Strategic Pricing Proposal to Counter Generic Sildenafil
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STRATEGIC PRICING PROPOSAL TO COUNTER GENERIC SILDENAFIL
We, the Viagra Senior Marketing Managers, are proposing the post-patent expiration Strategic Pricing Plan to the Pfizer Executive Leadership Team for presentation at the next quarterly meeting.
Viagra has been very successful since its approval in March 1998 as a first in class erectile dysfunction (ED) medication. We achieved gross revenue of $1.9 billion last year despite competition from the two other branded drugs in our market, Cialis and Levitra. As we look to the future and our patent expiration in 2020, we need to plan to face our generic competition. The goal for the Viagra post-patent expiration Strategic Pricing Plan is to maximize profit as long as possible. This report will provide an overview of our past and current state, and arrive at our proposed pricing strategy plan in which we will achieve the best outcome.
ZOLOFT (ANTI-DEPRESSION DRUG) CASE EXAMPLE: PRICE ELASTICITY OF DEMAND
In our efforts to predict what will happen to Viagra once our patent expires, we reviewed another Pfizer’s drug, Zoloft, as a case example. Zoloft was the leading antidepressant drug that brought in $3.3 billion in sales before its patent expired on June 30, 2006. It faced branded competition from Effexor XR from Wyeth, Paxil and Welbutrin XL from GlaxoSmithKline, and Cymbalta from Eli Lilly & Co. The demand for Zoloft was inelastic before patent expiration which allowed Pfizer to set a high price for the drug. Demand then became elastic when generics entered the market post-patent expiration. The below graphs display this change in demand elasticity for Zoloft. We expect this will be the same for Viagra.
PAST AND CURRENT STATE OF VIAGRA
The current market for ED drugs includes three patented brand drugs: Viagra (Pfizer), Levitra (Bayer) and Cialis (Eli Lilly). Viagra was introduced in March 1998 and held a pure monopoly
STRATEGIC PRICING PROPOSAL TO COUNTER GENERIC SILDENAFIL
We, the Viagra Senior Marketing Managers, are proposing the post-patent expiration Strategic Pricing Plan to the Pfizer Executive Leadership Team for presentation at the next quarterly meeting.
Viagra has been very successful since its approval in March 1998 as a first in class erectile dysfunction (ED) medication. We achieved gross revenue of $1.9 billion last year despite competition from the two other branded drugs in our market, Cialis and Levitra. As we look to the future and our patent expiration in 2020, we need to plan to face our generic competition. The goal for the Viagra post-patent expiration Strategic Pricing Plan is to maximize profit as long as possible. This report will provide an overview of our past and current state, and arrive at our proposed pricing strategy plan in which we will achieve the best outcome.
ZOLOFT (ANTI-DEPRESSION DRUG) CASE EXAMPLE: PRICE ELASTICITY OF DEMAND
In our efforts to predict what will happen to Viagra once our patent expires, we reviewed another Pfizer’s drug, Zoloft, as a case example. Zoloft was the leading antidepressant drug that brought in $3.3 billion in sales before its patent expired on June 30, 2006. It faced branded competition from Effexor XR from Wyeth, Paxil and Welbutrin XL from GlaxoSmithKline, and Cymbalta from Eli Lilly & Co. The demand for Zoloft was inelastic before patent expiration which allowed Pfizer to set a high price for the drug. Demand then became elastic when generics entered the market post-patent expiration. The below graphs display this change in demand elasticity for Zoloft. We expect this will be the same for Viagra.
PAST AND CURRENT STATE OF VIAGRA
The current market for ED drugs includes three patented brand drugs: Viagra (Pfizer), Levitra (Bayer) and Cialis (Eli Lilly). Viagra was introduced in March 1998 and held a pure monopoly
References: [1]http://www.cbsnews.com/8301-505123_162-42842870/price-of-viagra-has-risen-108-since-launch-100-pills-now-cost-1400/ [2]Tirole, p. 65-66 [3]Pfizer 2008 10K [4]Pfizer 2011 10K [5]National Institutes of Health (NIH) Consensus Conference. NIH Consensus Development Panel on Impotence. Journal of the American Medical Association. 1993;270:83-90 [6]Carson CC. Erectile dysfunction in the 21st century: whom we can treat, whom we cannot treat and patient education. International Journal of Impotence Research 2002; 14(Suppl 1):S29–34. http://www.ncbi.nlm.nih.gov/pubmed/11850732 [7]Seftel AD. Erectile Dysfunction in the Elderly: Epidemiology, Etiology and Approaches to Treatment. The Journal of Urology 2003; Vol 169, Issue 6, Pgs 1999-2007. [8]http://www.viagra.com/about-erectile-dysfunction/erectile-dysfunction.aspx [9]http://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/understandinggenericdrugs/ucm167991.htm