pharmaceutical companies and their patent expiries

8/12/2019 Pharmaceutical Companies and Their Patent Expiries

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Pharmaceutical companies

and their patent expiries

Pharmaceutical companies face difficult times when a patent of a brand name drug expires. Brand name drugs often see a large decline in their sales value. This research studies, using five case studies, what pharmaceutical companies do to overcome such a sales decline. The

used strategies are evaluated, using sales values, to see whether these strategies work. Pharmaceutical companies have five possible brand extension strategies they can use,namely: Extended release !"#, new indication, second generation, fixed$dose$combination%&'# and over$the$counter (T'#. Based on the results of this research, the second

generation strategy is the most effective strategy pharmaceutical companies can use toovercome patent expiry of their blockbuster brand name drugs.

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TABLE OF CONTENT

ACKNOWLEDGEMENTS--------------------------------------------------------------------------------- 2

TABLE OF CONTENT--------------------------------------------------------------------------------------3

1 INTRODUCTION--------------------------------------------------------------------------------------- 5

Table 1 Framework used in this thesis-------------------------------------------------------72 LITERATURE REVIEW-------------------------------------------------------------------------------9

2.1 T !"#$ "F %#&'( !)T!'*+"'* --------------------------------------------------------------------,Table 2 &nso s Product-/arket rowth matrix-----------------------------------------10

)*.+.+ arket penetration$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ + )*.+.* arket development$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+ )*.+. Product development$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+ )*.+./ &iversification$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

2.2 %#&'( !)T!'*+"' *T#&T! +!* +' T ! P /& !3T+ &4 +'(3*T#$ ------------------------11 )*.*.+ arket penetration 0 Extended release !"#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+* )*.*.* arket development 0 1ndication expansion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ + )*.*. Product development 0 2econd generation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+/ )*.*./ &iversification 0 %ixed$dose combination and over$the$counter$$$$$$$$$$$$$$$$$$$$$$$$+3 )*.*.3 (ther product$related strategies 0 4ew molecular entity$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+5 )*.*.5 'onclusion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table 5 onceptual ramework--------------------------------------------------------------16Table Possible patent term extensions----------------------------------------------------17

2.5 %#&'( !)T!'*+"' *3 !** ------------------------------------------------------------------------17

)*. .+ 6dvantages and disadvantages of brand extension strategies$$$$$$$$$$$$$$$$$$$$$$$$$$$+7 Table 8 &d9anta es and disad9anta es brand extensions--------------------------------1:2. % #&'( !)T!'*+"' *3 !** +' T ! P /& !3T+ &4 +'(3*T#$ ----------------------------1,

)*./.+ arket penetration 0 Extended release$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+8osts o the extended release strate ;------------------------------------------------------------1,%ene its o the extended release strate ;--------------------------------------------------------1,#isks o the extended release strate ;------------------------------------------------------------20onclusion------------------------------------------------------------------------------------------- 20

)*./.* arket development 0 4ew indication$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ *+osts o a new indication strate ;----------------------------------------------------------------21%ene its o a new indication strate ;-------------------------------------------------------------21#isks o a new indication strate ;----------------------------------------------------------------22

onclusion------------------------------------------------------------------------------------------- 22 )*./. Product development 0 2econd generation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$**

1


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osts o a second eneration strate ;------------------------------------------------------------25%ene its o a second eneration strate ;---------------------------------------------------------25#isks o a second eneration strate ;------------------------------------------------------------25onclusion------------------------------------------------------------------------------------------- 2

)*././ &iversification 0 %ixed$dose combination and over$the$counter$$$$$$$$$$$$$$$$$$$$$$$$*/osts o a ixed-dose combination and o9er-the-counter strate ;----------------------------2%ene its o a ixed-dose combination and o9er-the-counter strate ;-------------------------28#isks o a ixed-dose combination and o9er-the-counter strate ;----------------------------28onclusion------------------------------------------------------------------------------------------- 28

3 METHODOLOGY------------------------------------------------------------------------------------- 27

5.1 / !T "( ---------------------------------------------------------------------------------------------- 27 ) .+.+ 'ase study$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ) .+.* 'ase study in this research$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$*9 ) .+. 2ales value$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

5.2 ( &T& &'&4$*+* ---------------------------------------------------------------------------------------514 RESULTS------------------------------------------------------------------------------------------------ 33

.1 < +T +' - &*! &'&4$*+* -----------------------------------------------------------------------------55 )/.+.+ Effexor Effexor !"#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Patent expir; ! exor )# and its considered strate ies----------------------------------------5onclusion------------------------------------------------------------------------------------------- 5

)/.+.* Pro ac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Patent expir; Pro=ac and its considered strate ies----------------------------------------------58onclusion------------------------------------------------------------------------------------------- 56

)/.+. Prilosec$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Patent expir; Prilosec and its considered strate ies--------------------------------------------57onclusion------------------------------------------------------------------------------------------- 5:

)/.+./ ;antac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Patent expir; >antac and its considered strate ies----------------------------------------------5,

onclusion------------------------------------------------------------------------------------------- 5, )/.+.3 'laritin$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Patent expir; laritin and its considered strate ies--------------------------------------------- 0onclusion------------------------------------------------------------------------------------------- 1

.2 #"** - &*! &'&4$*+* ------------------------------------------------------------------------------- 1Table 6 onsidered brand extension strate ies-------------------------------------------- 2Table 7 Final brand extension strate ies---------------------------------------------------- 2

.5 * &4!* ?&43! !?&43&T+"' -------------------------------------------------------------------------- 5 )/. .+ Effexor !"$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table : *ales 9alue ! exor )# @?erispanA ?"'&B-------------------------------------- )/. .* Pro ac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table , *ales 9alue Pro=ac @annual reportsB----------------------------------------------- 8 )/. . Prilosec$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table 10 *ales 9alues Prilosec @annual reportsB------------------------------------------- 6 )/. ./ ;antac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table 11 *ales 9alues >antac @external sourceB-------------------------------------------- 7 )/. .3 'laritin$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table 12 *ales 9alues laritin @annual reportsB-------------------------------------------- : )/. .5 'onclusion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Table 15 "9er9iew h;potheses--------------------------------------------------------------805 CONCLUSION------------------------------------------------------------------------------------------51

RECOMMENDATIONS------------------------------------------------------------------------------ 52

6.1 / &'& !#+&4 +/P4+ &T+"'* ------------------------------------------------------------------------826.2 # !*! +/P4+ &T+"'* ----------------------------------------------------------------------------82

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7 LIMITATIONS AND FUTURE RESEARCH----------------------------------------------------54

7.1 4 +/+T&T+"'* ------------------------------------------------------------------------------------------ 87.2 F 3T3#! #!*! -----------------------------------------------------------------------------------88

REFERENCES---------------------------------------------------------------------------------------------- 57

A!!ENDICES----------------------------------------------------------------------------------------------- 2

&PP!'(+) + P/& !3T+ &4 +'(3*T#$ ------------------------------------------------------------62&PP!'(+) ++


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1 INTRODUCTION

The pharmaceutical industr; 1 is acin di icult times.


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a di icult time when the; ace patent expir; and there ore it is increasin l; important or

pharmaceutical companies to de end their re9enues @%ruceA 2005B. This research is there ore

ocused on brand name dru s that ace patent expir; and their strate ies to o9ercome the

competition o eneric dru s.

