Analyzing Pfizer's Potential in the Swedish Pharmaceutical Market

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Business Organisations and Environments in a Global
Context
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Executive summary
Pfizer’s background was given by mentioning some major milestones in this organisation. Their
revenue and legal structure, shareholders were given. Sweden’s economy was discussed and their
political situation was analysed. Culture amongst Swedish people was identified. Amount of FDI
in Sweden in recent years was found and evidence has been given. Scenario of pharmaceutical
business was evaluated through situational analysis. This analysis focused on some facts, which
are related to external factors. It weighed both positive as well as negative impact of Pfizer’s
business. Ultimately, “Porter’s Five Forces” analysis helped in understanding competitive
environment of pharmaceutical business in Sweden, which will affect Pfizer.
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Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................5
Conclusion.....................................................................................................................................16
Reference list.................................................................................................................................17
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Introduction
Business environment is collection of every factor, which may influence business of a company.
This will include a study on Pfizer. Pfizer will be expanding their pharmaceutical business in
Sweden through foreign direct investment. They will operate from their country of origin in
Sweden. This study focuses on this topic. For this, background information of Pfizer will contain
in first section. Then economic condition, political situation, culture, and financial system of
Sweden will be evaluated. Then this business scenario will be analysed. For this situational
analysis will be conducted on Sweden. Competitors, buyers, suppliers, and power of new
entrants will be assessed for Pfizer.
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Discussion
Background Information on (Pfizer)
Pfizer is a pharmaceutical company and it presently employs over 92400 people. They have
revenue of 53.64 billion USD in 2018. Pfizer is a publicsector organisation based in New York.
Pfizer has reached more than 90 international markets, including Japan, Canada, New Zealand,
and Western Europe. They sell their products to 125 countries across international borders.
Albert Bouria is their CEO. Charles Pfizer founded the company in 1849 and the organisation
grew by merging with Pharmacia, Warner-Lambert (pfizer.com, 2019). The organisation’s
income tripped in 2017, which amounted to 21.3 billion USD. This is the second largest
pharmaceutical company. They have their research centre in Groton. In 2018, they have been
ranked 57th in fortune 500 company list. They announced in December 2018 to merge with
GlaxoSmithKline. The British company was meant to give 68 percent share. They produce
medical supplies for immunology, cardiology, neurology and many more. Pfizer wanted to
merge with Allergan PLC by cracking a deal worth millions of pounds.
Pfizer has some main products, which brings them maximum amount of revenue. These are
Lyrica, PRevanar 13 suite, Lipitor, Xeljanz, Ibrance, Sutent and Viagra. These products has
brought them huge amount of revenues. About 10 percent of their sales come from Japan. They
have manufacturing units in China, Ireland, Belgium, India, Italy, Singapore, and US. They
operate about 60 plants. About 40 percent revenue annually comes from sales though their retail
chains, stores, pharmacies and distributors. In 1849, Charles Pfizer borrowed money and set up
their first fine chemical business. Their first production was tartaric acid, which dates back to
1862. They sold it to chemical and food industries. The company’s expansion was propelled
during civil war. Their revenues were doubled at this time in 1868. In 1880, Pfizer started to
produce citric acid using lemon. First international expansion came in 1882, when they found
many clients in West Mississippi. They opened office in Chicago, which was outside of New
York. Charles Erhart leaves partnership to William. In 1899, they were declared as the leader in
chemical business in US (pfizer.co.uk, 2019).
There are some organisations, who owns maximum share of Pfizer. These organisations are
JPMorgan Chase, Capital World investors, BlackRock, State Street, and Vanguard. JPMorgan
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Chase owns 1.27percent;Capital World Investors own 2.67 percent, BlackRock5.03 percent,
State Street 5.11 percent, and Vanguard 7.96 percent (money.cnn.com, 2019). Other
organisations such as SSgA Funds Management, T. Rowe Price Associates, Geode Capital
Management, Northern Trust Investments, and Wellington Management own shares of this
company.
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Background Information on the Business Environment in (Sweden)
Economy
Figure 1: GDP Sweden
(Source: countryeconomy.com, 2019)
Sweden’s GDP is 466,925 million Euros in 2018. There has been a 2.4 percent growth in it. GDP
per capita of Sweden grew to 45900 Euros. This indicates a great financial health of this country.
This kind of major growth in economy is a positive factor. This may make other countries more
interested to invest in Sweden. Recent rise in GDP per capita is evidence to greater financial
strength of people. This increases their purchase power for any kind of products. Final
consumption percentage of households in Sweden had a growth of 2.2 percent in 2017. By taking
into account of total expenditure of Swedish community, people have spent about 3 percent of
their money on Health.
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Figure 2: GDP per capita in Sweden
(Source: countryeconomy.com, 2019)
Culture
Swedish people are egalitarian in nature. They are humble and do not believe in boasting.
Population of Sweden contains Swedish people, Sami, and Finnish citizens. Business culture of
Sweden is egalitarian too. There are no formal hierarchy and consensus is a major business
principle. Therefore, business can become easier due to flexible organisational structures.
Swedish people prefer to be punctual in work. Price is Swedish people’s primary concern. They
look at prices of products first before buying. Quality comes as their second factor of concern.
These people indulge in research before buying a product. Due to large number of population
being connected by internet, they try to obtain information about a product first. According to
research, 53 percent Swedish customers are use internet to research. About 13 percent people do
research about products in stores (En.portal.santandertrade.com, 2019). Other major factor,
which changes their buying behaviour, is after sales service. They believe in getting excellent
quality of post purchase service from any company.
