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Pharmaceutical companies

and their patent expiries


Pharmaceutical companies face difficult times when a patent of a brand name drug expires.
Brand name drugs often see a large decline in their sales value. This research studies, using
five case studies, what pharmaceutical companies do to overcome such a sales decline. The
used strategies are evaluated, using sales values, to see whether these strategies work.
Pharmaceutical companies have five possible brand extension strategies they can use,
namely: Extended release !"#, new indication, second generation, fixed$dose$combination
%&'# and over$the$counter (T'#. Based on the results of this research, the second
generation strategy is the most effective strategy pharmaceutical companies can use to
overcome patent expiry of their blockbuster brand name drugs.
0
TABLE OF CONTENT
ACKNOWLEDGEMENTS--------------------------------------------------------------------------------- 2
TABLE OF CONTENT-------------------------------------------------------------------------------------- 3
1 INTRODUCTION--------------------------------------------------------------------------------------- 5
Table 1 Framework used in this thesis-------------------------------------------------------7
2 LITERATURE REVIEW------------------------------------------------------------------------------- 9
2.1 T!"#$ "F %#&'( !)T!'*+"'*-------------------------------------------------------------------- ,
Table 2 &nso--.s Product-/arket 0rowth matrix-----------------------------------------10
)*.+.+ ,arket penetration$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ +-
)*.+.* ,arket development$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ +-
)*.+.. Product development$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ +-
)*.+./ &iversification$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ++
2.2 %#&'( !)T!'*+"' *T#&T!1+!* +' T! P&#/&2!3T+2&4 +'(3*T#$------------------------11
)*.*.+ ,arket penetration 0 Extended release !"#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+*
)*.*.* ,arket development 0 1ndication expansion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+.
)*.*.. Product development 0 2econd generation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+/
)*.*./ &iversification 0 %ixed$dose combination and over$the$counter$$$$$$$$$$$$$$$$$$$$$$$$+3
)*.*.3 (ther product$related strategies 0 4ew molecular entity$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+5
)*.*.5 'onclusion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ +5
Table 5 2onceptual -ramework--------------------------------------------------------------16
Table 7 Possible patent term extensions----------------------------------------------------17
2.5 %#&'( !)T!'*+"' *322!**------------------------------------------------------------------------17
)*...+ 6dvantages and disadvantages of brand extension strategies$$$$$$$$$$$$$$$$$$$$$$$$$$$+7
Table 8 &d9anta0es and disad9anta0es brand extensions--------------------------------1:
2.7 %#&'( !)T!'*+"' *322!** +' T! P&#/&2!3T+2&4 +'(3*T#$----------------------------1,
)*./.+ ,arket penetration 0 Extended release$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$+8
2osts o- the extended release strate0;------------------------------------------------------------1,
%ene-its o- the extended release strate0;--------------------------------------------------------1,
#isks o- the extended release strate0;------------------------------------------------------------20
2onclusion------------------------------------------------------------------------------------------- 20
)*./.* ,arket development 0 4ew indication$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$*+
2osts o- a new indication strate0;---------------------------------------------------------------- 21
%ene-its o- a new indication strate0;-------------------------------------------------------------21
#isks o- a new indication strate0;---------------------------------------------------------------- 22
2onclusion------------------------------------------------------------------------------------------- 22
)*./.. Product development 0 2econd generation$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$**
1
2osts o- a second 0eneration strate0;------------------------------------------------------------25
%ene-its o- a second 0eneration strate0;---------------------------------------------------------25
#isks o- a second 0eneration strate0;------------------------------------------------------------25
2onclusion------------------------------------------------------------------------------------------- 27
)*././ &iversification 0 %ixed$dose combination and over$the$counter$$$$$$$$$$$$$$$$$$$$$$$$*/
2osts o- a -ixed-dose combination and o9er-the-counter strate0;----------------------------27
%ene-its o- a -ixed-dose combination and o9er-the-counter strate0;-------------------------28
#isks o- a -ixed-dose combination and o9er-the-counter strate0;----------------------------28
2onclusion------------------------------------------------------------------------------------------- 28
3 METHODOLOGY------------------------------------------------------------------------------------- 27
5.1 /!T"(---------------------------------------------------------------------------------------------- 27
)..+.+ 'ase study$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ *7
)..+.* 'ase study in this research$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$*9
)..+.. 2ales value$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ .-
5.2 (&T& &'&4$*+*--------------------------------------------------------------------------------------- 51
4 RESULTS------------------------------------------------------------------------------------------------ 33
7.1 <+T+'-2&*! &'&4$*+*----------------------------------------------------------------------------- 55
)/.+.+ Effexor Effexor !"#$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ..
Patent expir; !--exor )# and its considered strate0ies----------------------------------------57
2onclusion------------------------------------------------------------------------------------------- 57
)/.+.* Pro:ac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ ./
Patent expir; Pro=ac and its considered strate0ies----------------------------------------------58
2onclusion------------------------------------------------------------------------------------------- 56
)/.+.. Prilosec$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ .7
Patent expir; Prilosec and its considered strate0ies--------------------------------------------57
2onclusion------------------------------------------------------------------------------------------- 5:
)/.+./ ;antac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ .9
Patent expir; >antac and its considered strate0ies----------------------------------------------5,
2onclusion------------------------------------------------------------------------------------------- 5,
)/.+.3 'laritin$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /-
Patent expir; 2laritin and its considered strate0ies---------------------------------------------70
2onclusion------------------------------------------------------------------------------------------- 71
7.2 2#"**-2&*! &'&4$*+*-------------------------------------------------------------------------------71
Table 6 2onsidered brand extension strate0ies--------------------------------------------72
Table 7 Final brand extension strate0ies----------------------------------------------------72
7.5 *&4!* ?&43! !?&43&T+"'-------------------------------------------------------------------------- 75
)/...+ Effexor !"$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ //
Table : *ales 9alue !--exor )# @?erispanA ?"'&B--------------------------------------77
)/...* Pro:ac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /3
Table , *ales 9alue Pro=ac @annual reportsB-----------------------------------------------78
)/.... Prilosec$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /5
Table 10 *ales 9alues Prilosec @annual reportsB-------------------------------------------76
)/.../ ;antac$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /7
Table 11 *ales 9alues >antac @external sourceB--------------------------------------------77
)/...3 'laritin$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /9
Table 12 *ales 9alues 2laritin @annual reportsB--------------------------------------------7:
)/...5 'onclusion$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ /8
Table 15 "9er9iew h;potheses--------------------------------------------------------------80
5 CONCLUSION------------------------------------------------------------------------------------------ 51
RECOMMENDATIONS------------------------------------------------------------------------------ 52
6.1 /&'&1!#+&4 +/P4+2&T+"'*------------------------------------------------------------------------82
6.2 #!*!&#2 +/P4+2&T+"'*----------------------------------------------------------------------------82
2
7 LIMITATIONS AND FUTURE RESEARCH----------------------------------------------------54
7.1 4+/+T&T+"'*------------------------------------------------------------------------------------------ 87
7.2 F3T3#! #!*!&#2----------------------------------------------------------------------------------- 88
REFERENCES---------------------------------------------------------------------------------------------- 57
A!!ENDICES----------------------------------------------------------------------------------------------- 2
&PP!'(+) + P&#/&2!3T+2&4 +'(3*T#$------------------------------------------------------------62
&PP!'(+) ++ <&)/&'-&T2 &2T-------------------------------------------------------------------65
5
1 INTRODUCTION
The pharmaceutical industr;
1
is -acin0 di--icult times. <hen pharmaceutical companies -ace
the expir; date o- a patent o- a prescription dru0 @herea-ter re-erred to asC brand name dru0B
other pharmaceutical companies can easil; introduce 0eneric dru0s to the marketA which will
compete directl; with the brand name dru0. This is -acilitated b; the introduction o- the (ru0
Price 2ompetition and Patent Term #estoration &ct o- 1,:7 in the 3nited *tates o- &mericaA
also known as the <axman-atch &ct
2
@%hatA 2008B. +n 1,:1A *tatman researched the e--ect o-
patent expiration on the market position o- dru0s. e -ound that brand name dru0s that lose
their patent protection are 0raduall; losin0 market share to 0eneric and other brand name
dru0sA howe9er this has onl; a small e--ect durin0 that timeA with a maximum o- 1:.2 per cent
decline in market share @*tatmanA 1,:1C p. 67B. 1enerall;A pharmaceutical companies with
patented dru0s held on to their market share position be;ond patent expiration. 'e9erthelessA
*tatman expressed his concerns about an introduction o- a law which is desi0ned to encoura0e
substitution.
