Marketing Management

Term 1
Professor Siddharth S Singh
Case Write-up: Marketing Antidepressants: Prozac and Paxil
Group K7
Ankita Vashista 61920593
Ishita Gupta 61920497
Rishi Rohan 61920899
Saksham Makhija 61920587
Ujjwal Rana 61920835

What was the value proposition of the early antidepressants (the MAOIs and the tricyclics)?
Was the value proposition of Prozac similar to these early antidepressants, or different?
How was the value proposition of Paxil differentiated from that of Prozac?
a) At any given time, about 10 million Americans or roughly 5% of the U.S. population suffers
from clinical depression.
The early antidepressants for clinical depression, MAOIs and Tricyclics, worked by increasing
the level of serotonin and norepinephrine, the chemicals believed to be associated with
mood.
Before Paxil, they were the only drugs available in the market for clinical depression.
And although highly effective, both had severe side effects and were toxic in large dosage.
b) The drug Prozac aimed at creating a clean drug that would aim to selectively improve the
serotonin level without any other side effect and this would be their unique selling point.
Thus, although Prozac was not necessarily more effective in treating severe depression, it had
the following advantage:
1. It was difficult to overdose on Prozac and hence, it was safer in the hands of potentially
suicidal patients
2. It was easy to administer Prozac and one 20mg capsule everyday was enough for a
patient.
3. Side effects caused due to Prozac were considered insignificant when compared to the
side effects of its alternatives.
c) Paxil was originally identified as an alternative to Prozac, particularly for those individuals who
had trouble tolerating Prozac or were concerned about Prozac’s long-term side effects.
 Paxil had a significantly shorter half-life than Prozac which meant that Paxil stayed in the body
for a lesser duration than Prozac. Despite this differentiation, Paxil remained overshadowed
by Prozac.
It was only in 1999 that the market situation changed for Paxil when it received the FDA
approval for the treatment of social anxiety disorder (SAD).
Paxil utilized this advantage and focused only on SAD. Their marketing plan was designed to
spread education about SAD and encourage its diagnosis and treatment.
When compared, Prozac and Paxil targeted two different segments.
Prozac marketed itself as a drug for clinical depression with insignificant side effects whereas
Paxil targeted the mental disorder it had the sole approval for, which was social anxiety
disorder (SAD).
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Why did the early antidepressants (the MAOIs and tricyclics) fail to achieve widespread
acceptance in the market?
What factors accounted for the success of Prozac?
What factors accounted for the success of Paxil?
a) Prior to Prozac, clinical depression was primarily treated by two classes of antidepressants-
Tricyclics and Monoamine Oxidase Inhibitors (MAOIs). Both these types of antidepressants
worked by increasing the levels of Serotonin and Norepinephrine - chemicals that are
believed to carry nerve signals through the nervous system and are associated with mood.
Despite the effectiveness of these drugs in clinical trials (with a success rate of almost 60% to
80% in alleviating symptoms of depression), they were difficult to administer. The same
dosage could yield different results in different patients, and thus, a patient who was
prescribed tricyclics was required to begin with a very low dosage which the doctor gradually
increased over time, till optimal dose was found using blood monitoring. Quantities that were
too small or quantities that were too large were seen to have caused side-effects. Even proper
doses had the tendency to cause weight gain, extreme sluggishness, constipation, urinary
retention, and disturbances in heart rhythm and blood pressure. Further aggravations in
terms of headaches and high blood pressure were also seen in these cases. As a result of
these, the drugs could not earn the trust of the patients to ensure goodness of their health
and to gain freedom from their depression.
Apart from the above, these drugs also caused problems to many psychiatrists/ doctors who
prescribed them, in terms of the distortion of their analyses and them being subjected to
unworthy accusations and complaints from the patients. This brought these drugs in bad
taste of the doctors who were pushed to prescribe it only when circumstances necessitated.
As a result of these failures (both at the intermediate as well as ultimate consumers level) in
delivering the value that these antidepressants had to offer, they could not achieve the
 market acceptability that they strived to attain. Also, since they were already off-patent, they
were not being promoted or detailed energetically. A combination of all these issues
necessitated the existence of an antidepressant that was free from most of the side-effects,
if not all, and that could be more readily accepted by the doctors and the patients alike.
b) Prozac was developed with a goal to formulate a clean drug that worked exclusively to
increase serotonin levels in the brain, without causing major side-effects.
The reasons because of which Prozac succeeded in its endeavor were-
1. Detailed tactics and in-depth knowledge of the product- Eli Lilly employed detailing tactics in
planning for Prozac’s launch. Lilly urged its sales force to educate themselves about modern
psychiatric practices, in particular the global trend toward psychopharmacology. Lilly
consciously directed its sales efforts toward psychiatrists, especially those who were major
prescribers and opinion leaders.
2. Extreme emphasis on value offered- As a part of their sales initiatives also, Lilly’s sales
representatives emphasized the several advantages that Prozac commanded over its existing
alternatives. They argued that, since it was difficult to overdose on Prozac due to its relatively
lower effectiveness rate, it was safer in the hands of potentially suicidal patients. This also
allowed Prozac to be administered easily. Moreover, the side effects witnessed for Prozac,
which included jitteriness, insomnia, nausea, loss of libido, and weight loss, were not
considered serious.