This research is mainl; ocused on what pharmaceutical companies do to maintain their

re9enues when the; ace patent expir;. Pharmaceutical companies o brand name dru s ha9e

to ind a wa; to maintain their sales 9alues and o9ercome the competition o eneric dru s

when patent expiration is approachin . Pharmaceutical companies ha9e di erent strate ies

that the; could useC promotional strate iesA product-related strate iesA pricin strate iesA

partnerships and the le al route @& rawal and ThakkarA 1,,7B. This research is ocused on the

product-related strate ies. Product-related strate ies are strate ies that mainl; contain

alterations in the dru itsel . +t is interestin to explore the t;pes o product-related strate ies

pharmaceutical companies use to extend the li ec;cle o a dru A thus o9ercomin a sales

decline a ter patent expir;. +n addition to the strate ; itsel A the timin o the strate ; is also

important. +n this researchA the last three ;ears o a patent term are important. The strate ;

implemented in the be innin o the li ec;cle is not seen as a strate ; to o9ercome patent

expir;A rather it is seen as a strate ; to broaden a consumer base or to o er a better product. &

strate ; implemented at the end o the patent term is seen as a strate ; to extend the patent

termA or protect the sales. There oreA a three ;ear period is chosen. !xamples o product-

related strate ies in the pharmaceutical industr; areC extended release @)#BA indication

expansionA second enerationA ixed-dose combinations @F( BA and o9er-the-counter @"T B

@D9esicA 200:B. These examples are shown in Table 1. &n )# is a renewed dru where the

acti9e in redient is released slower in the bod;E it contains the same acti9e molecule. &n

indication expansion is a strate ; in which a dru is used or a new indication. & second

eneration is a strate ; in which a dru is renewed or the same market but with a di erentormulation. & F( in9ol9es a new product with combined acti9e in redients that can be

launched in a new indication market. &n "T dru is a dru which is sold directl; to

consumers without the need or a prescription.


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patent expiration. To sustain brand e uit; pharmaceutical companies can de ine a brand

le9era e strate ;A usin the ori inal brand to de9elop a new or similar product and introduce it

to the market @TauberA 1,::B. &ccordin to %alachander and hose @2005BA companies are

moti9ated to le9era e a brand s e uit;A and the; do this b; proli eration o brand extensions.

%rand extension theor; discusses that a brand can be extended into the same marketA or to a

new market. & compan; can come up with a completel; new productA or the; can sta; with

the old product. +n Table 1 ;ou can ind the basic ramework used in this research which

combines the product-related strate ies or pharmaceutical companiesA as described abo9eA

with the product-market matrix o &nso @1,8:B.

Table 1 Framework used in this thesis

The product-related strate iesA or brand extension strate iesA are illustrated with the example

o the brand name dru &dalatA which has the acti9e in redient calcium-anta onist ni edipine

@D9esicA 200,B. This dru was irst used or h;pertension in 1,78A howe9er sales could be

increased with new ormulations @*andner and >ie elbauerA 200:B. These new ormulations

were called 'i edipine-#etard and 'i edipine-"ros and were once-dail; dosin dru s.


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(espite the amount o research in this areaA the research on li ec;cle extension strate ies

pharmaceutical companies actuall; ollow when acin patent expir; and whether these

strate ies are e ecti9e is not thorou hl; studied @ rabowski and ?ernonA 1,,2B.

The research uestion consists o two maHor elements. FirstA it is acknowled ed that

pharmaceutical companies use brand extension strate ies when the; ace patent expiration. *o

the irst uestion to be answered isC


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2 LITERATURE REVIEW

+n this literature re9iew the theor; o brand extensions will be thorou hl; e9aluated. FirstA a

description o the theor; on brand extensions will be i9en in order to de9elop a ramework.

*econdA a thorou h e9aluation o brand extensions in the pharmaceutical industr; will extend

the existin ramework into a conceptual ramework or possible brand extensions in the

pharmaceutical industr;. +n the third para raphA an e9aluation o ad9anta es and

disad9anta es o the strate ies will ollow and this will result in h;potheses. The conceptual

ramework in combination with the h;potheses will be used in the empirical part o this

research.

"2#1 T$%&'( &) *'+, %./%,0 &,0

&lthou h in the research o Tauber @1,::B it was stated that Theodore amble was the irst

who wrote about brand extensions in 1,67A &nso @1,8:B had also written about brand

extensionsA or di9ersi ication strate ; what it was acknowled ed back then. &ccordin to

&nso @1,8:BA a di9ersi ication strate ; is a speci ic kind o shi t in the product-market

composition o a compan; to dri9e uture rowth. &nso describes our di erent strate ies

or business rowthA our product-market strate iesE market penetrationA market de9elopmentA

product de9elopmentA and di9ersi ication. &lthou h there are a 9ariet; o 9er; di erent

models to describe real-li e situations @&nso A 1,8:BA this rowth model is used as a basis or

this research. !xamples o di erent extensions mentioned in the literature areC 'o9el 9ersus

older line extensionsA non-branded 9ersus brandedA co-branded 9ersus sel branded etc. @ on

et al.A 2008B. *imilarl;A as mentioned in the introductionA there are se9eral li ec;cle extension

strate ies that pharmaceutical companies can use which can be placed in the our uadrants o this modelA these di erent strate ies will be thorou hl; e9aluated in para raph 2.2.


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Table 2 &nso s Product-/arket rowth matrix

2.1.1 /arket penetration

/arket penetration is a product-market rowth strate ; in which the same product is used to

sell the product in the same marketA see Table 2. +n other wordsA the compan; is not departin

rom its ori inal product-market strate ;A it is an incremental product. &n example o such a

strate ; could be that there is a marketin campai n which stimulates current customers to

bu; the current productA expandin its customer base. "r the strate ; in9ol9es indin new

customers which are in the same market but did not use the product ;et. $etA another example

is a small chan e in the product which does not reall; chan e the product but i9es it more

tasteA or is a more e ecti9e product which enerates more consumers.

2.1.2 /arket de9elopment

/arket de9elopment is a product-market rowth strate ; in which the same product is used toser9e a di erent marketA see Table 2. " ten the product undertakes a small alteration in order

to ser9e the new market. &n example o such a strate ; is that a product which is mainl;

reco nised as a product or older people is now repositioned as a product or ;oun er people

as well. *uch a strate ; is used to ain more market share b; broadenin the consumer base.

2.1.5 Product de9elopment

Product de9elopment is a product-market rowth strate ; in which the existin market isser9edA howe9erA a newerA si ni icantl; impro9ed product is launched. This in9ol9es next

eneration products. &n example o such a strate ; is that a product is impro9ed or the same

market in order to sell more. #e ularl;A the old product is not sold an;moreA onl; the new and

impro9ed product is sold to the customers. owe9er it is possible that the old product is still

sold next to the new and impro9ed product. People who do not want to switch to the new

product can still bu; the older 9ersion. This strate ; is used to keep customers satis ied and to

sta; ahead o the competition.

,


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2.1. (i9ersi ication

(i9ersi ication is a product-market rowth strate ; in which a new product is de9eloped to

ser9e a complete new market. &n example is that an established brand de9elops a new product

that ser9es a di erent market than what it was ser9in be ore. These radical inno9ations

re uire a lot o research and de9elopment.

