Friday, October 11, 2019

Marketing Anti-Depressants: Prozac and Paxil Essay

The expiration of Prozac’s patent necessitates swift, defensive action from all companies in the SSRI industry. As generics enter the market, demand for more expensive, branded medications will fall as price sensitive consumers switch to the cheaper alternatives. Additionally, incident prices on consumers themselves, in the form of copayments, will rise as insurance companies pressure their constituents to switch to more cost-effective offerings. To overcome these obstacles, we recommend the following to both GSK and Lily: 1. A decisive repositioning of the brand to emphasize its advantages over market substitutes. 2. The rapid deployment of new inclinations to support previous point while simultaneously addressing the issue of competition. Background: Prozac’s early success stemmed from its value proposition of effectiveness and relative safety, compared to the current brands on the market. Prozac involved minimal side effects and was easy to self-administer, in contrast to the dangers associated with the Tricyclics and MAOIs on the market at the time. Prozac first segmented and targeted psychiatrists who were the main prescribers of anti-depressant medications then. After Prozac’s reputation grew, they targeted the general practitioners who were comfortable prescribing such a safe drug requiring minimal doctor supervision, thereby eliminating the need to send patients to costly specialists. Once the FDA relaxed rules on advertising prescription drugs, Prozac targeted the general public with a series of advertising campaigns. Furthermore, Prozac initially positioned itself simply as an anti-depressant treatment but soon expanded to a cure-all drug, treating issues ranging from OCD to compulsive gambling. Originally positioned as an alternative to Prozac, an SSRI called â€Å"Paxil† was introduced in 1993. Like Prozac, Paxil was effective for various illnesses, could be taken once a day, and had comparable side effects. However, an opportunity to market and develop an unknown emerged in 1999 when Paxil became the â€Å"first and only† medication to receive FDA approval in treating social anxiety disorder (SAD). SmithKline Beecham changed its marketing plan, with a new focus on heightening SAD public awareness. An aggressive campaign was launched and supplemented by direct-to-consumer advertising, focused almost entirely on the disorder, rather than the drug. The next year, SmithKline Beecham merged with Glaxo Wellcome to position themselves as one of the world’s largest pharmaceutical companies, known as GlaxoSmithKline (GSK), enabling a significant increase in their DTC advertising budget which in turn triggered roughly $1. 6 billion in sales. Recommendations: Although Paxil’s patent does not expire for several years, it will be significantly and similarly affected by the expiration of Prozac’s patent. Therefore, its reactive strategy to the nullification of Prozac’s exclusivity should be very similar, on a conceptual level, to what we are proposing to Lily. The foremost concern for both Paxil and Prozac will be repositioning. Paxil has the advantage of remaining an exclusive brand and thus does not face the immediate concern of losing existing customers to a direct generic replacement. However, Paxil must stress its unique benefits to new customers to stay competitive with other brands and generic forms of Prozac. Towards this end, we recommend that Paxil reorient its DTC marketing strategy to target those who suffer from illnesses uniquely treatable by Paxil, specifically SAD and Generalized Anxiety Disorder (GAD). In addition, GSK should heavily emphasize the advantages of its newly approved controlled release variant, particularly decreased side effects. Finally, practitioner advertising should be increased and similarly targeted. These measures will ensure that potential customers suffering from SAD or GAD will be more likely to both recognize their illness and purchase the GSK product. Even more, consumers may be drawn from other brands attributable to the promise of decreased side effects. Similarly, Lily should put heavy emphasis on their new, weekly variant of Prozac. Additionally, following the introduction of generics, Prozac should focus its marketing strategy around PMMD. Basis for Recommendation: The population of people suffering from the two adds up to 9. 3 million Americans (minus overlap for people who suffer from both), about 6. 5% of the adult population in America (Exhibit 5). With the incredible versatility Paxil has had treating various conditions, these two aforementioned conditions, both relatively new, have not gotten the attention from GSK that it really should garner given the fact that no other company can attract people in this state. GSK must look to re-position itself as a figure-head, a trailblazer in the field of SAD and GAD to build a strong market share now and develop brand loyalty to off-set, as best they can, the impending downturn brought on by future generics for the product. Based on the regression we conducted using data from Exibit 12 , we believe that DTC advertising presents an effective way to increase both company’s bottom lines. Looking at the data for prescription drugs, a $1 million investment will, on average, yield a $14. million increase in sales for the product alone. That is a pretty sizeable increase and the model proves that there is a strong correlation between DTC advertising and sales. This does seem reasonable, especially given the companies’ proclivity toward airing late-night infomercials (a form of DTC) when a large group of depressed patients are watching, leading them to go into the doctor’s office the next time, recall the product they were exposed to by t he ad, and request to have it prescribed. Paxil gets about $19. 6 million dollars return on a $1 million investment in DTC advertising. Similarly, Prozac should run a similar type of advertising campaign. Since they do not show up in the statistics in Exhibit 12, they should be slightly more hesitant to go all-in on the investment but should incrementally invest and see which direction it takes sales; all signs point to a solid return for Prozac which already has a solid brand image and loyalty. Lastly, with the advent of the generic, both Paxil and Prozac have to seriously consider lowering their prices to a competitive level to keep pace somewhat with the much cheaper generic, Prozac needing to do so more because of its $14 higher price-tag of $79. 20 to Paxil’s $65. 70. With this market penetration pricing, and within a reasonable interval, consumers will be willing to pay that extra bit because they are comfortable with the brand and value its credibility and integrity. Plus, once consumers see a decrease in price, even with a cheaper generic option, those who are price-sensitive but satisfied users of Paxil or Prozac will see discount  and feel like they did not have to change their buying patterns but saved money. The fact is Prozac and Paxil may completely lose out on their market share in the fields the generic has access to unless the respective companies make calculated, practical price cuts. Although Lilly and GSK’s hands are forced, they still stand to benefit greatly for this market penetration pricing strategy.

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