Index

Table Of Contents 1

Mergers and Acquisitions 2Introduction 2Complex Dynamics of the Industry 2Current Trends in the Pharmaceutical Industry 2

Pfizer’s Mergers And Acquisitions 3Increased Portfolio 3Patent Expiration 3R&D - Lack Of Innovation 4Biotech Expertise 4

Business Ethics And Sustainability 5

Ethical Policies At Pfizer 5

Corporate Social Responsibilities of Pfizer 5

Waste Management and Recycling 5

Water Usage 5

Helping Climate Change and Its Impact 6

Leading Product Stewardship Efforts 6

Sustaining Access to Potable Water 6

Organizational Approach To CSR 7

Pfizer’s Critical Business Ethics Strategy 7

Sustainability Strategy 7

Threat To Pfizer (And The Pharma Industry) 9Patent Expirations 9

Opportunity For Pfizer (And The Pharma Industry) 11Emerging Markets 11

Diaries 13

References 15

MERGERS AND ACQUISITIONSPFIZER - THE PHARMACEUTICAL GIANTS

Introduction

The most widely accepted purpose of mergers and acquisition in terms of literature has the following three motives which are as follows: “Firstly, an undervaluation of the target firm or a temporary overvaluation of acquiring firm’s shares might make an M&A highly attractive. Secondly, an M&A option can provide merging firms complementarities in marketing and production, gaining economies of scale and scope as well as improvement in risk characteristics or financial constraints and Thirdly, market power and concentration plays a crucial role in a firm’s decision to pursue M&A”. (Huck and Conrad, 2004; Shimizu et al, 2004). Although the view of scholars on the purpose of M&A might stand true for most industries, however, the role of M&A in pharmaceutical industry has other strategic criterions as well. During the course of this report Pfizer’s M&A activities over the last few years and their strategic importance to the company would be covered. However, to fully comprehend the M&A decisions taken by Pfizer, it is essential to understand the complex dynamics, current situation and trends of the pharmaceutical industry.

Complex Dynamics Of The Industry

“Drug firms have 20 years of competitive price protection from the time they are awarded a patent. However, the lengthy drug development process experienced by pharmaceutical firms has expanded from 11.6 years to 14.9 years during the last two decades” (Deeds and Rothaermel, 2003) “meaning that firms now need to reap the rewards of their development efforts even sooner than the traditional benchmark of within 7 years of the product launch”. (Javalgi & Wright, 2003). “Since only one compound in 5000 discovered ever reaches the point of marketed product” (Saftlas, 2008), “experts have calculated that large pharmaceutical firms each need to launch at least five “significant” drugs per year having a sales potential of $350 million or more (Javalgi and Wright, 2003). Since pharmaceutical companies are already struggling to innovate through R&D, this seems to be a difficult task.

Current Trends in the Pharmaceutical Industry

According to IMS, a leading provider of prescription drug data, “worldwide sales of pharmaceutical products reached from $756 billion in 2007 to $837 billion in 2009”. However, the pharmaceutical industry is facing a $130 billion loss in sales by 2012 due to patent expiration.

Despite the poor economic conditions, large scale mergers and acquisitions have taken place in the last five years. According to KPMG international “Over the period of 2004-2009, the total disclosed value of mergers and acquisitions in the pharmaceutical industry reached $226 billion. Prior to 2005, the average size of the deals was $164 million, but the period from 2004-2009, the average size of

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the deals increased to $430 million”. The following section will showcase the M&A’s of Pfizer over the last couple of years and their strategic motives behind those transactions in light with the prevailing circumstances of the industry.

PFIZER’S MERGERS AND ACQUISITIONS

Pfizer, which is based in New York, is the largest pharmaceutical industry in the world in terms of sales. Pfizer went through a number of mergers over the last decade. Few of them are as follows:

Pfizer merged with King Pharmaceuticals in 2010 for $3.6 billion Pfizer merged with Wyeth in 2007 for $68 billion Pfizer bought BioRexis Pharmaceutical in 2007 Pfizer bought Pharmacia, 9th largest pharmaceutical in 2003

Although the scale of these mergers is quite different from one another but on the whole the strategic importance of buying these companies, in my view, is considerably similar. Hence, in terms of Pfizer’s strategy, I will collectively demonstrate the reasons behind these mergers in the following section.