&ll our strate ies are paths which companies can take toward uture rowth @&nso A 1,8:B.

These our strate ies can take di erent orms in di erent industriesA and this is the reason that

the possible brand extension strate ies or the pharmaceutical industr; are e9aluated next in

order to ad9ance the existin ramework @see Table 2B into a conceptual ramework or the

pharmaceutical industr;.

"2#2 B'+, %./%,0 &, 0/'+/% %0 , /$% $+' + %6/ + , 60/'(

*ince 1,: A pharmaceutical companies o prescription dru s ace stron competition o

eneric dru manu acturers. +n the literature there is extensi9e research on di erent aspects o

the pharmaceutical industr;. +n the research o a9es et al. @1,,1B the competiti9e

en9ironment a ter patent expir; is studied. The research re9eals that prices o eneric

competitorsA when the; enter the marketA are much lower in comparison to the branded dru s.

This is a point o caution or pharmaceutical companies. +n this research pricin issues are not

examined. Possible le al strate ies to extend the patent term o a dru when it aces patent

expir; is thorou hl; researched b; %hat @2008B and will not be researched here. &nother le al

route which will not be urther discussed here is the use o trademarks. Trademarks last or a

li etime and i9e the manu acturer le al protection or a brand nameA lo o etc. Trademarks

di erentiate the product @ hudno9sk;A 1,:5B. eneric competition cannot use the brand name

o the dru and there ore cannot make use o the ac uired brand lo;alt; @*tatmanA 1,:1B. &

ourth topic o research is li ec;cle mana ement @4 /B @D9esicA 200:B. The paper o D9esic

re9iews what pharmaceutical companies could do to maximise their return on in9estment.

(ue to stron re ulations and increasin competition in the industr;A pharmaceutical

companies should put reater emphasis on the product s li ec;cle. There is a need or 4 /E

when and how to mana e each sta e o the li ec;cle. & critical sta e in the li ec;cle is the

expiration o a patent which needs to be mana ed. 4 / strate ies will allow the companies

to maximise their return on in9estment @D9esicA 200:B.

10


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&s mentioned in the introductionA this research is ocused on product-related strate iesA brand

extension strate ies. ie elbauerA 200:B. There are a lot o di erent options or

pharmaceutical companies to pursue. &s mentioned in the introduction the promotional

strate iesA pricin strate iesA partnerships and the le al route are be;ond the scope o this

research. There oreA onl; the product-related strate iesA the brand extension strate iesA that

pharmaceutical companies can ollowA will be elaborated on.

The possible brand extension strate iesA as mentioned in the introductionA areC )#A indication

expansionA second enerationA F( A and "T . These brand extensions strate ies will be

thorou hl; explained next and will be linked to the brand extension dimensions o &nso

which will result in a conceptual ramework or this research @see Table 5B.

2.2.1 /arket penetration !xtended release @)#B

&n )# is a brand extension strate ; where a pharmaceutical compan; in9ents a dru which

dissol9es slowl; and releases the dru o9er time inside the bod; o the patient. "ther uses o

the name )# areC Time release technolo ;A also known as sustained-release @*#BA sustained-

action @*&BA extended-release @!#A )#A or )4BA time-release or timed-releaseA controlled-

release @ #BA modi ied release @/#BA and continuous-release @ # or ontinB @Time release

technolo ;B. This research will use )# as an o9erall name or this strate ;. )# means that

the dru is released o9er timeA allowin patients to take the dru Hust once dail; rather than

twice or e9en thrice dail;. +n eneralA it is the same dru or the same market but with a

di erent use o the dru A a so-called incremental chan e o the dru . &n )# is o ten used

earlier in the li ec;cle o a dru A so not at the time o patent expir;. &n example o an )#

strate ; is ! exor )# rom the pharmaceutical compan;


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;ears o extension is i9en with an )# strate ;A howe9er this does not necessaril; ha9e to be

the case. !9er; dru is indi9iduall; e9aluated b; the F(&A this includes all possible brand

extensions.

This )# strate ; replaces the market penetration strate ; in the product-market rowth

matrix o &nso . &s with the market penetration strate ;A the )# strate ; in9ol9es the same

product and ser9es the same marketA onl; an incremental chan e takes place.

2.2.2 /arket de9elopment +ndication expansion

&n indication expansion @herea ter re erred to asC new indicationB strate ; is a brand

extension strate ; in which a pharmaceutical compan; demonstrates that the dru is e ecti9e

or other conditions and diseases than the ori inal dru was ori inall; patented or @*andner

and >ie elbauerA 200:B. The aim o this strate ; is to ser9e a complete new marketA in this

case a market with a di erent diseaseA and secure market share. & si ni icant amount o

s;stematic research and de9elopment has to be in9ol9ed in this strate ; @D9esicA 200:B. This

strate ; is o ten pursued earl; in the li ec;cle o a dru . The strate ; behind *ildena ilA rom

the pharmaceutical compan; P i=erA is an example o such a strate ;. This dru was irst used

to treat &n inaA un ortunatel; ailin in that area. owe9erA the dru was later appro9ed or

use to treat !rectile (;s unction @!(B @*andner and >ie elbauerA 200:B.


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2.2.5 Product de9elopment *econd eneration

& second eneration strate ; is a brand extension strate ; which includes new ormsA new

s;nthesis techni ues and new dosa es o the ori inal dru . & second eneration strate ; is

sometimes called re ormulation launch @D9esicA 200:B. & second eneration is a new andimpro9ed dru . +t is si ni icantl; di erent rom the irst eneration but ser9es the same

consumers as the irst eneration.


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2.2. (i9ersi ication Fixed-dose combination and o9er-the-counter


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2.2.8 "ther product-related strate ies 'ew molecular entit;

& new molecular entit; @'/!B is a strate ; where a pharmaceutical compan; in9ests in

research and de9elopment to disco9er a complete new dru or a new market. This inno9ati9e

strate ; is costl; @approximatel; J800 to J:00 million @ onle;A 2008 and (i/asi et al.A

2005BB and takes a lot o time due to testin and meetin other patent re uirements. %road

claims or new dru s are di icult to make due to the limited data one can achie9e. (espite the

act that there is a need or an in9estmentA '/! s are worthwhile disco9erin due to a lon

patent period. &n example o a '/! is 4ipitorIA a dru which is appro9ed b; the F(& in

1,,6 and is used or treatment o hi h cholesterol @3* Food and (ru &ssociationB. This

'/! strate ; is a product-related strate ; due to the act that it in9ol9ed disco9erin a new

product. The '/! strate ; howe9er is not a brand extension strate ; because the pharmaceutical compan; is not tr;in to extend the li ec;cle o an existin brand name dru .

There oreA the '/! strate ; will not be discussed urther in this research.

2.2.6 onclusion

The i9e possible brand extension strate ies in the pharmaceutical industr; described abo9e

are depicted in the product-market rowth matrix below. +n Table 5A all our product-market

rowth strate ies are positioned in the our uadrants. 3nder these our product-marketrowth strate ies the i9e brand extension strate ies o the pharmaceutical industr; are

depicted as well. This combination results in the conceptual ramework or this research.

