Current Events: Job Opportunities & Sales Growth

Worried about the future of the pharmaceutical industry do to the current state of the economy and losses the pharmaceutical industry has experienced over the past decade? Well no need to worry much because many positive events have been occurring recently in the industry.

The pharmaceutical industry has experienced a lot of losses over the past decade due to the recession. Many jobs were lost, plants closed, and the development of new medication put on hold. Among all of that, recently the government has been requesting effective drugs for a cheaper price, drug companies are losing their patents, and productivity is falling due to the creation of new drugs. But even with all the losses that the pharmaceutical industry has experienced and the hardships they are currently experiencing, there is a light at the end of the tunnel. Recently things have been looking up for the pharmaceutical industry as far as the employment sector is concerned and things are getting better. According to Pharma Fierce, new job opportunities have surfaced in the pharmaceutical industry, and now is the time for the public to take advantage of this opportunity.

There are currently several job opportunities in the pharmaceutical industry. According to Pharma Fierce (2011), “since 2001 300,000 pharma employees have lost their jobs, primarily in R&D and sales.” With a loss in jobs as large as this, it is a good sign that new job opportunities have emerged in this industry. Some of the jobs they are offering are Clinical Research and Regulatory Affairs, Bio-manufacturing, Healthcare Information Technology, Medical Devices, Medical Communications, and Patent Law and Technology Transfer. Even with all these dream job opportunities though, employee-seekers are not only looking for people with PhDs, but they are also encouraging them to get additional training do to the simple fact that these pharmaceutical companies can not afford to just hire “smart” people. They need people who they are positive will do the job above and beyond the standards they request.

Another positive event occurring in the pharmaceutical industry today is that GlaxoSmithKline’s sales have grown. According to Pharma Fierce, GlaxoSmithKline posted a sales growth of 4% for the third quarter, which beat the sales growth assumption analysts had estimated. With the record of their company’s third quarter sales growth, the outlook for 2012’s sales growth is looking good. In fact, GSK is so confident that they will do well in the year of 2012 that they have recently increased their dividend and increased their stock buyback plan by 15% in order to keep investors interested and holding on. It is the success of companies like GSK that gives hope for the future of the pharmaceutical industry even with all the challenges they will be facing with their patents expiring.

~ Zenas

Sources:

http://www.fiercepharma.com/story/new-job-opportunities-emerging-big-pharma/2011-10-26?utm_medium=nl&utm_source=internal

http://www.fiercepharma.com/story/gsk-sales-grow-thanks-emerging-markets-japan/2011-10-26?utm_medium=nl&utm_source=internal

Key Industry Leader Gains Even More

Johnson & Johnson Inc. is one of the leaders in the global pharmaceutical industry with 36% of the market share in the United States alone. Johnson & Johnson has adapted a very unique and successful business model. The company highly supports diversification in both its products and its target consumer. They offer hundreds of different kinds of products to people of all ages, genders, and various needs all over the world. The Johnson & Johnson website claims that they have great responsibility in this expanding global environment by reaching out to more and more people everyday, everywhere. The company is a strong multi-national company with operations in over 57 countries. Even with its large customer base of household products, Johnson & Johnson’s top market is its pharmaceuticals, which includes its flagship product Remicade.

Johnson & Johnson’s financial statement for 2010 reported revenue of $61.6 Billion, down $200 Million from 2009 but up $2 Billion from 2008. Total company assets increased from $94.7 Billion in 2009 to $102.9 Billion last year. The company experienced a huge $10 Billion growth between 2005 and 2007 and eventually it became a steady growth through the recession, however the recession did not cause any negative consequences in growth. In fact, the net income has growth significantly as well without any dips. From 2007 to 2010 the company gained $3 Billion in net income. Cash flow has also steadily increased over the years; from $12.5 Billion in 2005 to $16.3 Billion last year. Current company liabilities have consequently increased too; from $20.9 Billion in 2008 to $23.1 Billion last year.

Johnson & Johnson is one of the top five key industry players. It owns a huge chunk of the US pharmaceutical market and is inching its way over to a bigger global market share in the next couple years through its diversification strategy and the production of generic medication.

Djeki Bidjerano

Sources:

http://finance.yahoo.com/q/ks?s=JNJ

http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/cp/companyFinancials.do

http://www.investor.jnj.com/2010annualreport/chairman/pharmaceuticals.html

http://www.wikinvest.com/stock/JOHNSON_%26_JOHNSON_(JNJ)

Gain or Loss?

Sources:

http://www.pfizer.com/about/

http://www.pfizer.com/files/annualreport/2010/annual/review2010.pdf

Gain or Loss?