Increased Portfolio

One strategy which was common in all the above mentioned cases was the diversity of portfolio that each of the merged firm’s offered. The gain of Pfizer in merger with Pharmacia, 2003 was to extend its portfolio to anti-cancer therapeutics where it had a minimal expertise. The merger with BioRexis offered them diversity in the field of diabetics. With King, Pfizer picked up their portfolio in the pain category and Wyeth merger offered Pfizer a strong vaccine portfolio as well as 10 potential CNS and Alzheimer’s drugs. The question is that is more power and diversification the only reason world’s largest pharmaceutical company underwent all these mergers or does it signal some shortfall of the company for the future? The answer is ‘patent expiration’ which will be covered in the following heading.

Patent Expiration

One of the most complex and critical element in the pharmaceutical industry which sets it aside from most other industries is the patent expiration of drugs. Patent expiration plays a crucially significant role in mergers & acquisitions strategy. Once patent for drugs expire generic firms are able to produce the drug at a fraction of its original price, therefore giving real threat to the existence of patent drugs. According to Hawthorne, Fran & Crains (2010) “14 of Pfizers patent drugs are expiring in 2014 which includes blockbuster drugs like Lipitor and Viagra. It includes drugs like Genotropin and Vfend who earned Pfizer $ 887 and $798 billion dollars respectively in 2009”. Dave Luvison (2009) states “Pfizer faces patent problems, especially the 2011 expiration of patent rights to cholesterol drug Lipitor, the best-selling drug in the world, accounting for a quarter of the company’s 2007 revenue of $48 billion”. Hence, Pfizer realises that it’s essential to increase portfolio of patent drugs through merger with firms that acquire them. Merger with Wyeth added 2 patent drugs BeneFIX and Enbrel.

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R&D - Lack Of Innovation

According to A. Pollock (2009) “It is an open secret that many of the major firms have struggled to improve the output of new drugs, and so mergers and acquisitions serve as a quick means to reinvigorate their pipelines”. Demirbag, Chang and Tatoglu (2009) suggest “deteriorating R&D might be the primary motive underlying research-intensive pharmaceutical firms’ decision to engage in M&A’s where they may pursue one of two well-known strategies: strengthen their in-house R&D through acquisition of small biotech firms, or engage in large horizontal mergers to achieve greater economies of scale and scope in their R&D”. As suggested by the scholars R&D forms a great part of consideration for strategic Mergers and acquisitions, more importantly because lack of R&D development in current settings urge big firms to merge with other firms for better productivity and innovation. Pfizer’s mergers with Wyeth and Pharma were also directed for better R&D opportunities.

Biotech Expertise

Saftlas (2008) explains “In contrast to traditional medicines, which are based on small molecule technology, biologies are large-molecule proteins made from living organisms. As such, they offer several advantages, including therapies that generally require shorter development times, greater efficacy, and reduce side-effects. They also offer much better patent protection than traditional drugs”. He further states “Over the past three years, large pharmaceutical companies have responded by, among other strategies, forming alliances and buying biotech companies”. As the author suggests, biotech seems to be the most important invention in pharmaceutical industry in a long time and because of its advantages in comparison to the traditional drugs, all big names want to be associated to producing biotech drugs. Strategically it is crucial for big pharmaceutical firms to develop advancements in biotech to keep their long held positions in the industry. A. Pollock (2009) suggest that “the megamerger by Pfizer of Wyeth was clearly designed to strengthen their R&D abilities in the biotech field, which is seen the future of drug development”.

Hawthorne, Fran and Crains (2010) verified “Long-term gains from Wyeth hinge on its expertise biologics drugs made from living cells”. In his statement after the merger Pfizer CEO, Jeffrey Kindler predicted that the merger with Wyeth would “produce the world’s premiere biopharmaceutical company”. Pfizer merger to BioRexis and King is also noted towards advancement in biotech field.

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BUSINESS ETHICS AND SUSTAINABILITY

Ethical Policies At Pfizer

“Any organization that works in green activities to ensure that all process, goods, and

manufacturing processes effectively deal with environmental issues and at the same time maintain

their profit is called sustainable business.” (Landrum, et al 2009)

Pfizer has a very big loyalty towards environmental, health and safety issues. They are progressing

on the strength of their environmental programmes to improve sustainable practices all through

their business. Pfizer’s sustainability programs are planed to make integrated and tactical approach.

They are setting short term and long term priorities for environmental activities.