Table 5 onceptual ramework

18


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+n the abo9e para raphs the di erent possible patent extensions are described as well. &

summar; o the possible patent extensions are depicted in Table .

Table Possible

patent term extensions

"2#3 B'+, %./%,0 &, 06 %00

*uccess o a brand extension is o ten a matter o whenA where and how to extend the brand.

*uccess ul brand extensions ha9e to be well-planned and implemented. 'ew products ha9e a

hi h risk o ailure.


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approximatel; J800 to J:00 million @ onle;A 2008 and (i/asi et al.A 2005BB. & i th

ad9anta e o brand extension strate ies is that it could increase market co9era e b; ainin

new customersA dependin on the strate ; used. & sixth ad9anta e is that with brand extension

strate ies the brand can be re9italisedA renewin the ener ; and interest or the brand @DellerA

200:B. Finall;A it could pa9e the wa; or subse uent brand extensions.


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"2#4 B'+, %./%,0 &, 06 %00 , /$% $+' + %6/ + , 60/'(

+n the pharmaceutical industr;A the abo9e described ad9anta es and disad9anta es could be

apparent as well. +n this para raph ad9anta es and disad9anta es o each o the our brand

extension strate ies in the pharmaceutical industr; will be discussed. The bene its

@ad9anta esB and risks @disad9anta esB will be ar ued and will result in h;potheses or each

brand extension strate ;.

2. .1 /arket penetration !xtended release

The strate ; in the irst uadrant o the conceptual rameworkA see Table 5A is market

penetration. This strate ; in9ol9es the )# strate ; in the pharmaceutical industr;. This

strate ; is concerned with a slower release o the dru in the bod; o a patientA resultin in an

intake o the dru onl; once-a-da; instead o twice or e9en more times per da;. This strate ;

in9ol9es a product that is ser9in the same market with the same productA tr;in to et them

more in9ol9ed with the product in order to keep the patients with the dru and there ore with

the compan;A also a ter a dru patent expires. &ppl;in or a patent with this strate ; could

lead to a patent extension o up to three ;ears @%hatA 2008BA see Table .

'osts of the extended release strategy


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consumers. FurthermoreA an )# i9es the brand name dru a boostE people are aware o the

dru and will be on top o the mind o consumers. Finall;A when the )# is success ul this

pro9ides possibilities to introduce subse uent extensions.

"isks of the extended release strategy& risk that is in9ol9ed with an )# is the potential ailure o the extension.


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up to i9e ;ears or a complete new patent o twent; ;earsA see Table . This strate ; has the

chance to et the hi hest possible patent extension in all strate ies researched here and

there ore has the potential to be 9er; e ecti9e.

'osts of a second generation strategy&ccordin to %hat @2008BA de9elopment o a second eneration dru in9ol9es expensi9e

clinical and other studies. ompared to a '/! the costs in9ol9ed in a second eneration dru

are not that hi hA howe9er this strate ; needs a considerable in9estment. &lthou h it needs

considerable in9estment it could pa; o due to the act that a patent extension o up to i9e

;ears is possible. /arketin and distribution costs can be e ecti9el; mana ed b; usin the

ori inal brand name dru andKor trademark to promote the second eneration dru . & ood

example is 'exiumA &stra>eneca promoted 'exium as the Npurple pill A Hust like PrilosecA andas a better ormulation o Prilosec. The; build upon the ori inal brand e uit; @ onle;A 2008B.

Benefits of a second generation strategy

First o allA a success ul second eneration strate ; could ha9e a positi9e e ect on the ima e

o the ori inal brand name dru or e9en on the pharmaceutical compan;. *econdl;A a second

eneration dru has a lower percei9ed risk b; consumers due to the act that the dru is or

the same disease and is known b; consumers. urrent customers are amiliar with the dru

and the percei9ed risk o the impro9ed dru is there ore lower. Patients trust the brand and

there ore its producer. & third bene it is that the possible extension o the patent could create

an increase in the return on in9estment or the brand name dru because it increases the

li etime o the dru . Finall;A the brand could be re9italised throu h the second eneration

dru A new ener ; is i9en to the brand name dru .

"isks of a second generation strategy

& second eneration dru has the potential o ailureA or to be less success ul than the ori inal

brand name dru and what was irst thou ht.


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timin is 9er; important.


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&n "T strate ; is not that costl; because the brand name dru is oin o patent and is sold

in the o9er-the-counter marketA o ten in a milder 9ersion. %ecause a milder 9ersion o a dru

is launchedA there is not a lot o research needed.

Benefits of a fixed$dose combination and over$the$counter strategy& F( strate ; is a challen in strate ; in which a new product is launched or new

customers. %ecause it is a complete new productA althou h existin compounds are usedA the

product is not bene itin rom the existin product that much. There oreA a ood option or a

F( is that it uses the name o the brand name dru in order to ha9e the possibilit; to

re9italise the brand with a new product.


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The "T strate ; has a ood chance o de eatin eneric dru s that come into the market and

that is bene icial or the pharmaceutical compan;. & pharmaceutical compan; will there ore

onl; use the "T strate ; when there is no other opportunit; to extend the li ec;cle o the

brand name dru .

The abo9e leads to the ollowin h;pothesis or these two strate iesA

a C +n the last three ;ears prior to patent expir;A pharmaceutical companies will not

use the F( strate ;.

b C ombined sales o the branded dru and F( dru are more than 60M o the

ori inal sales 9alue o the brand name dru prior to patent expir;.

c C +n the last three ;ears prior to patent expir;A pharmaceutical companies will use

the "T strate ; onl; when the; do not use one o the other brand extension strate ies

researched here.

d C ombined sales o the branded dru and its "T dru are more than 60M o the

ori inal sales 9alue o the brand name dru prior to patent expir;.

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3 METHODOLOGY

This research is conducted in order to determine what kind o brand extension strate ies

pharmaceutical companies use when their brand name dru ace patent expir;. +n this research

acin patent expir; is seen as three ;ears be ore patent expir; until the actual patent expir;

date. Furthermore this research studies whether these strate ies are e ecti9e. +n order to

answer these uestions a case stud; is conducted. & case stud; in which existin cases are

e9aluated to ind out what strate ies are ollowed b; pharmaceutical companies when the;

ace patent expir;. Therea ter sales 9alues o these dru s will be e9aluated. This methodolo ;

chapter will elaborate on the chosen methodA this will include Husti ication o the methodAexplanation o the methodA and how it is conducted.

"3#1 M%/$&

The method used in this research is the case stud; method. The case stud; method is a method

which is widel; acknowled ed as a teachin de9ice @Perr;A 1,,:B. &lthou h it is not o ten

used in marketin science @%onomaA 1,:8BA it could be used as a research methodolo ; @$inA

1,, B and is ad9ocated as a 9alid research strate ; in marketin @%onomaA 1,:8B. ase stud;

is 9er; use ul when an obHect in its real-li e context is researched @$inA 1,, B. +n this researchA

the strate ies ollowed b; pharmaceutical companies are studiedA which is a real-li e context

situation. &lthou h it is not a common used research methodA the case stud; is used in this

research.

