BackPfizer set to change India management structure in line with global model
The changes will create five main business segments; Pfizer to name the current managing director, Aijaz Tobaccowalla, as country manager
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Mumbai: Pfizer Inc., the world’s largest drug maker by sales, which is among the top 10 firms in India’s ₹ 75,000 crore drug market after the merger with Wyeth India, is likely to make key changes in its local management structure.
The changes, in sync with the global parent’s new business focus, will create five main business segments—established products or branded generics, innovative drugs, vaccines, oncology or cancer drugs and consumer health.
Each of these will be led by separate heads reporting directly to the US parent, three people familiar with the development said, requesting anonymity.
The US parent, in its newly restructured business model, focuses on three broad areas—innovative products (mainly patented drugs), established products and VOC (vaccines, oncology and consumer health). The formal division of these revenue units in India and the appointment of the respective heads will be announced soon.
Meanwhile, Pfizer is set to name the current managing director, Aijaz Tobaccowalla, as country manager. He will be responsible for the established products unit, which contributes about 85% of the company's revenue.
“The other business unit heads will be appointed soon," said one of the persons cited above.
“As part of the global business focus, there needs some changes at the higher level as the business would run as three main revenue units, though it won’t have any impact on the field force or on the consumer," Tobaccowalla said.
Pfizer and Wyeth, after four years of a global merger following Pfizer’s $68 billion acquisition of Wyeth in 2009, had on Saturday announced the merger of these two entities in India.
Wyeth’s strong portfolio of vaccine and woman healthcare products brings a complementary business portfolio for Pfizer. The combined entity, which has been integrated at the operational level for sometime now, is present in nearly all therapeutic segments in India and had a combined turnover of about ₹ 2,000 crore in fiscal year ended March.
The new management model by which separate business heads—responsible for different segments—reporting directly to the parent is a shift from the traditional management style of Pfizer India, which has been present in the country since 1950.
Pfizer in India had in the past followed a system under which all business heads used to report to the managing director as the business in the entire country was treated as one revenue centre.
Industry experts say they do not know how this model will work for a company such as Pfizer, which will still get at least 80% revenue from one segment and will not be able to afford to deploy exclusive teams for other small segments.
At present, Pfizer doesn’t have enough products under the innovative products segment and thus not many people are on the field exclusively in this area.
“Each model has its advantages and disadvantages," said Kewal Handa, a former managing director at Pfizer India. “Since the changes in the global business model demands such restructuring, one needs to wait and see the outcome. But business alignment and execution are key to success in any model."
Another multinational drug maker Abbott Laboratories, also present in India since 1911, was following the model of multiple heads reporting to its global headquarters on various business segments and entities at the profit and loss level, but reversed the system early this year by posting a new country head.
“This change is more to look into these businesses as independent entities and report on them from the point of the P&L (profit and loss) strategy," Tobaccowalla said on the sidelines of the company’s formal announcement on the merger with Wyeth India on Saturday.
“But it won’t create any inefficiencies in the system. The finance team will have an impact in terms of how the revenue is reported. There will be a country manager and business heads for each of the verticals. We are running it as one country though all business heads may not report to me," Tobaccowalla said.
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