Pfizer Inc. is one of the major leaders in the pharmaceutical industry. They research and develop prescription medicines that are available for both humans and animals and are responsible for some of the most well-known drugs in the world. Pfizer targets health care, animal health, and consumer health care and it has products available in more than 150 countries. Pfizer’s mentality is mostly geocentric, which means they are known for applying standards that are both universal and local to evaluate all parts of their company. In Pfizer’s 2003 Annual Report it stated that they planned to measure performance both at the headquarters and at each of the subsidiaries according to three activities—financial performance, the ability to increase the availability of healthcare, and the level of corporate social responsibility. Their business structure is very complex and the size and resource distribution represent Pfizer’s requirement of a creative organizational structure to support them.

According to Pfizer’s 2010 financial statement they exceeded their revenue and earnings
per share goals. Pfizer recorded record sales of $67.8 billion on a diverse group of products. In their biotechnology organization they focused more on prescription-only human health products and brought in $58.5 billion in sales, up 29% from 2009. The company believes that this success was due to the addition of their Wyeth’s products. Pfizer is staying on track to achieve their multiyear cost reduction goal of about 4 to 5 billion dollars by the end of 2012. They were able to
achieve more than $2 billion in cost reductions in 2010 and their adjusted diluted earnings per share of $2.23 exceeded their guidance for the year. In December 2010, Pfizer’s board of directors approved an 11% increase in the first quarter dividends to 20 cents a share. They stated that they expect to repurchase around $5 billion of common stock during 2011.

Pfizer was also able to meet expectations in other key performance indicators that other companies in the pharmaceutical industry are starting to adopt. These indicators include environmental sustainability, investments in treatments for neglected diseases, and
improvement in access to medications.

Treating the Recession

For the most part the major pharmaceutical companies have been unaffected by the recession. Certain non-essential drugs and lifestyle drugs can be hurt by the economy. Overall though brand name pharmaceuticals have been extremely resilient to the economic downturn. When something is a necessity it is one of the last things people will stop spending money on. If you literally need a certain drug to survive than you will keep spending the money on it no matter what the economic climate.

Some major brand name pharmaceutical companies managed to make huge gains during the recession. For example Johnson & Johnson had a 10 billion dollar increase in their total assets, mostly caused by a five billion dollar increase in their cash and cash equivalents. Another example is GlaxoSmithKline. GSK had gains of over three billion dollars stemming from an increase in there intangible assets.

Teva Pharmaceuticals, the worlds largest generic drug company, made gains of almost 5 billion dollars in their assets. These gains were largely the result of growth in goodwill and other intangible assets. Their net sales also increased to the tune of more than two billion dollars.

Not all major companies where making large gain during the recession though. AstraZeneca did not have large gains but remained in approximately the same financial condition. AstraZeneca saw their assets decrease by around 50 million dollars. 50 million out of 30 billion is not a significant portion of their assets.

Pfizer and Merck both made outrages gains due to mergers with other large companies. Pfizer’s balance sheet almost doubled in every category from 2008 to 2009 due to their purchase of Wyeth pharmaceuticals. In the case of Merck and their reverse merger with Schering Plough their total assets nearly tripled from 2008 o 2009. At the same time Merck’s total sales increased by almost four billion dollars and Pfizer’s revenue increased by almost two billion.

Pharmaceutical companies are much more worried about the demographic of the population, specifically age, and their patents. Interestingly after the recession, between 2009 and 2010, many of these companies began to lose assets and revenue.

Sources:

http://clients.ibisworld.com.proxyau.wrlc.org/industryus/productsandmarkets.aspx?indid=487&highlight=economy

http://files.shareholder.com/downloads/JNJ/1464725905x0x359541/6EAF4E16-08B2-4AD4-86AC-5BDB928E5320/JNJ_2009AR.PDF

http://www.pfizer.com/files/annualreport/2009/financial/financial2009.pdf

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzcxMDk4fENoaWxkSUQ9MzY4MDQ2fFR5cGU9MQ==&t=1

Buying Innovation

How much money does it take to be truly innovative?  It depends on who you ask.

If you were to ask pharmaceutical companies, most of whom spend at least 10% of their total revenue on R&D, the figures would be huge.  In fact, Pfizer, the largest pharmaceutical company in the world say that $8 billion dollars per year isn't unreasonable.  Then again, perhaps it is.  In a recent survey of 600 different top executives, Booz & Co. discovered none of the pharmaceutical companies even made it into the top ten most innovative firms, despite their gargantuan R&D budgets.  In fact, the top five companies that were ranked most innovative only included one with a research budget which broke into the top ten. That firm was Microsoft, which ranked number five on the list.  The other top-rated firms were General Electric at the fourth position, 3M at number three, Google coming in second, and Apple leading the pack at number one.  Strangely enough, the top four all had R&D budgets which were lower than the 30th position.

