www.pfizer.com.html
History
Factors of production
Input Prices
Substitutes
Implicit/Explicit Costs
Price Discrimination
Advertising
Minimizing...
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Pfizer Pharmaceutical Presented By: Brian Hennessy

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Pfizer Pharmaceutical Presented By: Brian Hennessy

  1. 1. Presented By: Brian Hennessy Matt Socha Jamie Harper Adam Ravenstahl Lindsey Rodgers http://www.pfizer.com.html
  2. 2. Brian: History Factors of production Lindsey: Input Prices Subsidies Jamie: Substitutes Implicit/Explicit Costs Adam: Price Discrimination Advertising Matt: Minimizing Cost/Profit Maxmization Monopolistic Competition
  3. 3. HISTOR YBegan in 1849 as Charles Pfizer and Company Fine Chemicals In Brooklyn, New York New factory and headquarters moved to Manhattan in 1868 Pfizer scientist discovered Penicillin in 1928 Pfizer expanded company global in 1951 http://www.pfizer.com.html
  4. 4. HISTOR YIn 1971 Pfizer Central Research was established Major breakthrough medication Celebrex released in 1997 Pfizer was recognized as company of the year by Forbes Magazine in 1999 In 2000 Pfizer merged with Warner-Lambert Pfizer merges with Pharmacia in 2003 http://www.pfizer.com.html
  5. 5. Factors of Production Land: The physical space of production and natural supplies involved Uses nearly 2,500 separate naturally occurring resources Spread among 4 continents Labor: Time spent to produce product Research Projects Production FDA Approval Capital: Physical: Buildings, Machinery, Lab Equipment Human: Training and Skills http://www.pfizer.com.html
  6. 6. Derived DemandThe demand for an input arises from And fluctuates according to the demand for the Product it helps to produce • Pfizer is #1 in therapeutics • Anticipation of new medicines • $32.4 Billion revenue (2002) http://www.pfizer.com.html
  7. 7. Input PricesInput Prices  Research andResearch and DevelopmentDevelopment  In 2003 PfizerIn 2003 Pfizer budgeted $7.1 billionbudgeted $7.1 billion for researchfor research Research and Developement Costs 3500 4000 4500 5000 5500 2000 2001 2002 Year$inmillions http://www.pfizer.com.html
  8. 8.  On average it costs $500 million and 14 years to bring 1On average it costs $500 million and 14 years to bring 1 new medicine from the lab to the patientnew medicine from the lab to the patient  Fewer than 1 of every 10 drugs developed ever reachesFewer than 1 of every 10 drugs developed ever reaches the marketthe market http://www.pfizer.com.html
  9. 9. SubsidiesSubsidies  Main focus: low-income elderlyMain focus: low-income elderly  Pfizer Patient Assistance ProgramsPfizer Patient Assistance Programs  Working to develop programs that provideWorking to develop programs that provide pharmaceutical coverage for low-income elderlypharmaceutical coverage for low-income elderly persons with disabilities who do not qualify forpersons with disabilities who do not qualify for MedicaidMedicaid http://www.pfizer.com.html
  10. 10.  30 states’ laws provide for a direct subsidy30 states’ laws provide for a direct subsidy using state fundsusing state funds  MedicaidMedicaid  Pfizer’s other solutions for drug coveragePfizer’s other solutions for drug coverage http://www.pfizer.com.html
  11. 11. Over The Counter BenedrylBenedryl  ListerineListerine  NeosporinNeosporin Generic DiphenhudramineGeneric Diphenhudramine EquateEquate Triple Antibiotic CreamTriple Antibiotic Cream Pfizer Products Generic Brands http://www.pfizer.com.html
  12. 12. Prescription DrugsPrescription Drugs ViagraViagra CelebrexCelebrex ZoloftZoloft  LevitraLevitra  VioxxVioxx  PaxilPaxil Pfizer Products Non-Pfizer Products http://www.pfizer.com.html
  13. 13. Explicit CostExplicit Cost Out-of-pocket expensesOut-of-pocket expenses Machinery, lab materials, and purchasing outsideMachinery, lab materials, and purchasing outside resourcesresources http://www.pfizer.com.html
  14. 14. Implicit CostImplicit Cost  Opportunity costs associated with a firm’s useOpportunity costs associated with a firm’s use of self owned resourcesof self owned resources http://www.pfizer.com.html
  15. 15. Minimizing Costs Mergers lower production costs Pfizer is constantly working to become more efficient in production Repetitive jobs and equipment can be eliminated/sold. Acquisition of Warner-Lambert cut costs by more than $1.8 Billion Courtesy www.pfizer.com
  16. 16. Minimizing costs contd. Greater volume produced decreases production cost Law of Diminishing Marginal Utility Specialization- An increased focus on Human Pharmaceuticals Discontinuing of several products Tetra Fish Care Adams Confectionary Schick-Wilkinson Sword shaving products Loestrin and Estrostep women’s health products Courtesy www.pfizer.com
  17. 17. Profit Maximization In 2002, nearly all of Pfizer’s major products outpaced competitors Acquisition of Pharmacia will bring Pfizer into new areas of medicine. Courtesy of www.pfizer.com 10 medicines w/ sales over $1 billion. 5 over $2 billion 3 over $3 billion 1 over $7 billion Oncology and ophthalmology Constantly developing new drugs. R&D
  18. 18. In Monopolistic competition Aside from High Start-Up costs, R&D, no real barriers to entry/exit Government patents Price Discrimination Medicaid and Medicare. Many buyers and sellers competes w/ Merck and generic brands Downward sloping demand curve, can’t change price too much. Government encourages price discrimination for pharmaceutical companies http://www.pfizer.com.html
  19. 19. Price DiscriminationPrice Discrimination When customers get reduced pricesWhen customers get reduced prices Those paying full price are beingThose paying full price are being discriminated againstdiscriminated against Pfizer gives price cuts to those…Pfizer gives price cuts to those… Without moneyWithout money Desperate for the productDesperate for the product Who lack drug coverageWho lack drug coverage http://www.pfizer.com.html
  20. 20. Purpose of AdvertisementPurpose of Advertisement Reduce search and opportunity costsReduce search and opportunity costs Promote efficient resource allocationPromote efficient resource allocation Promote competitionPromote competition http://www.pfizer.com.html
  21. 21. Types of Pfizer AdvertisementsTypes of Pfizer Advertisements TV commercialsTV commercials Magazine articlesMagazine articles Newspaper articlesNewspaper articles BrochuresBrochures http://www.pfizer.com.html
  22. 22. TOP 10 NETWORK TV ADVERTISERS 2002 2001 1 General Motors Corp.$ 777.8 661.8 2 Procter & Gamble Co. 723.7 586.4 3 Johnson & Johnson 471.5 400.6 4 Ford Motor Co. 437.9 305.1 5 Pfizer 401.0 342.4 6 PepsiCo 369.3 336.1 7 AOL Time Warner 352.7 359.5 8 Walt Disney Co. 345.8 311.4 9 GlaxoSmithKline 316.2 335.4 10 Unilever 305.0 270.9 Source: Nielsen Media Research/Nielsen Monitor-Plus. Dollars in millions. http://www.pfizer.com.html
  23. 23. QUESTIONS ??QUESTIONS ?? http://www.pfizer.com.html
  24. 24. History Factors of production Input Prices Substitutes Implicit/Explicit Costs Price Discrimination Advertising Minimizing Cost/Profit Maxmization Monopolistic Competition Subsidies

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