Political
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Constitutional monarchy is the basis of parliament democracy in Sweden. King is head of state
but yields no power over this country. Stefan Lofven is prime minister, who is from modern
party. There has been four months of political instability in Sweden before arrival of Sweden
Democrats. There has been recent turmoil, as many parties are not agreeing to include a fat left
party in government (ft.com, 2019). Stefan Lofven has promised to bring stability. Executive
power in Sweden is hereditary. There is legislative power, which is controlled by parliament,
which is known as Riksdag.
Legal
Sweden’s law is controlled by parliament, which has legislative power. Sweden does not have
any restriction on foreign investment. They follow rules set at EU and UN regarding trade
policies. Therefore, doing business in Sweden is not difficult, as they allow foreign direct
investment. There is company act, which organisations need to follow to do business in Sweden.
Registration can be done by filling for “Foretagsregistreing” and can be sent to Swedish tax
agency. There are many regulations according to employment. These laws protect employees
inside organisations. It is a point to consider for organisations, who are trying to expand in
Swedish market through FDI. Until 2010, there was a monopoly in Sweden in case of pharmacy
business. Medicines were sold through National Corporation of Swedish Pharmacies. After some
reformation, the scenario changed. Other companies were allowed to sell medicines on their own
(Bergmanet al., 2016).
Financial system
Financial system in Sweden is quite stable now. There has been major improvement in fixed-
income as well as foreign exchange market. Liquidity requirements are quite high in Sweden.
Main Swedish banks are seeing profits due to great economic condition. There has been crisis in
stock market of Sweden in past. It has recovered now due to help from government. Sweden is a
top country when it comes to global privatisation. They have privatised deregulated services
much faster than any country. This has increased efficiency of various industries, which has
become a major cause for financial benefits. Sweden’s financial system has changed over years.
Credit agencies gave Sweden AAA rating in 2017. Therefore, changes inside this organisation.
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From 1990s, Swedish government has been able to control public spending. They were able to
avert maximum damage in global crisis in 2008 by this method.
Figure 3: FDI in Sweden
(Source:tradingeconomics.com, 2019)
FDI in Sweden has reached an amount of 63.7 SEK billions at 1st quarter of 2019. In average,
21.25 billion SEK has been the rate of FDI. Therefore, this data implies that FDI in Sweden is
quite possible as this market is having large amount of foreign investments. Therefore, it brings
numerous opportunities for any foreign company.
Analysis of the Business Scenario
Elements Factors Impact
Political  Rise of Democratic
Party in Sweden under
Stefan Lofven is a
major change
(government.se, 2019).
 Sweden takes no VAT
in case of prescribed
Political condition may
change in Sweden by bringing
its stability after Stefan
Lofven’s power acquisition.
Impact due to political
stability Sweden can be
positive for Pfizer, as it may
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medicine. They take 25
percent VAT for OTC
medicines
(avalara.com, 2019).
provide more opportunity.
The party has promised to
bring positive changes in
Sweden by upgrading their
policies. Therefore, it can give
better opportunity to Pfizer,
which signifies positive
impact. Due to no VAT policy
on medicines on Sweden,
Pfizer may be able to generate
more profits by decreasing
prices on their pharmaceutical
products. Therefore, impact of
this factor could be positive.
Economical  Sweden’s GDP has
reached to 4790748
SEK in 2018
(statista.com, 2019).
 FDI in Sweden has
increased to
63.7billion SEK by
2019
(
tradingeconomics.com,
2019).
 Turnover of pharmacy
market of Sweden in
2018 is 75 percent for
prescription
pharmaceuticals
(statista.com, 2019).
GDP growth may mark ascend
of Sweden’s economic health.
Therefore, it gives an ideal
situation for Pfizer, as people
are economically stronger to
purchase medicines. Influence
of GDP growth is positive
according to this data. High
number of FDI in Sweden
gives evidence that it is ideal
for Pfizer to use this method.
Therefore, this particular
factor regarding FDI can
provide positive impact.
Turnover of pharmacy market
comes from prescribed drugs,
which is ideal for business of
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Pfizer. Impact on Pfizer’s
business can be positive.
Social  Fourteenpercent
spending of money
from people’s end in
Sweden is done on
medicines.
 Older people in
Sweden are opting for
medicines.
 Youth is Sweden has
been using high
amount of
antidepressant pills
(Frecceroet al., 2016).
High amount of spending in
medicines shows that it is a
fertile market for Pfizer. High
amount of usage in anti-
depressant drugs from young
people’ end in Sweden may
boost business for Pfizer.
Older people in Sweden may
give more financial advantage
to Pfizer, as they are
purchasing high quantity of
medicines. These factors can
become positive for Pfizer in
Sweden.
Technological  New technology is
focusing on usage of
Nano fluid real time
QPCR method.
 Medicines are made by
extensive study on
DNA and RNA by
genome assessment.
This is making
medicine trials better
and drugs more
effective (Heet al.,
2016).
Due to increase of usage in
QPCT method, trial and error
process is improved.
Medicines of many companies
are seeing improvement due to
more research on human
DNA. This is helping them to
produce better medicines,
which is increasing
competition in market.
Therefore, Pfizer will face
significant amount of
competition in Sweden. This
may become harmful for their
business, which implies
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