3. Spreading education about the product to existing users and intermediaries- Lilly sponsored
massive educational efforts directed toward general practitioners. Since, these marketing
activities coincided with a nationwide effort by managed care providers to cut costs, Lilly was
able to position Prozac as an appealing alternative for general practitioners who were
reluctant to send patients to expensive specialists as Prozac did not require any constant
medical supervision. Lilly along with several professional organizations set out to stimulate
appropriate diagnoses and help remove the social stigma of psychiatric disorders. This
positive word-of-mouth about the drug allowed it to gain more social acceptance amongst
the people.
4. Using testimonials to vouch for product efficiency/ Establishing relatability- Prozac’s
popularity was further boosted when Kramer first published Listening to Prozac, which
described his personal experiences in prescribing the drug. Kramer’s opinion and the
controversy around it stimulated a nationwide discussion about the nature of depression.
Compared with the antidepressants of the past Prozac became familiar and socially
acceptable. It shattered old stigmas.
5. Creating further value in the product offering/ Evolving the product- Prozac’s further progress
in being effective at treating other disorders like obsessive-compulsive disorder (OCD) and
panic disorder took it to newer heights. Indeed, because Prozac was already on the market
and physicians felt comfortable with the side effects associated with the drug, the familiar
green pill soon became a treatment for problems such as smoking, alcoholism, bulimia, and
 even kleptomania. It also started catering to socially topical concerns as gambling, obesity,
premenstrual syndrome (PMS) and fear of public speaking.
c) Despite Prozac’s presence, Paxil achieved success primarily due to the following reasons:
1. Superior value and plugging the existing gap – Since, Paxil didn’t remain in the body for as
long as Prozac did, its half-life was 21 hours, compared with Prozac’s which could last up to
384 hours. Therefore, it allowed respite to those individuals who had trouble tolerating
Prozac or were concerned about Prozac’s long-term side-effects.
2. Untouched market- Paxil was the first and only medication to win U.S. approval for Social
Anxiety Disorder (SAD) and it indulged in heightening public awareness of SAD, a disorder
that most people viewed not as a serious medical condition but as a form of “shyness.”
3. Spreading education about the product to potential/new users and intermediaries- The
marketing plan involved educating reporters, consumers, and physicians about SAD in order
to encourage diagnosis and treatment. The agency also launched an aggressive media
campaign featuring video news releases and press kits.
Paxil supplemented the public relations campaigns with a direct-to-consumer advertising
campaign. And the message in the DTC advertisements focused almost exclusively on social
anxiety disorder, rather than the drug (Paxil) itself.
4. Establishing relatability- The Strategy involved interaction with SAD patients who were willing
to share their experiences with the media. It helped make the disorder identifiable and
understand that it is much more than shyness.
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Case Exhibit 10 consists of a self-test for Social Anxiety Disorder. Take a look at the questions
on this test and come up with a prediction for what an average individual of average mental
health would score on this test. (Possible scores range from 0 to 68).
The Social Anxiety Disorder self-test tests a person on 17 factors.
The scores for each factor can range from 0 to 4. Hence the total score of the test can range from
0 to 68.
All the questions asked in the survey are surrounding symptoms of SAD, and a higher score in any
of the question will indicate that the person suffers from social anxiety disorder.’
If seen on an average, a person with score 0 to 34 can be considered as safe and someone who
does not suffer from SAD.
Any score higher than 34 should highlight the fact that at least one SAD symptom is present in
the person.
As mentioned above, an average individual should score anywhere between 0 to 34 to be in safe
zone or SAD free.
The only assumption in the above prediction is that scores will be equally spread over all
questions as a person with certain mental health will mark more or less the same score in all
questions. Any anomaly in the spread of scores should be identified and checked for.
As it can be an indication of a particular behavior of the person in certain situations or can also
be an anomaly in the survey thereby skewing the test results.
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What are the different ways that Lilly and SmithKline Beecham/GlaxoSmithKline (SKB/GSK)
have captured value from their respective drugs?
Have these companies done a good job of maximizing their product’s revenue potential?
Lilly captured value from Prozac in the following ways:
a) Exploiting the competitive advantage Prozac has over tricyclics and MAOIs through savvy
detailing:
Tricyclics and MAOIs were difficult to administer and had severe side effects.
Lilly exploited this advantage by emphasizing the several advantages Prozac had over existing
alternatives which made it easier for psychiatrists to endorse and prescribe Prozac and helped
increase its revenue.
b) Right targeting and positioning of Prozac in front of general practitioners and benefiting from
the “off-label” prescribing of Prozac:
Lilly, soon after Prozac launch, diverted more of its detailing efforts toward general
practitioners. Lilly was able to position Prozac—which did not need to be accompanied by
constant medical supervision—as an appealing alternative for general practitioners who were
reluctant to send patients to expensive specialists. By 1989, it was estimated that over 60%
of prescriptions resulted from a visit to a primary-care physician or non-mental health
specialist.
Thus, by right targeting and positioning, Lilly was able to capture value from Prozac.
Later, as Prozac began developing a reputation for being effective at treating other disorders,