What does this mean for big pharma then?  A staunch possibility is that perhaps money is not always the path to innovation.  Companies like Apple, Google, 3M, and GE foster world changing initiatives while spending budgets which may seem insignificant to pharmaceutical conglomerations which can afford 8 billion dollar expenditures on product development.  The top ranked innovators do more than spend money, they encourage creativity.  They innovate not just in scientific advancement, although that still is a factor, but in their management structure and the whole of their company.  They try new things, take risks, and allow for freedoms that pharmaceutical companies have trouble dreaming of.  The same strategies taken by highly innovative technological institutions cannot always be taken by pharmaceutical companies, however.

Pharmaceutical companies have one responsibility that the top ranked innovators in the Booze & Co. survey don't often need to consider - safety.  The products that companies like Pfizer create cannot be experimented upon by employees who want to create side projects and then tested with minimal risk.  In fact, minimal risk is almost entirely impossible in the pharmaceutical market without large expenditure.  So maybe it isn't so bad for drug manufacturing entities to spend more than other organizations to keep their employees and consumers safe.  Why should it matter to us as consumers if corporate executives rank big pharmaceutical firms, whose leaps in creativity may be small chemical compounds or any other scientific reach which doesn't truly reach the pubic, as less innovative than companies like Apple and Google which have a public persona and whose products touch the lives of everyone they come into contact with.  Just because the innovations in the pharmaceutical industry aren't always publicized as much as the new iPad does not mean that Apple is more innovative as a corporation, no matter what a list of CEOs says.

So how much money does it take to be truly innovative?  Maybe it doesn't depend on who you ask.  Maybe it depends on how public your innovations are.  Maybe it simply depends on who you're responsible for.

-Spencer Swan

Information for the article was gathered from:

http://online.wsj.com/article/SB10001424052970203752604576645401657833270.html?KEYWORDS=innovation

http://www.actupny.org/reports/drugcosts.html#chart_one

Global Companies

The companies in the Pharmaceutical Industry that are most global are located in the UK, Switzerland, Germany and the US. Since the Pharmaceutical Industry requires sophisticated manufacturing techniques and high-cost research and development, the most profitable firms are in advanced, developed economies. The following companies are still in the lead today for global revenues, even after the continually changing market.

Pfizer is the leading global pharmaceutical company with global revenues of $51.3 billion in 2005, even with a 2.4% decline in 2004. It has the largest pharmaceutical research and development organization in the industry and had superior success with Lipitor, which is the best-selling drug in the world.

GlaxoSmithKline is next;this company is headquartered in the UK and is located in 116 countries. They also market their products in 125 countries. The US is its largest market, followed by Europe. In 2005, their global revenues were $39.5 billion and increased by 19% from 2004 to 2005.

Two other companies are Sanofi-Aventis and Novartis. Sanofi-Aventis operates in 100 countries and is headquartered in Paris, France. Its revenues in 2005 totaled $33,946.5 million in 2005, which was an 8.5% increase over 2004. Novartis headquartered in Switzerland, and was created in 1996 after Ciba-Geigy and Sandoz Laboratories merged. Their major products include Benefiber and Lamisil.

The key to success of these companies in other countries has been their ability to translate their objectives into achievable targets, clearly communicate them and found the right resources to achieve them. Also, they have been able to work internally and understand to value diversity and, most importantly, they have been able to adapt to changes.

In the Pharmaceutical Industry, if major companies do not produce a successful, high valuable drug one year, they will see a major impact on their revenue and profit numbers at the end of their fiscal year. Shifts in the market share over the past years have been mostly because companies have not been able to come up with new medicines to replace the ones on which patents have expired. Consequently, patents are a huge part of the industry and companies' successes rely on them. The discovery and development of important new medicines is what will ensure that major companies remain competitive.

Sources:

http://www.duke.edu/web/soc142/team2/firms.html

Having the "Global Mindset" Equals Success?

Often we assume that the United States is the supreme leader in the market and production of pharmaceuticals. That is a mistake, however. The United States was a primary focus for pharmaceutical companies until recently.

