Prozac Paxil in Us Drug Industry

In anticipation of Prozac coming off patent, Lilly has adopted a multi-pronged strategy. What do you think of the various elements of this strategy? In general, should the company scale back on marketing Prozac, or should it ramp up its Prozac marketing efforts in anticipation of generic competition? What should GSK’s marketing strategy be for Paxil, now that Prozac is coming off patent? Should it be similar to, or different from, Lilly’s strategy?

Prozac has been a phenomenal success in the US drug industry ever since its introduction. During initial years driven by a unique composition and strong marketing and communication campaign it constantly beat the expectations of Lilly’s and registered strong sales growth year on year. Weak functional attribute of the existing product along with a lack of will by early entry depressant firms to counter the market capturing strategy of Prozac indeed helped Lilly and the unique marketing campaign put it strongly at the heart of consumers as a strong medical brand with accepted social value. Prozac along with few other medicines having therapeutic use in central nervous system are accounts for approx. 50% of Lilly’s total sale. However, the competitor medicine albeit not exactly in the same domain has given stiff competition which has resulted in almost sales in last 4 years.

Prozac’s patent is due to expire in August 2001 and the entry of low cost generic drug in the same category looms large at Prozac and other patented competitors. It is expected that prices will go down below to 25% of current prices over a period of 6 months due to introduction of generic medicines with same composition. Prozac management team is looking at 3 broad strategies to counter strong headwinds posed by generic drugs. They are:

1. Launch of new delivery method Prozac reducing intake frequency for the drug
2. Repositioning of Prozac for new indications and
3. Aggressive R&D effort. Betting particularly big on high return anti-depressant market

To evaluate the strength of proposed strategies we would like to begin by putting across a SWOT analysis of Prozac as a brand and Lilly as a firm in the medicine field.

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