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ZANTAC

1
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 Case Overview
Group 4
• Tagamet was
introduced in 1977 by Smith
Kline as the pioneer drug to
combat stomach ulcers.

• After having owned

the market for a few
years, in 1983 a competing firm Glaxo introduced Zantac as an alternative acid blocker with a
different molecular structure.

• Zantac took over the market in 1987 as it was proven to be a superior drug compared to Tagamet
with lesser-known side-effects and a shorter dosage span.

• Zantac had only Tagamet as its competitor for 6 years before its patent expired. This allowed for
new competitors, Pepcid and Axid to join in the fray of anti-ulcerant adoption.

• With the advent of proton pump inhibitors, Losec was launched into the market in 1988 by Astra.

• The CMO of Zantac was looking at an inflection point which was fast approaching his company and
had to decide on feasible courses of action to defend Zantac’s brand.

Problems

• Zantac was registered as a prescription drug and was approved for distribution only in hospitals
and pharmacies. General Practitioners (GPs) accounted for 85% of all anti-ulcerant prescriptions
and hence the drug did not get enough access to reach target populations.
• GPs were not competent enough to use the subtle differences between drugs and patient
conditions according to a survey. They needed the assistance of medical reps to assist them with
upcoming drugs and mapping them to the right patient. This posed a problem for Zantac as
medical reps were not always held in high regard by the medical community owing to credibility
issues and other negative opinions.
• Zantac was not perceived initially to have much improvements over Tagamet and hence
distributors tried to coerce manufacturers to introduce the drug at a lower price to be accepted as
an alternative. This posed potential problems to the brand image of Zantac in addition to a
competitive price point drowning out any chances at a successful replacement of Tagamet.
• Glaxo had earned the image of having poor marketing competency and this had started out a
chain of publicity which caused market research to reveal that doctors basically saw Zantac as an
imitation to Tagamet.

2
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 Analysis

S
STRENGTHS
W
WEAKNESSES
O
OPPORTUNITIES
T
THREATS

3
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 Ana• lysi s
Fewer side • Prescription • Tagamet • Emergence of
effects only by patent expiry competition
• Public service doctors • Goofups by with scope to
SWOT
announcement • Weak brand SK in undercut
• Convenient image of interpreting • Proton-pump
dosage Glaxo in market inhibitors
• Potent sales certain major dynamics emerging
force countries • Co-marketing rapidly
• Global can lead to
presence growth in
market share

Market/industry analysis

• Entry barriers are high due to time required, patents, approval requirements from regulatory
authorities.
• Requires a good sales force to attend to hospitals, general practitioners, pharmacies.
• There is high investment in terms of R&D, time, clinical trials, perception surveys etc.
• High importance of establishing relationships with doctors and practitioners by the sales
representatives.
• Zantac’s market share was 42%.
• H2-blockers: Famotidine had a global market share of 12%, Axid had 2%.
• 75% of H2 blocker global market share was shared by four main players - Zantac, Tagamet,
Pepcid, Axid.

4
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 Value
Proposition
• Effective results for ulcer treatment
• Convenient dosage schedule
• Low drug interactions
• No side effects
• Large spread distribution

Consumer analysis

• 10 -15% of Western population suffer from Ulcers at least once in their lifetime
• Of the patients with peptic ulcer related complications, 65% were for acute treatments and 30%
were patients undergoing maintenance treatment
• Consumers are growing more price sensitive as the overall healthcare costs are increasing.
• Patients were given the pills not just for Ulcer treatment but for a variety of other gastro digestive
diseases.
• High priced drugs are perceived to have higher quality by few doctors.
• There was a growing segment of consumers who were non-approved users. This group of
consumers would be directly purchasing the product from stores without a doctors’ prescription.

Analysis of situation at hand

• In order to salvage Glaxo’s poor product pusher image and also to not let the discovery of a truly
revolutionary product from going down the drain, large budget was allocated to brandish Zantac in
its rightful glory.
• Co-marketing efforts on a global scale and rapid operational decisions in bringing down dosage
and instilling a new dynamic in the ulcer disease landscape from temporary pain relief to a more
long- term chronic image in need of permanent treatment worked wonders for the brand
• A pervasive ad campaign positioning the product as faster, simpler and safer helped gain traction.
• Price inelasticity was leveraged to price the product at a premium and collaborating with opinion
leaders established firmly the credibility of Zantac as a superior product.
• A series of mistakes like dosage miscommunication, absence of branding efforts, countering side
effects caused Tagamet to be wiped out of the industry.

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 Recommendations
• Continually involving opinion leaders in clinical trials and conferences can create awareness and
image for Zantac prior to the launch of line extensions of the product.
• As Zantac is current market leader in ulcer medication, they should venture into new line of
medicine that is currently in their pipeline considering the entire spectrum of gastrointestinal
diseases. Soon the anti-ulcerant space will be saturated with competition.
• Should invest in R&D to bring about improvements in dosage schedule.
• Keeping track of its competitors like Losec and others. They could even consider acquiring Losec
as an extension of their portfolio.
• Make people aware about the gastrointestinal disease through seminars and online forums, blogs
etc. which could include educating them about harmful effects of smoking, frequent use of aspirin,
non-steroidal and anti-inflammatory drugs prescribed for arthritic conditions.
• Tie-up with loyalty programs that encourage people to indulge in healthier eating habits and
rewards them by involving them into allied commercial ventures.

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