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Sabrina GeorgeSabrina George

Sheliah VinkSheliah Vink

Katherine KingKatherine King

Company Company ProfileProfile

Pfizer/MerckPfizer/Merck

PfizerPfizer Research-basedResearch-based

Technology-Technology-intensive intensive productsproducts

Three business Three business segmentssegments

MerckMerck Global research-Global research-

drivendriven

Broad range of Broad range of productsproducts

Benefit servicesBenefit services

Market Info on Market Info on PfizerPfizer

Trading at 43 3/16Trading at 43 3/16

Market Capital is Market Capital is $272,674.02 $272,674.02 millionmillion

59.7% of shares 59.7% of shares held by held by institutionsinstitutions

Market Info on Market Info on MerckMerck

Trading at 89 Trading at 89 15/1615/16

Market Capital Market Capital $206,904.38 $206,904.38 millionmillion

53.8% of shares 53.8% of shares held by held by institutionsinstitutions

Net IncomeNet Income

Pfizer-Pfizer- $3,179 million $3,179 million

(1999)(1999)

Merck-Merck- $5,891 million $5,891 million

(1999)(1999)

Pfizer vs. MerckPfizer vs. Merck ““Two of the world’s drug titans Two of the world’s drug titans

are facing off in a war for are facing off in a war for dominance -- and their strategies dominance -- and their strategies couldn’t be more different. In couldn’t be more different. In the end, the presidential election the end, the presidential election may decide who wins.”may decide who wins.”

Fortune MagazineFortune MagazineLee CliffordLee Clifford

PfizerPfizer

American Home Products / Warner American Home Products / Warner Lambert situationLambert situation

Overbid AHP by more than $10 Overbid AHP by more than $10

billionbillion

““Partner of Choice”Partner of Choice”

Pfizer earned this Pfizer earned this

nickname by nickname by

promoting drugs promoting drugs

for smaller for smaller

companiescompanies

““Predator Of Predator Of Choice”Choice”

o Pfizer earned Pfizer earned

this new this new

nickname after nickname after

the merger with the merger with

Warner-LambertWarner-Lambert

Merck’s Medco Merck’s Medco SubsidiarySubsidiary

• More than 370 More than 370 million products million products delivered yearlydelivered yearly

• On-line On-line pharmacy pharmacy businessbusiness

Merck-MedcoMerck-MedcoContracts from Contracts from

unions, unions, corporations, corporations, insurance insurance carriers, and carriers, and HMO’sHMO’s

Three $80 Three $80 million high-million high-tech pharmaciestech pharmacies

Medco’s TrainingMedco’s Trainingo Sensitivity Sensitivity

training for training for service reps service reps includes includes cotton stuffed cotton stuffed in ears, in ears, gloves and gloves and vaseline on vaseline on glasses.glasses.

StrategiesStrategies

Pfizer’s StrategyPfizer’s Strategy

““Free-spending, Free-spending, free marketer”free marketer”

Unregulated Unregulated healthcare healthcare environmentenvironment

Merck’s StrategyMerck’s Strategy Getting deeper Getting deeper

into managed into managed carecare

Medicare reformMedicare reform

““far-reaching far-reaching inescapable inescapable HMO”HMO”

Who Will Dominate?Who Will Dominate?

Pfizer’s Competitive Pfizer’s Competitive EdgeEdge

““Marketing Marketing machine”machine”

20,000 sales reps20,000 sales reps

Spends 39% of Spends 39% of revenue on sales revenue on sales and marketingand marketing

Merck’s Competitive Merck’s Competitive EdgeEdge

o Embracing Embracing managed caremanaged care

o Concern for Concern for uncovered uncovered seniorsseniors

o Employee Employee

amenities.amenities.

Making A Deal Making A Deal With The DevilWith The Devil

Irked independent pharmacistsIrked independent pharmacists

Limited distribution of FosamaxLimited distribution of Fosamax

An equity stake in CVS ProCareAn equity stake in CVS ProCare

Medco’s Your Plan programMedco’s Your Plan program

Merck’s ViewMerck’s View

Controlling the means of Controlling the means of distribution would be a distribution would be a critical advantage in an critical advantage in an environment more hostile environment more hostile to profitsto profits..

Pfizer’s ViewPfizer’s View

““Pfizer is clearly betting Pfizer is clearly betting that thethat the

medical environment medical environment doesn’t change that much-doesn’t change that much-that people will continue that people will continue to pay up for drugs.”to pay up for drugs.”

Sales ForceSales Force

Pfizer’s Sales Pfizer’s Sales ForceForce

o 20,000 sales 20,000 sales repsreps

o Each rep Each rep averages 459 averages 459 visits to doctorsvisits to doctors

o Very aggressive Very aggressive approachapproach

Merck’s Sales ForceMerck’s Sales Force

11,000 sales reps11,000 sales reps

Salespeople are Salespeople are “collegial,” “collegial,” “responsible,” “responsible,” and “less and “less aggressive”aggressive”

Political EffectsPolitical Effects

Bush Bush AdministrationAdministration

Pfizer benefitsPfizer benefits

Merck suffersMerck suffers

Gore Gore AdministrationAdministration

Merck profitsMerck profits

Pfizer takes a Pfizer takes a divedive

ConclusionConclusion

Which one is Which one is better?better?

Based on Based on electionelection

Our vote is Our vote is for Merckfor Merck

Thank YouThank You!!

Don’t Don’t forget forget to voteto vote