Corporate Social Responsibilities of Pfizer

Matten (2010) indicate that if the pharmaceutical companies want to maintain their ethical profile,

they need to further align their products with corporate social responsibility. Pfizer is increasingly

integrating products and services into CSR strategies.

Waste Management and Recycling

Pfizer has a very effective policy to deal with the waste materials and to reuse it if possible. They use

the waste management hierarchy which means eliminate or reduce the waste or ether reuse it or

recycle it. “To produce its most popular drugs, the pharmaceutical giant Pfizer revised a complex four-

step process that produced toxic wasted into a one-step process using ethanol, saving millions of

dollar.” (Watch, 2010)

They are recycling their organic solvent which they are using in manufacturing processes. This is

perhaps their major recycled material in quantity. They are directly recycling around 40% of solvents

they are using in their operations. They are also recovering the energy from the remaining wastes.

They also have separate dedicated containers to collect the material which is having toxic materials

i.e. electronic equipments. This helps them in separating this recyclable material from the other

wastes.

Water Usage

Protected and efficient water supply is a main challenge in many companies. Sustainable safe water

supply access is also a main challenge. Overuse of water and mismanagement of water supply is also a

challenge. Although Pfizer’ water usage amount in its laboratories and manufacturing sites is

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considerably low however management of water is very efficient within the addressing this world

health issue. Windsor, (2010) emphasizes that the organizations could measure the amount of

material disposed of that ends up in the landfill, or the amount of water used during the production.

Helping Climate Change and Its Impact

Nowadays, as known, climate change is one of the most critical environmental and global health

issues. According to Cowie, (2007) there are many diseases whose ranges are likely to change with

climate. Pfizer is especially concerned due to potential impact on world health. As a Global company,

Pfizer has an obligation to address the greenhouse gases footprint and embrace reduction

opportunities.

Pfizer has made significant progress in the performance of energy management and greenhouse gas

emissions – including goal-setting, measurement and transparency.

Leading Product Stewardship Efforts

Pfizer products and services are related to environmental impacts – including suppliers and materials

producers, and downstream distribution, product use and disposal. This complex value chain crosses

a variety of internal and external organizations and functions.

Stakeholders increasingly expect companies to address “life-cycle” product impact and embrace

product design, development, and delivery opportunities to reduce those impacts. A product-focused

sustainable business strategy of Pfizer supports greener packaging, products and supply chain. Global

scale position for Pfizer is to be an industry leader in these areas and distinguish its product in the

competitive business environment.

Sustaining Access to Potable Water

One of the most important global issues is access to clean water we face today. Because of the

changing climate that may become more critical in coming years all around the world. Growing

consensus prove that sustainable access to safe water supply will be further challenged by overuse,

population growth, economics, and politics, presenting risk not only to individuals and public sector

but also to the private sector.

Comprehensive assessments provides to Pfizer consider environmental factors that are very

important to stakeholders and that can drive business success.

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ORGANIZATIONAL APPROACH TO CSR

In late 2008, Pfizer began a process to refine its Corporate Social Responsibility (CSR) strategy to

better support the company’s evolving business priorities and organizational changes. This

presented a new opportunity to involve senior leaders and functions from across the company in

guiding the company’s approach to CSR. The company also wanted to leverage its strong

environmental, health, and safety (EHS) programs to build a leading environmental sustainability

initiative that would connect to and support its other CSR strategies.

Pfizer’s Critical Business Ethics Strategy

1. Create a more coordinated and effective approach to CSR management. In addition to

providing ongoing, strategic guidance to the company on how to improve global

coordination of its CSR strategy, the company is developing recommendations on ways to

expand board-level oversight of CSR and identify new opportunities to involve the board in

CSR strategy and decision-making. BSR also worked to support the development of Pfizer’s

global CSR network that brings together Pfizer employees from around the world who have

CSR-related responsibilities in an effort to localize their global CSR strategy.

2. Develop an environmental sustainability road map. BSR partnered with Pfizer’s EHS

taskforce to develop a more strategic approach to environmental initiatives that will result in

greater business and societal value. Pfizer has a road map for environmental sustainability

that aims to achieve cost efficiencies, product and brand differentiation, and, most

importantly, progress on some of the world’s most pressing environmental challenges and

their impact on global health.

3. Strengthen Pfizer’s CSR reporting. Pfizer’s ongoing efforts to improve the measurement and

communication of its performance on CSR issues such as access to medicine, research and

development, patient safety, and corporate governance.

