In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue came from abroad. Today, that makes up more than half of the S&P 500's growth.
And that number is growing. The truth is, investors regularly underestimate how much demand comes from abroad. More important, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Pfizer (NYSE: PFE ) . We'll examine not only where its sales and earnings come from, but how its sales abroad have changed over time.
Where Pfizer's sales were five years ago
Five years ago, Pfizer produced 52% of its sales within the United States.
Source: S&P Capital IQ.
Where Pfizer's sales are today
Today, America is still Pfizer's largest market, but its influence is shrinking. While the United States still contributes 43% of sales, domestic sales growth lags far behind other regions.
Source: S&P Capital IQ.
Like its blue-chip peers, Pfizer is shifting its sales focus to new regions across the globe. However, it's also using acquisitions to further its international aims. Take the Wyeth acquisition, for example; before the merger, Wyeth had extremely solid international sales. Between 2003 and 2008, it grew its international segment 104%, while sales to the United States grew only 12% during the same time frame.
Competitor checkup
One last point to check is how Pfizer's footprint compares with some of its peers':
|
Company
|
Geography With Most Sales
|
Percent of Sales
|
| Pfizer |
United States |
43% |
| Johnson & Johnson (NYSE: JNJ ) |
United States |
48% |
| Abbott Laboratories (NYSE: ABT ) |
United States |
43% |
| Eli Lilly (NYSE: LLY ) |
United States |
56% |
Source: S&P Capital IQ.
The geographic profiles of most large companies in the health-care sector are similar. If you're looking for a direct play into higher growth markets, these companies should benefit, but they may have a more difficult time than competitors in other industries, such as consumer goods. In those sectors, companies compete on brand instead of intellectual property, which is easily copied in emerging markets that have limited controls on cheaper substitutes. Still, of all the options above, Pfizer has the strongest exposure away from developed countries, and, as noted earlier, is placing a continued focus on expanding its geographic reach through not only organic sales, but acquisitions as well.
Keep searching
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