Description
The objective of an efficacious pharmaceutical is to make certain molecules biologically active in humans. Not surprisingly, however, the same molecules that can cause desired results can have adverse effects in the body as well as post-patient - after the drug is expressed from the body and its active ingredients are released from disposal pipes into streams and other water bodies.
This case was prepared by Research Associates Alia Anderson and Karen O’Brien under the supervision of Associate
Professor Andrea Larson at the Darden School of Business at the University of Virginia. It is intended to serve as a
basis for class discussion rather than to illustrate the effective or ineffective handling of an administrative situation. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any
form by any means without permission by the ACS Green Chemistry Institute®. These materials were developed
through a cooperative effort of the American Chemical Society’s Green Chemistry Institute and the U.S.
Environmental Protection Agency (EPA) Office of Pollution Prevention and Toxics’ Design for the Environment
Program. Partial funding was provided by the EPA through Cooperative Agreement #X8-83077701-0. Any opinions,
findings, and conclusions or recommendations expressed in this publication are those of the authors and do not
necessarily reflect the views of the EPA. Any mention of trade names does not imply endorsement by the EPA.
©2009 American Chemical Society
Pfizer Pharmaceuticals:
Green Chemistry Innovation and Business Strategy
Yujie Wang reviewed the presentation she had prepared for the executive committee’s
strategy meeting later that afternoon. Three of the committee members were familiar
with the ideas and she could count on their support. Four others had pushed for new
ideas to be fed into their group over the last year. Depending on the strength of her
argument this time, they might be persuaded to support the project. The final two, who
had significant responsibility for product development and operations, were somewhat
less predictable. She had informed them of her progress during the project but they
seemed disinterested at best. Then again, they were all busy people, and she had
found it hard to schedule the intermediate briefings she wanted to bring everyone along.
She knew the executives must be won over at least to a stance of “no opposition” to the
proposal she would make.
Pharmaceuticals and Personal Care Products (PPCPs)
The objective of an efficacious pharmaceutical is to make certain molecules biologically
active in humans. Not surprisingly, however, the same molecules that can cause
desired results can have adverse effects in the body as well as post-patient—after the
drug is expressed from the body and its active ingredients are released from disposal
pipes into streams and other water bodies.
Regulations require extensive pre-testing of toxins in drugs (typically conducted by
subcontractors) on different aquatic and mammalian species. Some critics argue the
tests are sufficient; others question how accurately those surrogate studies can predict
real results. Sweden, a nation that has aggressively studied chemical impacts on health
and ecological systems, actively restricts non-benign drug manufacture and distribution,
requires labeling of environmental toxins, and imposes sales caps and even bans. The
European Union’s 2005 Registration, Evaluation, Authorization, and Restriction of
Chemicals (REACH) legislation would impose additional requirements on drug
manufacturers (market size: 450 million).
According to the U.S. Environmental Protection Agency (EPA), PPCPs present scientific
concerns for the following reasons:
Large quantities of a wide spectrum of PPCPs (and their metabolites) can
enter the environment following use by multitudes of individuals or
domestic animals and subsequent discharge to (and incomplete removal
by) sewage treatment systems. PPCP residues in treated sewage effluent
(or in terrestrial runoff or directly discharged raw sewage) then enter the
environment. All chemicals applied externally or ingested (and their
bioactive transformation products) have the potential to be excreted or
washed into sewage systems and from there discharged to the aquatic or
terrestrial environments. Input to the environment is a function of the
efficiency of human/animal absorption and metabolism and the efficiency
of the waste treatment technologies employed—if any (sewage is
sometimes discharged without treatment by storm overflow events, failure
of systems, or “straight piping”). Removal efficiencies from treatment
plants vary from chemical to chemical and between individual sewage
treatment facilities (because of different technologies employed and
because of operational fluctuations and “idiosyncrasies” of individual
plants). Obviously, discharge of untreated sewage maximizes occurrence
of PPCPs in the environment. No municipal sewage treatment plants are
engineered for PPCP removal. The risks posed to aquatic organisms (by
continual lifelong exposure) and to humans (by long-term consumption of
minute quantities in drinking water) are essentially unknown. While the
major concerns to date have been the promotion of pathogen resistance
to antibiotics and disruption of endocrine systems by natural and synthetic
sex steroids, many other PPCPs have unknown consequences. The latter
are the focus of the ongoing U.S. EPA Office of Research and
Development (ORD) work summarized here.
1
Pfizer
In 2005, Pfizer employed 15,000 scientists and support staff in seven major labs around
the world. Every weekday, 38,000 sales representatives sold Pfizer products. The
company’s $3 billion annual advertising budget made it the fourth-largest U.S.
advertiser. In spring 2005, Pfizer was interviewing to fill the position of vice president of
green chemistry. The new position reported to Dr. Kelvin Cooper, senior vice president,
Worldwide Pharmaceutical Sciences, Pfizer Global R&D. The individual who would fill
the position would need to examine the competitive challenges ahead, the internal
progress to date, and ways to build on the successes of Zoloft and Viagra as examples
of innovative green chemistry embedded in corporate strategy. In the short term, how
1
U.S. Environmental Protection Agency (EPA). http://www.epa.gov/ppcp/ (accessed March 4, 2009).
©2009 American Chemical Society 2
could the company take the lessons learned from those two cases and apply them
beneficially elsewhere?
Exploring those questions had been Yujie Wang’s task for the past two months. The
innovations provided dramatic cost savings, and the removal of toxic materials reduced
both costs and risk. Given growing global attention to corporate accountability,
increased government scrutiny of pharmaceutical companies, and the fast-growing
popularity of sustainable business strategy, could adoption of a green chemistry
strategy help Pfizer’s reputation and offer opportunities for growth and profit? In this
industry, companies competed primarily on drug offering and secondarily on process,
with “maximum yield” as the main objective to maximize profitability.
Adding sustainability to the mix meant explicitly integrating human and community
health, as well as ecological system preservation, into corporate performance.
Sustainable development ideas introduced decades earlier had been transformed into
business practices and were strategically implemented by well-known global companies
such as Toyota, General Electric, Wal-Mart, Electrolux, and United Technologies. Wal-
Mart and General Electric announced sustainability as part of their core strategy in
2005. The goal was to achieve financial success concurrently with these broader
objectives.
Debate on climate change and discussion of pollutants’ effect on human health and the
environment had raised awareness of the human influence on natural systems;
consequently, financial institutions and insurance companies were paying more
attention to firms’ existing and future liabilities. In the face of increased scrutiny by
governments and nongovernmental organizations, firms were starting to assess their
own vulnerabilities and opportunities with respect to such topics. “Sustainability” and
“sustainable business” were two common terms in that discussion. Others in business
used the phrase “triple bottom line,” which referred to performance across financial,
social, and ecological standards, or strategy attuned to economy, equity, and
environment.
According to J oanna Negri, a process chemist and manager and a member of the
company’s green chemistry team, Pfizer “views sustainability and green chemistry as
outcomes of good science—and this provides competitive business advantage through
enhanced efficiency and safer processes.”
Green Chemistry at Pfizer
In 2002, Pfizer won the U.S. Presidential Green Chemistry Award for Alternative
Synthetic Pathways for its innovative manufacturing process for sertraline hydrochloride
(HCl). Sertraline (“sir-tra-leen”) HCl was the active ingredient in the pharmaceutical
Zoloft. Zoloft—in 2005, the most prescribed agent of its kind—was used to treat clinical
depression, which struck more than 20 million American adults and cost society nearly
©2009 American Chemical Society 3
$44 billion annually. As of February 2000, more than 115 million Zoloft prescriptions had
been written in the United States; 2003 global sales grew to $3.11 billion.
2
Applying the principles of green chemistry, Pfizer dramatically improved the commercial
manufacturing process of sertraline. After meticulously investigating each of the
chemical steps, Pfizer implemented green chemistry technology for this complex
commercial process, which required extremely pure product. As a result, Pfizer
significantly improved both worker and environmental safety. The new commercial
process (referred to as the “combined” process) offered dramatic pollution prevention
benefits, including improved safety and material handling, reduced energy and water
use, and double overall product yield.
3
That success inspired green chemistry
enthusiasts at Pfizer to look for other manufacturing processes to which the principles
could be applied.