5.1.1 ase stud;

& case stud; is de ined as O QR a description o a mana ement situation.S @%onomaA 1,:8BA or

O QR a research strate ; which ocuses on understandin the d;namics present within sin le

settin s.S @!isenhardtA 1,:,BA or O QR an empirical in uir; that in9esti ates a contemporar;

phenomenon within its real-li e contextA especiall; when the boundaries between phenomenon

and context are not clearl; e9ident.S @$inA 1,, B. ase studies combine di erent wa;s o data

sourcesA namel; inter9iewsA uestionnairesA archi9esA obser9ationsA inancial dataA market

per ormance dataA and competiti9e data @!isenhardtA 1,:,E %onomaA 1,:8B. & case stud; has

9arious aimsC description o a situationA testin existin theor;A or enerate theor; @!isenhardtA

1,:,B.

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& case stud; research has se9eral drawbacks. FirstA accordin to (ul and ak @200:BA a case

stud; is a ualitati9e research method and not a statistical research method. *econdl;A a case

stud; uses a small number o casesA whereas other methods use a lar er number o data @(ul

and akA 200:B. Finall;A cases are sometimes o9erl; complex which result in di icult

interpretation o the results @!isenhardtA 1,:,B. (espite the drawbacksA there are some bene its

as well. First o allA a case stud; uses multiple data sources which pro9ide a better and more

comprehensi9e picture o the situation under stud; @%onomaA 1,:8B. *econdA case studies

re uire direct obser9ation and there ore i9e a true 9ersion o realit; @%onomaA 1,:8B. Finall;A

a case stud; i9es a description o se uential steps in a mana ement situation which pro9ides

a clear representation o the situation @%onomaA 1,:8E (ul and akA 200:B.

&ccordin to !isenhardt @1,:,BA the ideal number o cases does not exist. owe9er !isenhardt

@1,:,B recommends usin between our and ten casesA with more than ten cases the

in ormation ets too excessi9e to cope with.

5.1.2 ase stud; in this research

+n this researchA a case is de ined as a description o a mana ement situation o a brand name

dru o a pharmaceutical compan; that is acin patent expir;. The stud; o the case will

result in a clear ima e o the situation in which the pharmaceutical compan; is operatin in

and what strate ; is ollowed in that situation. /oreo9erA existin case studies are used to

e9aluate situations o brand name dru s o pharmaceutical companies. The aim o the case

stud; conducted here is both a description o the situation and testin the h;potheses which

were established rom the literature re9iew. The case studies used are a thorou h description

o a real-li e situation. From this real-li e situation a thorou h description is i9en. From the

description a speci ic ollowed strate ; can be obtained which are e9aluated in li ht o the

brand extension theor;A as described in the literature re9iew. The h;potheses about how o ten

a strate ; is used can be tested to see how man; times a certain strate ; is ollowed. Testin

the h;potheses about sales 9alues can be tested with an e9aluation o the sales 9alues o the

dru in uestionA which will be thorou hl; explained in the next para raph.

(espite the act that case stud; research is not o ten used in marketin researchA the case

stud; is used in this research. !9en thou h it is not o ten used se9eral researchers identi ; the

case stud; research as a 9alid method in marketin @%onomaA 1,:8E $inA 1,, B. +n this

27


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research it is needed to see what kind o strate ies pharmaceutical companies are ollowin

when their brand name dru ace patent expir;. To stud; what pharmaceutical companies are

doin A case stud; is a wa; to ind de inite answers. uantitati9e data is not 9er; unctional in

this situation because it does not i9e a detailed description o a chosen method. &lthou h

uantitati9e data can pro9ide how man; times a brand extension strate ; is used it cannot

pro9ide in-depth in ormation about wh; and which brand extension strate ; is ollowed when

a brand name dru is acin patent expir;. There are other methods to ind ualitati9e dataA

such as inter9iews and obser9ations. The use o case studies combines all these di erent kinds

o collectin ualitati9e data. There ore it is the chosen method in this research.

+n this research i9e existin cases will be studied which are obtained rom the !uropean ase

learin ouse @! B database. The literature su ests that ideall; between our to ten

cases are used. The choice to choose i9e cases is that the cases are a9ailable in the database

and there ore do not ha9e to be obtained b; inter9iewin A obser9ationA etcetera. The !

database is a database or case studies. These case studies can be used or teachin and

learnin @! A 2011B. &lthou h these cases are mainl; used or teachin A the cases are well

de9eloped and a thorou h e9aluation o the brand name dru . These cases are there ore 9er;

use ul or this research. 'ext to the case studies there will be searched or more in ormation

on strate ies in order to a9oid the possibilit; o o9erlookin certain acti9ities o

pharmaceutical companies a ter the case is written. +n ormation such as annual reports and

websites are in ormati9e used sources.

ases will be ac uired rom lar e blockbuster dru s which lost their patent a ter the

introduction o the


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strate ies are considered to use and sometimes more than one strate ; is used to o9ercome

patent expir;. The strate ; which is used b; a pharmaceutical compan; should be clear orm

the case in order to be chosen or this research.


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uestion. &nnual reports o the pharmaceutical companies and other external sources are

e9aluated to ac uire sales 9alues o the brand name dru s.

To e9aluate the sales 9alue o the particular brand name dru under stud; there can be seen

what the chan e was in sales 9alue durin the time that a brand extension strate ; was used.

The sales 9alues o a brand name dru rom one ;ear prior to the introduction o the brand

extensions strate ; will be compared with the combined sales 9alue one or two ;ears a ter the

introduction o the brand extension strate ; o both the brand name dru and the brand

extension. This i9es a ood understandin on whether the ollowed brand extension strate ;

is success ul in maintainin the sales 9alues. &s mentioned be oreA a sales 9alue decrease o

up to 0MA or maintained sales o at least 60MA is seen as a success ul brand extension

strate ;. & ter the sales 9alue e9aluation the second part o the h;potheses can be tested with

the results.

51


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considered to be the bi est marketin e ort b; an; compan; to promote an anti-depressant

dru in colle e campuses. ! exor )# became the best-sellin dru in the anti-depressant

market with net re9enues o more than J2 billion rom 2002 till 200: @/ikkilineniA 200,B.

Patent expiry Effexor !" and its considered strategies+n 200,A ! exor )# was nearin its patent expir; date which was in 2010. ! exor )# was a

ke; re9enue earner o


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ph;sicians to prescribe the dru . (ue to the act that also non-ps;chiatrists ph;sicians were

able to prescribe the dru the costs o treatin depression and other mental illnesses are

decreased and at the same time the number o patients who had access to treatment is

increased. *imultaneousl; with the launch o Pro=ac the whole compan; was ull; educated

about depressionA serotoninA and the practise o ps;chiatr; in eneral.


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order to eliminate the side e ects @increased anxiet;A restlessnessA insomniaA a itationA and sexual

d;s unctionB. The **#+-8 T2 can be seen as an )# strate ;. %usiness de9elopment opportunities

were tar eted upon in-license compounds or the treatment o depression rom other pharmaceutical

companies. These business de9elopment opportunities cannot be placed in one o the our brand

extension strate ies. ;mbalta is a serotonin and norepinephrine receptor inhibitor @*'#+B that was

de9eloped or the treatment o maHor depression disorder @/((B. "n top o thatA people at !li 4ill;

thou ht that it could also be de9eloped or the treatment o pain. The potential o this dru is that it can

be used both or depression and pain. ;mbalta is a new ormulation o Pro=ac and there ore can be

seen as a second eneration strate ;.

