Opportunities for Traditional Drug Companies
Opportunities for Traditional “Drug” Companies
Raymond J. Grote, III
June 5, 2013
Boston University
MET AD 741
Abstract:
This paper explores two large, influential companies, Eli Lilly and Pfizer. Despite their unquestionable success and knowledge of the market for diabetes products, they failed badly in crucial decisions. This paper proposes reasons that the companies failed in certain efforts and recommendations for changes and future growth opportunities.
What went wrong?
From the cases and readings this week, it is clear that perhaps the largest missteps for both Pfizer and Eli Lilly were their failures to understand the changing basis of competition. Christensen states that "when multiple products offer enough functionality and enough reliability, then customers will be reluctant to pay price premiums for improvements in either of these areas" (Christensen, 1999). In Eli Lilly’s (Eli’s) roll out of synthetic insulin and in their future plans for the roll out of a long-release insulin product, they have clearly failed to recognize this concept. They 're not likely to gain premium pricing for either of these as they represent very little improvement to the client.
In Pfizer 's case, the roll-out of Exubera similarly missed the mark. Weintraub states that clients never felt that needles were much of a hassle and that they caused virtually no pain. Pfizer was attempting to charge a 30% premium to something that customers did not really care about and insurance companies thought was not worth the expense. (Weintraub, 2007)
Further, both companies failed to understand their stakeholders or "lead clients". In fact, they barely reached out to them at all, it seems, in attempting to validate their market. As Bruce Frank asserted “In retrospect the market was not all that dissatisfied with highly purified pork insulin” (Eli Lilly and Company: Innovation in Diabetes Care, 2004). Similarly, Pfizer failed to reach out in a meaningful way to
Raymond J. Grote, III
June 5, 2013
Boston University
MET AD 741
Abstract:
This paper explores two large, influential companies, Eli Lilly and Pfizer. Despite their unquestionable success and knowledge of the market for diabetes products, they failed badly in crucial decisions. This paper proposes reasons that the companies failed in certain efforts and recommendations for changes and future growth opportunities.
What went wrong?
From the cases and readings this week, it is clear that perhaps the largest missteps for both Pfizer and Eli Lilly were their failures to understand the changing basis of competition. Christensen states that "when multiple products offer enough functionality and enough reliability, then customers will be reluctant to pay price premiums for improvements in either of these areas" (Christensen, 1999). In Eli Lilly’s (Eli’s) roll out of synthetic insulin and in their future plans for the roll out of a long-release insulin product, they have clearly failed to recognize this concept. They 're not likely to gain premium pricing for either of these as they represent very little improvement to the client.
In Pfizer 's case, the roll-out of Exubera similarly missed the mark. Weintraub states that clients never felt that needles were much of a hassle and that they caused virtually no pain. Pfizer was attempting to charge a 30% premium to something that customers did not really care about and insurance companies thought was not worth the expense. (Weintraub, 2007)
Further, both companies failed to understand their stakeholders or "lead clients". In fact, they barely reached out to them at all, it seems, in attempting to validate their market. As Bruce Frank asserted “In retrospect the market was not all that dissatisfied with highly purified pork insulin” (Eli Lilly and Company: Innovation in Diabetes Care, 2004). Similarly, Pfizer failed to reach out in a meaningful way to
Bibliography: Eli Lilly and Company: Innovation in Diabetes Care, HBS 9-696-077 (April 2004). Adams, R. (2002). A Good Hard Kick in the Ass: Basic Training for Entrepreneurs. New York: Random House/Crown Business. Christensen, C. M. (1999). Innovation and the General Manager. Boston, MA: McGraw-Hill Irwin. Marcial, G. (2013, March 11). Retrieved June 1, 2013, from forbes.com: http://www.forbes.com/sites/genemarcial/2013/03/11/jj-faces-potentially-disrupting-competition-in-its-lucrative-glucose-monitoring-business-from-tiny-diagnostics-outfit/ Weintraub, A. (2007, October 18). Pfizer 's Exubera Flop. Retrieved June 1, 2013, from businessweek.com: http://www.businessweek.com/stories/2007-10-18/pfizers-exubera-flopbusinessweek-business-news-stock-market-and-financial-advice