Complicating matters, however, was the state of the pharmaceutical industry in 2005; it
was beleaguered by multiple issues affecting brand and profit margins, criticism of
industry’s policies on access to drugs in poorer communities, and lawsuits resulting
from unexpected side effects. Could greener processes provide Pfizer an edge in this
shifting landscape? Would it generate both the cost savings needed to justify the effort
and the social capital that would support Pfizer’s reputation, brand, and even its license
to operate?
In 2001, informal conversations at a conference at the University of Massachusetts’s
Center for Sustainable Production marked the beginning of Pfizer’s involvement in
green chemistry. While there, Dr. Berkeley Cue, then vice president of pharmaceutical
sciences research at Groton Labs (reporting to Pfizer Global R&D’s Cooper) was
surprised to learn that some Pfizer environment and safety chemists in attendance
shared his interest. Impressed by the green chemistry work of professor and chemist
J ohn Warner at the University of Massachusetts, Cue believed the approach held
potential for Pfizer.
From 2001 to 2004, Cue built a group at Groton, pulling in the discovery chemists from
R&D to optimize products from the design stage. In talking with other R&D sites at
Pfizer, the network quickly spread to the U.K. offices and Pfizer’s R&D center in La
J olla, California. When Pfizer purchased Pharmacia in 2003, the company discovered
that some of their new acquisition’s R&D people were interested in green chemistry.
Cue described his role as supporting a bottom-up initiative: “I brought people together in
a tactical way and provided resources to give them a strategy and a voice upwards in
the organization, and out.”
2
PharmExec.com.
http://pharmexec.findpharma.com/pharmexec/data/articlestandard//pharmexec/202004/95192/article.pdf
(accessed March 4, 2009).
3
U.S. Environmental Protection Agency (EPA).
http://www.epa.gov/greenchemistry/pubs/pgcc/winners/gspa02.html (accessed March 4, 2009).
©2009 American Chemical Society 4
In late 2003, a steering committee formed to address the importance of the ideas for the
corporation overall. Soon the active proprietary ingredients (API) chemists joined in and
communication about the ideas expanded into legal and corporate affairs and
R&D/manufacturing co-development teams. The committee communicated the
message up and down the corporate hierarchy. Even the global marketing division was
interested in the potential of this approach. By 2005, Pfizer had green chemistry activity
in all seven of its R&D sites and had even begun to educate the federal oversight
agency for the pharmaceutical industry, the Food and Drug Administration (FDA). (The
FDA, with its legislative commitment to not compromise patient safety, was a
demanding taskmaster that could dictate significant green chemistry changes to
production that, although beneficial, would require long approval time frames.)
E-Factors and Atom Economy
Green chemistry is the design of chemical products or processes that eliminates or
reduces the use and generation of hazardous substances. The application of green
chemistry principles provided a roadmap that enabled designers to use more benign
and efficient methods.
The industry used an assessment tool called E-Factor to evaluate all major products. E-
Factor was defined in this industry as the ratio of total kilograms of all materials (raw
materials, solvents, and processing chemicals) used per kilogram of active product
ingredient (API) produced. Firms were identifying drivers of high E-Factor values and
taking actions to improve efficiency.
A pivotal 1994 study indicated that for every kilogram of API produced, between 25 and
100 kilograms or more of waste was generated as standard practice in the
pharmaceutical industry, a figure that was still common to the industry in 2005.
Multiplying the E-Factor by the estimate of kilograms of API produced by the industry
overall suggested that for the year 2003 as much as 500 million to 2.5 billion kilograms
of waste could be the byproduct of pharmaceutical API manufacture. That waste
represented a double penalty: costs associated with purchasing chemicals that are
diverted from API yield; and costs associated with disposing of that waste (ranging from
$1 to $5 per kilogram). Very little information was released by industry competitors, but
a published 2004 GlaxoSmithKline life-cycle assessment of their API manufacturing
processes revealed that 75 to 80 percent of the waste produced was solvent (liquid) and
20 to 25 percent solid, of which a considerable proportion was likely hazardous under
state and federal law.
For years pharma said it did not produce significant enough product volumes to be
concerned about toxicity and waste, particularly relative to commodity chemical
producers, but with the competitive circumstances changing, companies were eager to
find ways to cut costs, eliminate risk, and improve their image. After implementing its
award-winning process in sertraline manufacture, Pfizer’s experience suggested green
chemistry–guided process changes brought E-Factor ratios down to 10 to 20 kilograms.
The potential to dramatically reduce E-Factors through “benign by design” principles
©2009 American Chemical Society 5
could, indeed, be significant. Lilly, Roche, and Bristol Meyers Squibb—all winners of
Presidential Green Chemistry Awards between 1999 and 2004—reported improvements
of this magnitude after applying green chemistry principles.
Predictably, green chemistry also fit with “Six Sigma,” a methodology that considers
waste a process defect. “Right the first time” was an industry initiative backed by the
FDA. Groton’s Cue viewed green chemistry as a lens that allowed the company to look
at processes and yield objectives in a more comprehensive way, with quality programs
dovetailing easily with this approach.
Pfizer Company Background
Charles Pfizer and his cousin, Charles Erhart, created Pfizer Inc. in 1849 in Brooklyn,
New York. The company, today the world’s largest drug company, began its climb to the
top of the industry in 1941, when it was asked to mass-produce penicillin for the war
effort. In the 1950s, the company opened branches in Belgium, Canada, Cuba, Mexico,
and the United Kingdom and began manufacturing in Asia, Europe, and South America.
Pfizer expanded its research and development, introducing a range of drugs and
acquiring consumer products such as BenGay and Desitin, and by the mid-1960s,
Pfizer’s annual worldwide sales had grown to $200 million.
4
Pfizer engaged in the discovery, development, manufacturing, and marketing of
prescription medicines, as well as over-the-counter products, for humans and animals.
In 2003, 88 percent of Pfizer’s revenue was generated from the human pharmaceuticals
market, 6.5 percent from consumer health care products, and 4 percent from animal
health products.
5
Pfizer was traded on the New York Stock Exchange as ticker PFE. Its
major competitors included Merck & Co. of Germany and J ohnson & J ohnson,
GlaxoSmithKline Plc, and Novartis—all in the United States.
6
Throughout the world, more than one billion prescriptions were written for Pfizer
products in 2003.
7
In 2004, 14 of their drugs were top sellers in their therapeutic
categories, including Zoloft, erectile dysfunction therapy Viagra, pain management
Celebrex
®
, and cholesterol-lowering Lipitor
®
.
8
Its many over-the-counter remedies
include Benadryl
®
and Sudafed
®
. Subsidiaries in the Pfizer pharmaceutical group
included Warner-Lambert, Parke-Davis, and Goedecke. In 2000, Pfizer merged with
Warner-Lambert, moving the company into the group of top five drug makers in the
world. Pfizer then acquired pharmaceuticals company Pharmacia in 2003, making it the
largest drug company in the world. This acquisition allowed Pfizer to diversify its product
4
Dow J ones Reuters Business Interactive LLC (trading as Factiva). Pfizer Inc.. 2003.
5
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
6
Business and Company Resource Center. Pharmaceuticals Industry Snapshot. 2002.
7
Pfizer Inc., 8K Filing and 2003 Performance Report.
8
Business and Company Resource Center.
©2009 American Chemical Society 6
line, because Pharmacia owned a range of therapeutic products in new areas, such as
oncology, endocrinology, and ophthalmology.
9
The merger, which cost Pfizer $54
billion, also greatly expanded its pipeline through Pharmacia’s research in
atherosclerosis, diabetes, osteoporosis, breast cancer, neuropathic pain, epilepsy,
anxiety disorders, and Parkinson’s disease. By 2004, Pfizer had locations in 80
countries and sold products in 150 countries. In 2003, Pfizer also began selling some of
its non-pharmaceutical businesses, such as the Adams confectionary unit (to Cadbury
Schweppes) and Schick-Wilkinson Sword shaving products (to Energizer Holdings).
10
Pfizer was headquartered in New York and, in 2005, had four subsidiaries involved in
pharmaceuticals, consumer health care and animal health care. Three subsidiaries
conducted their business under the Pfizer company name, the fourth as Agouron
Pharmaceuticals.
Pfizer posted total revenues for 2003 at $45.2 billion worldwide, an increase of 40
percent from 2002, and net income of $3.9 billion. While the company’s largest market
was in the United States, Pfizer’s international market grew 56 percent in 2003, to
revenues of $18 billion. J apan was its second-largest single national market.