such as obsessive-compulsive disorder (OCD) and panic disorder, the “off-label” prescribing
of Prozac became a frequent practice by physicians.
This “off-label” prescribing of Prozac for varied problems including smoking, alcoholism,
bulimia, and even kleptomania increased Prozac’s revenue
c) Helping remove social stigma around psychiatric disorders through educational campaigns
and thereby helping increase acceptability of psychiatric drugs including Prozac:
Lilly sponsored massive educational efforts directed toward general practitioners and helped
remove the social stigma of psychiatric disorders. This created a strong word of mouth about
the drug, shattered old stigmas and, as the author put it, helped Prozac attain the familiarity
 of Kleenex and the social status of spring water. This resulted in increased consumption of
Prozac.
d) Leveraging the relaxed FDA norms and foraying into direct-to-consumer (DTC) advertising:
After the competition intensified, Lilly tried to capture value from Prozac by launching a
direct-to-consumer advertising campaign with ad placements in national publications and,
later on, airing of a 30-minute infomercial
e) Lily secured FDA approvals for new indications such as Dysthymia, Geriatric depression, OCD,
Bulimia and PMDD and thus, increased Prozac’s market base.
f) Lilly increased sales calls on doctors by 25% in 1999 to boost sales and recapture market share
g) Charging premium pricing and thereby leveraging the strong brand recognition and brand
loyalty of Prozac:
As is clear from Exhibit 6, Lilly was charging a 13-36% premium over competition on account
of strong brand recognition of Prozac. This helped Lilly capture more value from Prozac.
Although Prozac’s sales were on the rise for most of the decade, Lilly still did not do a good job
of maximizing Prozac’s revenue potential. The reason for the same are as follows:
a) Failing to exploit the competitive advantage of Prozac being the only drug having FDA
approval for specific disorders such as dysthymic disorder, geriatric disorder and bulimia:
Prozac received the FDA approval for the treatment of dysthymic disorder in 1990, geriatric
depression in 1991 and bulimia in 1996.
As per Exhibit 5, 5.4% of the U.S. population suffers from dysthymia. This is an even bigger
population size than the population suffering from clinical depression (5%). Prozac had
exclusive FDA approval for such a big market segment of dysthymia and yet Lilly failed to
target this segment selectively. The blanket campaign around depression could have been
refined to selectively target people suffering from dysthymia to generate more sales.
Similarly, selective targeting of people suffering from geriatric depression and bulimia could
have further increased revenue of Prozac.
b) Losing the first mover’s advantage by neither seeking new indication approvals early on nor
expanding to non-US markets early on.
Lilly received FDA approval for panic disorder after more than a decade while late entrants
were able to secure the same early on, thereby resulting in missed opportunity.
Lilly, evidently, was also slow in expanding to new markets. By 2000, around 85% of Prozac’s
revenue ($2.6 Billion dollar) was coming from U.S. alone and it still awaited approval for
depression for Japan market as on 2002 (as per Exhibit 14)
c) Generic, non-targeted direct-to-consumer (DTC) advertising did not have lasting impact.
 Lilly forayed into DTC advertising of Prozac in 1997 and, as evident from Exhibit 3, the sales
of Prozac went down in 1999 after rising slightly in 1998.
Like SKB/GSK, had Lilly centered its campaign on disorders for which it had exclusive FDA
approvals, the consumer targeting could have been more precise and successful.
SKB/GSK Lilly captured value from Paxil in the following ways:
a) Differentiated initial positioning:
Initially, SKB tried to capture value from Paxil by positioning it as an alternative to Prozac with
reduced long-term side effects due to its significantly less half-life.
b) Selecting most competitively advantageous segment and conducting targeted advertising:
In 1999, Paxil was the only SSRI to receive FDA approval for SAD. SAD affects 3.7% of U.S.
population, which is a sizable market.
SKB decided to focus solely on SAD in its marketing plan for Paxil as Paxil was the first and
only approved medicine for SAD.
After SKB became GSK, it increased its targeted DTC campaign spending to over $90 million
and helped GSK generate $1.6 billion in revenue by 2000
This focused approach gave SKB a clear advantage and helped it capture value from Paxil.
c) Conducting effective public awareness campaigns to create consumer pipeline for Paxil:
SKB decided to launch awareness campaigns around SAD. It was estimated that only 5% of
the SAD sufferers ever seek treatment. SKB educated stakeholders and recruited SAD patients
which helped them put a face on the disorder.
These efforts resulted in over 400 million mentions of SAD in media and citations in
prestigious magazines by the time Paxil received the FDA approval for SAD.
This created demand for SAD treatment and increased sales of Paxil.
SKB/GSK did a good job of maximizing Prozac’s revenue potential because:
SKB/GSK exploited the competitive advantage of Paxil being the only FDA approved drug for SAD,
which was a sizable market. The selective targeting, the savvy marketing plan around creating
awareness and the aggressive DTC spending all helped SKB/GSK increase revenue from Paxil to
$1.6 billion.
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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 anticipation of Prozac coming off patent, Lilly has adopted a multi-pronged strategy. The
various elements of this strategy are:
• The development of new delivery methods for Prozac: Lilly had received FDA approval for a
90 mg. version of Prozac that could be taken just once a week.
The advantage of this element was it offered users more convenience. However, this element
seems vulnerable under the pricing pressure that generics would put Prozac under. The
expectation is that generic version of Prozac would initially cost 75% and in the long term
settle at 20% of the cost of Prozac. The convenience of taking the pill once a week would not
be able to trump price sensitivity for most users.