Pharmaceutical companies cannot launch new products whene9er the; want. The; ha9e to 0et
appro9al -rom the Food and (ru0 &dministration @F(&BA which demonstrates that the dru0 is
sa-e and e--ecti9e @see &ppendix + -or a more detailed description o- the appro9al processB.
&-ter such appro9al the dru0 0ets a limited patent period in which it has exclusi9it; ri0hts to
market the dru0. &-ter the introduction o- the <axman-atch &ct in 1,:7 there is a chan0e
obser9able that has both ad9anta0es and disad9anta0es -or pharmaceutical companies o-
brand name dru0s. &n ad9anta0e o- the <axman-atch &ct is that it pro9ides pharmaceutical
companies with a lon0er period o- market exclusi9it;. & disad9anta0e is that the <axman-
atch &ct was le0islated to enable -aster introduction o- 0eneric dru0s @%hatA 2008B. The
increasin0 competition in the industr; results in si0ni-icant reductions in sales -or brand name
dru0s once the patent expires. & 0ood example is the 0eneric entr; o- -luoxetine in the
antidepressant marketA in 2001. <ithin two weeks the market share o- the 0eneric -luoxetine
exceeded the market share o- Pro=acA the brand name dru0 o- !li 4ill; @(russ et al.A 2007B.
&ccordin0 to 1rabowski and ?ernon @1,,2B more than hal- o- a brand name dru0s. market
share is lost durin0 the -irst ;ear a-ter patent expir;. This indicates that brand name dru0s -ace
1
& more detailed description o- the pharmaceutical industr; can be -ound in appendix +
2
& more detailed description o- the <axman-atch &ct can be -ound in appendix ++.
7
a di--icult time when the; -ace patent expir; and there-ore it is increasin0l; important -or
pharmaceutical companies to de-end their re9enues @%ruceA 2005B. This research is there-ore
-ocused on brand name dru0s that -ace patent expir; and their strate0ies to o9ercome the
competition o- 0eneric dru0s.
This research is mainl; -ocused on what pharmaceutical companies do to maintain their
re9enues when the; -ace patent expir;. Pharmaceutical companies o- brand name dru0s ha9e
to -ind a wa; to maintain their sales 9alues and o9ercome the competition o- 0eneric dru0s
when patent expiration is approachin0. Pharmaceutical companies ha9e di--erent strate0ies
that the; could useC promotional strate0iesA product-related strate0iesA pricin0 strate0iesA
partnerships and the le0al route @&0rawal and ThakkarA 1,,7B. This research is -ocused on the
product-related strate0ies. Product-related strate0ies are strate0ies that mainl; contain
alterations in the dru0 itsel-. +t is interestin0 to explore the t;pes o- product-related strate0ies
pharmaceutical companies use to extend the li-ec;cle o- a dru0A thus o9ercomin0 a sales
decline a-ter patent expir;. +n addition to the strate0; itsel-A the timin0 o- the strate0; is also
important. +n this researchA the last three ;ears o- a patent term are important. The strate0;
implemented in the be0innin0 o- the li-ec;cle is not seen as a strate0; to o9ercome patent
expir;A rather it is seen as a strate0; to broaden a consumer base or to o--er a better product. &
strate0; implemented at the end o- the patent term is seen as a strate0; to extend the patent
termA or protect the sales. There-oreA a three ;ear period is chosen. !xamples o- product-
related strate0ies in the pharmaceutical industr; areC extended release @)#BA indication
expansionA second 0enerationA -ixed-dose combinations @F(2BA and o9er-the-counter @"T2B
@D9esicA 200:B. These examples are shown in Table 1. &n )# is a renewed dru0 where the
acti9e in0redient is released slower in the bod;E it contains the same acti9e molecule. &n
indication expansion is a strate0; in which a dru0 is used -or a new indication. & second
0eneration is a strate0; in which a dru0 is renewed -or the same market but with a di--erent
-ormulation. & F(2 in9ol9es a new product with combined acti9e in0redients that can be
launched in a new indication market. &n "T2 dru0 is a dru0 which is sold directl; to
consumers without the need -or a prescription.
<hen a dru0 is approachin0 the date o- patent expir; the assets o- the dru0 itsel-A called brand
eFuit;A are important. %rand eFuit; o- a prescription dru0 consists -or example o- the brand
nameA researchA knowled0e and current customers @DellerA 200:B. !xperiences in the market
and with the product are also important assets -or a pharmaceutical compan; when -acin0
8
patent expiration. To sustain brand eFuit; pharmaceutical companies can de-ine a brand
le9era0e strate0;A usin0 the ori0inal brand to de9elop a new or similar product and introduce it
to the market @TauberA 1,::B. &ccordin0 to %alachander and 1hose @2005BA companies are
moti9ated to le9era0e a brand.s eFuit;A and the; do this b; proli-eration o- brand extensions.
%rand extension theor; discusses that a brand can be extended into the same marketA or to a
new market. & compan; can come up with a completel; new productA or the; can sta; with
the old product. +n Table 1 ;ou can -ind the basic -ramework used in this research which
combines the product-related strate0ies -or pharmaceutical companiesA as described abo9eA
with the product-market matrix o- &nso-- @1,8:B.
Table 1 Framework used in this thesis
The product-related strate0iesA or brand extension strate0iesA are illustrated with the example
o- the brand name dru0 &dalatA which has the acti9e in0redient calcium-anta0onist ni-edipine
@D9esicA 200,B. This dru0 was -irst used -or h;pertension in 1,78A howe9er sales could be
increased with new -ormulations @*andner and >ie0elbauerA 200:B. These new -ormulations
were called 'i-edipine-#etard and 'i-edipine-"ros and were once-dail; dosin0 dru0s. <ith
such a new -ormulation a dru0 could 0et appro9al -rom the F(& and 0enerall; 0et a limited
patent extension -or up to -i9e ;ears. The abo9e product-related strate0; is an example o- a
brand extension strate0;A what will be used as the basis o- this research. Pharmaceutical
companies tr; to continue with their success brand b; introducin0 brand extensions and with
that the; shi-t the demand -rom the ori0inal brand to their new extension and thereb; the;
could extend the li-ec;cle o- the dru0. <ith the extension o- the li-ec;cle the; could maintain
the sales 9alues when the; -ace patent expir; o- their brand name dru0.
+n this research the -ollowin0 central research Fuestion is answeredC
<hat kind o- brand extension strate0ies are pharmaceutical companies usin0 when
prescription dru0s are -acin0 patent expiration and what is the impact on their sales 9aluesG
6
(espite the amount o- research in this areaA the research on li-ec;cle extension strate0ies
pharmaceutical companies actuall; -ollow when -acin0 patent expir; and whether these
strate0ies are e--ecti9e is not thorou0hl; studied @1rabowski and ?ernonA 1,,2B.
The research Fuestion consists o- two maHor elements. FirstA it is acknowled0ed that
pharmaceutical companies use brand extension strate0ies when the; -ace patent expiration. *o
the -irst Fuestion to be answered isC <hat kind o- brand extension strate0ies are
pharmaceutical companies usin0 in the last three ;ears o- their patent termG & second element
is whether these strate0ies are e--ecti9e. &ccordin0l;A the second Fuestion isC &re the sales
9alues maintained throu0h the used brand extensionsG
+n order to answer the central research Fuestion a case stud; is done to see what kind o-
li-ec;cle extension strate0ies are used b; pharmaceutical companies. Therea-terA an e9aluation
o- sales 9alues o- both the brand name dru0 and the brand extensions is done. *ales 9alues
will be e9aluated one ;ear be-ore the strate0; is introduced and one ;ear a-ter the strate0; is
introduced to see whether the sales 9alues areA at leastA maintained.
The research starts with a literature stud; -rom which a conceptual -ramework is de9eloped.
