Putting all your eggs in one basket

According to their website, Pfizer works across developed and emerging markets to advance wellness, prevention, treatments and cures. Pfizer operates in the pharmaceutical industry. They currently have over 31 drugs on the market focused on a variety of different illnesses. They also produce a number of animal health products. Over the last decade, Pfizer has acquired two companies – Wyeth and Warner-Lambert. Both corporations have only strengthened the pharmaceutical giant and allowed them to explore more innovative ways of drug discovery.

An important element in preparing for a crisis is strategic management, which involves analyzing the environment the organization operates in. Many organizations operate under a corporate strategy that is typified by identifying the industries the organization is in. An organization can operate in a single industry, multiple related industries, or multiple unrelated industries. Pfizer operates in a single industry.

Operating in a single industry is often the best way to avoid a crisis. By limiting the number of areas your corporation is involved in, the more control the organization has. However, when a crisis does occur the damage is usually worse. When a company only has investments in one industry, there are no others to soften the blow and make up for lost revenue. In Pfizer’s case, their single business industry contains enough diversification within its product lines to make up for any slight dips.

Imitation drugs can cause a Real crisis

As discussed in earlier posts, sources of crises can be either internal or external. Often, external crises present the greatest challenge as they are difficult to predict. However, predicting a potential crisis is the focus of crisis management and is essential to the development of a crisis management plan. In addition to team members, command center locations and guidelines for activating the plan, outlining potential crises with suggested responses is a vital element to a crisis management plan.

Currently, the pharmaceutical industry is plagued by the selling of imitation drugs. Pfizer recently sponsored a survey asking Eastern Europeans if they had ever purchased imitation drugs. Despite the obvious loss of profits, pharmaceutical companies also face possible hits to their brand as these drugs are often packaged in ways similar to the “real” drugs. The imitation drugs often contain toxic chemicals creating a serious health risk. If one of these imitation drugs was being sold as, let’s say, Pfizer’s Lipitor and a consumer died after taking it this would be a crisis for Pfizer.

One possible solution to this problem is to first begin by confirming whether the drug responsible was an imitation or a “real” Pfizer drug. Assuming that it was an imitation drug responsible for the death, Pfizer would first need to announce that to its various publics. The key message would be Pfizer was sorry for this tragedy, but none of their drugs were responsible. To reinforce their positive brand image, they should launch an educational campaign focusing on the danger of imitation drugs and the extent of the problem.

It is important to be flexible when preparing a crisis management plan. Although this is one solution to this potential crisis, there could be many more that would be more appropriate given specific circumstances.

Pfizer launches online wellness system

Part of crisis management involves constantly monitoring the culture of your company and its external influences. A corporation must constantly be evaluating whether or not all of their business practices are in line with the company’s message and the image it wishes to project. This includes how it treats its employees, new business ventures and any partnerships. Partnerships are especially important, as it is difficult to control how another company is behaving and their behaviors are an indirect reflection on your company.

This week, Pfizer announced that they would be partnering with Keas Inc. to launch an online prevention and wellness program. The program’s primary function is to help patients with challenges such as weight loss, smoking cessation and diabetes prevention while giving them personalized tools for success. A spokesperson for Pfizer explained that the partnership made sense based on Pfizer’s commitment to innovation.

Often, when large corporations partner with other organizations the most important factor considered is the economic stability of both organizations and what each organization stands to gain from the partnership. If the numbers are correct, the partnership goes ahead. Corporations fail to analyze whether or not the partnership is aligned with the company’s goals and missions. And then are shocked when a crisis results. Sometimes, partnerships that seem like a home run can result in a crisis.

In 2000, sports apparel giant Nike offered professional golfer Tiger Woods an endorsement deal. Woods was the most famous golfer since Arnold Palmer and Jack Nicholas so the partnership seemed like a slam dunk for Nike. We all know what happened next. What seemed like a lucrative partnership for both, but Woods’ ensuing scandal made it clear that his values were not in align with Nike’s.

It is unlikely that a giant like Pfizer is entering into this partnership lightly. It can be guaranteed that it is a collaboration that has been intensely studied. And on the surface, it seems to make sense. Both companies exist to improve the lives of its publics by helping them maintain a healthy life. In the interest of keeping users as safe as possible, all care plans are being written by physicians, Pfizer and other medical experts. For now, this seems like it will be a successful partnership for both Keas and Pfizer, but Pfizer should constantly be reevaluating that partnership to make sure it does not result in a crisis for either company.

Could healthcare reform be Pfizer's next big crisis?

When evaluating a potential crisis there are two types of causes – external and internal. Internal causes are often things the company is doing wrong and know is wrong, while external causes are circumstances the company has no control over. External forces can be broken down into political-legal, economic, social, and technical. As a pharmaceutical company, Pfizer has the most to fear from political-legal causes.

For the last year healthcare reform has been at the center of congressional debates. Preliminary bills have been passed in the U.S. House of Representatives and the Senate is currently debating the issue. It’s unclear to what extent these new regulations will have an effect on the Pharmaceutical industry, but it can be assumed it will present a fair share of problems. One of the largest components of proposed legislation is reducing the cost of drug prescriptions. Pharmaceutical companies depend on selling drugs to provide the majority of their profits. They spend millions of dollars creating new drugs in order to then make millions of dollars selling drugs. Federally stipulated drug prices could throw the industry into a period of rapid recession.

Pfizer needs to be planning for a potential hit in the profits made from their various drugs. Developing a task force to deal strictly with potential changes that will come of new healthcare regulations, will give Pfizer a tremendous advantage. Political analysts, lawyers, lobbyists, and business analysts would be ideal candidates for a healthcare reform crisis team. The team should, or course, be lead by a PR practitioner (or practitioners) with extensive backgrounds in the pharmaceutical industry. The goal of effective crisis management is to be prepared for anything that may hurt your company and have a prepared plan of how to handle it.