Sustainability Strategy

Pfizer is focusing its environmental sustainability strategy on three key issues—climate,

product stewardship, and water—where the company can have the biggest potential

impacts, maximizing benefits to the environment and the company’s bottom line. Specific

action plans and strategies for each are now being developed.

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Finally, Pfizer’s most recent CSR report has provided readers with improved information to

evaluate the company’s performance on key issues and challenges, as well as a set of

specific goals and metrics for the year ahead. In 2010, Pfizer will begin to incorporate CSR

into the company’s annual review that accompanies its financial report and will provide

more information to all investors about how Pfizer integrates CSR into its business practices.

By providing such information directly to all investors, the company is signalling to the

broader investment community that management of CSR issues is a critical part of its long-

term business success.

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THREAT TO PFIZER AND THE PHARMA INDUSTRY

PATENT EXPIRATIONS

As we discussed earlier, the average timeframe for development of a new drug is almost 15 years, this is after only 1 out of 5000 drugs experimented reach the market. Expert opinion suggests that it takes further 10 years for the companies to recover the cost of the drugs. This makes patents extremely important to the Pharmaceutical industry as they enable them to recover huge investments in the form of R&D costs.

The biggest threat facing the pharmaceutical industry at the moment is ‘Patent Cliff’ –a colloquial term for the disruption which occurs when a firm or industry loses the monopoly granted by one or more patents. Many pharmaceutical companies face the prospect of expiring blockbuster drug patents.

The casual observer may think that the pharma industry is involved in a real-world game of Monopoly with such massive takeovers in recent years. However, most - if not all - of these mergers and acquisitions have been a result of the Patent Cliff. Many of the biggest selling drugs in the industry – blockbuster drugs – are about to lose or have already lost their patent protection.

As reported in St. Louis Today in 2009, four of the top five U.S. sellers in 2009 have their patents expiring by the end of this year. These blockbuster drugs are

1) Pfizer's $7.5 billion Lipitor, 2) Bristol-Meyer Squibb's $5.6 billion Plavix, 3) GlaxoSmithKline PLC's $4.7 billion, 4) Advair Diskus and AstraZeneca PLC's $4.2-billion Seroquel.

A report prepared by Bernstein Research in December 2009 stated that pharma industry is set to face the sharpest revenue decline in history over the next 5 years, which is a direct result of the fact that 18 out of the top 20 selling drugs in the world are going to lose patent protection. This is also backed by a RSC report in January 2009, the pharma industry will see over $63 billion of annual income washed away due to patent erosion by 2014. The graph below shows estimated declining sales for the top 10 blockbuster drugs.

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Source: www.rsc.org

According to IMS Health, a healthcare consulting company, the industry is set to lose patents on drugs that generated $92 billion, almost 1/3 of the industry’s $300 billion in revenue. This is based on 2009 sales figures.

These patent losses mean big pharmaceutical companies are looking at gaping holes in their portfolios, with consumers and insurers having access to cheaper generic versions of these drugs. Generic drug is a drug which is produced and distributed without patent protection. Generic drugs can be legally produced, for drugs which were previously patented, in the following situation:

1) The patent has expired, 2) The generic company certifies the brand company's patents are either invalid, unenforceable or will not be infringed, 3) For drugs which have never held patents, or 4) In countries where a patent(s) is/are not in force.

Thus, expiration of a patent removes the monopoly a patent holder has on drug sales licensing. Typically, patents cannot be renewed and generic versions of the drug can be almost immediately launched in the market on original drugs’ patent expiry. As per Generic Pharmaceutical Association, generics cost 30%-80% less than a brand drug, but still allow the drug manufacturer to within a profit since the development costs are a fraction of R&D costs associated with developing new drugs. The extremely low costs for these generic drugs make them easily affordable developing countries. E.g. AFX News reported in August 2008 that Thailand government had approved import of millions of doses of a generic version Plavix, a blood-thinning drug used to help prevent heart attacks, at a cost of around 2 UK pence per dose. The drug would be imported from India, the leading manufacturer of generic drugs.

Experts believe that pharma companies have realized in the recent years that spending billions on R&D of new drugs is no longer as fruitful as compared to the years gone by. This is clear from the fact that average R&D cost and time for a new drug has significantly increased, but new drugs approved and made available in the market has fallen. Pharma companies need to move away from this conventional source of revenue generation and develop different strategies for profit

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maximisation. This could include buying products from smaller and foreign companies, who don’t have marketing network in their countries, and distributing them locally. Another option could be top the huge potential presented by new geographic locations such as developing economies of the world.