11
“[Pfizer’s]
portfolio of leading medicines, which spanned most major therapeutic categories, drove
Pfizer’s strong revenue growth in the fourth quarter and full-year 2003,” according to
Karen Katen, executive vice president of the company and president of Pfizer Global
Pharmaceuticals. In fall 2004, Pfizer appeared well positioned for continued industry
leadership. Pfizer projected strong financial performance. The company had a target of
$54 billion for its 2004 revenue and planned to spend about $7.9 billion in R&D during
2004.
12
“In the dynamic environment of today’s worldwide pharmaceutical industry,” said
David Shedlarz, executive vice president and chief financial officer, “Pfizer is uniquely
well-positioned to sustain our strong and balanced performance, leverage past and
future opportunities, reinforce and extend our differentiation from others in the industry,
and exploit both our operational flexibility and our proven abilities to execute.”
13
Industry Challenges
Despite Pfizer’s optimism and past financial success, by early 2005, the entire
pharmaceuticals industry suffered from a devastating lack of customer trust. From 1990
to 2004, the industry experienced a series of well-publicized criticisms. Most contentious
amongst these critiques was the accessibility of AIDS drugs to patients in southern
Africa. Analysts such as Merrill Goozner, former chief economics correspondent for the
Chicago Tribune, suggested in 1999 that private pharmaceutical companies contributed
to the global AIDS crisis by claiming that lowering the price of drugs or easing patent
9
Business and Company Resource Center.
10
Ibid.
11
Pharmaceutical Business Review [online].
12
Pfizer Inc., 8K Filing and 2003 Performance Report.
13
Ibid.
©2009 American Chemical Society 7
protection for manufacturers in third-world countries would “stifle innovation.”
14
In 2004,
products from a flu vaccine production plant in the United Kingdom, critical to the U.S.
supply, were blocked due to health and safety concerns. The same year, New York
Attorney General Elliot Spitzer filed suit against pharmaceutical giant GlaxoSmithKline,
saying that the company concealed important information about the safety and efficacy
of Paxil
®
, an antidepressant drug. Adding to the controversy surrounding the
pharmaceutical industry, popular filmmaker Michael Moore announced plans in 2005 to
create a documentary called Sicko, which would use interviews with physicians,
patients, and members of Congress to expose an industry that Moore claimed “benefits
the few at the expense of the many.”
15
A poll conducted in December 2004 showed that Americans held pharmaceutical
companies at the same low esteem as tobacco companies.
16
The pressure on Pfizer
grew in late 2004 when prescriptions for its Celebrex pain relief and arthritis drug fell 56
percent in December following the company’s announcement that the drug was linked
to cardiovascular risk (heart attacks and strokes), a problem similar to Merck & Co.’s
billion-dollar blockbuster drug Vioxx
®
(Merck, which was suspected of concealing
Vioxx’s potentially lethal side effects to maintain sales, withdrew it from the market in
September 2004, undermining both public confidence in the pharmaceutical industry
and the regulatory oversight of the FDA.
17
); Pfizer ceased advertising Celebrex. In
December 2004, the S&P 500 Pharmaceutical Subindustry Index was down 12.8
percent for the year, though the S&P 500 was up 6.8 percent.
The pharmaceutical industry was a high-risk, high-reward business. Consumers
demanded lifesaving drug discoveries that were safe and affordable. In the United
States, drug patents only lasted for five to 10 years, so pharmaceutical companies were
constantly threatened by generic competition. In 2004, it cost an estimated $897 million
to develop and test a new medicine; about 95 percent of chemical formulas failed during
this process. In 2002, the FDA approved only 17 new drugs, the lowest number since
1983. In an attempt to boost innovation, pharmaceutical R&D skyrocketed, with Pfizer
investing $7 billion on R&D in 2003, leading the industry by a margin of several billion.
18
In 2005, Pfizer managed the world’s largest private pharmaceutical research effort, with
more than 13,000 scientists worldwide. That tremendous investment, however, was not
translating into drug output, which had been spiraling downward since 1996. In J anuary
2005, Pfizer had 130 new molecules in its pipeline of new medicines, along with 95
14
Goozner, M. Third World Battles for AIDS Drugs. Chicago Tribune. April 28, 1999.
15
Dutka, E. Giving Them a Sick Feeling. Los Angeles Times. December 22, 2004.
http://articles.latimes.com/2004/dec/22/entertainment/et-sicko22
16
Angell, M. Big Pharma is a Two-faced Friend. Financial Times. J uly 19, 2004.
17
Agovino, T. Drug Industry Weathers Horrid Year and Outlook Appears Rocky.. Associated Press.
December 16, 2004.
18
Rotman, D. Can Pfizer Deliver? Technology News. February 2004.
©2009 American Chemical Society 8
projects to expand the use of current therapies.
19
To meet its 2005 revenue goal of
double-digit growth, Pfizer planned to file applications for 20 new drugs before 2010.
20
Analysts viewed that unprecedented growth rate skeptically, saying that Pfizer had only
seven drugs in the FDA testing phases.
From 1993 to 2003, Pfizer spent about $2 billion on drugs that failed in advanced
human testing or were pulled off the market due to problems such as liver toxicity. Thus,
Pfizer decided in 2005 to shift R&D focus to analyzing past failed drug experiments to
find patterns that might help detect toxicity earlier in the expensive testing process.
From 1995 to 2005, pharmaceutical companies invested significant R&D funding into
genomics experiments, which were very expensive and yielded less-than-revolutionary
results. After a decade of investments in high-powered genomic tools, pharmaceutical
companies were in their most prolonged and painful dry spell in years. “Genomics is not
the savior of the industry. The renaissance is in chemistry,” said Rod MacKenzie,
Pfizer’s vice president of discovery research in Ann Arbor, Michigan.
Brand Protection
To counteract a growing reputation that Pfizer was unwilling to engage with certain
NGOs, Pfizer was one of the earliest of the few U.S. companies to sign the voluntary
U.N. Global Compact defining principles for corporate behavior, including human rights,
labor, and the environment. The U.N. Global Compact was designed to open dialogue
between business, governments, NGOs, and society-at-large. The compact requires
use of the precautionary principle, a guide to company decision-making that assumed,
“lack of full scientific certainty shall not be used as a reason for postponing cost-
effective measures to prevent environmental degradation.”
21
A study in 2003 by the
International Institute for Management Development in Geneva found that stakeholders
expect more social responsibility from the pharmaceutical sector than from any other
industry. Pfizer transformed its quarterly “Financial Report” into a “Performance Report,”
which included updates on corporate citizenship;
22
the Chronicle of Philanthropy rated
the company “the world’s most generous company.”
In the pharmaceuticals industry, innovation can be stifled by the complexity of global
business, science, government, religion, and public response, all colliding over issues of
life and death. AIDS was driving high demand for more breakthrough medicines but at
an affordable price. “We have learned that no single entity—whether business,
19
Nielson, N. Pfizer, A New Mission in Action. Learning to Talk: Corporate Citizenship and the
Development of the UN Global Compact. Greenleaf Publishing: Sheffield, UK, 2004.
20
Ibid.
21
United Nations Rio Declaration on the Environment and Development, 1992.
22
Nielson, N. Pfizer, A New Mission in Action. Learning to Talk: Corporate Citizenship and the
Development of the UN Global Compact. Greenleaf Publishing: Sheffield, UK, 2004.
©2009 American Chemical Society 9
government, or NGO—can alone bridge the deep divides between poverty and
affluence, health and disease, growth and stagnation. As the world’s foremost
pharmaceutical company, we have an important obligation to take a global leadership
role,” Pfizer Chairman Hank McKinnell commented.
23
In 2000, Pfizer conducted focus groups at several Pfizer locations around the world to
create a new mission. First, it was decided that Pfizer would measure itself on a
combination of financial and non-financial measures, reflecting stakeholders’ changing
expectations of business. Second, Pfizer would no longer measure itself solely against
others in the pharmaceuticals industry, but against all other companies in all industries.
The new mission statement is:
We will become the world’s most valued company to patients, customers,
colleagues, investors, business partners, and the communities where we
live. This is our shared promise to ourselves and to the people we serve.