• The repositioning of Prozac for new indications: Lilly had received FDA approval for the use
of fluoxetine hydrochloride in the treatment of several other disorders. It had already
received approvals from the FDA for obsessive-compulsive disorder and bulimia, and had
recently become the first antidepressant approved for the treatment of geriatric depression
(depression among the elderly) in the United States. In 2000, Lilly had also received FDA
approval for the use of fluoxetine hydrochloride to treat premenstrual dysphoric disorder
(PMDD), a severe form of premenstrual syndrome (PMS) that was characterized by severe
monthly mood swings and physical symptoms that interfered with daily life. Lilly was
currently awaiting FDA approval for several other indications, including panic disorder (Zoloft
and Paxil had already received FDA approval for this indication) and posttraumatic stress
disorder (PTSD). Lilly was also preparing to file for FDA approval of a pediatric version of
Prozac, which would make it the only SSRI on the market with this claim.
For the aforementioned disorders, namely: OCD, Bulimia, geriatric depression, PMDD and
pediatric depression, Prozac had the first mover advantage as it was either the lone drug
approved by the FDA or the leading in the race to approval. While it would still be vulnerable
to generics even with the repositioning, marketing efforts to create a market around these
disorders could give Lilly some short terms gains due to its brand recognition and first mover
advantage. Over the longer term, insurance companies will still push consumers away from
Prozac to generics since they are a completely substitutable cheaper alternative. Lilly could
also position Prozac as a drug for treating Dysthymia for which it has been approved and does
not face competition from existing Pharma players. It could gain a headstart against generics
for this indication as well and hope that market erosion occurs at a rate which allows it time
to focus on development of newer drugs.