OPPORTUNITY FOR PFIZEREMERGING MARKETS

“In 2014, the global generics market is forecast to have a value of $183.2 billion, an increase of 55.7% since 2009. Asia Pacific accounts for 36.2% of the global generics market value” September 2010, Companiesandmarkets.com

With high-quality research, low-cost manufacturing facilities and educated personnel, the Asian pharmaceutical industry presents both a competitive threat and partnering opportunities. The emerging markets of the world, especially India and China - 2 countries with highest population and economic growth rate in the world – provide tremendous potential to existing big players in pharma industry. The expected benefits from entering into these markets are discussed below:-

Low Development Cost

Asia would be leading the growth within the pharmaceutical industry – especially generics - in the next few years, particularly the emerging markets of India and China. Asia is increasingly becoming the location of choice for clinical trials, which is a direct result of generally much lower costs of drug development in the region as compared to Western Countries. A recent report by Global Industry Analysts suggested predicted that "Asia-Pacific, driven by India and China also represents the most promising market, slated to expand at the overall highest compounded growth rate through 2015."

The anticipated loss of multibillion dollar revenues from expiring patents and increased development times and cost has driven pharma’s to explore the previously untapped generic drug space. Asia is recognized by companies as one of the leading generic drugs market. With an increasing aging world population, particularly in developed countries, governments are looking to the generic drugs market for affordable and high quality medicine. This has been compounded by the global slowdown, and with opportunities provided by the low development costs, many pharma’s are looking to expand their operations in these regions through merging with, or acquiring local players.

Economies of Scale

Cenblog, in an article published in May, 2010 about Abbott’s takeover of Piramal Healthcare of India, reported “Emerging markets” have become the buzz words within the pharma industry, as improving economies mean more people can afford medicines in countries like China, India, Brazil, and Russia. According to Burrill & Co, just 13% of the pharma world was in emerging markets in 2011, whereas forecasts suggest 50% of business will be in those markets by 2020. Also, the huge population in emerging markets – around 2.5 billion in India and China combined - provides an excellent opportunity for companies to exercise economies of scale. This, despite the fact that profit margins are low from generic drugs, would allow companies to remain profitable in the long run. At the JPMorgan Healthcare conference, Sanofi-Aventis CEO Christopher Viehbacher noted that more than 50% of growth in the drug industry will come from those regions.

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Opportunities for Internal Development

India: The world’s fourth largest producer of pharmaceuticals by volume, accounting for around 8% of global production (Holmes, 2010). The Indian industry has been evolving in the run up to the new post-patent era and since. R&D departments are favouring developing novel drug delivery systems and discovery research and are moving away from reverse-engineering. It is anticipated that Indian companies will be held in good stead for selling their own branded products to these markets in the future because of their experience of selling generics in the international.

China: The reform process started a decade earlier than in India which has resulted in positioning Chinese pharmaceutical industry at an advantage when compared to Indian Industry on some parameters. Chinese pharma industry is almost 4.5 larger than India, is growing at 17% as compared to India’s 10% and is a lot less dependent on government funding.

UK: Over 80% of prescriptions in the mature UK market are written generically. The Indian and Chinese pharma companies have always had UK as a focus market with 9 Indian companies running 11 manufacturing sites. UK’s Medicines and Healthcare Regulatory Agency (MHRA) approved more than 260 marketing authorizations from Jan, 2009 to Jan, 2010.

Brazil: Brazil has been the most notable emerging generic market in recent years. In 2009, generic medicines increased 19.0% in volume to 330.0 million units over the previous year, representing 19.4% of the pharmacy sector by volume. There was a 24.0% increase in value terms, with general medicine sales crossing US $2.2 billion. The Brazilian market has had Indian companies’ presence for several years. In 2008, a significant part of all trade between India and Latin America was represented by the US$166 million worth of Indian pharmaceutical exports to Brazil.

The attractive opportunities offered by the loss of patent protection on several major products in the coming period, and resolution of the biosimilar regulatory issue in the US, has to be offset against price reduction pressures driven by the ongoing economic downturn and aggressive competition for the business that is on offer. By the above research above, it is clear that the threats posed by the ‘Patent Cliff’ to Pfizer, and the Pharma Industry overall, can be easily overcome through several opportunities on offer in the global pharmaceutical market.