Pfizer’s purpose is to dedicate ourselves to humanity’s quest for longer,
healthier, happier lives through innovation in pharmaceutical, consumer,
and animal health products.
Pfizer stated that it measured progress as putting people and communities first;
operating ethically; being sensitive to the needs of its colleagues; and preserving
and protecting the environment.
In 2002, Pfizer donated $447 million to programs like its Diflucan Partnership Program,
which provides healthcare training and free medicine to treat HIV/AIDS-related
infections to patients in Africa, Haiti, and Cambodia. That year, Pfizer also held an
internal symposium on green chemistry, a design approach that continued to drive
manufacturing toward more benign material use.
In 2003, Pfizer became a member of the World Business Council on Sustainable
Development, the International Business Leaders Forum, and Business for Social
Responsibility—organizations that provide resources to firms to promote sustainable
business practices internationally, sometimes referred to as the triple-bottom-line
performance (economy, environment, equity). Pfizer set a company goal for 2007 to
reduce carbon dioxide emissions by 35 percent per million dollars of sales and, by
2010, supply 35 percent of global energy needs through cleaner sources. Pfizer is a
member of the U.S. Environmental Protection Agency’s Climate Leaders Program, a
voluntary industry-government partnership. Pfizer was again included in the Dow J ones
Sustainability Asset Management Index, a global index that tracks the performance of
leading companies, not only in economic terms but also against environmental and
social standards.
23
Medicines to Change the World. Pfizer’s 2003 Annual Review.
http://www.pfizer.nl/pdf/annualreportpfizer2003.pdf (accessed March 4, 2009).
©2009 American Chemical Society 10
Zoloft
Zoloft was released in 1992 and was approved for six mood and anxiety disorders,
including depression, panic disorder, obsessive-compulsive disorder (OCD) in adults
and children, post-traumatic stress disorder (PTSD), premenstrual dysphoric disorder
(PMDD), and social anxiety disorder (SAD).
24
Zoloft was the most prescribed
depression medication, with more than 115 million prescriptions written in the United
States in its first seven years on the market.
25
According to Pfizer’s 2003 filings, Zoloft
brought in $3.1 million in worldwide revenue, with $2.5 million coming from the U.S.
market. Those revenues show an increase of 16 percent worldwide—14 percent in the
United States and 23 percent internationally during the fourth quarter of 2003,
compared to the same period of the previous year.
26
Zoloft sales comprised
approximately 9 percent of Pfizer’s total U.S. sales in 2003, second only in sales
percentage to Lipitor.
In 2002, Pfizer was awarded the Green Chemistry Award for Alternative Synthetic
Pathways. Pfizer received the award for its development of the sertraline process, an
innovative process for deriving Zoloft, in which sertraline is the active ingredient. Since
developing the new process in 1998, Pfizer successfully implemented it as the standard
in sertraline manufacture. To make Zoloft, a pure output of sertraline must be isolated
from a reaction that occurs in solvent (or in a combination of solvents). The “combined”
process of isolating sertraline was the third redesign of the commercial chemical
process since its invention in 1985.
27
Each of those redesigned reactions decreased the
number of solvents used, thus simplifying both the process (through energy required
and worker-safety precautions) and the resulting waste disposal. The traditional process
used titanium tetrachloride, a liquid compound that was toxic, corrosive, and air-
sensitive (it formed hydrochloric acid when it came in contact with air).
28
It was used in
one phase of the process to eliminate water, which reversed the desired reaction if it
remained in the mix. In the process of “dehydrating” this step of the reaction, the
titanium tetrachloride reacted to produce heat, hydrochloric acid, titanium oxychloride,
and titanium dioxide. Those byproducts were carefully recovered and disposed, which
required an additional process (energy), inputs (washes and neutralizers), and costs
(waste disposal). The new process blended the two starting materials in the benign
24
Medicines to Change the World. Pfizer’s 2003 Annual Review.
http://www.pfizer.nl/pdf/annualreportpfizer2003.pdf (accessed March 4, 2009).
25
U.S. Environmental Protection Agency (EPA), Green Chemistry Challenge, 2002 Alternative Synthetic
Pathways Award. http://www.epa.gov/greenchemistry/pubs/pgcc/winners/gspa02.html (accessed March
4, 2009).
26
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
27
EPA Green Chemistry Application, Pfizer, Green Chemistry in the Redesign of the Sertraline Process.
2002.
28
Ibid.
©2009 American Chemical Society 11
solvent ethanol and relied on the regular solubility properties of the product to control
the reaction. By completely eliminating the use of titanium tetrachloride, the “combined”
process removed the hazards to workers and the environment associated with
transport, handling, and disposal of titanium wastes.
29
Using ethanol as the solvent also
significantly reduced the quantities of one of the starting materials, and allowed for this
material to be recycled back into the process, increasing efficiency.
Another accomplishment of the new process was discovering a more selective catalyst.
The original catalyst caused a reaction that created unwanted byproducts. Removing
these impurities required a large volume of solvent as well as substantial energy. Also,
portions of the desired end-product were lost during the purification process, decreasing
overall yield. The new, more selective catalyst produced lower levels of impurities,
which, in turn, had the effect of requiring less of the reactant (mandelic acid) for the next
and final reaction in the process. Finally, the new catalyst was recovered and recycled,
providing additional efficiency.
By redesigning the chemical process to be more efficient and produce less harmful or
expensive waste products, the “combined” process of producing sertraline provided
both economic and environmental/health benefits. Typically, 20 percent of the
wholesale price was manufacturing costs, of which approximately 20 percent was the
cost of the tablet or capsule, with the remaining percentage representing all other
materials, energy, water, and processing costs. With generics on the horizon, achieving
materials and processing cost reductions could prove a decisive capability differentiator.
Subsequent to receipt of the green chemistry award, Pfizer realized an even more
efficient process driven off the earlier successes. The starting material for sertraline,
called tetralone, contained an equal mixture of two components: one produces sertaline;
the other forms a byproduct that must be removed, resulting in a process that is only
half as productive. Using a cutting-edge separation technology called multiple-column
chromatography (MCC), Pfizer scientists were able to fractionate the starting material
into the pure component that results in sertraline. The other component can be recycled
back to the original 1:1 mixture, which could be now mixed with virgin starting material
and resubjected to MCC separation. This new process was reviewed and approved for
use by the FDA. The net result was twice as much sertraline produced from a unit of
starting material, and half the manufacturing plant capacity was required per unit of
sertraline produced.
A Depressing Decree from the United Kingdom
In December 2003, the Medicines and Healthcare Products Regulatory Agency (MHRA)
of the United Kingdom included Zoloft (sold in the United Kingdom as Lustral
®
) on a list
of antidepressants banned from use for the treatment of children and teenagers
29
EPA Green Chemistry Application, Pfizer, Green Chemistry in the Redesign of the Sertraline Process.
2002.
©2009 American Chemical Society 12
younger than age 18.
30
The safety and efficacy of the drugs was in question, a query
brought to the attention of U.K. health officials after high rates of suicide were observed
in patients taking certain antidepressants. Of the major antidepressants, only Eli Lily’s
Prozac is currently permitted for use in U.K. children.
31
Pfizer immediately put out a
statement disagreeing with the findings of the MHRA, claiming that their “controlled
clinical-trial data in pediatric and adolescent depression shows no statistically significant
association between use of Zoloft and either suicidal ideation or suicidal behavior in
depressed pediatric and adolescent populations.”
32
After reviewing Pfizer’s studies of
Zoloft in pediatric populations, the FDA’s Office of Pediatric Therapeutics concluded in
2003 that no safety signals called for FDA action beyond ongoing monitoring of adverse
events.
33
Conclusion
Pharmaceutical decision-makers expect market and industry turbulence, but they were
particularly constrained in 2005 by the confluence of regulation, distrust, monitoring
technology improvement, medical and ecological studies, costly company errors,
economic decline, and prohibitive R&D investment requirements. What could green
chemistry offer within that context, if anything?
Yujie Wang made last-minute changes to her priority list of recommendations and saved
the slide presentation to a Zip
®
drive. It was time to head down the hall to the executive
committee meeting.
30
U.K. Set to Ban Antidepressants for Children. AFX International Focus. December 10, 2003.
31
AFX International Focus.
32
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
33
Pfizer Inc.