This -ramework is based upon the theor; o- brand extensions and the di--erent strate0ies
pharmaceutical companies can use to o9ercome patent expir; @see Table 1B. &-ter the
literature stud; the research will continue with a case stud;. +n this case stud;A workin0 papers
are e9aluated to see what kind o- strate0ies pharmaceutical companies are -ollowin0 when
the; -ace patent expir;. The strate0ies will be e9aluated accordin0 to the -ramework
de9eloped in the literature re9iew. &-ter this case stud; an e9aluation o- the sales 9aluesA o-
the dru0s e9aluated in the case studiesA will -ollow. The anal;sis o- the results o- the case
stud; and the sales e9aluation will result in a clear understandin0 o- e--ecti9e strate0ies
pharmaceutical companies can use to maintain their sales. &-ter the empirical part o- the
research a conclusion o- the research will -ollow. Finall;A implicationsA limitations and areas
-or -uture research will be described.
7
2 LITERATURE REVIEW
+n this literature re9iew the theor; o- brand extensions will be thorou0hl; e9aluated. FirstA a
description o- the theor; on brand extensions will be 0i9en in order to de9elop a -ramework.
*econdA a thorou0h e9aluation o- brand extensions in the pharmaceutical industr; will extend
the existin0 -ramework into a conceptual -ramework -or possible brand extensions in the
pharmaceutical industr;. +n the third para0raphA an e9aluation o- ad9anta0es and
disad9anta0es o- the strate0ies will -ollow and this will result in h;potheses. The conceptual
-ramework in combination with the h;potheses will be used in the empirical part o- this
research.
"2#1 T$%&'( &) *'+,- %./%,01&,0
&lthou0h in the research o- Tauber @1,::B it was stated that Theodore 1amble was the -irst
who wrote about brand extensions in 1,67A &nso-- @1,8:B had also written about brand
extensionsA or di9ersi-ication strate0; what it was acknowled0ed back then. &ccordin0 to
&nso-- @1,8:BA a di9ersi-ication strate0; is a speci-ic kind o- shi-t in the product-market
composition o- a compan; to dri9e -uture 0rowth. &nso-- describes -our di--erent strate0ies
-or business 0rowthA -our product-market strate0iesE market penetrationA market de9elopmentA
product de9elopmentA and di9ersi-ication. &lthou0h there are a 9ariet; o- 9er; di--erent
models to describe real-li-e situations @&nso--A 1,8:BA this 0rowth model is used as a basis -or
this research. !xamples o- di--erent extensions mentioned in the literature areC 'o9el 9ersus
older line extensionsA non-branded 9ersus brandedA co-branded 9ersus sel- branded etc. @on0
et al.A 2008B. *imilarl;A as mentioned in the introductionA there are se9eral li-ec;cle extension
strate0ies that pharmaceutical companies can use which can be placed in the -our Fuadrants o-
this modelA these di--erent strate0ies will be thorou0hl; e9aluated in para0raph 2.2. <hile
there is a lot o- research on brand extensionsA this basic model o- &nso--A the product-market
0rowth matrix @DellerA 200:BA is still 9er; use-ulA particularl; in this research. +n Table 2 ;ou
can -ind the basic model o- the product-market 0rowth matrix o- &nso--.
:
Table 2 &nso--.s Product-/arket 0rowth matrix
2.1.1 /arket penetration
/arket penetration is a product-market 0rowth strate0; in which the same product is used to
sell the product in the same marketA see Table 2. +n other wordsA the compan; is not departin0
-rom its ori0inal product-market strate0;A it is an incremental product. &n example o- such a
strate0; could be that there is a marketin0 campai0n which stimulates current customers to
bu; the current productA expandin0 its customer base. "r the strate0; in9ol9es -indin0 new
customers which are in the same market but did not use the product ;et. $etA another example
is a small chan0e in the product which does not reall; chan0e the product but 0i9es it more
tasteA or is a more e--ecti9e product which 0enerates more consumers.
2.1.2 /arket de9elopment
/arket de9elopment is a product-market 0rowth strate0; in which the same product is used to
ser9e a di--erent marketA see Table 2. "-ten the product undertakes a small alteration in order
to ser9e the new market. &n example o- such a strate0; is that a product which is mainl;
reco0nised as a product -or older people is now repositioned as a product -or ;oun0er people
as well. *uch a strate0; is used to 0ain more market share b; broadenin0 the consumer base.
2.1.5 Product de9elopment
Product de9elopment is a product-market 0rowth strate0; in which the existin0 market is
ser9edA howe9erA a newerA si0ni-icantl; impro9ed product is launched. This in9ol9es next
0eneration products. &n example o- such a strate0; is that a product is impro9ed -or the same
market in order to sell more. #e0ularl;A the old product is not sold an;moreA onl; the new and
impro9ed product is sold to the customers. owe9er it is possible that the old product is still
sold next to the new and impro9ed product. People who do not want to switch to the new
product can still bu; the older 9ersion. This strate0; is used to keep customers satis-ied and to
sta; ahead o- the competition.
,
2.1.7 (i9ersi-ication
(i9ersi-ication is a product-market 0rowth strate0; in which a new product is de9eloped to
ser9e a complete new market. &n example is that an established brand de9elops a new product
that ser9es a di--erent market than what it was ser9in0 be-ore. These radical inno9ations
reFuire a lot o- research and de9elopment.
&ll -our strate0ies are paths which companies can take toward -uture 0rowth @&nso--A 1,8:B.
These -our strate0ies can take di--erent -orms in di--erent industriesA and this is the reason that
the possible brand extension strate0ies -or the pharmaceutical industr; are e9aluated next in
order to ad9ance the existin0 -ramework @see Table 2B into a conceptual -ramework -or the
pharmaceutical industr;.
"2#2 B'+,- %./%,01&, 0/'+/%21%0 1, /$% 3$+'4+5%6/15+7 1,-60/'(
*ince 1,:7A pharmaceutical companies o- prescription dru0s -ace stron0 competition o-
0eneric dru0 manu-acturers. +n the literature there is extensi9e research on di--erent aspects o-
the pharmaceutical industr;. +n the research o- 2a9es et al. @1,,1B the competiti9e
en9ironment a-ter patent expir; is studied. The research re9eals that prices o- 0eneric
competitorsA when the; enter the marketA are much lower in comparison to the branded dru0s.
This is a point o- caution -or pharmaceutical companies. +n this research pricin0 issues are not
examined. Possible le0al strate0ies to extend the patent term o- a dru0 when it -aces patent
expir; is thorou0hl; researched b; %hat @2008B and will not be researched here. &nother le0al
route which will not be -urther discussed here is the use o- trademarks. Trademarks last -or a
li-etime and 0i9e the manu-acturer le0al protection -or a brand nameA lo0o etc. Trademarks
di--erentiate the product @2hudno9sk;A 1,:5B. 1eneric competition cannot use the brand name
o- the dru0 and there-ore cannot make use o- the acFuired brand lo;alt; @*tatmanA 1,:1B. &
-ourth topic o- research is li-ec;cle mana0ement @42/B @D9esicA 200:B. The paper o- D9esic
re9iews what pharmaceutical companies could do to maximise their return on in9estment.
(ue to stron0 re0ulations and increasin0 competition in the industr;A pharmaceutical
companies should put 0reater emphasis on the product.s li-ec;cle. There is a need -or 42/E
when and how to mana0e each sta0e o- the li-ec;cle. & critical sta0e in the li-ec;cle is the
expiration o- a patent which needs to be mana0ed. 42/ strate0ies will allow the companies
to maximise their return on in9estment @D9esicA 200:B.
10
&s mentioned in the introductionA this research is -ocused on product-related strate0iesA brand
extension strate0ies. <hat pharmaceutical companies can do with their products to o9ercome
patent expir;. +n other wordsA this research is -ocused on li-ec;cle extension strate0ies
@herea-ter re-erred to asC brand extension strate0iesB pharmaceutical companies can -ollow. +n
the literature di--erent possible strate0ies -or pharmaceutical companies are explained
@D9esicA 200:A *andner and >ie0elbauerA 200:B. There are a lot o- di--erent options -or
pharmaceutical companies to pursue. &s mentioned in the introduction the promotional
strate0iesA pricin0 strate0iesA partnerships and the le0al route are be;ond the scope o- this
research. There-oreA onl; the product-related strate0iesA the brand extension strate0iesA that
pharmaceutical companies can -ollowA will be elaborated on.
