Pfizer’s Future Depends on IT Transformation

With its business model ailing, this pharmaceutical giant tries a new IT formula, including a loyalty discount card, mobile applications aimed at consumers, and a cloud-based tablet CRM system for physicians

Chip-munching, sedentary people have made Pfizer a bundle of money. Lipitor, a drug that lowers cholesterol, ranks as Pfizer’s top-selling pill for 12 years running. A blockbuster among blockbusters, Lipitor brought in $10.7 billion, or 16 percent, of the company’s $67.8 billion in revenues last year.

This month, though, Pfizer loses a crucial patent protection on Lipitor and, with it, the exclusive right to make and sell the drug. Competitors are ready to swoop in with generic versions and swoop out with many billions of dollars.

In the next four years, patents on six other key Pfizer medicines are due to expire. Viagra, the drug of choice for treating erectile dysfunction, is another huge product for Pfizer. The company went to court this summer to fight for control of it after a challenge from a generics maker. To Pfizer’s relief, a judge ruled that a key Viagra patent is valid until 2019.

Still, Pfizer knows it can’t rely on super pills alone to stay vital. In the past few years, it has conducted large cost-cutting projects, including shrinking its workforce by tens of thousands and its research budget by billions. Slashing operations costs means that patent expirations won’t be such a blow, relatively speaking.

But the company also seeks new sources of business that will produce reliable sales for decades. Key to the plan is cultivating relationships with individual patients, especially in emerging markets such as Brazil, China and India. By helping people work with their doctors and pharmacies to manage lifelong conditions such as arthritis and hypertension, Pfizer hopes to nurture lifelong customers. Hunting blockbusters remains important for Pfizer, but holding the hands of individual patients is a growing strategy for the company.

The pharmaceutical industry at large faces similar challenges, resulting in layoffs, mergers and R&D cutbacks, plus acquisitions of generics and biotechnology companies, all in an effort at reinvention, says Erik Gordon, an assistant professor of business at the University of Michigan. “Relying on blockbusters, you make a zillion bucks and you spent a zillion bucks. When it disappears to generics, you have to change what you’re doing,” Gordon says. “The industry is facing desperation.”

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