The University of Maryland University College
Introduction: The Problem
At Eli Lilly and Company (Lilly), patent expiration is part of everyday business. However, Prozac, Lilly’s flagship product and market leader in the most popular class of pharmaceuticals used to treat depression – the selective serotonin reuptake inhibitors (SSRIs) was definitely a cause for concern (Ofek & Laufner, p.1). Patent expiration meant that generics would flood the market and Prozac’s current $2 billion in annual sales would create a huge revenue gap (Ofek & Laufner, p.1). Although management at Lilly was actively seeking a successor to Prozac the road to pharmaceutical breakthroughs is known to be a long and risky one.
In 1998 the New Antidepressant Team (NAT), a cross functional team of research and development (R&D) and marketing is formed by two colleagues at Lilly to contemplate a “successor strategy” (Ofek & Laufner, p.7). John Kaiser the marketing director and his other colleagues in the NAT efficiently and quickly narrow down their options down to “Five Assets” – five already existing products and/or market segments with enough promise to be potential Prozac successors (Ofek & Laufner, p.7). However, out of these “Five Asset’s”, Cymbalta - a drug developed by Lilly in the early 90s which was discontinued in Phase 2 testing after it failed to show reduction in Major Depressive Disorder (MDD), the most severe form of depression, when 20 mg once Daily (OD) dosages were administered (Ofek & Laufner, p.8). After digging through piles of research John and the other members of the team found that Cymbalta could treat depression as well as chronic pain caused by depression and could go on to become a huge successor to Prozac, due to its dual affect and marketability. Establishing the link between chronic pain and depression, referred to as the “mind-body-link” by NAT, becomes the next logical step.
Strategic Issues & Options
As time grew closer in 2000 Kaiser knew critical decisions about Cymbalta’s future development needed to be made (Ofek & Laufner, p.1). In particular NAT members had to decide how to prioritize clinical trials for Cymbalta and also deciding on which clinical objective to peruse first. With large-scale trials costing in the $25-$50 million range and typically lasting anywhere from 15 – 18 moths these questions were critical to Cymbalta’s success (Ofek & Laufner, p.2). The team could only afford to choose one objective before submitting the results to the FDA for marketing approval. One option was to conduct new research for once-a-day (OD) dosage of 60 mg for Cymbalta to treat MDD offering one convenient dose putting Cymbalta on par with the competition. The second option was to invest in clinical trials for a new indication that could potentially establish a differentiating factor between Cymbalta and existing antidepressants, an attractive option because physicians viewed efficacy in all current antidepressants as similar to each other. The third and final option was to delay the submission to the FDA sacrificing valuable time in the race to market as an opportunity cost for establishing both of the previous two objectives (Ofek & Laufner, p.2).
Eli Lilly and Company has been a market leader and innovator in pharmaceutical drug industry, especially in the highly profitable SSRI antidepressant segment (Ofek & Laufner, p.1). However, due to the imminent patent expiration of its flagship drug Prozac, the company feels threatened and considers a successor is imperative to maintaining its status as an innovator and leader in antidepressants SSRIs and also in the overall pharmaceutical drug industry. John Kaiser the marketing director and part of the NAT at Lilly along with the newly established New Product Planning Division (NPP), has been analyzing the situation to come up with a strong...