In recent times, the pharma industry has shifted its focus slightly from the United States to the new ever-expanding global market. GlaxoSmithKline (GSK), one of the leaders in the pharmaceutical industry, has a sole focus on spreading its products to the Asian market. “It is ‘a significant opportunity for GSK to extend its commercial footprint and build operational scale in this fast growing Asian market,’ says Christophe Weber, GSK's senior vice president & regional director of Asia Pacific.” GSK’s mission statement page says “Broadening and balancing our portfolio, and moving away from a reliance on 'white pills/western markets'.” GSK is a UK-based company and it continues to show more and more significance in the world markets.

There is now a general consensus among the pharma leaders that foreign markets are worth investing in. Diversity in the market is now a trend among the leaders. Johnson & Johnson have pinpointed that “diversity” is their main focus. This has shown a great effect on its customers. In the 1990s, J&J was trying to expand in Brazil. However, the ethnocentric American culture proved futile. Brazil’s markets for J&Js products did not open up until the company reframed and restructured their values. The valued “global mindset” prevailed.

Pfizer Inc. has the biggest market share in the world currently. Their strategy is simple and direct, yet effective. At first, Pfizer’s aim was to have as many geographic locations, both offshore and nearshore, as possible. This created a sense that Pfizer is present in many different regions. Currently, the company’s aim is to expand in the Asian market (like GSK) including emphasizing on India. Recently, though, Pfizer has been investing heavily into research and development. This has played a crucial role to the company’s recent success. “Spending $8.1 billion in research & development (R&D) in 2007, Pfizer has the industry's largest pharmaceutical R&D organization: Pfizer Global Research and Development.” The R&D department is responsible for the innovation and creation of new drugs. This is a smart move by the company since several of its patents on blockbuster drugs expire this shortly. Not only is Pfizer physically expanding globally, they are also developing the most profitable products to reach out to the market.

-Djeki Bidjerano

Sources for the information posted:

GlaxoSmithKline:

http://seekingalpha.com/article/205264-gsk-expands-emerging-markets-reach-with-south-korean-investment

http://www.gsk.com/mission-strategy/grow.htm

Johnson & Johnson:

http://www.jnj.com/connect/about-jnj/diversity/faqs

http://knowledgenetwork.thunderbird.edu/research/2009/06/05/brazil/

Pfizer:

http://www.ngpharma.com/article/Pfizer-global-RD-today-and-tomorrow/

http://www.pfizer.com/investors/financial_reports/financial_reports_annualreview_2007.jsp

http://www.reuters.com/article/2011/08/02/us-pfizer-idUSTRE7710KL20110802

Where in the World are Major Pharmaceuticals?

Hands down the most global companies in the pharmaceutical industry are the largest companies. These large Companies include Pfizer Inc., Merck and Co. Inc., Johnson & Johnson, and GlaxoSmithKline.

As demonstrated by Pfizer India is a growing player in the pharmaceutical industry. Recently Pfizer contracted with an India based company to help commercialize its products for once they lose patents. Pfizer is also in the possession of almost 80 manufacturing plants around the world (some of those due overlap in geographic region due to Pfizer’s acquisition of other companies and will most likely seize to exist in the near future). Like with most companies the U.S. is still the companies largest market thanks to our property laws and large population. At the same time though, Pfizer’s international sales have been growing to now include revenues of over half a billion dollars in 14 countries.

For Merck the portion of its revenue coming from the U.S. has continued to drop over the past fiver years. In 2007 U.S. sales represented over 60 percent of their revenue in 2011 it has dropped to a little over 55 percent. This shows an increased value in its international markets. Currently they have employees in 120 countries and 31 factories worldwide. At the same time they are expanding into markets in Latin America, the Middle East, Africa, Eastern Europe and the Asia-Pacific region.

Johnson & Johnson have operations in 57 countries and sell their products in over 170 countries. In the second quarter of 2011 international sales were up almost 16 percent. 50 percent of their sales are international and 43 percent of their operating profits came from overseas. Europe accounted for 25 percent of sales and 29 percent of operating profit and Africa/Asia accounted for 16 percent of sales and 7 percent of operating profit.

GlaxoSmithKline has 79 manufacturing sites in over 38 countries. Furthermore they have offices in over 100 countries with major research centers the UK, USA, Belgium and China. They delivered vaccines to over 179 countries in 2010. Major markets for GSK include the United States, Japan, the United Kingdom, France, Italy and Germany. While most of its revenue in recent years has come from these major established markets it continues to look at new markets to expand into. Currently GSK is looking at the emerging markets of Brazil, Russia, India and China.

Even with the major countries penetrating overseas problems still remain. The problem is, as previously discussed in other posts, the importance of patents in the industry. If other nations do not protect the intellectual property rights of the companies there is little incentive for them to go over seas. Because of this most companies have stuck with established western markets that have strong intellectual property protection laws. One solution to this problem has been the increased number of free trade agreements that include reinforcing intellectual property protection.