The possible brand extension strate0iesA as mentioned in the introductionA areC )#A indication
expansionA second 0enerationA F(2A and "T2. These brand extensions strate0ies will be
thorou0hl; explained next and will be linked to the brand extension dimensions o- &nso--
which will result in a conceptual -ramework -or this research @see Table 5B.
2.2.1 /arket penetration !xtended release @)#B
&n )# is a brand extension strate0; where a pharmaceutical compan; in9ents a dru0 which
dissol9es slowl; and releases the dru0 o9er time inside the bod; o- the patient. "ther uses o-
the name )# areC Time release technolo0;A also known as sustained-release @*#BA sustained-
action @*&BA extended-release @!#A )#A or )4BA time-release or timed-releaseA controlled-
release @2#BA modi-ied release @/#BA and continuous-release @2# or 2ontinB @Time release
technolo0;B. This research will use )# as an o9erall name -or this strate0;. )# means that
the dru0 is released o9er timeA allowin0 patients to take the dru0 Hust once dail; rather than
twice or e9en thrice dail;. +n 0eneralA it is the same dru0 -or the same market but with a
di--erent use o- the dru0A a so-called incremental chan0e o- the dru0. &n )# is o-ten used
earlier in the li-ec;cle o- a dru0A so not at the time o- patent expir;. &n example o- an )#
strate0; is !--exor )# -rom the pharmaceutical compan; <;eth. !--exor )# was launched in
1,,5A in the same ;ear as !--exor was launched. !--exor )# was promoted as a dru0 -or the
treatment o- anxiet; disorders associated with depression @/ikkilineniA 200,B. !--exor on the
other hand was onl; promoted -or the treatment o- maHor depression disorder @/((B. <ith an
)# strate0; a pharmaceutical compan; can -ile -or an extension o- the patent and could 0et
up to three ;ears o- an extension o- its market exclusi9it; @%hatA 2008B. +n 0eneralA up to three
11
;ears o- extension is 0i9en with an )# strate0;A howe9er this does not necessaril; ha9e to be
the case. !9er; dru0 is indi9iduall; e9aluated b; the F(&A this includes all possible brand
extensions.
This )# strate0; replaces the market penetration strate0; in the product-market 0rowth
matrix o- &nso--. &s with the market penetration strate0;A the )# strate0; in9ol9es the same
product and ser9es the same marketA onl; an incremental chan0e takes place.
2.2.2 /arket de9elopment +ndication expansion
&n indication expansion @herea-ter re-erred to asC new indicationB strate0; is a brand
extension strate0; in which a pharmaceutical compan; demonstrates that the dru0 is e--ecti9e
-or other conditions and diseases than the ori0inal dru0 was ori0inall; patented -or @*andner
and >ie0elbauerA 200:B. The aim o- this strate0; is to ser9e a complete new marketA in this
case a market with a di--erent diseaseA and secure market share. & si0ni-icant amount o-
s;stematic research and de9elopment has to be in9ol9ed in this strate0; @D9esicA 200:B. This
strate0; is o-ten pursued earl; in the li-ec;cle o- a dru0. The strate0; behind *ildena-ilA -rom
the pharmaceutical compan; P-i=erA is an example o- such a strate0;. This dru0 was -irst used
to treat &n0inaA un-ortunatel; -ailin0 in that area. owe9erA the dru0 was later appro9ed -or
use to treat !rectile (;s-unction @!(B @*andner and >ie0elbauerA 200:B. <ith a new
indication strate0; the pharmaceutical compan; has to pro9e that the dru0 is e--ecti9e and sa-e
-or a new disease. <ith this strate0; the pharmaceutical compan; can also -ile -or a new
patent in which the; ha9e the chance to 0et up to three ;ears extension o- their market
exclusi9it;. #ecallA e9er; dru0 is e9aluated indi9iduall; b; the F(&.
This strate0; can also replace one o- the -our product-market 0rowth strate0ies o- the model
o- &nso--. ereA it can replace the market de9elopment strate0; in the model. #ecall that a
new indication ser9es a new market with another disease. ereA it ser9es new patients. +n the
product-market 0rowth matrix the market de9elopment strate0; is a strate0; in which another
market is ser9ed with the same productA which is similar to this new indication strate0;.
12
2.2.5 Product de9elopment *econd 0eneration
& second 0eneration strate0; is a brand extension strate0; which includes new -ormsA new
s;nthesis techniFues and new dosa0es o- the ori0inal dru0. & second 0eneration strate0; is
sometimes called re-ormulation launch @D9esicA 200:B. & second 0eneration is a new and
impro9ed dru0. +t is si0ni-icantl; di--erent -rom the -irst 0eneration but ser9es the same
consumers as the -irst 0eneration. <ithin the second 0eneration strate0; there are two possible
strate0iesC 'ew -ormulation and F(2. The two strate0ies are sli0htl; di--erent -rom each
other. & new -ormulation is a chan0e in the process o- makin0 the dru0. & F(2
5
is combinin0
di--erent acti9e molecules. The new -ormulation strate0; is to ser9e existin0 consumersA while
the F(2 strate0; ser9es both existin0 and new consumers. The new -ormulation strate0; will
be called second 0eneration strate0; in this research. & so-called second 0eneration dru0 can
be seen as an impro9ement o- the ori0inal dru0. !xamples o- impro9ements include impro9ed
sa-et;A -ewer side e--ectsA better Fualit; o- li-e e--ects and -ewer doses @%hatA 2008B. & 0ood
example o- a second 0eneration dru0 is 'exiumA which is the -ollow-up dru0 o- Prilosec and
is launched in 2001. 'exium is made -rom a re-ined -orm o- the acti9e in0redient o- Prilosec.
The aim was to di--erentiate the second 0eneration -rom its ori0inal dru0 and there-ore let the
users switch to this second 0eneration dru0. 2ommunication o- a clear bene-it -or patients and
doctors can be communicated in order to in-orm the users and moti9ate them to use the
second 0eneration dru0 as a replacement o- the ori0inal brand name dru0. <ith this strate0;
the pharmaceutical compan; can -ile -or an extension o- the patent with the F(& which could
extend the market exclusi9it; o- the dru0 -rom six months up to -i9e ;ears. *ometimesA when
a dru0 is considered as a new dru0A althou0h it is launched as a second 0enerationA a
pharmaceutical compan; can -ile -or a new patent which 0i9es the new dru0 a market
exclusi9it; o- twent; ;ears. From these twent; ;ears the market appro9al time should be
subtracted. #ecallA e9er; dru0 is e9aluated indi9iduall; b; the F(&.
This strate0; -its well with the product de9elopment strate0; o- the product-market 0rowth
matrix o- &nso-- @1,8:B. #ecall that the product de9elopment strate0; is a strate0; in which a
product is altered to pro9ide a better product -or the existin0 market. +n the second 0eneration
strate0; exactl; the same is happenin0A the product is impro9ed to ser9e the same market with
a si0ni-icantl; impro9ed dru0.
5
The F(2 strate0; is more o-ten launched in a new market and there-ore is placed under di9ersi-ication and
thorou0hl; discussed in 2.2.7.
15
2.2.7 (i9ersi-ication Fixed-dose combination and o9er-the-counter
<ithin the di9ersi-ication Fuadrant o- the model o- &nso-- there are two strate0ies that
pharmaceutical companies can use. FirstA the F(2 strate0;A this is a strate0; in which existin0
compounds are combined into a new product which can be used -or a new indication. & F(2
strate0; in9ol9es a new product that can be launched in a new indication market. & F(2
strate0; is a challen0in0 option. & F(2 strate0; can ser9e both a new market and the existin0
marketE howe9er it is most o-ten used -or a new market. This strate0; has the chance to -ile
-or a new patent. &n example o- a F(2 strate0; is !x-or0eIA which is a combination o-
amlodipineA and 9alsartan @D9esicA 200:B. This F(2 is pro9ed to be e--ecti9e in reducin0
blood pressures and on top o- that it has a reduced amount o- side e--ects.