©2009 American Chemical Society 13
doc_227417281.pdf
The objective of an efficacious pharmaceutical is to make certain molecules biologically active in humans. Not surprisingly, however, the same molecules that can cause desired results can have adverse effects in the body as well as post-patient - after the drug is expressed from the body and its active ingredients are released from disposal pipes into streams and other water bodies.
This case was prepared by Research Associates Alia Anderson and Karen O’Brien under the supervision of Associate
Professor Andrea Larson at the Darden School of Business at the University of Virginia. It is intended to serve as a
basis for class discussion rather than to illustrate the effective or ineffective handling of an administrative situation. No
part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any
form by any means without permission by the ACS Green Chemistry Institute®. These materials were developed
through a cooperative effort of the American Chemical Society’s Green Chemistry Institute and the U.S.
Environmental Protection Agency (EPA) Office of Pollution Prevention and Toxics’ Design for the Environment
Program. Partial funding was provided by the EPA through Cooperative Agreement #X8-83077701-0. Any opinions,
findings, and conclusions or recommendations expressed in this publication are those of the authors and do not
necessarily reflect the views of the EPA. Any mention of trade names does not imply endorsement by the EPA.
©2009 American Chemical Society
Pfizer Pharmaceuticals:
Green Chemistry Innovation and Business Strategy
Yujie Wang reviewed the presentation she had prepared for the executive committee’s
strategy meeting later that afternoon. Three of the committee members were familiar
with the ideas and she could count on their support. Four others had pushed for new
ideas to be fed into their group over the last year. Depending on the strength of her
argument this time, they might be persuaded to support the project. The final two, who
had significant responsibility for product development and operations, were somewhat
less predictable. She had informed them of her progress during the project but they
seemed disinterested at best. Then again, they were all busy people, and she had
found it hard to schedule the intermediate briefings she wanted to bring everyone along.
She knew the executives must be won over at least to a stance of “no opposition” to the
proposal she would make.
Pharmaceuticals and Personal Care Products (PPCPs)
The objective of an efficacious pharmaceutical is to make certain molecules biologically
active in humans. Not surprisingly, however, the same molecules that can cause
desired results can have adverse effects in the body as well as post-patient—after the
drug is expressed from the body and its active ingredients are released from disposal
pipes into streams and other water bodies.
Regulations require extensive pre-testing of toxins in drugs (typically conducted by
subcontractors) on different aquatic and mammalian species. Some critics argue the
tests are sufficient; others question how accurately those surrogate studies can predict
real results. Sweden, a nation that has aggressively studied chemical impacts on health
and ecological systems, actively restricts non-benign drug manufacture and distribution,
requires labeling of environmental toxins, and imposes sales caps and even bans. The
European Union’s 2005 Registration, Evaluation, Authorization, and Restriction of
Chemicals (REACH) legislation would impose additional requirements on drug
manufacturers (market size: 450 million).
According to the U.S. Environmental Protection Agency (EPA), PPCPs present scientific
concerns for the following reasons:
Large quantities of a wide spectrum of PPCPs (and their metabolites) can
enter the environment following use by multitudes of individuals or
domestic animals and subsequent discharge to (and incomplete removal
by) sewage treatment systems. PPCP residues in treated sewage effluent
(or in terrestrial runoff or directly discharged raw sewage) then enter the
environment. All chemicals applied externally or ingested (and their
bioactive transformation products) have the potential to be excreted or
washed into sewage systems and from there discharged to the aquatic or
terrestrial environments. Input to the environment is a function of the
efficiency of human/animal absorption and metabolism and the efficiency
of the waste treatment technologies employed—if any (sewage is
sometimes discharged without treatment by storm overflow events, failure
of systems, or “straight piping”). Removal efficiencies from treatment
plants vary from chemical to chemical and between individual sewage
treatment facilities (because of different technologies employed and
because of operational fluctuations and “idiosyncrasies” of individual
plants). Obviously, discharge of untreated sewage maximizes occurrence
of PPCPs in the environment. No municipal sewage treatment plants are
engineered for PPCP removal. The risks posed to aquatic organisms (by
continual lifelong exposure) and to humans (by long-term consumption of
minute quantities in drinking water) are essentially unknown. While the
major concerns to date have been the promotion of pathogen resistance
to antibiotics and disruption of endocrine systems by natural and synthetic
sex steroids, many other PPCPs have unknown consequences. The latter
are the focus of the ongoing U.S. EPA Office of Research and
Development (ORD) work summarized here.
1
Pfizer
In 2005, Pfizer employed 15,000 scientists and support staff in seven major labs around
the world. Every weekday, 38,000 sales representatives sold Pfizer products. The
company’s $3 billion annual advertising budget made it the fourth-largest U.S.
advertiser. In spring 2005, Pfizer was interviewing to fill the position of vice president of
green chemistry. The new position reported to Dr. Kelvin Cooper, senior vice president,
Worldwide Pharmaceutical Sciences, Pfizer Global R&D. The individual who would fill
the position would need to examine the competitive challenges ahead, the internal
progress to date, and ways to build on the successes of Zoloft and Viagra as examples
of innovative green chemistry embedded in corporate strategy. In the short term, how
1
U.S. Environmental Protection Agency (EPA). http://www.epa.gov/ppcp/ (accessed March 4, 2009).
©2009 American Chemical Society 2
could the company take the lessons learned from those two cases and apply them
beneficially elsewhere?
Exploring those questions had been Yujie Wang’s task for the past two months. The
innovations provided dramatic cost savings, and the removal of toxic materials reduced
both costs and risk. Given growing global attention to corporate accountability,
increased government scrutiny of pharmaceutical companies, and the fast-growing
popularity of sustainable business strategy, could adoption of a green chemistry
strategy help Pfizer’s reputation and offer opportunities for growth and profit? In this
industry, companies competed primarily on drug offering and secondarily on process,
with “maximum yield” as the main objective to maximize profitability.
Adding sustainability to the mix meant explicitly integrating human and community
health, as well as ecological system preservation, into corporate performance.
Sustainable development ideas introduced decades earlier had been transformed into
business practices and were strategically implemented by well-known global companies
such as Toyota, General Electric, Wal-Mart, Electrolux, and United Technologies. Wal-
Mart and General Electric announced sustainability as part of their core strategy in
2005. The goal was to achieve financial success concurrently with these broader
objectives.
Debate on climate change and discussion of pollutants’ effect on human health and the
environment had raised awareness of the human influence on natural systems;
consequently, financial institutions and insurance companies were paying more
attention to firms’ existing and future liabilities. In the face of increased scrutiny by
governments and nongovernmental organizations, firms were starting to assess their
own vulnerabilities and opportunities with respect to such topics. “Sustainability” and
“sustainable business” were two common terms in that discussion. Others in business
used the phrase “triple bottom line,” which referred to performance across financial,
social, and ecological standards, or strategy attuned to economy, equity, and
environment.
According to J oanna Negri, a process chemist and manager and a member of the
company’s green chemistry team, Pfizer “views sustainability and green chemistry as
outcomes of good science—and this provides competitive business advantage through
enhanced efficiency and safer processes.”
Green Chemistry at Pfizer
In 2002, Pfizer won the U.S. Presidential Green Chemistry Award for Alternative
Synthetic Pathways for its innovative manufacturing process for sertraline hydrochloride
(HCl). Sertraline (“sir-tra-leen”) HCl was the active ingredient in the pharmaceutical
Zoloft. Zoloft—in 2005, the most prescribed agent of its kind—was used to treat clinical
depression, which struck more than 20 million American adults and cost society nearly
©2009 American Chemical Society 3
$44 billion annually. As of February 2000, more than 115 million Zoloft prescriptions had
been written in the United States; 2003 global sales grew to $3.11 billion.
2
Applying the principles of green chemistry, Pfizer dramatically improved the commercial
manufacturing process of sertraline. After meticulously investigating each of the
chemical steps, Pfizer implemented green chemistry technology for this complex
commercial process, which required extremely pure product. As a result, Pfizer
significantly improved both worker and environmental safety. The new commercial
process (referred to as the “combined” process) offered dramatic pollution prevention
benefits, including improved safety and material handling, reduced energy and water
use, and double overall product yield.
3
That success inspired green chemistry
enthusiasts at Pfizer to look for other manufacturing processes to which the principles
could be applied.
