Static and Dynamic Assessment of Pfizer - Case Study Example

Pfizer Pfizer Static Analysis Pfizer is one of the largest biopharmaceutical companies with its headquarters in New York, U.S. It is a public company and functions all over the world. Pfizer was found in 1849 and by now in terms of revenue it is the world’s largest pharmaceutical company. The current President and CEO of Pfizer is Ian Read. The company produces a wide range of vaccine and medical supplies. Pfizer has many subsidiaries like “Agouron Pharmaceuticals, G. D. Searle & Company, Parke-Davis, etc. In addition to it, Innopharma, Greenstone, Warner-Lambert, Zoetis and Wyeth” are also the subsidiaries of Pfizer. Now Wyeth is a wholly owned subsidiary of Pfizer. Total assets of Pfizer are worth US$ 172.101 billion, and its net income is around US$ 22.003 billion. The market capital is US$ 195.40 billion. Its return on equity is 13.40%, and return on assets is 5.73%. Pfizer has around 78,000 employees working for it in its global network (DePamphilis, 2003). At Pfizer, the size of the Board of Directors is 13 and all of them are highly experienced individuals. It is a diverse Board in terms of gender, skills and ethnicity. “Dennis A. Auslello, Frances D. Ferguson, W. Don Cornwell, Helen H. Hobbs, Constance J. Horner, James M. Kilts, George A. Lorch, Shantanu Narayen, Suzanne Nora Johnson, Ian C. Read, Stephen W. Sanger, James C. Smith and Marc Tessier-Lavigne” are a part of Board of Directors. Pfizer is listed at “New York Stock Exchange (PFE), London (PFZ), Euronext and Swiss”. Since April 2004, its shares have also been listed as a part of of the Dow Jones Industrial Average. Stocks of Pfizer can be directly purchased by Computershare Trust Company, which is authorized by Pfizer. Pfizer provides direct deposit of dividends to the stockholder into their bank accounts if the common stocks are held in their name. From direct deposit the shareholders receive the dividend amount account in their bank accounts on the date of payment of dividends rather than receiving cheques (Gibson et al., 2011). The last Annual General Meeting (AGM) at Pfizer was held on 10th November 2014, in which all the board members decide the next plans for the company. It initially discusses the plans that need to implement and analyses the substantial risks, uncertainties and assumptions. Befor5e implementing plans all the risks and assumptions are analysed in order to avoid obstacles from the plan. The Board of Directors attends the Annual General Meetings once every year focuses on what they have to achieve in the coming years (Anon., 2014). The committee of Board of Directors is the Audit Committee, and it consists of three or more Directors of the Board. W. Don Cornwell holds the Chairpersons position and is independent part of the Audit Committee. Dennis A. Auslello, Suzanne Nora Johnson and Stephen W. Sanger are the members of the Audit Committee of Pfizer. The charter of Pfizer includes that the Audit Committee must meet at least six times in a year with the periodic meeting held separately with the internal auditor and the independent auditors. Company’s financial statements and internal controls are viewed by the Board of Directors, which is assisted and represented by the Audit Committee. Pfizer’s performance of internal audit function and an independent auditor and its legal and regulatory requirements are also controlled and assisted by the Audit Committee. The auditing report includes “reports on financial statement, management’s responsibility for the financial statement, auditors’ responsibility, opinion and legal and regulatory requirements.” The audit conducted must be up to the standard of Institute of Chartered Accountancy of that country. There is a whole set of rules and regulation requirement which needs to be fulfilled for the auditing report. The Compensation Committee at Pfizer includes the Board of Directors, and it is in the Charter of Pfizer that the compensation committee must establish yearly and long term goals and objectives (Oceana Editorial Board, 2011). At Pfizer the capital raising is done through initial public offerings and by Pfizer Venture Investments (PVI). Pfizer raises its capital a lot through IPO and is engaged in doing that. PVI make investments that have high returns in those areas from which Pfizer can gain current or future strategic interest (Anon., 2014). Principle of transparency is an important element to which Pfizer is committed. Participation in efforts of public interest is reflected by the disclosure of activities which includes “funding for educational activities, post-marketing commitments, experimental medicines, clinical trials and payments to health care professionals” (Anon., 2014). At Pfizer, a strict code of conduct is followed, and every employee of the company must comply with letter and spirit of the code. The Business conduct at Pfizer is known as the ‘blue book’, which is translated in 28 languages. It is the duty of every employee to abide and strictly follow the rules and policies of the company’s business conduct. Some common conflicts, which must be avoided by the Directors of the company, are relationship of the company with third parties, compensation from non-company sources, gifts and personal use