• The development of new antidepressants: Since 1998, Lilly had increased its R&D budget
30% (to more than $2 billion) and hired hundreds of scientists in search of its next
blockbuster.
Over the long-term, this option should be the centre of focus for Lilly. Lilly should review its
development pipeline and prioritize production of drugs that could be the most differentiated
from Prozac, gain early FDA approval for newer indications and present a sizeable revenue
opportunity. Atomoxetine, under development for the treatment of ADHD seems a suitable
candidate for the focus of Lilly’s marketing efforts.
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In general, should the company scale back on marketing Prozac, or should it ramp up its
Prozac marketing efforts in anticipation of generic competition?
The introduction of generics is going to create a tremendous pricing pressure on Prozac. Most
anti-depressant users will have insurance and insurance companies will push consumers towards
generics in order to cut their own costs. Over the long-term, Prozac is bound to lose substantial
market share to generics. Lilly has two options to pick for its marketing strategy to tackle this
threat:

• Gradually scale down its marketing towards Prozac

• Go all out for a final push to sustain its market share for a few months and then scale down

Prozac and other central nervous system diseases account for nearly 50% of Lilly’s revenue of
10.3 billion dollars. The total marketing cost for Lilly is 3.2 billion dollars of which approximately
50% could be attributed to the same diseases as well. Scaling down its marketing, would result
in decreasing market share while retaining profit margin levels. A final push approach would at
best help in the maintenance of market share for a short period (6 months – till a single generic
version is available) and is unlikely to lead to an increase in market share due to existing
competition from existing Pharma players. While this approach might generate more net
revenue, it will affect margin levels to decrease to a greater level than the first approach.
We recommend that Lilly should scale down its marketing towards Prozac. During the scale down
process, Lilly should focus more on repositioning and differentiating Prozac from existing
competition, whilst also focusing on newer indications where it could gain a small first mover
advantage over generics. DTC should be primary channel through which Lilly should reach out to
potential consumers and leverage its brand recognition amongst existing users while
complementing those efforts with patient advocacy groups and sales calls to general
practitioners.
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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?
The availability of generic versions of Prozac was expected to have an impact on all of the SSRIs
on the market. GSK adopted a strategy which was similar to Lilly’s for maintaining and growing
market share in the antidepressant market :

• The development of new delivery methods for Paxil: In 1999, GSK had received FDA approval
for a controlled-release version of Paxil (Paxil CR), which hadn’t been launched and caused
fewer side effects than Paxil.
Lilly had developing a 90 mg, once a week version of Prozac while GSK had developed a
controlled-release version. While Lilly was focusing on convenience with its new delivery
method strategy, Paxil was focusing on better patient outcomes by reducing side effects. Paxil
could somewhat differentiate itself from Prozac by directing its marketing efforts on
emphasizing the lower side effects of the CR version. We feel that a substantial number of
users could prioritise reduction of lower side effects over cheaper generic alternative.
• The repositioning of Paxil for new indications: Paxil was already FDA-approved for a number
of indications, including depression, OCD, panic, and social anxiety disorder. Paxil had also
recently received FDA approval for the treatment of generalized anxiety disorder (GAD). It
was currently awaiting approval for PTSD, and was in the midst of Phase III trials for the
treatment of PMDD (using a controlled-release formulation).
This is the option which GSK should prioritize over the other two options.
Of all these indications, Paxil was the sole anti-depressant approved for the treatment of GAD
(Generalized Anxiety Disorder) and SAD (Social Anxiety Disorder), which gave it a unique
market to play in. This market would be safe from the introduction of generic versions of
Prozac, since Prozac was not approved for these indications. Zoloft was undergoing clinical
trials for SAD while no other company was in the drug development cycle for GAD. The loss
of market share to generics as a clinical depression drug could be offset by new market to be
created around GAD (estimated 5.4 million patients) and SAD (estimated 4.0 million patients).
There could be some overlap between these patients, but this repositioning could
significantly help Paxil in surviving the price onslaught from the introduction of generic
versions of Prozac. The primary communication channel for this repositioning would again be
Direct-To-Consumer advertising, as the need was to create awareness about these lesser
understood disorders. Creating self-assessment charts would greatly help in spreading
awareness about the disorders. Since Paxil was the sole treatment approved for these
disorders, awareness increase would directly lead to greater sales.

• The development of new antidepressants: In 2000, GSK had invested over $3.5 billion in
research and development.55 In the non-SSRI antidepressant market, GSK already had a
successful product in Wellbutrin and was working to develop other selective norepinephrine
reuptake inhibitors.
While the development of new antidepressants was of the utmost importance to Lilly, Paxil
should prioritize repositioning and newer delivery methods over this as a part of its marketing
strategy. Paxil had the option of creating newer markets around itself where it could maintain
a significant share till its patent expiry due to lack of competition in the space. These markets
would hold a significant barrier for entry of newer players due to the headstart that Paxil has
attained. Prozac would anyway find it difficult to enter less saturated markets as it carries its
own competition (generic versions) in whichever market it tries to explore now.

Our recommendation for prioritization of marketing strategies (1-highest, 3-lowest)

Marketing Strategy Lilly - Prozac GSK - Paxil

Newer delivery methods 3 2
Repositioning for newer indications 2 1
Development of new anti-depressants 1 3
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