+n 2000A be ore the '&T launched their possible extensions and one ;ear be ore patent expir;A !li 4ill;

alread; introduced two new indication dru s o Pro=ac in order to broaden their consumer roup.

These new indications were Pro=ac weekl; and *ara em. Pro=ac weekl; was introduced or

chronicall; depressed patients and *ara em was introduced or women @DramerA 2000B. %oth dru s

were not extendin the patent o Pro=acA which expired in 2001. $etA the extensions were ocused on

broadenin the consumer base.

+n 200 A both ;mbalta and *;mb;ax were launched. %oth are considered second eneration dru s.


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related indications. !xcessi9e acid emission can lead to the ollowin disordersC duodenal

ulcersA astric ulcersA astroesopha eal re lux disease @ !#(A or commonl; known as

heartburnBA and patholo ical h;per secretor; conditions. Prilosec is treatin the abo9e

mentioned disorders and is pro9ed to be hi hl; e ecti9e. Prilosec was irst onl; marketed to

specialists. & ter almost ten ;earsA in 1,,7A the compan; launched a direct-to-consumer

@(T B campai n. Throu h this campai n the dru ac uired more than 50 per cent o the

antiulcer prescription market in 1,,:. &stra>eneca introduced a patient riendl; marketin

campai n b; namin Prilosec the NPurple Pill . &d9ertisin with this name was 9er;

success ul. +n 2000A Prilosec contributed more than a third to the re9enue o &stra>enecaA

which meant that Prilosec was a 9er; important blockbuster dru or the compan;.

Patent expiry Prilosec and its considered strategiesPrilosec was acin patent expir; in "ctober 2001. owe9erA in 1,,:A 1,,, and 2000A

&stra>eneca iled suits a ainst se9eral eneric manu acturers or patent in rin ement. O+n

"ctober 2002A the 3* (istrict ourt or the *outhern (istrict o 'ew $ork ruled that two

&stra>eneca patents @N250 and N808B QR are 9alid until 2007.S @&stra>enecaA 2002B.

&stra>eneca appealed a ainst the rulin o non-in rin ement. &lthou h the patents are

extendedA other eneric manu acturers were permitted to brin the eneric dru s to the

market. +n (ecember 2002A the irst eneric omepra=ole was launched. &nd durin 2005Athree other eneric 9ersions were launched as well @&stra>enecaA 2005B. %ecause eneric

9ersions were launched in the marketA the ori inal date o patent expir; is applicable here. The

eneric 9ersions introduced can ha9e a ne ati9e impact on the sales 9alues. There ore the

initial patent expir; o 2001 will be used in this research as the patent expir; date o Prilosec.

+n 1,,8A &stra>eneca alread; brou ht to ether a roup o marketersA law;ers and scientists to come up

with a solution or the approachin patent expir; o Prilosec. The; called themsel9es the N*hark Fin

proHect . The; came up with nearl; i t; solutions @ arrisA 2002B. +n earl; sprin 2001A &stra>eneca s

!" had se9eral options le t to considerC +ntroducin a second eneration prescription dru branded

as 'exiumA introducin an &stra>eneca eneric omepra=oleA andKor an "T 9ersion o omepra=ole.

'exium is a new ormulation o Prilosec s acti9e in redientA called esomepra=ole ma nesium.


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+n the endA the inal decision was to et appro9al o the F(& to market the second eneration dru

'exium and extend the patent. +n 2000 &stra>eneca ot appro9al to market 'exiumA in 2001 the; had

appro9al in the 3*& and launched 'exium in 52 countries. &stra>eneca launched a marketin

campai n in which the; wanted to switch consumers rom PrilosecK4osec to 'exium. "n top o this

launchA the proHect team was able to keep eneric dru s out o the market until 2005. +n 2005A

&stra>eneca ot appro9al or an "T 9ersion o omepra=oleA named Prilosec "T A which was priced

under other eneric 9ersions o Prilosec. +n the case o +krama @200:B it is written that Oanal;sts elt

that the compan; had succeeded in its li ec;cle mana ement strate ;.S @+krama and Purka;asthaA

200:B.

'onclusion

Finall;A &stra>eneca considered three strate ies and decided to use two o them. The irst strate ;

used was a second eneration strate ;A 'exiumA which was launched in 2000A one ;ear be ore patentexpir;. Therea terA in 2005A &stra>eneca used another strate ; to maintain salesA Prilosec "T A an

"T strate ;. owe9erA the "T 9ersion o Prilosec is not considered as a strate ; to o9ercome

potential sales decline caused b; the patent expir; o Prilosec because Prilosec "T was launched in

2005 which is two ;ears a ter the introduction o the other brand extension strate ; 'exium. "n top o

that Prilosec "T does not pro9ide patent term extension. There oreA 'exium is considered the

strate ; which &stra>eneca used to o9ercome patent expir; which is a second eneration strate ;.

.1. >antac

%ased onC &n elmar and PinsonA 1,,2 and 1,,5

>antac is a dru rom the pharmaceutical compan; laxo*mithDline and was launched in

1,:1 in the 3nited Din dom and in 1,:5 in the 3*&. >antac s eneric nameA or acti9e

in redientA is ranitidine h;drochloride @ranitidineB. "ther brand names o >antac areC &ntakA

&=antacA #aniplexA >anticA *ostrilA #anidrilA Tri erA 3lsexA >inetacA oralenA uantorA

#anidinA and #anix. >antac is used as an antiulcer dru . >antac was the second dru in the

market and there ore had to pro9e itsel to be considered b; consumers. Ta ametA the irst

dru in the antiulcer marketA was doin a ood Hob and was not impressed b; >antac. *e9eral

months be ore launchA >antac started to introduce the dru to doctorsA tellin that the dru had

no ad9anta es o9er Ta ametA but worked aster. The introduction campai n positioned >antac

as a much asterA simpler and more speci ic dru A a new and more ad9anced antiulcer dru .

>antac ac uired market share all o9er the world. & ter the launchA in 1,: and 1,:8A research

was published in leadin medical Hournals. This research indicated that patients who

57


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experienced an ulcer recurrence durin the ;ear that ollowedA despite continuous treatmentA

was twice as hi h or the dru Ta amet as or >antac. >antac had a lobal market share o 2

per cent in 1,:,A which was ood considerin the competition in the antiulcer market. +n

1,::A PrilosecA as described in the pre9ious para raphA was launched b; &stra>eneca. +n

1,,2A >antac was still the number one dru in the pharmaceutical industr;. owe9erA the

battle between Prilosec and >antac was belie9ed to continue or the next i9e to ten ;ears.