Complicating matters, however, was the state of the pharmaceutical industry in 2005; it
was beleaguered by multiple issues affecting brand and profit margins, criticism of
industry’s policies on access to drugs in poorer communities, and lawsuits resulting
from unexpected side effects. Could greener processes provide Pfizer an edge in this
shifting landscape? Would it generate both the cost savings needed to justify the effort
and the social capital that would support Pfizer’s reputation, brand, and even its license
to operate?
In 2001, informal conversations at a conference at the University of Massachusetts’s
Center for Sustainable Production marked the beginning of Pfizer’s involvement in
green chemistry. While there, Dr. Berkeley Cue, then vice president of pharmaceutical
sciences research at Groton Labs (reporting to Pfizer Global R&D’s Cooper) was
surprised to learn that some Pfizer environment and safety chemists in attendance
shared his interest. Impressed by the green chemistry work of professor and chemist
J ohn Warner at the University of Massachusetts, Cue believed the approach held
potential for Pfizer.
From 2001 to 2004, Cue built a group at Groton, pulling in the discovery chemists from
R&D to optimize products from the design stage. In talking with other R&D sites at
Pfizer, the network quickly spread to the U.K. offices and Pfizer’s R&D center in La
J olla, California. When Pfizer purchased Pharmacia in 2003, the company discovered
that some of their new acquisition’s R&D people were interested in green chemistry.
Cue described his role as supporting a bottom-up initiative: “I brought people together in
a tactical way and provided resources to give them a strategy and a voice upwards in
the organization, and out.”
2
PharmExec.com.
http://pharmexec.findpharma.com/pharmexec/data/articlestandard//pharmexec/202004/95192/article.pdf
(accessed March 4, 2009).
3
U.S. Environmental Protection Agency (EPA).
http://www.epa.gov/greenchemistry/pubs/pgcc/winners/gspa02.html (accessed March 4, 2009).
©2009 American Chemical Society 4
In late 2003, a steering committee formed to address the importance of the ideas for the
corporation overall. Soon the active proprietary ingredients (API) chemists joined in and
communication about the ideas expanded into legal and corporate affairs and
R&D/manufacturing co-development teams. The committee communicated the
message up and down the corporate hierarchy. Even the global marketing division was
interested in the potential of this approach. By 2005, Pfizer had green chemistry activity
in all seven of its R&D sites and had even begun to educate the federal oversight
agency for the pharmaceutical industry, the Food and Drug Administration (FDA). (The
FDA, with its legislative commitment to not compromise patient safety, was a
demanding taskmaster that could dictate significant green chemistry changes to
production that, although beneficial, would require long approval time frames.)
E-Factors and Atom Economy
Green chemistry is the design of chemical products or processes that eliminates or
reduces the use and generation of hazardous substances. The application of green
chemistry principles provided a roadmap that enabled designers to use more benign
and efficient methods.
The industry used an assessment tool called E-Factor to evaluate all major products. E-
Factor was defined in this industry as the ratio of total kilograms of all materials (raw
materials, solvents, and processing chemicals) used per kilogram of active product
ingredient (API) produced. Firms were identifying drivers of high E-Factor values and
taking actions to improve efficiency.
A pivotal 1994 study indicated that for every kilogram of API produced, between 25 and
100 kilograms or more of waste was generated as standard practice in the
pharmaceutical industry, a figure that was still common to the industry in 2005.
Multiplying the E-Factor by the estimate of kilograms of API produced by the industry
overall suggested that for the year 2003 as much as 500 million to 2.5 billion kilograms
of waste could be the byproduct of pharmaceutical API manufacture. That waste
represented a double penalty: costs associated with purchasing chemicals that are
diverted from API yield; and costs associated with disposing of that waste (ranging from
$1 to $5 per kilogram). Very little information was released by industry competitors, but
a published 2004 GlaxoSmithKline life-cycle assessment of their API manufacturing
processes revealed that 75 to 80 percent of the waste produced was solvent (liquid) and
20 to 25 percent solid, of which a considerable proportion was likely hazardous under
state and federal law.
For years pharma said it did not produce significant enough product volumes to be
concerned about toxicity and waste, particularly relative to commodity chemical
producers, but with the competitive circumstances changing, companies were eager to
find ways to cut costs, eliminate risk, and improve their image. After implementing its
award-winning process in sertraline manufacture, Pfizer’s experience suggested green
chemistry–guided process changes brought E-Factor ratios down to 10 to 20 kilograms.
The potential to dramatically reduce E-Factors through “benign by design” principles
©2009 American Chemical Society 5
could, indeed, be significant. Lilly, Roche, and Bristol Meyers Squibb—all winners of
Presidential Green Chemistry Awards between 1999 and 2004—reported improvements
of this magnitude after applying green chemistry principles.
Predictably, green chemistry also fit with “Six Sigma,” a methodology that considers
waste a process defect. “Right the first time” was an industry initiative backed by the
FDA. Groton’s Cue viewed green chemistry as a lens that allowed the company to look
at processes and yield objectives in a more comprehensive way, with quality programs
dovetailing easily with this approach.
Pfizer Company Background
Charles Pfizer and his cousin, Charles Erhart, created Pfizer Inc. in 1849 in Brooklyn,
New York. The company, today the world’s largest drug company, began its climb to the
top of the industry in 1941, when it was asked to mass-produce penicillin for the war
effort. In the 1950s, the company opened branches in Belgium, Canada, Cuba, Mexico,
and the United Kingdom and began manufacturing in Asia, Europe, and South America.
Pfizer expanded its research and development, introducing a range of drugs and
acquiring consumer products such as BenGay and Desitin, and by the mid-1960s,
Pfizer’s annual worldwide sales had grown to $200 million.
4
Pfizer engaged in the discovery, development, manufacturing, and marketing of
prescription medicines, as well as over-the-counter products, for humans and animals.
In 2003, 88 percent of Pfizer’s revenue was generated from the human pharmaceuticals
market, 6.5 percent from consumer health care products, and 4 percent from animal
health products.
5
Pfizer was traded on the New York Stock Exchange as ticker PFE. Its
major competitors included Merck & Co. of Germany and J ohnson & J ohnson,
GlaxoSmithKline Plc, and Novartis—all in the United States.
6
Throughout the world, more than one billion prescriptions were written for Pfizer
products in 2003.
7
In 2004, 14 of their drugs were top sellers in their therapeutic
categories, including Zoloft, erectile dysfunction therapy Viagra, pain management
Celebrex
®
, and cholesterol-lowering Lipitor
®
.
8
Its many over-the-counter remedies
include Benadryl
®
and Sudafed
®
. Subsidiaries in the Pfizer pharmaceutical group
included Warner-Lambert, Parke-Davis, and Goedecke. In 2000, Pfizer merged with
Warner-Lambert, moving the company into the group of top five drug makers in the
world. Pfizer then acquired pharmaceuticals company Pharmacia in 2003, making it the
largest drug company in the world. This acquisition allowed Pfizer to diversify its product
4
Dow J ones Reuters Business Interactive LLC (trading as Factiva). Pfizer Inc.. 2003.
5
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
6
Business and Company Resource Center. Pharmaceuticals Industry Snapshot. 2002.
7
Pfizer Inc., 8K Filing and 2003 Performance Report.
8
Business and Company Resource Center.
©2009 American Chemical Society 6
line, because Pharmacia owned a range of therapeutic products in new areas, such as
oncology, endocrinology, and ophthalmology.
9
The merger, which cost Pfizer $54
billion, also greatly expanded its pipeline through Pharmacia’s research in
atherosclerosis, diabetes, osteoporosis, breast cancer, neuropathic pain, epilepsy,
anxiety disorders, and Parkinson’s disease. By 2004, Pfizer had locations in 80
countries and sold products in 150 countries. In 2003, Pfizer also began selling some of
its non-pharmaceutical businesses, such as the Adams confectionary unit (to Cadbury
Schweppes) and Schick-Wilkinson Sword shaving products (to Energizer Holdings).
10
Pfizer was headquartered in New York and, in 2005, had four subsidiaries involved in
pharmaceuticals, consumer health care and animal health care. Three subsidiaries
conducted their business under the Pfizer company name, the fourth as Agouron
Pharmaceuticals.
Pfizer posted total revenues for 2003 at $45.2 billion worldwide, an increase of 40
percent from 2002, and net income of $3.9 billion. While the company’s largest market
was in the United States, Pfizer’s international market grew 56 percent in 2003, to
revenues of $18 billion. J apan was its second-largest single national market.