of company assets. All the conflicts must be avoided and dealt seriously at Pfizer. The generic conflict resolution is strictly followed at Pfizer, all the drugs are tested and experimented before bringing them in the market and drugs are not allowed to be sold without proper labelling. The Directors must keep all the information related to the company confidential (Manley, 1991). Pfizer continuously reviews and keeps on improving to lessen the impact on the environment and conduct responsible business practices. It is also involved in contributing to overall health of the world. It has helped around 3 million uninsured patients to get access to more than 37 million Pfizer prescriptions in 5 years, which amounts up to $ 7.3 billion (Gibson, et al., 2011). Dynamic Analysis Litigation in the Past Five Years From the past, it has been observed that Pfizer is involved in a number of suits because of its pharmaceutical products and also because of the companies, which it has acquired or merged itself with (Jennings, 2012). Following are the lawsuit cases that were imposed on Pfizer: Brigham Young University v. Pfizer, 2012 U.S. Dist. LEXIS 53929 (D. Utah Apr. 16, 2012) Brigham Young University and Monsanto Company, which was later acquired by Pfizer, through research they developed a ‘super aspirin’ a drug that could reduce pain. BYU was supposed to avail 15% royalty on the sale of that drug. As Pfizer took over Monsanto, the 15% royalty was not given to BYU for which they filed a law suit against Pfizer. As a matter of fact, the court provided partial victory to BYU in terms of the fine paid by Pfizer. However, this grant stayed in operation for first motion. The amount of fine which was paid by Pfizer as a result of ruling of the court was $850,000. Herein, it should be noted that before providing an alternative resolution method to Pfizer, there was a study conducted by the lawyers concerning Pfizer litigation. Nevertheless, court considered BYU to be fully in charge for the resolution. Resolution: As evident from the press releases during the time of the case between BYU v. Pfizer, the company was somewhat guilty of the charges. It was due to this reason that they opted for an alternative way to resolve the issue. Pfizer found paying fines for the damages as the possible and agreeable resolution. As a result, the court imposed a fine of $450 million. Blue Cross and Blue Shield of Kansas, Inc. v. Pfizer, Inc. et al 2575 in M:05-cv-01699-CRB Blue Cross Blue Shield (BCBS) a health insurance company filed a case against Pfizer as they were illegally marketing their drugs. It was claimed that Pfizer unethically persuaded the doctors to prescribe such drugs and heavily bribed the doctors for doing this act. On the top of it, the company paid expenses for the trips for the lectures concerning the Bexta drug so that they could make use of the facts to market its sub-measured quantities. Alternative Resolution against Pfizer: Herein, this case was also on the verge of getting extended to more than three sanctions. It would have increased the litigation cost on the company. Therefore, yet again, Pfizer chose to pay for the damages. Consequently, the court posed a ruling against Pfizer where Pfizer had to pay $325 million in 2014 as a case settlement. Conclusion It is concluded that Pfizer is one of the largest Pharmaceutical Company all over the world. It operates all over the world and has around 78,000 employees working for it. The company follows its business conducts strictly and over the past it has acquired few companies. It has many consumer healthcare products like Chapstick, Emergen-C, Advil, etc. From the time of formation, the company has been very strong in its operational activities and earning profits but on the other hand, it has also been involved in cases, which set a bad image for the company. Many people have died because of a mistake made by the representatives of Pfizer. Pfizer must check its products and sell them when they are completely safe for the use. The company should avoid taking risk as many people die because of it. Therefore, transparency remains a very critical aspect when it comes to litigation of the company. Also, the alternative resolutions that have been opted by Pfizer to solve the cases are to be evaluated for transparency. There is, however, the possible legal audit that is undertaken timely. In order to increase its goodwill, Pfizer must be able to present audit reports for its litigation to prove augmented transparency. List of References Anon., 2014. Annual Report. New York: Pfizer Inc. DePamphilis, D., 2003. Mergers, Acquisitions, and Other Restructuring Activities: An Integrated Approach to Process, Tools, Cases, and Solutions. 2nd ed. Massachusetts: Academic Press. Gibson, J., Ivancevich, J. & Konopaske, R., 2011. Organizations: Behavior, Structure, Processes. 1st ed. New Delhi: Tata McGraw-Hill Education. Jennings, M., 2012. Cengage Advantage Books: Foundations of the Legal Environment of Business. 2nd ed. New Jersey: Cengage Learning. Manley, W.W., 1991. Executives Handbook of Model Business Conduct Codes. 1st ed. New Jersey: Prentice Hall. Oceana Editorial Board, 2011. American International Law Cases Fourth Series: 2009. 1st ed. Oxford: Oxford University Press. Read More