Patent expiry ;antac and its considered strategies

>antac was acin patent expir; in 1,,7A e9en thou h laxo*mithDline was not inished with

>antac. +n 1,:6A laxo*mithDline had oreseen this upcomin e9ent and increased its number

o researchers with 5000 in three ;ears to disco9er another winnin dru . For almost twel9e

;ears >antac was a success ul brand and de9eloped a power ul brand with lar e brand e uit;.This was important when acin patent expir; althou h it was not enou h when eneric dru s

came into the market with a lower price. +n 1,,6A one ;ear be ore patent expir;A

laxo*mithDline launched a milder 9ersion o >antacA called >antac 78. >antac 78 was

a9ailable as an "T dru . @%ased onC The new business road testA 2007B

'onclusion

FirstA laxo*mithDline considered onl; one strate ;A namel; a new winnin dru . The;

increased the amount o researchers to ind this. owe9er when the patent expir; date was

approachin there was no new dru read; ;et and there ore another strate ; was consideredA

namel; an "T 9ersion o >antac. Finall;A >antac 78A the "T 9ersion o >antac was

launched in 1,,6A which is considered as the strate ; ollowed b; laxo*mithDline to

o9ercome patent expir; o their blockbuster dru >antac. This strate ; is an "T strate ;.

5:


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.1.8 laritin

%ased onC %err;A 200

laritin is a dru rom the pharmaceutical compan; *cherin -Plou hA which is mer ed with/erck in 200,. laritin is launched in 1,,5 as a prescription dru A while its patent was iled

in 1,:1. +ts eneric nameA or acti9e in redientA is loratadine. laritin is an antihistamine dru

which is used a ainst aller ies. laritin is used to relie9e patients o an anno;in cou hA

runn; noseA and water; e;es.


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indication and the second eneration strate ;. +n the antiulcer marketA Prilosec ollowed the

second eneration strate ; whereas >antac chose or an "T strate ;.

Table 6 onsidered brand

extension strate ies

The inal strate ies chosen b; the pharmaceutical companies are depicted in Table 7 and are

placed in the ramework o this research. & detailed moti9ation o wh; pharmaceutical

companies chose or the strate ies depicted in Table 7 cannot be obtained rom the used cases

directl;. owe9erA the pharmaceutical companies are most likel; to choose or brand

extension strate ies which are considered as most inanciall; and practical easible.

Pharmaceutical companies are most likel; to choose or strate ies which are expected to

succeed and be success ul.

Table 7 Final

brand extension

strate ies

1


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+n Table 7 ;ou can see that in our out o the i9e cases the brand extension strate ; o second

eneration is ollowed. +n two out o the i9e cases an "T strate ; is ollowed. +n one o

them the "T strate ; is pursuit but next to a second eneration strate ;A so not as a stand-

alone strate ;. +n one case the new indication strate ; is ollowed. From this anal;sis abo9e

we can accept ;pothesis 1aC 1n the three years prior to patent expiry, pharmaceutical

companies will use the !" strategy the least in comparison to the other brand extension

strategies researched here . From Table 7 can be seen that the )# strate ; is indeed used the

least b; pharmaceutical companies. !li 4ill; @Pro=acB introduced Pro=ac


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reports and other external sources. (ue to the act that not all 9alues were a9ailable in annual

reportsA there are some di erences in the t;pe o sales 9alues @e. . worldwide 9s. 3* onl;B.

owe9erA rom e9er; sin le dru the sales 9alues are obtained rom the same source in order

to be consistent. +t is tried to obtain worldwide sales 9alues rom annual reports. + this was

not a9ailable in annual reportsA the 9alues are obtained rom other sources and when that is

not possible either sales 9alues o onl; the 3* are obtained.

.5.1 ! exor )#

The pharmaceutical compan;


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did a ood Hob in de endin the sales 9alue o ! exor )# with the introduction o a second

eneration dru A Pristi . There oreA the second eneration strate ; ollowed b;


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the new indication strate ; ollowed is considered ine ecti9e. +n 200 A the two brand

extension strate ies were inall; introducedC *;mb;ax and ;mbalta. ;mbaltaA in particularA

was 9er; success ul a ter the irst ;ear with more than J800 million increase in its sales 9alue.

To see whether the chosen strate ; is e ecti9e it is needed to look at the combined sales o

Pro=acA *;mb;ax and ;mbalta in 2008 and compare it with the sales 9alue o Pro=ac prior to

2001A the ;ear that the patent o Pro=ac expired. (ue to the act that there are no sales 9alues

or 2008A the sales 9alue o 200 @ or Pro=ac onl;B is used to see whether the strate ; is

e ecti9e. The combined sales 9alue is then J1.2, billionA which is ,A:M o the ori inal sales

9alue o Pro=ac @J2.8, billionB. This percenta e o the sales is maintained a ter the patent o

Pro=ac expiredA which is not enou h to label this strate ; e ecti9e @recallC the maintained

sales 9alue should be at least 60MB. eneca chose or a second eneration strate ;A 'exiumA to

o9ercome the patent expir; o Prilosec in 2001. 'exium was launched in 2001. +n order to

state whether this strate ; is e ecti9e the sales 9alues o Prilosec are e9aluated or the ;ears

2000 until 2002A one ;ear be ore the introduction o the brand extension and patent expir; o

Prilosec until one ;ear a ter patent expir;. Therea terA the sales 9alues o 'exium are

e9aluated or the ;ears 2001 and 2002A the ;ear o introduction o the brand extension and one

;ear a ter the introduction. &ll sales 9alues are obtained rom the annual reports o

&stra>enecaA which are a9ailable on their corporate website. The sales 9alues are worldwide

sales i ures and depicted in Table 10.

Table 10 *ales 9alues Prilosec @annual reportsB

8


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&s can be seen in Table 10 abo9e the sales 9alue o PrilosecA a ter patent expir; in 2001A

dropped with 1:M in 2002. This is a decline o J,88 million. The sales o 'exium on the

other hand took o in that ;ear and increased with 2 :M. This is an increase o J1 10 million

which more than o sets the decline in sales o Prilosec. #ecall that the maintained sales with

the brand extension should be at least 60M o the sales 9alue o the ori inal brand name dru

be ore patent expir; in order to be labelled e ecti9e. +n 2002A the combined sales o Prilosec

and 'exium was J6.6 billionA which is more than the sales in 2000. From thisA the second

eneration strate ; o Prilosec can be considered e ecti9e. +n the annual report o 2002 the

ollowin statement is madeC OThe stron rowth o 4exium more than o set declines in

enecaA 2002C P51B. From this statement and the abo9e data it is clear

that the compan; is satis ied with the results o their chosen strate ;. There oreA the second

eneration strate ; ollowed b; &stra>eneca is considered e ecti9e.

.5. >antac

The pharmaceutical compan; laxo*mithDline chose or an "T strate ; or their

blockbuster dru >antac which aced patent expir; in 1,,7. The "T 9ersion o >antacA

>antac 78A was launched in 1,,6. To see whether this strate ; is e ecti9e in maintainin the

sales 9alueA the sales 9alues o the ;ears 1,,8 until 1,,: are e9aluated or >antacA one ;ear

be ore introduction o >antac 78 until one ;ear a ter patent expir;. *ubse uentl;A the sales

9alues or >antac 78 are e9aluated or the ;ears 1,,6 throu h 1,,:A the ;ear that the brand

extension is introduced and one ;ear a ter patent expir;. %oth sales 9alues will be e9aluated

rom the 3* onl;. These sales 9alues are obtained rom an external source.