11
“[Pfizer’s]
portfolio of leading medicines, which spanned most major therapeutic categories, drove
Pfizer’s strong revenue growth in the fourth quarter and full-year 2003,” according to
Karen Katen, executive vice president of the company and president of Pfizer Global
Pharmaceuticals. In fall 2004, Pfizer appeared well positioned for continued industry
leadership. Pfizer projected strong financial performance. The company had a target of
$54 billion for its 2004 revenue and planned to spend about $7.9 billion in R&D during
2004.
12
“In the dynamic environment of today’s worldwide pharmaceutical industry,” said
David Shedlarz, executive vice president and chief financial officer, “Pfizer is uniquely
well-positioned to sustain our strong and balanced performance, leverage past and
future opportunities, reinforce and extend our differentiation from others in the industry,
and exploit both our operational flexibility and our proven abilities to execute.”
13
Industry Challenges
Despite Pfizer’s optimism and past financial success, by early 2005, the entire
pharmaceuticals industry suffered from a devastating lack of customer trust. From 1990
to 2004, the industry experienced a series of well-publicized criticisms. Most contentious
amongst these critiques was the accessibility of AIDS drugs to patients in southern
Africa. Analysts such as Merrill Goozner, former chief economics correspondent for the
Chicago Tribune, suggested in 1999 that private pharmaceutical companies contributed
to the global AIDS crisis by claiming that lowering the price of drugs or easing patent
9
Business and Company Resource Center.
10
Ibid.
11
Pharmaceutical Business Review [online].
12
Pfizer Inc., 8K Filing and 2003 Performance Report.
13
Ibid.
©2009 American Chemical Society 7
protection for manufacturers in third-world countries would “stifle innovation.”
14
In 2004,
products from a flu vaccine production plant in the United Kingdom, critical to the U.S.
supply, were blocked due to health and safety concerns. The same year, New York
Attorney General Elliot Spitzer filed suit against pharmaceutical giant GlaxoSmithKline,
saying that the company concealed important information about the safety and efficacy
of Paxil
®
, an antidepressant drug. Adding to the controversy surrounding the
pharmaceutical industry, popular filmmaker Michael Moore announced plans in 2005 to
create a documentary called Sicko, which would use interviews with physicians,
patients, and members of Congress to expose an industry that Moore claimed “benefits
the few at the expense of the many.”
15
A poll conducted in December 2004 showed that Americans held pharmaceutical
companies at the same low esteem as tobacco companies.
16
The pressure on Pfizer
grew in late 2004 when prescriptions for its Celebrex pain relief and arthritis drug fell 56
percent in December following the company’s announcement that the drug was linked
to cardiovascular risk (heart attacks and strokes), a problem similar to Merck & Co.’s
billion-dollar blockbuster drug Vioxx
®
(Merck, which was suspected of concealing
Vioxx’s potentially lethal side effects to maintain sales, withdrew it from the market in
September 2004, undermining both public confidence in the pharmaceutical industry
and the regulatory oversight of the FDA.
17
); Pfizer ceased advertising Celebrex. In
December 2004, the S&P 500 Pharmaceutical Subindustry Index was down 12.8
percent for the year, though the S&P 500 was up 6.8 percent.
The pharmaceutical industry was a high-risk, high-reward business. Consumers
demanded lifesaving drug discoveries that were safe and affordable. In the United
States, drug patents only lasted for five to 10 years, so pharmaceutical companies were
constantly threatened by generic competition. In 2004, it cost an estimated $897 million
to develop and test a new medicine; about 95 percent of chemical formulas failed during
this process. In 2002, the FDA approved only 17 new drugs, the lowest number since
1983. In an attempt to boost innovation, pharmaceutical R&D skyrocketed, with Pfizer
investing $7 billion on R&D in 2003, leading the industry by a margin of several billion.
18
In 2005, Pfizer managed the world’s largest private pharmaceutical research effort, with
more than 13,000 scientists worldwide. That tremendous investment, however, was not
translating into drug output, which had been spiraling downward since 1996. In J anuary
2005, Pfizer had 130 new molecules in its pipeline of new medicines, along with 95
14
Goozner, M. Third World Battles for AIDS Drugs. Chicago Tribune. April 28, 1999.
15
Dutka, E. Giving Them a Sick Feeling. Los Angeles Times. December 22, 2004.
http://articles.latimes.com/2004/dec/22/entertainment/et-sicko22
16
Angell, M. Big Pharma is a Two-faced Friend. Financial Times. J uly 19, 2004.
17
Agovino, T. Drug Industry Weathers Horrid Year and Outlook Appears Rocky.. Associated Press.
December 16, 2004.
18
Rotman, D. Can Pfizer Deliver? Technology News. February 2004.
©2009 American Chemical Society 8
projects to expand the use of current therapies.
19
To meet its 2005 revenue goal of
double-digit growth, Pfizer planned to file applications for 20 new drugs before 2010.
20
Analysts viewed that unprecedented growth rate skeptically, saying that Pfizer had only
seven drugs in the FDA testing phases.
From 1993 to 2003, Pfizer spent about $2 billion on drugs that failed in advanced
human testing or were pulled off the market due to problems such as liver toxicity. Thus,
Pfizer decided in 2005 to shift R&D focus to analyzing past failed drug experiments to
find patterns that might help detect toxicity earlier in the expensive testing process.
From 1995 to 2005, pharmaceutical companies invested significant R&D funding into
genomics experiments, which were very expensive and yielded less-than-revolutionary
results. After a decade of investments in high-powered genomic tools, pharmaceutical
companies were in their most prolonged and painful dry spell in years. “Genomics is not
the savior of the industry. The renaissance is in chemistry,” said Rod MacKenzie,
Pfizer’s vice president of discovery research in Ann Arbor, Michigan.
Brand Protection
To counteract a growing reputation that Pfizer was unwilling to engage with certain
NGOs, Pfizer was one of the earliest of the few U.S. companies to sign the voluntary
U.N. Global Compact defining principles for corporate behavior, including human rights,
labor, and the environment. The U.N. Global Compact was designed to open dialogue
between business, governments, NGOs, and society-at-large. The compact requires
use of the precautionary principle, a guide to company decision-making that assumed,
“lack of full scientific certainty shall not be used as a reason for postponing cost-
effective measures to prevent environmental degradation.”
21
A study in 2003 by the
International Institute for Management Development in Geneva found that stakeholders
expect more social responsibility from the pharmaceutical sector than from any other
industry. Pfizer transformed its quarterly “Financial Report” into a “Performance Report,”
which included updates on corporate citizenship;
22
the Chronicle of Philanthropy rated
the company “the world’s most generous company.”
In the pharmaceuticals industry, innovation can be stifled by the complexity of global
business, science, government, religion, and public response, all colliding over issues of
life and death. AIDS was driving high demand for more breakthrough medicines but at
an affordable price. “We have learned that no single entity—whether business,
19
Nielson, N. Pfizer, A New Mission in Action. Learning to Talk: Corporate Citizenship and the
Development of the UN Global Compact. Greenleaf Publishing: Sheffield, UK, 2004.
20
Ibid.
21
United Nations Rio Declaration on the Environment and Development, 1992.
22
Nielson, N. Pfizer, A New Mission in Action. Learning to Talk: Corporate Citizenship and the
Development of the UN Global Compact. Greenleaf Publishing: Sheffield, UK, 2004.
©2009 American Chemical Society 9
government, or NGO—can alone bridge the deep divides between poverty and
affluence, health and disease, growth and stagnation. As the world’s foremost
pharmaceutical company, we have an important obligation to take a global leadership
role,” Pfizer Chairman Hank McKinnell commented.
23
In 2000, Pfizer conducted focus groups at several Pfizer locations around the world to
create a new mission. First, it was decided that Pfizer would measure itself on a
combination of financial and non-financial measures, reflecting stakeholders’ changing
expectations of business. Second, Pfizer would no longer measure itself solely against
others in the pharmaceuticals industry, but against all other companies in all industries.
The new mission statement is:
We will become the world’s most valued company to patients, customers,
colleagues, investors, business partners, and the communities where we
live. This is our shared promise to ourselves and to the people we serve.
Pfizer’s purpose is to dedicate ourselves to humanity’s quest for longer,
healthier, happier lives through innovation in pharmaceutical, consumer,
and animal health products.