*econdA there is the "T2 strate0;. This strate0; is di--erent than the F(2 in that the dru0 is
not sold as a prescription dru0 an;moreE patients can bu; the product o9er-the-counter in a
pharmac; or other shop. & pharmaceutical compan; has to appl; -or appro9al at the F(& to
0et an "T2 status -or the dru0. This is 0i9en when the dru0 is pro9ed to be hi0hl; trustworth;
and sa-e to use without the need o- a prescription -rom a doctor. <ith this strate0; 0eneric
prescription dru0s can come into the marketA but will not ha9e a hi0h chance o- success
because the "T2 dru0 is known b; consumers and is now easier to access. The 0eneric dru0s
in the market would still need a prescriptionA so it is not as eas; to purchase as the known
"T2 9ersion.
<ith the F(2 strate0;A a pharmaceutical compan; can -ile -or a new patent which 0i9es
market exclusi9it; o- twent; ;ears @<T" "/2A 2006B. The market appro9al time is
subtracted -rom these twent; ;ears. 2on9ersel;A the "T2 strate0; cannot be used to -ile -or a
patent extension. &lthou0h the "T2 strate0; is sometimes used to maintain the sales 9alue o-
a dru0A it is not a brand extension strate0; that extends patent li-e. owe9er it could be used
as a strate0; to o9ercome patent expir; and there-ore is seen as a brand extension strate0;A or
li-ec;cle extension strate0;A in this research.
The F(2 and "T2 strate0; replaces the di9ersi-ication strate0; in the matrix o- the product-
0rowth strate0ies. #ecall that with the di9ersi-ication strate0; a new product is de9eloped to
ser9e a new marketA which is similar to the F(2 and "T2 strate0;.
17
2.2.8 "ther product-related strate0ies 'ew molecular entit;
& new molecular entit; @'/!B is a strate0; where a pharmaceutical compan; in9ests in
research and de9elopment to disco9er a complete new dru0 -or a new market. This inno9ati9e
strate0; is costl; @approximatel; J800 to J:00 million @2onle;A 2008 and (i/asi et al.A
2005BB and takes a lot o- time due to testin0 and meetin0 other patent reFuirements. %road
claims -or new dru0s are di--icult to make due to the limited data one can achie9e. (espite the
-act that there is a need -or an in9estmentA '/!.s are worthwhile disco9erin0 due to a lon0
patent period. &n example o- a '/! is 4ipitorIA a dru0 which is appro9ed b; the F(& in
1,,6 and is used -or treatment o- hi0h cholesterol @3* Food and (ru0 &ssociationB. This
'/! strate0; is a product-related strate0; due to the -act that it in9ol9ed disco9erin0 a new
product. The '/! strate0; howe9er is not a brand extension strate0; because the
pharmaceutical compan; is not tr;in0 to extend the li-ec;cle o- an existin0 brand name dru0.
There-oreA the '/! strate0; will not be discussed -urther in this research.
2.2.6 2onclusion
The -i9e possible brand extension strate0ies in the pharmaceutical industr; described abo9e
are depicted in the product-market 0rowth matrix below. +n Table 5A all -our product-market
0rowth strate0ies are positioned in the -our Fuadrants. 3nder these -our product-market
0rowth strate0ies the -i9e brand extension strate0ies o- the pharmaceutical industr; are
depicted as well. This combination results in the conceptual -ramework -or this research.
Table 5 2onceptual -ramework
18
+n the abo9e para0raphs the di--erent possible patent extensions are described as well. &
summar; o- the possible patent extensions are depicted in Table 7.
Table 7 Possible
patent term extensions
"2#3 B'+,- %./%,01&, 0655%00
*uccess o- a brand extension is o-ten a matter o- whenA where and how to extend the brand.
*uccess-ul brand extensions ha9e to be well-planned and implemented. 'ew products ha9e a
hi0h risk o- -ailure. <hile new products ha9e a hi0h chance o- -ailureA brand extensionsA on
the other handA ha9e more chance to succeed. %rand extensions o--er a wide ran0e o-
ad9anta0es but it also brin0s disad9anta0es with them @DellerA 200:B. The next para0raph will
elaborate on these ad9anta0es and disad9anta0es o- the -our brand extension strate0ies o-
&nso--. +n para0raph 2.7 these will be applied to the strate0ies in the pharmaceutical industr;A
as depicted in the -ramework in Table 5. The anal;sis o- ad9anta0es and disad9anta0es -or the
di--erent brand extension strate0ies will lead to h;potheses -or this research.
2.5.1 &d9anta0es and disad9anta0es o- brand extension strate0ies
%rand extension strate0ies ha9e both ad9anta0es and disad9anta0es. "ne ad9anta0e o- brand
extension strate0ies is that an impro9ed product could impro9e the brand name dru0.s ima0e
andKor parent brand ima0e @DellerA 200:B. <hen consumers ha9e a positi9e attitude towards a
brandA the extension is likel; to 0et a similar attitude -ormation. & second ad9anta0e is that a
brand extension reduces the percei9ed risk o- that extension b; consumers because consumers
know the brand and its reputation -or introducin0 other hi0h-Fualit; products in the past
@Deller and &akerA 1,,2B. & third ad9anta0e is that brand extension strate0ies reduce costs b;
usin0 promotional expenditures more e--icientl; and b; decreasin0 the costs o- acFuirin0
distribution @&aker and DellerA 1,,0B. & -ourth ad9anta0e is that b; usin0 brand extensions a
compan; a9oids costs o- de9elopin0 a complete new brand or product @DellerA 200:B @e.0. a
new -ormulation costs approximatel; J10-J80 million @%hatA 2008BA whereas a new dru0 costs
16
approximatel; J800 to J:00 million @2onle;A 2008 and (i/asi et al.A 2005BB. & -i-th
ad9anta0e o- brand extension strate0ies is that it could increase market co9era0e b; 0ainin0
new customersA dependin0 on the strate0; used. & sixth ad9anta0e is that with brand extension
strate0ies the brand can be re9italisedA renewin0 the ener0; and interest -or the brand @DellerA
200:B. Finall;A it could pa9e the wa; -or subseFuent brand extensions. <hen a brand
extension is success-ul it is a 0ood base to -urther de9elop and build upon this brand extension
@DellerA 200:B.
%esides all the ad9anta0es described abo9eA brand extension strate0ies also ha9e se9eral
disad9anta0es. The -irst disad9anta0e o- brand extension strate0ies is that it can ha9e a
potential ne0ati9e e--ect on the ori0inal brand name andKor parent brand @4oken and #oedder
LohnA 1,,5BA weakenin0 what the brand name means and stands -or. This could be the case
when extensions are not consistent with the ori0inal brand andKor do not meet consumer
expectations @#oedder Lohn et al. 1,,:B and there-ore are seen as a -ailure. & second
disad9anta0e is that a brand extension can con-use andKor -rustrate consumers @DellerA 200:B.
&n extension can con-use customers because the; do not know which product is the ri0ht one
to choose. & third disad9anta0e is that resistance -rom retailers can be an issue in a brand
extension strate0; @DellerA 200:B. <hen an extension is launched it could be the case that it is
not distributed and there-ore it could end in a -ailure. & -ourth disad9anta0e is that a brand
extension strate0; could be a success but at the same time cannibalise the sales o- an existin0
product @DellerA 200:B. Finall;A b; usin0 a brand extension strate0; the compan; can miss the
opportunit; o- de9elop a complete new brand or product @DellerA 200:B.
+n Table 8 the ad9anta0es and disad9anta0es o- brand extension strate0ies are summarised.
Table 8 &d9anta0es and disad9anta0es brand extensions
17
"2#4 B'+,- %./%,01&, 0655%00 1, /$% 3$+'4+5%6/15+7 1,-60/'(
+n the pharmaceutical industr;A the abo9e described ad9anta0es and disad9anta0es could be
apparent as well. +n this para0raph ad9anta0es and disad9anta0es o- each o- the -our brand
extension strate0ies in the pharmaceutical industr; will be discussed. The bene-its
@ad9anta0esB and risks @disad9anta0esB will be ar0ued and will result in h;potheses -or each
brand extension strate0;.
