Innovation in the Insulin´S Industry
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INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
INNOVATION IN THE INSULIN´S INDUSTRY THE ELI LILLY AND PFIZER EXAMPLES
Martin Meister Boston University MET AD 741 May, 2012
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INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
Introduction The focus of the present paper is to understand why the pharmaceutical companies Eli Lilly and Pfizer failed in the introduction of what was supposed to be priced premium innovative products like the 100% pure synthetic insulin “Humulin” or the inhalable insulin “Exubera” and make the correspondent recommendations for the future develop of the firms.
Analysis To gain an understanding and find some possible explanations, we will analyze the situation from different points a view. Be big and arrogant Big companies have great advantages like economies of scale, well managed infrastructure, brand equity and substantial market share, but some only try to defend their market share, focusing only on processes and product creation instead of listening to customers (Christensen, 1999). For example, Eli Lilly had almost the 80% of the US insulin market and did not want to introduce new products like the insulin pens because potential cannibalization´s risks (Christensen, 2004). By the other hand, the managers of Pfizer thought they had a product that was going to revolutionize the market. But, after their failure, they blamed the drug´s launching, the marketing campaign and the sales strategy. For them the product was excellent (Simons, 2007), that is, the problem was outside the company.
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INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
Did not listen to customers´ pain Eli Lilly and Pfizer invested millions of dollars generating innovative products related with insulin, like Humulin that was supposed to be the “supreme breakthrough in insulin product” (Christensen, 2004) or Pfizer with their Exubera, the “next big thing in drugs” (Weintraub, 2007). Both of them failed, and one of the most
INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
INNOVATION IN THE INSULIN´S INDUSTRY THE ELI LILLY AND PFIZER EXAMPLES
Martin Meister Boston University MET AD 741 May, 2012
2
INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
Introduction The focus of the present paper is to understand why the pharmaceutical companies Eli Lilly and Pfizer failed in the introduction of what was supposed to be priced premium innovative products like the 100% pure synthetic insulin “Humulin” or the inhalable insulin “Exubera” and make the correspondent recommendations for the future develop of the firms.
Analysis To gain an understanding and find some possible explanations, we will analyze the situation from different points a view. Be big and arrogant Big companies have great advantages like economies of scale, well managed infrastructure, brand equity and substantial market share, but some only try to defend their market share, focusing only on processes and product creation instead of listening to customers (Christensen, 1999). For example, Eli Lilly had almost the 80% of the US insulin market and did not want to introduce new products like the insulin pens because potential cannibalization´s risks (Christensen, 2004). By the other hand, the managers of Pfizer thought they had a product that was going to revolutionize the market. But, after their failure, they blamed the drug´s launching, the marketing campaign and the sales strategy. For them the product was excellent (Simons, 2007), that is, the problem was outside the company.
3
INNOVATION IN THE INSULIN´S INDUSTRY – MARTIN MEISTER
Did not listen to customers´ pain Eli Lilly and Pfizer invested millions of dollars generating innovative products related with insulin, like Humulin that was supposed to be the “supreme breakthrough in insulin product” (Christensen, 2004) or Pfizer with their Exubera, the “next big thing in drugs” (Weintraub, 2007). Both of them failed, and one of the most
References: Adams, R. (2002). A good hard kick in the ass: Basic training for entrepreneurs. New York, NY: Random House/Crown Business Christensen, C.M. (1999). Innovation and the general manager. Boston, MA: McGraw-Hill Irwin Christensen, C.M. (2004). Eli Lilly and Company: Innovation in diabetes care. Boston, MA: Harvard Business School Publisher Gutierrez, C. (2007, October 18). Pfizer washes its hands of Exubera. Retrieved on May 27, 2012 from http://www.forbes.com/2007/10/18/pfizer-earnings-closer-marketsequities-cx_cg_1018markets47.html Lawsuit Guru (2008, Jun 27). FDA approves first inhaled insulin. Retrieved on May 28, 2012 from http://www.youtube.com/watch?v=gOy12-VIWI4 Simons, J. (2007, October 19). How the Exubera debacle hurts Pfizer. Retrieved od May 27, 2012 from http://money.cnn.com/2007/10/19/magazines/fortune/simons_ pfizer_erbitux.fortune/?postversion=2007101916 Weintraub, A. (2007, October 18). Pfizer´s Exubera Flop. Bloomberg BusinessWeek. Retrieved on May 26, 2012 from http://www.businessweek.com/technology/ content/oct2007/tc20071018_028695.htm