PFIZER India PVT Ltd.

MANAGEMENT DEVELOPMENT INSTITUTE, GURGAON

2014
Pfizer
A Report On its Distribution Channel and Sales
Force Structure
[ T Y P E T H E C O M P A N Y A D D R E S S ]
Executive Summary

This report is a part of the project work for the Sales and Distribution Management course under
taken by the students of PGPM Batch 2013-2015 under the guidance of Prof. J N Godinho. This
report provides an insight into the structure of the channels of distribution employed by Pfizer, a
renowned pharmaceutical company in the world.
This report focuses on the channels of distribution employed by Pfizer for its various categories of
products and the marketing flows performed by the various channel partners involved. We also
analyze the effectiveness of these channels and highlight the drawbacks of the system if any and
provide recommendations for the same.

Table of Contents
Executive Summary ................................................................................................................................. 2
Introduction ............................................................................................................................................ 4
Pfizer India .......................................................................................................................................... 5
Channel Structure ................................................................................................................................... 6
Carry & Forwarding Agent (C&F Agent) .............................................................................................. 6
Wholesalers ........................................................................................................................................ 7
Retailers/Pharmacists ......................................................................................................................... 7
Institutional Supplies .......................................................................................................................... 7
Sales Management in Pfizer .................................................................................................................... 8
Nature of Sales Management ............................................................................................................. 8
Levels of Sales Manager Positions ...................................................................................................... 8
Sales Objectives and Strategies .......................................................................................................... 9
Sales Territories .................................................................................................................................. 9
Sales Quota and Size of Sales Force .................................................................................................. 10
Sales Force Staffing ........................................................................................................................... 10
Planning......................................................................................................................................... 10
Recruitment .................................................................................................................................. 10
Selection ........................................................................................................................................ 11
Marketing Flows Performed by the Channel Partners ......................................................................... 11
Product Flow ..................................................................................................................................... 11
Negotiation Flow ............................................................................................................................... 11
Ownership Flow ................................................................................................................................ 12
Information Flow .............................................................................................................................. 12
Promotional Flow .............................................................................................................................. 12
Pros and Cons of the Channel Structure ............................................................................................... 13
Recommendations ................................................................................................................................ 14
References ............................................................................................................................................ 15



Introduction
Pfizer Inc. (Pfizer), incorporated on June 2, 1942, is a research-based, global biopharmaceutical
company. It is one of the world's largest pharmaceutical companies by revenues. The Company
manages its operations through five segments: Primary Care; Specialty Care and Oncology;
Established Products and Emerging Markets; Animal Health, and Consumer Healthcare.
The Companys diversified global healthcare portfolio includes human and animal biologic and small
molecule medicines and vaccines, as well as nutritional products and consumer healthcare products.
Its Animal Health business unit discovers, develops and sells products for the prevention and
treatment of diseases in livestock and companion animals. Primary Care operating segment includes
revenues from human prescription pharmaceutical products primarily prescribed by primary-care
physicians. Specialty Care and Oncology operating segment consist of the specialty care business
unit and the oncology business unit. Pfizer's products include the blockbuster drug Lipitor, Lyrica,
Diflucan, Zithromax, Viagra and Celebrex/Celebra. The Company markets vaccines, anti-infectives,
anti-inflammatories, antiemetics and parasiticides.
Revenues from biopharmaceutical products contributed approximately 86% of its total revenues
during the year ended December 31, 2011. Pfizer increased its global presence through the
acquisitions of Warner-Lambert and Pharmacia. Additionally, through strategic partnerships and
acquisitions of diversified businesses, such as Wyeth, Pfizer solidified its place as one of the most
diversified companies in the global health care industry. Pfizer continues to focus on applying
science and the company's global resources to improve health and well-being at every stage of life.
In November 2012, the Company acquired NextWave Pharmaceuticals, Inc. On November 30, 2012,
the Company completed the sale of its Nutrition business.


Traditionally, Pfizer was vertically integrated and its value chain could typically be summarized as
follows:

In an effort to reduce cost and the risks associated with time intensive process of R&D for producing
and new drug, Pfizer has become more horizontal. Now some of the functions of the traditional
value chain, including R&D have been outsourced

Pfizer India
Pfizer in India has three business divisions:
Pharmaceutical Division: This division markets both prescription and OTC products. The key brands
of Pfizer are Corex, Becosules, Gelusil and Benadryl
Animal Health Division: This division caters to animal pharmaceuticals and is amongst the top four
players in the Indian market with revenues of US$ 12 million
Research and Development Division: This division includes Pfizers clinical research operations as
well as the biometrics division. Over the years, Pfizer India has participated in Phase II, III and IV
global trials and has contributed significantly to advancing standards and the research culture in
India.

Discovery
Product
Development
Manufacturing Marketing
Small Bitotech
Universities
Research
Oganizations
Manufacturing
Organizations
Sales
Organizations
Channel Structure
Pfizers distribution channel can be depicted simply using the following diagram:

The pharmaceutical major used to operate depots at an earlier point in time till 1995 but moved on
to the C&F model. Usually in a state there is only one appointed C&F agent. From the C&F agent the
drugs are moved on to the wholesalers or more popularly known as the Stockists. The Stockists are
responsible for providing the retailers with drugs. In this section we would analyze each of the
channel partners in details and describe the marketing flows performed by the channel partners.
Carry & Forwarding Agent (C&F Agent)
The existence of the C&F agent is justified by the division of the central and state sales tax system. In
India the interstate sale of goods attract central sales taxes (CST) but the interstate transfer of goods
does not entail any kind of taxes. For this reason most pharmaceutical companies have a C&F agent
and transfer goods as interstate stock transfer. Pfizer India has one C&F agent in most states with
more than one C&F agent in some of the larger states and some of the smaller north eastern states
might have none.
Manufacturer
/Plant
Carry &
Forwarding
Agent
Wholesaler 1
Retailer
Wholesaler 2
Retailer
Wholesalers
The wholesalers/Stockists usually market the products of 6-8 pharmaceutical companies. Getting the
wholesalers tag for a company as big as Pfizer is considered to be a catch and hence the company
has its own set of terms and conditions before appointing someone as a wholesaler. Usually the
agency interested in taking wholesale dealership has to deposit lump sum money with the company
The number of wholesalers in a city can be much higher in comparison to smaller towns. The
wholesalers in the big cities/metros compete against each other. Large number of wholesalers has
added to the bargaining power of retailers/pharmacists. Stockists do get discounts from the
manufacturers and also get free samples from the manufacturers.
Retailers/Pharmacists
The number of Retailers and Pharmacists also depends on the size of the population of the
city/town. The retailers mostly procure the drugs from the wholesalers. A new phenomenon in India
mostly coming up in metros is the establishment of Drug retail Chain Stores like Apollo Pharmacy.
These retain chains by pass the wholesalers and deal directly with the manufacturer through the
C&F agent. Organized Retail consist of only 3% of the total drug sales
Also prior to 2009 before the acquiring of Wyeth, Pfizers percentage of OTC (Over the Counter
Drugs, can be sold without prescription) was almost negligible. With the merger of Wyeth and many
other acquisitions Pfizer has a sizeable number of OTC products in its product portfolio. For these
Pfizer has entered into a talk with ITC to distribute its products along with their FMCG products.
Institutional Supplies
Institutional supplies are 7% of the total drug sales in India. Distribution for institutions (divided into
state funded, central funded & large hospitals) happen either through stockist or directly from the
company C&F.
Sales Management in Pfizer

Nature of Sales Management
Nature of sales management is relationship building which is integrated with marketing, as the
influencers for using the drug of pharmaceutical companies are doctors. Only if the drugs are written
on the prescription would the consumer ask for the same from the retailers. Since most of the drugs
marketed by Pfizer are premium products, Pfizer lays a lot of importance in maintaining its
relationship with the doctors through the medical representatives.
Levels of Sales Manager Positions
Pfizer is using combination of Line and staff Organization and Product Organization






CEO,PFIZER
India
VP Marketing
National Sales Manager
Regional/Zonal/Divisional Sales
Manager
District/Area Sales Manager
Medical Representatives
Sales Objectives and Strategies
The sales objectives are set by the company top managers which were further divided into
territories wise, after getting sales objective manager with sales force forms strategies and tactics to
achieve the given target and then sales force implement those strategies to achieve the target.

Sales Territories
Pfizer is using Build-up method for the development of the sales territories, which provides equal
work load on sales force. Company allots salespeople to geographic territories, consisting of current
& prospective customers.
For example:
Delhi is divided into:
1. East Delhi
2. West delhi
3. North Delhi
4. South Delhi

Implementation
Evolves Tactics & Plans
Strategies & Tactics
By Managers in liason with Sales Force
Sales Objective
Set By Top Management
Sales Quota and Size of Sales Force
Pfizer use sales volume quota for its sales force. Since the company is having 7 SBU and many
products per SBU hence they are using Rupee Sales Volume Quota. Sales quota is defined
individually for small territories and for big cities where individually it is difficult to define quota
hence the company gives a pool quota.
Eg: Quota for entire Delhi city where 23 sales people are working is Rs 1.5 Crores for month of May
2012. A combination of 2-3 methods is used for the determination of sales quota which includes past
experience method, expert opinion and territory potential method.
As explained earlier size of sales force is determined on the basis of sales potential of the territory.
Sales Force Staffing
Sales force Staffing Process includes following stages:
Planning
It includes no of sales person required and the outline i.e. Job analysis, Job description and Job
identification.
Recruitment
Recruitment is done mainly by internal source includes employeereferrals and current employee
until and unless huge no of sales persons are required such as during business expansion etc. During
that time few external source such as advertisements in newspapers etc are used.

Selection

Marketing Flows Performed by the Channel Partners
The important flows involved in the pharmaceutical industry can be classified under the following
heads:
Product Flow
The product flow refers to the actual movement of the drugs through the various channel partners
and finally to the end consumer. In case of Pfizer the drugs move from the plants to the carry and
forwarding agent present in various states to the wholesalers and retailers and finally to the
consumers.
Negotiation Flow
The channel partners involved in this flow usually involve in some kind of negotiatory function. It is
important her to note that the manufacturer and the C&F agent gets involved in the negotiations
and the medical representative gets into negotiation with the wholesalers and it is upon their
direction that the C&F agent forwards the title of the goods to the wholesalers.
Screening
Resumes
Written
Test
(Aptitude)
Initial
Interview
HR
Interview
Reference
Check
Ownership Flow
This represents the transfer of the title (right of ownership) amongst the channel partners.
Information Flow
Pfizer being a front runner in R&D launches new drugs to the market frequently. Before the launch
of a product it organizes a Product Launch meet for its medical representatives team. In these
meetings the medical representatives are trained on how to talk to the doctor and the benefits of
the new drug. The medical representatives play an important role in influencing the doctors. The
wholesalers are given only some basic information what the drug does and are not given extensive
technical information on the drugs.
Promotional Flow

Pros and Cons of the Channel Structure



Recommendations


References