2.7.1 /arket penetration !xtended release
The strate0; in the -irst Fuadrant o- the conceptual -rameworkA see Table 5A is market
penetration. This strate0; in9ol9es the )# strate0; in the pharmaceutical industr;. This
strate0; is concerned with a slower release o- the dru0 in the bod; o- a patientA resultin0 in an
intake o- the dru0 onl; once-a-da; instead o- twice or e9en more times per da;. This strate0;
in9ol9es a product that is ser9in0 the same market with the same productA tr;in0 to 0et them
more in9ol9ed with the product in order to keep the patients with the dru0 and there-ore with
the compan;A also a-ter a dru0 patent expires. &ppl;in0 -or a patent with this strate0; could
lead to a patent extension o- up to three ;ears @%hatA 2008BA see Table 7.
'osts of the extended release strategy
<ith e9er; brand extension strate0; there are costs in9ol9ed. +n the case o- an )# the costs
are not as hi0h as -or a '/! since it does not ha9e to in9est in a new dru0. This is 9er;
ad9anta0eous -or pharmaceutical companies because in9entin0 a '/! is 9er; costl;. 2osts
in9ol9e marketin0 o- the )# and the alteration o- the dru0 be-ore it can produce the )#.
/arketin0 costs are not 9er; hi0h due to the -act that the ori0inal brand name dru0 andKor
trademark is known and does not need to be hea9il; promoted. &n example o- a promotion o-
an )# which made use o- the ori0inal product is !--exor )# as described in para0raph 2.2.1
@/ikkilineniA 200,B. The distribution and marketin0 costs can be e--ecti9el; mana0ed with an
)# strate0;.
Benefits of the extended release strategy
&n )# strate0; is bene-icial in the e;es o- a consumer due to the -act the @newB dru0 is not
departin0 -rom the ori0inal brand name dru0 and the new dru0 deli9ers an additional bene-it
to the consumer. For exampleA an )# makes the li-e o- a patient easier b; reducin0 the release
time o- the e--ecti9e in0redient in the dru0. The -act that an )# is sta;in0 close to its ori0inal
dru0 and that the li-e o- patients are made easier results in a lower percei9ed risk -or
1:
consumers. FurthermoreA an )# 0i9es the brand name dru0 a boostE people are aware o- the
dru0 and will be on top o- the mind o- consumers. Finall;A when the )# is success-ul this
pro9ides possibilities to introduce subseFuent extensions.
"isks of the extended release strategy
& risk that is in9ol9ed with an )# is the potential -ailure o- the extension. <hen that happens
consumers can lose con-idence in a dru0 and there-ore the ori0inal brand o- the dru0
deteriorates. &nother risk is that consumers 0et con-used or -rustrated with the )#. &n )# is
newA and there is a possibilit; that consumers ma; not understand wh; the; ha9e to switch to
a new prescription. !9en thou0h a pharmaceutical compan; knows that the )# is more
e--ecti9e it could con-use consumers. +t could -rustrate consumers because the; are 9er;
con9enient in the current situation and do not ha9e the need to switch. #etailers are dependent
on insurers in the decision o- which brand name dru0s the; sellA an insurer is pa;in0 -or the
patients. dru0. & risk is that the retailers do not want or cannot sell the )#. +- the )# is not
sold there is a hi0h risk that the extension will -ail. Finall;A cannibalisation can occur when an
)# is introduced in the marketA takin0 awa; sales o- the ori0inal dru0 rather than competin0
dru0s owned b; other pharmaceutical companies.
'onclusion
Taken e9er;thin0 to0etherA an )# is a 0ood strate0; to 0et up to three ;ears extension o- the
market exclusi9it;. owe9er this strate0; is likel; to be used when there is no chance o- a
bi00er and more impact-ul inno9ation. +t is a more 9aluable and e--ecti9e strate0; -or
pharmaceutical companies to take the opportunit; to impro9e the product in order to extend
the market with a new indication dru0A or to impro9e the product in such a wa; that it is a
complete di--erent product. That is wh; an )# strate0; is o-ten used earlier in the li-ec;cleA
when it can extend the patent periodA instead o- bein0 implemented at the time o- patent
expir;. There-oreA the chance that the )# strate0; is used at time o- patent expir;A
approximatel; -rom three ;ears be-ore patent expir;A is low. "ther strate0ies are more likel; to
be used. The success o- an )#A on the other handA will be sa-e and sound due to the -act that
current patients will probabl; switch to the )#. There-oreA

1a
C +n the three ;ears prior to patent expir;A pharmaceutical companies will use the
)# strate0; the least in comparison to the other brand extension strate0ies researched
here.
1,

1b
C 2ombined sales o- the brand name dru0 and its )# are more than 60M o- the
ori0inal sales 9alue o- the brand name dru0 prior to patent expir;.
2.7.2 /arket de9elopment 'ew indication
The strate0; in the second Fuadrant o- the conceptual -rameworkA see Table 5A is market
de9elopment. This strate0; in9ol9es a new indication strate0; in the pharmaceutical industr;.
This new indication strate0; in9ol9es a dru0 which ser9es a di--erent indication market with
the same product. This strate0; is used to expand to a di--erent market in which a
pharmaceutical compan; will sell their dru0s. +t is pre-erable used earl; in the li-ec;cle o- a
dru0 to 0et patents in another area o- treatment and extend market co9era0e o- the dru0.
&ppl;in0 -or a patent with this strate0; could lead to an extension o- the market exclusi9it; o-
up to three ;ears.
'osts of a new indication strategy
<ith a new indication strate0; the costs are not as hi0h as with a '/!A but the costs are
hi0her than that o- an )# strate0;. <ith a new indication strate0; si0ni-icant in9estment in
research and de9elopment is reFuired and also plannin0 is important @D9esicA 200:B. The new
dru0 has to be able to compete with the other existin0 dru0s in the indication market in which
the; are enterin0A in order to be competiti9e. & considerable amount o- marketin0 is needed to
position the dru0 in the new indication market.
Benefits of a new indication strategy
& lar0e bene-it o- the new indication strate0; is that the pharmaceutical compan; is increasin0
its market co9era0e with this strate0;. The new indication is ser9in0 a complete new patient or
disease 0roup. The customer base can be broadened and thereb; secure the market share o-
the brand name dru0. <ith this hi0h market co9era0e a dru0 is less dependent on onl; one
disease or patient 0roup and is increasin0 its chance to 0et a hi0her return on in9estment.
%eside the hi0her return on in9estment the pharmaceutical compan; can also achie9e
economies o- scale due to the -act that the market -or the dru0 is expandin0. &nother
ad9anta0e is that the pharmaceutical compan; has the possibilit; to launch subseFuent brand
extensions. Finall;A with a new indication strate0; a pharmaceutical compan; can a9oid costs
o- de9elopin0 a '/!.
20
"isks of a new indication strategy
& risk o- a new indication strate0; is that the pharmaceutical compan; could miss the
opportunit; to de9elop a completel; new dru0. (ue to the -act that the pharmaceutical
compan; is in9estin0 a lot o- research in -indin0 a new indication -or a dru0 it does not spend
mone; on de9elopin0 a '/!. & new indication strate0; -ocuses on a new market with the
same product instead o- aimin0 -or a new market with a new product. &nother risk o- a new
indication strate0; is that it is used earl; in the li-ec;cle o- a dru0 which means that it
probabl; will not help to maintain the sales 9alue when the date o- patent expir; is
approachin0 @recall that in this research this is -rom three ;ears prior to patent expir;B. & third
disad9anta0e is that a -ailure o- the brand extension could ha9e a dilution e--ect on the
ori0inal dru0. Finall;A a new indication strate0; could -ace resistance -rom retailers. #etailers
could think o- the new indication dru0 as once a0ain another dru0 in that market which could
result in resistance o- the retailer.
'onclusion
+n conclusionA a new indication strate0; is a 9er; e--ecti9e strate0; in an earl; sta0e o- the li-e
c;cle to 0et a patent in other disease areas and in9ol9e themsel9es in other patient 0roups. The
patent could be extended -or up to three ;ears. owe9er when a patent expir; date is
approachin0 this strate0; will not be the best option -or pharmaceutical companies to -ollow.
There-oreA

2a
C +n the three ;ears prior to patent expir;A pharmaceutical companies will not use a
new indication strate0;.

