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Analysis of the sensitivity of Pfizer to the business cycle and other factors

on 16 October 2014

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Transcript of Pfizer

An introduction to Pfizer
Factors that influence Pfizer:

1. Business cycle
2. Exchange Rates
3. Wages and Commodity
4. Fiscal Policy
5. Product exclusivity

1. Business cycle sensitivity
4. Fiscal policy sensitivity
- $100 Billion offer to AstraZeneca

- Increase Market & Decrease Competition

- Use excessive funds

- Tax Inversion will save Pfizer $1.2 billion/year

- Laws to prevent Tax Inversions

2. Exchange rate sensitivity
61% of its revenue is outside the U.S.

USD decreased 33% in value versus the Japanese Yen 2007-2012

USD decreased 15% in value versus the Euro 2006-2008

$1.2 billion loss due to foreign exchange

Costs weight more than earnings
3.1 Wage level proxy
2004: Pharmacia merger
2007: Exubera from market
2009: Wyeth merger

3.2 Wage level sensitivity
3.3 Commodity sensitivity
Proxy: Selling, informational and administrative costs (SI&A)
2009-2010: Wyeth merger

2010 - 2013: Reorganizing

4th largest pharmaceutical company

$51.6 billion revenue 2013

Best-selling drug ever: Lipitor

Other: Aricept, Lyrica, Viagra

Pipeline products
- Low business cycle sensitivy

- Moderate exchange rate sensitivity

- Low wage or commodity sensitivity
(but limited information)

- Critical factors:
Fiscal policy
Loss of product exclusivity

5. Product exclusivity
- Research and production of medicine: tough
business model

- Exclusivity on intellectual properties

- Revenue dependent on blockbusters
Lipitor 20% of revenue
Lost exclusivity in 2011-2012
"Most companies want to expand to increase profit, but Pfizer sells off business units to do so"

Why do you think this is?
Full transcript