Table 11 *ales 9alues >antac @external sourceB

&s can be seen in Table 11 abo9e the sales 9alue o >antac or the ;ear 1,,8 was not

a9ailable. +t seems that there is no decline in sales 9alue or >antac between 1,,6 and 1,,7A

howe9er in 1,,6 the sales 9alue is onl; a9ailable or three uarters o a ;ear there ore there

should be a decrease. antac expiresA 1,,7A there is a clear steep decline in

the sales 9alue. %etween 1,,7 and 1,,: the sales declined with 78M in the 3* onl;. &lthou h

6


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the; marketed >antac 78 "T A this could not counterbalance the steep decline in sales or

>antac. The sales 9alue o >antac in the ;ears be ore patent expir; was worldwide around J2

billion @ProkeschA 1,:,B. To consider the strate ; or >antac e ecti9eA the combined sales o

>antac and >antac 78 should be at least 60M o the sales 9alue o >antac be ore patent expir;A

which is J:00 million worldwide. 3* sales are on a9era e around 8M o total worldwide

sales @this calculation is made rom annual reportsB. ThusA the 3* should ha9e maintained

sales o around J560 million. The combined sales in the 3* are J518., million which is less

than 60M o the ori inal sales 9alue o >antac. %ased on these sales 9aluesA the "T strate ;

ollowed b; laxo*mithDline is considered ine ecti9e.

.5.8 laritin

The pharmaceutical compan; *cherin -Plou h chose or both a second eneration strate ;

and an "T strate ; @ larinex and laritin "T B to o9ercome patent expir; or their dru

laritin in 2002. %oth larinex and laritin "T were launched in 2002A the ;ear o patent

expir;.


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not compensated with the sales o the brand extensions. &ccordin to Lon ess @200 BA the

strate ; ollowed b; *cherin -Plou h ailed due to the act o dela;s in ainin appro9al o

the F(&. *cherin -Plou h had problems to switch consumers to larinex be ore enerics

were comin into the market. Taken e9er;thin to etherA the second eneration and "T

strate ; ollowed b; *cherin -Plou h are considered ine ecti9e.

.5.6 onclusion

From the results abo9e it can be seen that the )# strate ; is not used as a brand extension

strate ;. The new indication strate ; is used one time. The second eneration strate ; is used

our times. The F( strate ; is not used and the "T strate ; is used two times. +n the abo9e

sub para raphs the sales 9alues are e9aluated and it is showed whether the combined sales o

the branded dru and its brand extension is hi her than the ori inal sales o the branded dru

prior to patent expir; or introduction o the brand extension.

&s mentioned abo9eA the )# strate ; is not used and there oreA h;pothesis 1bC 'ombined

sales of the brand name drug and its !" are more than 5-= of the original sales value of the

brand name drug prior to patent expiry A cannot be accepted nor deniedA it simpl; cannot be

tested whether it can be accepted. The new indication strate ; is used one time and was not

e ecti9e. The sales o Pro=ac and its brand extension are onl; 2:M o the ori inal sales 9alue

o the brand name dru . There oreA h;potheses 2bC 'ombined sales of the brand name drug

and its new indication drug are more than 5-= of the original sales value of the brand name

drug prior to patent expiry A cannot be accepted. The second eneration strate ;A which is

pursuit in :0M o the casesA is e ecti9e in 80M o the cases. The combined sales 9alues o the

brand name dru and its extension@sB are hi herA in 80M o the casesA than the ori inal sales

9alue o the brand name dru prior to patent expir;.


50/63

name dru . There oreA h;pothesis dC 'ombined sales of the branded drug and its (T' drug

are more than 5-= of the original sales value of the brand name drug prior to patent expiry A

cannot be accepted. +n Table 15 below ;ou can ind an o9er9iew o all h;potheses and

whether the; are accepted as discussed here and in para raph .2.

Table 15 "9er9iew h;potheses

,


51/63

8 "' 43*+"'

Pharmaceutical companies ace di icult times when the patent o their brand name dru

expires.


52/63

6 #! "//!'(&T+"'*

The pharmaceutical industr; is acin di icult times. &s studied in this researchA it is 9aluable

or pharmaceutical companies to know what strate ies are most e ecti9e to a9oid a sales

decline when acin patent expir;. &s concludedA a second eneration strate ; is an e ecti9e

strate ; to use or brand name dru s. ereA implications or mana ers and researchers are

discussed.

" #1 M+,+ %' + +/ &,0

/ana ers o pharmaceutical companies work in a complex industr;A where rules and laws areo a main concern. &ll steps taken b; pharmaceutical companies are monitored. +t is 9er;

important or mana ers to ha9e a clear oal or their brand name dru .


53/63

or researchers rom this research is that thorou h research o blockbuster dru s is needed to

ind out what the maHorit; o the brand name dru s with a blockbuster status do to o9ercome

patent expir;. &nd in such research it is needed to ind out what the reasonin is behind

decisions in ollowed strate ies.


54/63

7 4+/+T&T+"'* &'( F3T3#! #!*!

The oal o this research was to ind e ecti9e strate ies used b; pharmaceutical companies to

o9ercome patent expir;. Patent expir; o ten leads to lar e declines in sales 9alues. %; indin

e ecti9e used strate ies the problem o sales decline could be a9oided. &lthou h the second

eneration strate ; is clearl; the most used and e ecti9e strate ; in this case stud;A there are

some limitations to this research and areas or uture research.

"7#1 L /+/ &,0

This research has our main limitations. First o allA due to the act that this research is a casestud; it is hard to eneralise or the whole pharmaceutical industr;. +n this research onl; i9e

cases are studied which makes it hard to eneralise or the whole industr;. +n order to do thisA

more blockbuster dru s ha9e to be studied to ha9e a ood sample o the pharmaceutical

industr;. *econdl;A in this research it is onl; researched what kind o strate ies

pharmaceutical companies are usin when acin patent expir;. The wa; in which the; came

up with a strate ; and wh; the; chose the used strate ; is not researched. For exampleA rom

this research it is not clear wh; two possible strate ies are not used.


55/63

"7#2 F6/6'% '%0%+' $

There are three main areas o uture research. FirstA accordin to Perr; @1,,:B it is necessar;

with a case stud; to test or statisticall; enerali=abilit;. &s mentioned in the limitationsA there

is not enou h data to eneralise the indin s or the whole industr;. "n top o thatA it would be pre erred b; the author to ha9e access to cases o all blockbuster dru s that aced patent

expir; in the past. owe9er due to limited access to cases and the time constraint this was not

possible. This research is a ood startA howe9er an extensi9e research on all blockbuster dru s

and their patent expiries would be interestin to research in the uture.


56/63

industr;. The introduction o eneric dru s is indeed made easierA and that works. $etA because

the law is enacted to stimulate two thin sA it should be researched what can be done in the

industr; to make it bene icial or both parties. +n other wordsC +n what wa; can the law be

re9ised in order to increase both the return on in9estment and #U( and not dilute the

encoura ement o introduction o eneric dru sG

These abo9e three areas o uture research can i9e mana ers a better understandin o their

ield and what the possibilities are in their industr;.

88


57/63

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*aulA *. @200:B. OF.(.&. appro9es


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63/63

A %, . II W+. +,-H+/ $ A /

+n 1,: A si ni icant chan es ha9e been made in the patent laws or the pharmaceutical

industr;. The (ru Price ompetition and Patent Term #estoration &ct o 1,: was le islated

to make it easier or eneric dru s to be introduced. This act is also known as the

pharmaceutical companies and their patent expiries

Documents