Pfizer stated that it measured progress as putting people and communities first;
operating ethically; being sensitive to the needs of its colleagues; and preserving
and protecting the environment.
In 2002, Pfizer donated $447 million to programs like its Diflucan Partnership Program,
which provides healthcare training and free medicine to treat HIV/AIDS-related
infections to patients in Africa, Haiti, and Cambodia. That year, Pfizer also held an
internal symposium on green chemistry, a design approach that continued to drive
manufacturing toward more benign material use.
In 2003, Pfizer became a member of the World Business Council on Sustainable
Development, the International Business Leaders Forum, and Business for Social
Responsibility—organizations that provide resources to firms to promote sustainable
business practices internationally, sometimes referred to as the triple-bottom-line
performance (economy, environment, equity). Pfizer set a company goal for 2007 to
reduce carbon dioxide emissions by 35 percent per million dollars of sales and, by
2010, supply 35 percent of global energy needs through cleaner sources. Pfizer is a
member of the U.S. Environmental Protection Agency’s Climate Leaders Program, a
voluntary industry-government partnership. Pfizer was again included in the Dow J ones
Sustainability Asset Management Index, a global index that tracks the performance of
leading companies, not only in economic terms but also against environmental and
social standards.
23
Medicines to Change the World. Pfizer’s 2003 Annual Review.
http://www.pfizer.nl/pdf/annualreportpfizer2003.pdf (accessed March 4, 2009).
©2009 American Chemical Society 10
Zoloft
Zoloft was released in 1992 and was approved for six mood and anxiety disorders,
including depression, panic disorder, obsessive-compulsive disorder (OCD) in adults
and children, post-traumatic stress disorder (PTSD), premenstrual dysphoric disorder
(PMDD), and social anxiety disorder (SAD).
24
Zoloft was the most prescribed
depression medication, with more than 115 million prescriptions written in the United
States in its first seven years on the market.
25
According to Pfizer’s 2003 filings, Zoloft
brought in $3.1 million in worldwide revenue, with $2.5 million coming from the U.S.
market. Those revenues show an increase of 16 percent worldwide—14 percent in the
United States and 23 percent internationally during the fourth quarter of 2003,
compared to the same period of the previous year.
26
Zoloft sales comprised
approximately 9 percent of Pfizer’s total U.S. sales in 2003, second only in sales
percentage to Lipitor.
In 2002, Pfizer was awarded the Green Chemistry Award for Alternative Synthetic
Pathways. Pfizer received the award for its development of the sertraline process, an
innovative process for deriving Zoloft, in which sertraline is the active ingredient. Since
developing the new process in 1998, Pfizer successfully implemented it as the standard
in sertraline manufacture. To make Zoloft, a pure output of sertraline must be isolated
from a reaction that occurs in solvent (or in a combination of solvents). The “combined”
process of isolating sertraline was the third redesign of the commercial chemical
process since its invention in 1985.
27
Each of those redesigned reactions decreased the
number of solvents used, thus simplifying both the process (through energy required
and worker-safety precautions) and the resulting waste disposal. The traditional process
used titanium tetrachloride, a liquid compound that was toxic, corrosive, and air-
sensitive (it formed hydrochloric acid when it came in contact with air).
28
It was used in
one phase of the process to eliminate water, which reversed the desired reaction if it
remained in the mix. In the process of “dehydrating” this step of the reaction, the
titanium tetrachloride reacted to produce heat, hydrochloric acid, titanium oxychloride,
and titanium dioxide. Those byproducts were carefully recovered and disposed, which
required an additional process (energy), inputs (washes and neutralizers), and costs
(waste disposal). The new process blended the two starting materials in the benign
24
Medicines to Change the World. Pfizer’s 2003 Annual Review.
http://www.pfizer.nl/pdf/annualreportpfizer2003.pdf (accessed March 4, 2009).
25
U.S. Environmental Protection Agency (EPA), Green Chemistry Challenge, 2002 Alternative Synthetic
Pathways Award. http://www.epa.gov/greenchemistry/pubs/pgcc/winners/gspa02.html (accessed March
4, 2009).
26
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
27
EPA Green Chemistry Application, Pfizer, Green Chemistry in the Redesign of the Sertraline Process.
2002.
28
Ibid.
©2009 American Chemical Society 11
solvent ethanol and relied on the regular solubility properties of the product to control
the reaction. By completely eliminating the use of titanium tetrachloride, the “combined”
process removed the hazards to workers and the environment associated with
transport, handling, and disposal of titanium wastes.
29
Using ethanol as the solvent also
significantly reduced the quantities of one of the starting materials, and allowed for this
material to be recycled back into the process, increasing efficiency.
Another accomplishment of the new process was discovering a more selective catalyst.
The original catalyst caused a reaction that created unwanted byproducts. Removing
these impurities required a large volume of solvent as well as substantial energy. Also,
portions of the desired end-product were lost during the purification process, decreasing
overall yield. The new, more selective catalyst produced lower levels of impurities,
which, in turn, had the effect of requiring less of the reactant (mandelic acid) for the next
and final reaction in the process. Finally, the new catalyst was recovered and recycled,
providing additional efficiency.
By redesigning the chemical process to be more efficient and produce less harmful or
expensive waste products, the “combined” process of producing sertraline provided
both economic and environmental/health benefits. Typically, 20 percent of the
wholesale price was manufacturing costs, of which approximately 20 percent was the
cost of the tablet or capsule, with the remaining percentage representing all other
materials, energy, water, and processing costs. With generics on the horizon, achieving
materials and processing cost reductions could prove a decisive capability differentiator.
Subsequent to receipt of the green chemistry award, Pfizer realized an even more
efficient process driven off the earlier successes. The starting material for sertraline,
called tetralone, contained an equal mixture of two components: one produces sertaline;
the other forms a byproduct that must be removed, resulting in a process that is only
half as productive. Using a cutting-edge separation technology called multiple-column
chromatography (MCC), Pfizer scientists were able to fractionate the starting material
into the pure component that results in sertraline. The other component can be recycled
back to the original 1:1 mixture, which could be now mixed with virgin starting material
and resubjected to MCC separation. This new process was reviewed and approved for
use by the FDA. The net result was twice as much sertraline produced from a unit of
starting material, and half the manufacturing plant capacity was required per unit of
sertraline produced.
A Depressing Decree from the United Kingdom
In December 2003, the Medicines and Healthcare Products Regulatory Agency (MHRA)
of the United Kingdom included Zoloft (sold in the United Kingdom as Lustral
®
) on a list
of antidepressants banned from use for the treatment of children and teenagers
29
EPA Green Chemistry Application, Pfizer, Green Chemistry in the Redesign of the Sertraline Process.
2002.
©2009 American Chemical Society 12
younger than age 18.
30
The safety and efficacy of the drugs was in question, a query
brought to the attention of U.K. health officials after high rates of suicide were observed
in patients taking certain antidepressants. Of the major antidepressants, only Eli Lily’s
Prozac is currently permitted for use in U.K. children.
31
Pfizer immediately put out a
statement disagreeing with the findings of the MHRA, claiming that their “controlled
clinical-trial data in pediatric and adolescent depression shows no statistically significant
association between use of Zoloft and either suicidal ideation or suicidal behavior in
depressed pediatric and adolescent populations.”
32
After reviewing Pfizer’s studies of
Zoloft in pediatric populations, the FDA’s Office of Pediatric Therapeutics concluded in
2003 that no safety signals called for FDA action beyond ongoing monitoring of adverse
events.
33
Conclusion
Pharmaceutical decision-makers expect market and industry turbulence, but they were
particularly constrained in 2005 by the confluence of regulation, distrust, monitoring
technology improvement, medical and ecological studies, costly company errors,
economic decline, and prohibitive R&D investment requirements. What could green
chemistry offer within that context, if anything?
Yujie Wang made last-minute changes to her priority list of recommendations and saved
the slide presentation to a Zip
®
drive. It was time to head down the hall to the executive
committee meeting.
30
U.K. Set to Ban Antidepressants for Children. AFX International Focus. December 10, 2003.
31
AFX International Focus.
32
Pfizer Inc., 8K Filing and 2003 Performance Report, Exhibit 99. J anuary 22, 2004.
33
Pfizer Inc.
©2009 American Chemical Society 13
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