DIARY: 13388

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Before undergoing this course, my understanding of Mergers & Acquisitions was only confined to the text book motives of gaining power and increasing portfolio and network. However, after researching about Merger & Acquisition I can safely argue that my horizon of M&A in terms of its strategic importance to Pharmaceutical firms has certainly broadened. While undergoing this assignment I realised why mega Pharmaceutical companies rely a great deal on Mergers & Acquisitions to meet their long and short term goals. Although, there are a number of reasons mentioned in the report, however, in my view, some of the critical issues when deriving the growth and future strategies in pharmaceutical companies are consideration of patent expirations and future growth of R&D in biotech drugs.

Blockbuster patent drugs are pivotal in generating revenues for pharmaceuticals. Because of the stagnant nature of R&D innovations in the last decade or two and the heavy cost and uncertainty in acquirement of patent, Mergers to acquire patent drugs remains the only option for industry giants like Pfizer to keep generating revenues and competitive edge. As research shows, that by the expiration of patent drugs in 2014, Pfizer would on average bare losses of a staggering $30 billion a year. Moreover, there is a serious threat to the industry giants by the emergence of biotech drugs as it is considered to be the future of the industry. Hence to acquire the expertise to produce biotech drugs, Mergers with bio technically advanced companies not only help in reducing the competition but also enhance the R&D ability of the industry giants.

DIARY: 12684

In this report I have a shared part of merger and acquisition. While making the report, I realized that for a company, strategic decision making process is highly important. A minor mistake of selecting wrong target company on wrong time could lead the acquiring firm towards a big trouble. To make a good strategy, the company must keep an eye on every single happening in industry and it has to have the ability to do a correct analysis of those changes. Right decision on right time and selection of right target firm is the only key to get the actual aim of mergers and acquisitions. During the thought process of merging or taking over any firm, the company should not forget that the change is not for every company, taking correct benefit of other’s weaknesses while knowing your capabilities is only the way of sustainability .

In the case of Pfizer, I came to know that there were two main reasons behind all its mergers and acquisitions, “diversification” and “to be the most powerful “.Pfizer is aware that what is going to be happened in pharmaceutical industry and what would be its impact on company’s sustainability in upcoming years. So on these bases; some good decision has already been taken by the company on the right time.

DIARY: 12979

In this study, every group member shared a particular section within this assignment. I have chosen

Evaluation of Ethical and sustainability policies of Pfizer section as I found it extremely effected to

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evaluate and have an understanding about companies’ sensitivity to their environment and their

social performance within their future strategies in pharmaceutical industry.

Accordingly, during this study, I realised that Pfizer is one of the giant companies in pharmaceutical

industry that the company can have the biggest potential impacts, maximizing benefits to the

environment. Pfizer integrates its CSR strategy into its business practices therefore CSR issues is a

critical part of its long-term business success. Environmental, health, and safety programs of Pfizer are

leading environmental sustainability initiative that would connect to and support its other CSR

strategies. A product-focused sustainable business strategy of Pfizer supports greener packaging,

products and supply chain. Global scale position for Pfizer is to be an industry leader in these areas

and distinguish its product in the competitive business environment.

DIARY: 12216

Being someone from the IT background, choosing a company in Pharmaceutical Industry gave me an

opportunity to learn about a totally different business market. I chose to analyse Threats and

Opportunities faced by the Pharma Industry, and describe what I felt was the one biggest Threat,

and one biggest Opportunity for the companies.

From my research, I realized that it is now a widely accepted fact that Pfizer’s and The Pharma

Industries’ biggest threat is the expiring patent of several blockbuster drugs. Companies including

don’t have many new drugs in the pipeline because of expert belief that this resource has been

exhausted. Increasing R&D costs and times along with decrease in number of drugs approved and

reaching the markets now make this a less attractive target-activity for pharma companies. Also, the

threat of generic drugs, which can be developed at a much lower cost and are available at lower

price bands impact the profits of the ex-patent owner significantly. However, the same threat can be

made into an opportunity if companies accept the opportunity offered by emerging markets, who

provide high-skilled workforce and low development cost along with readiness for generic drug

production. Several opportunities exist in countries like India, China, Russia etc. where companies

like Pharma can extend their operations by either setting up operations, or follow the norm in the

industry, i.e. mergers and acquisitions of existing companies.

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Matten, Dirk., Visser W., Pohl, M., (2010), “The A to Z of Corporate Social Responsibility”, Vol. 5. No.

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