Sources

http://clients.ibisworld.com.proxyau.wrlc.org/industryus/Majorcompanies.aspx?indid=487#MP351859

http://www.gsk.com/about/company.htm

http://www.jnj.com/connect/news/financial/johnson-and-johnson-reports-2011-second-quarter-results

Manufacturing Overseas

Manufacturing overseas is a popular trend in business today because it saves companies tons of money. Businesses choose to outsource in order to increase savings and cut costs. Outsourcing is an extremely appealing work method especially for those businesses that are on a tight budget. Not only will they be saving money through having their manufacturing facility in a foreign location but they also do not have to pay their outsourced employees as high of a salary as they would if they were domestic employees. The point is, anywhere businesses see opportunity to save money and increase profits they will, which is why even players within the pharmaceutical and biotechnical industry take part in manufacturing overseas.

            One example of a pharmaceutical company that manufactures overseas is Pfizer. Pfizer is a multinational pharmaceutical company that is big on manufacturing overseas. Since Pfizer purchased the pharmaceutical company Wyeth in 2009, its number of manufacturing facilities multiplied. According to Laura Bush, the Editor in Chief of BioPharm International, Pfizer has 79 manufacturing plants around the world, 43 of the plants from Pfizer and 36 from Wyeth. But among the multiple plants Pfizer has, they also have relationships with 250 contract manufacturers. The number of plants is too high especially when one considers that these plants might come in close location to one another or overlaps each other. Either way, Pfizer is looking to shut down 8 of these plants by 2015. The downside of shutting down these plants though is that about 6,000 jobs will be lost. The locations in which these plants are looking to be shut down in are Ireland, Puerto Rico, and the US.

            Another example of a biotechnical company that manufactures overseas is Amgen. In fact in recent news, Amgen and Pfizer announced their agreement in Pfizer sale of the manufacturing facility in Dun Laoghaire, Ireland to Amgen (the location mentioned in the previous paragraph that Pfizer is shutting down). Amgen has 3 overseas manufacturing facilities: Juncos, Puerto Rico, Breda, The Netherlands, and Dun Laoghaire, Ireland. According to their website their locations all of specific functions and facilities. Their location in Juncos, Puerto Rico is a biotechnology campus for mass manufacturing. It contains labs, warehouses, process development facilities, administrative and training buildings and more. Their location in Breda, The Netherlands is commercial operations site that deals with assembling, packaging, labels, and delivering to countries such as Europe, Africa, and the Middle East. Their location in Dun Laoghaire, Ireland has a warehouse and a bioprocessing suite among many other facilities.

            Another example of a pharmaceutical company that manufactures outside of the US is Johnson & Johnson. Johnson & Johnson calls their form of outsourcing “near-shore outsourcing” because most of their manufacturing facilities are located in Latin America. Julia Santos, Worldwide Strategic Outsourcing Director for Johnson & Johnson, claims that because of J & J’s plants within Latin America, they have created a better economy for the citizens there. Latin America seems to be the future for outsourcing, and according to Bush, “the Latin American region, primarily Brazil, Colombia, Chile, and Peru will see tremendous growth in nearshore outsourcing. As multinationals face difficulties in China, companies will be looking to Latin America (i.e., Brazil and Colombia) as an alternative.” It will be interesting to see if this in fact happens because this will only help to grow the Latin America economy. If more companies decide to outsource in Latin America then their GDP will increase causing them to rise out of being an underdeveloped country.

            Outsourcing is a popular trend in the pharmaceutical industry. It is something that saves these companies money and helps the foreign countries in which their manufacturing facilities are to grow. The most popular countries that companies normally outsource in are China and India. The fact that such a successful company such as Johnson & Johnson does near-shore outsourcing in Latin America raises curiosity for the future of Latin America and how other companies will respond to Johnson & Johnson’s success and if they will follow suit and set up facilities in Latin America as well. Anyhow, outsourcing is a business strategy that will remain popular due to the fact that it saves companies tons of money a year.

~ Zenas Wilson

Sources:

http://nearshoreamericas.com/tag/johnson-and-johnson/

http://www.idaireland.com/news-media/press-releases/amgen-to-purchase-pfizers/

http://biopharminternational.findpharma.com/biopharm/News/What-Will-Pfizer-Do-With-79-Manufacturing-Plants/ArticleStandard/Article/detail/656147

http://www.fiercepharma.com/story/pfizer-manufacturing-overhaul-claims-8-plants-6-000-jobs/2010-05-18

http://www.amgen.com/pdfs/Fact_Sheet_Manufacturing.pdf