2b
C 2ombined sales o- the brand name dru0 and its new indication dru0 are more than
60M o- the ori0inal sales 9alue o- the brand name dru0 prior to patent expir;.
2.7.5 Product de9elopment *econd 0eneration
The strate0; in the third Fuadrant o- the conceptual -rameworkA see Table 5A is product
de9elopment. This strate0; in9ol9es a second 0eneration dru0 in the pharmaceutical industr;.
This strate0; in9ol9es a si0ni-icant impro9ement o- the ori0inal dru0. & second 0eneration
dru0 is ser9in0 the existin0 market but with a si0ni-icantl; di--erent product. This strate0; is
used to maintain the current customersE let them switch -rom the ori0inal dru0 to the new and
impro9ed dru0. Timin0 is 9er; important with this strate0; to o9ercome cannibalisation.
&ppl;in0 -or a patent with this strate0; could lead to an extension o- the market exclusi9it; o-
21
up to -i9e ;ears or a complete new patent o- twent; ;earsA see Table 7. This strate0; has the
chance to 0et the hi0hest possible patent extension in all strate0ies researched here and
there-ore has the potential to be 9er; e--ecti9e.
'osts of a second generation strategy
&ccordin0 to %hat @2008BA de9elopment o- a second 0eneration dru0 in9ol9es expensi9e
clinical and other studies. 2ompared to a '/! the costs in9ol9ed in a second 0eneration dru0
are not that hi0hA howe9er this strate0; needs a considerable in9estment. &lthou0h it needs
considerable in9estment it could pa; o-- due to the -act that a patent extension o- up to -i9e
;ears is possible. /arketin0 and distribution costs can be e--ecti9el; mana0ed b; usin0 the
ori0inal brand name dru0 andKor trademark to promote the second 0eneration dru0. & 0ood
example is 'exiumA &stra>eneca promoted 'exium as the Npurple pill.A Hust like PrilosecA and
as a better -ormulation o- Prilosec. The; build upon the ori0inal brand eFuit; @2onle;A 2008B.
Benefits of a second generation strategy
First o- allA a success-ul second 0eneration strate0; could ha9e a positi9e e--ect on the ima0e
o- the ori0inal brand name dru0 or e9en on the pharmaceutical compan;. *econdl;A a second
0eneration dru0 has a lower percei9ed risk b; consumers due to the -act that the dru0 is -or
the same disease and is known b; consumers. 2urrent customers are -amiliar with the dru0
and the percei9ed risk o- the impro9ed dru0 is there-ore lower. Patients trust the brand and
there-ore its producer. & third bene-it is that the possible extension o- the patent could create
an increase in the return on in9estment -or the brand name dru0 because it increases the
li-etime o- the dru0. Finall;A the brand could be re9italised throu0h the second 0eneration
dru0A new ener0; is 0i9en to the brand name dru0.
"isks of a second generation strategy
& second 0eneration dru0 has the potential o- -ailureA or to be less success-ul than the ori0inal
brand name dru0 and what was -irst thou0ht. <hen such a -ailure is actuall; happenin0 this
could ha9e a ne0ati9e impact on the ori0inal brand name dru0 or e9en on the pharmaceutical
compan;. &nother risk is that consumers do not want to switch -rom the ori0inal brand name
dru0 to the second 0enerationA which is new and unknown -or them. There is a risk that
consumers 0et -rustrated or con-used with the second 0eneration dru0. #etailers are dependent
on insurers in the decision o- which brand name dru0s the; sellA an insurer is pa;in0 -or the
patients. dru0. & risk is that the retailers do not want or cannot sell the second 0eneration
dru0. +- the second 0eneration dru0 is not sold there is a hi0her chance o- -ailure. FurthermoreA
22
timin0 is 9er; important. <hen there is bad timin0 in9ol9ed in the launch o- a second
0eneration dru0 there is a hi0h chance o- cannibalisation o- the ori0inal dru0. Finall;A the risk
exists that the pharmaceutical compan; misses the chance o- a launchin0 a '/!. The hu0e
in9estment in a second 0eneration dru0 is a step toward a '/!.
'onclusion
Taken e9er;thin0 to0etherA a second 0eneration strate0; is a 9er; use-ul strate0; to o9ercome
patent expir;. &lthou0h there are relati9el; hi0h costs in9ol9edA this strate0; has also the
hi0hest possible return on in9estment. (ue to the possible patent extension there is a
possibilit; to extend the sales to up to -i9e ;earsA or e9en twent; ;ears when a pharmaceutical
compan; applies -or a new patent. +t is hi0hl; likel; that this strate0; is the most e--ecti9e
strate0; when -acin0 patent expir;. There-oreA

5a
C +n the last three ;ears prior to patent expir;A pharmaceutical companies will use
the second 0eneration strate0; the most in comparison to the other brand extension
strate0ies researched here.

5b
C 2ombined sales o- the branded dru0 and its second 0eneration dru0 are more than
60M o- the ori0inal sales 9alue o- the brand name dru0 prior to patent expir;.
2.7.7 (i9ersi-ication Fixed-dose combination and o9er-the-counter
The strate0; in the -ourth Fuadrant o- the conceptual -rameworkA see Table 5A is
di9ersi-ication. This strate0; in9ol9es a F(2A andKor an "T2 strate0; in the pharmaceutical
industr;. The F(2 strate0; in9ol9es a new dru0 that can be launched in a new indication
market. The "T2 strate0; in9ol9es a dru0 in a new marketA namel; the o9er-the-counter
market. /ost o- the timeA the dru0 is also new. %oth strate0ies are used to 0ain new customers
with a new dru0. &ppl;in0 -or a patent with the F(2 strate0; could lead to a new patent o-
twent; ;ears. <ith an "T2 strate0; there is no chance o- 0ainin0 a patent. *ee Table 7 -or an
o9er9iew o- all possible patent term extensions.
'osts of a fixed$dose combination and over$the$counter strategy
The F(2 is a new product with a combination o- existin0 compoundsKmolecules which can be
used -or a new indication. +n order to launch such a F(2A intensi9e research and de9elopment
acti9ities are needed. This includes a si0ni-icant in9estmentA which indicates that it is a
challen0in0 strate0ic option @D9esicA 200:B. & new patent could be acFuired with twent; ;ears
o- exclusi9it; which could lead to a 0ood return on in9estment -or this strate0;.
25
&n "T2 strate0; is not that costl; because the brand name dru0 is 0oin0 o-- patent and is sold
in the o9er-the-counter marketA o-ten in a milder 9ersion. %ecause a milder 9ersion o- a dru0
is launchedA there is not a lot o- research needed.
Benefits of a fixed$dose combination and over$the$counter strategy
& F(2 strate0; is a challen0in0 strate0; in which a new product is launched -or new
customers. %ecause it is a complete new productA althou0h existin0 compounds are usedA the
product is not bene-itin0 -rom the existin0 product that much. There-oreA a 0ood option -or a
F(2 is that it uses the name o- the brand name dru0 in order to ha9e the possibilit; to
re9italise the brand with a new product. <hen the F(2 is success-ul it has the possibilit; to
build upon this brand extension strate0; and introduce other brand extensions.
&n "T2 strate0; has a low percei9ed risk because consumers do not need a prescription
an;more which makes it easier to bu; the dru0. 2onsumers are -amiliar with the dru0 which
lowers the percei9ed risk as well. &nother bene-it is that the pharmaceutical compan; a9oid
the costs o- de9elopin0 a '/!. Finall;A an "T2 has the chance to de-end its tur- and steel
sales o- 0eneric dru0s.
"isks of a fixed$dose combination and over$the$counter strategy
& F(2 strate0; has a hi0h potential o- -ailure due to the -act that it is a risk; strate0; which
needs a lot o- research. "n top o- thatA the consumers cannot build on their knowled0e o- an
existin0 dru0 and there-ore their percei9ed risk is hi0her.
"ne risk -or an "T2 strate0; is that the chance exists to cannibalise sales o- the current brand
name dru0. 2onsumers are pulled towards the "T2 market and pulled awa; -rom the
description market in which the brand name dru0 is operatin0. *econdl;A in -ollowin0 the
"T2 strate0; it could mean that it misses the chance o- a '/!.
'onclusion
2oncludin0A a F(2 strate0; is a costl; and challen0in0 option which means that it takes a lot
o- e--ort to pursue. owe9er it has the chance o- a new patent. &lthou0h it is a use-ul strate0;
to -ollowA it will not be an o-ten used strate0; which pharmaceutical companies -ollow when
the; -ace patent expir; due to the -act that it is 9er; costl;. The; will not use the F(2 strate0;
as a brand extension strate0; when -acin0 patent expir;.
&n "T2 strate0; on the other hand is a strate0; which is cheap in comparison to all other
strate0ies researched here althou0h it does not extend the li-ec;cle o- the brand name dru0.
27
The "T2 strate0; has a 0ood chance o- de-eatin0 0eneric dru0s that come into the market and
that is bene-icial -or the pharmaceutical compan;. & pharmaceutical compan; will there-ore
onl; use the "T2 strate0; when there is no other opportunit; to extend the li-ec;cle o- the
brand name dru0.
The abo9e leads to the -ollowin0 h;pothesis -or these two strate0iesA

7a
C +n the last three ;ears prior to patent expir;A pharmaceutical companies will not
use the F(2 strate0;.

7b
C 2ombined sales o- the branded dru0 and F(2 dru0 are more than 60M o- the
ori0inal sales 9alue o- the brand name dru0 prior to patent expir;.

7c
C +n the last three ;ears prior to patent expir;A pharmaceutical companies will use
the "T2 strate0; onl; when the; do not use one o- the other brand extension strate0ies
researched here.

7d
C 2ombined sales o- the branded dru0 and its "T2 dru0 are more than 60M o- the
ori0inal sales 9alue o- the brand name dru0 prior to patent expir;.
28
3 METHODOLOGY
This research is conducted in order to determine what kind o- brand extension strate0ies
pharmaceutical companies use when their brand name dru0 -ace patent expir;. +n this research
-acin0 patent expir; is seen as three ;ears be-ore patent expir; until the actual patent expir;
date. Furthermore this research studies whether these strate0ies are e--ecti9e. +n order to
answer these Fuestions a case stud; is conducted. & case stud; in which existin0 cases are
e9aluated to -ind out what strate0ies are -ollowed b; pharmaceutical companies when the;
-ace patent expir;. Therea-ter sales 9alues o- these dru0s will be e9aluated. This methodolo0;
chapter will elaborate on the chosen methodA this will include Husti-ication o- the methodA
explanation o- the methodA and how it is conducted.
"3#1 M%/$&-
The method used in this research is the case stud; method. The case stud; method is a method
which is widel; acknowled0ed as a teachin0 de9ice @Perr;A 1,,:B. &lthou0h it is not o-ten
used in marketin0 science @%onomaA 1,:8BA it could be used as a research methodolo0; @$inA
1,,7B and is ad9ocated as a 9alid research strate0; in marketin0 @%onomaA 1,:8B. 2ase stud;
is 9er; use-ul when an obHect in its real-li-e context is researched @$inA 1,,7B. +n this researchA
the strate0ies -ollowed b; pharmaceutical companies are studiedA which is a real-li-e context
situation. &lthou0h it is not a common used research methodA the case stud; is used in this
research.
5.1.1 2ase stud;
& case stud; is de-ined as OPQR a description o- a mana0ement situation.S @%onomaA 1,:8BA or
OPQR a research strate0; which -ocuses on understandin0 the d;namics present within sin0le
settin0s.S @!isenhardtA 1,:,BA or OPQR an empirical inFuir; that in9esti0ates a contemporar;
phenomenon within its real-li-e contextA especiall; when the boundaries between phenomenon
and context are not clearl; e9ident.S @$inA 1,,7B. 2ase studies combine di--erent wa;s o- data
sourcesA namel; inter9iewsA FuestionnairesA archi9esA obser9ationsA -inancial dataA market
per-ormance dataA and competiti9e data @!isenhardtA 1,:,E %onomaA 1,:8B. & case stud; has
9arious aimsC description o- a situationA testin0 existin0 theor;A or 0enerate theor; @!isenhardtA
1,:,B.
26
& case stud; research has se9eral drawbacks. FirstA accordin0 to (ul and ak @200:BA a case
stud; is a Fualitati9e research method and not a statistical research method. *econdl;A a case
stud; uses a small number o- casesA whereas other methods use a lar0er number o- data @(ul
and akA 200:B. Finall;A cases are sometimes o9erl; complex which result in di--icult
interpretation o- the results @!isenhardtA 1,:,B. (espite the drawbacksA there are some bene-its
as well. First o- allA a case stud; uses multiple data sources which pro9ide a better and more
comprehensi9e picture o- the situation under stud; @%onomaA 1,:8B. *econdA case studies
reFuire direct obser9ation and there-ore 0i9e a true 9ersion o- realit; @%onomaA 1,:8B. Finall;A
a case stud; 0i9es a description o- seFuential steps in a mana0ement situation which pro9ides
a clear representation o- the situation @%onomaA 1,:8E (ul and akA 200:B.
&ccordin0 to !isenhardt @1,:,BA the ideal number o- cases does not exist. owe9er !isenhardt
@1,:,B recommends usin0 between -our and ten casesA with more than ten cases the
in-ormation 0ets too excessi9e to cope with.
5.1.2 2ase stud; in this research
+n this researchA a case is de-ined as a description o- a mana0ement situation o- a brand name
dru0 o- a pharmaceutical compan; that is -acin0 patent expir;. The stud; o- the case will
result in a clear ima0e o- the situation in which the pharmaceutical compan; is operatin0 in
and what strate0; is -ollowed in that situation. /oreo9erA existin0 case studies are used to
e9aluate situations o- brand name dru0s o- pharmaceutical companies. The aim o- the case
stud; conducted here is both a description o- the situation and testin0 the h;potheses which
were established -rom the literature re9iew. The case studies used are a thorou0h description
o- a real-li-e situation. From this real-li-e situation a thorou0h description is 0i9en. From the
description a speci-ic -ollowed strate0; can be obtained which are e9aluated in li0ht o- the
brand extension theor;A as described in the literature re9iew. The h;potheses about how o-ten
a strate0; is used can be tested to see how man; times a certain strate0; is -ollowed. Testin0
the h;potheses about sales 9alues can be tested with an e9aluation o- the sales 9alues o- the
dru0 in FuestionA which will be thorou0hl; explained in the next para0raph.
(espite the -act that case stud; research is not o-ten used in marketin0 researchA the case
stud; is used in this research. !9en thou0h it is not o-ten used se9eral researchers identi-; the
case stud; research as a 9alid method in marketin0 @%onomaA 1,:8E $inA 1,,7B. +n this
27
research it is needed to see what kind o- strate0ies pharmaceutical companies are -ollowin0
when their brand name dru0 -ace patent expir;. To stud; what pharmaceutical companies are
doin0A case stud; is a wa; to -ind de-inite answers. Tuantitati9e data is not 9er; -unctional in
this situation because it does not 0i9e a detailed description o- a chosen method. &lthou0h
Fuantitati9e data can pro9ide how man; times a brand extension strate0; is used it cannot
pro9ide in-depth in-ormation about wh; and which brand extension strate0; is -ollowed when
a brand name dru0 is -acin0 patent expir;. There are other methods to -ind Fualitati9e dataA
such as inter9iews and obser9ations. The use o- case studies combines all these di--erent kinds
o- collectin0 Fualitati9e data. There-ore it is the chosen method in this research.
+n this research -i9e existin0 cases will be studied which are obtained -rom the !uropean 2ase
2learin0 ouse @!22B database. The literature su00ests that ideall; between -our to ten
cases are used. The choice to choose -i9e cases is that the cases are a9ailable in the database
and there-ore do not ha9e to be obtained b; inter9iewin0A obser9ationA etcetera. The !22
database is a database -or case studies. These case studies can be used -or teachin0 and
learnin0 @!22A 2011B. &lthou0h these cases are mainl; used -or teachin0A the cases are well
de9eloped and a thorou0h e9aluation o- the brand name dru0. These cases are there-ore 9er;
use-ul -or this research. 'ext to the case studies there will be searched -or more in-ormation
on strate0ies in order to a9oid the possibilit; o- o9erlookin0 certain acti9ities o-
pharmaceutical companies a-ter the case is written. +n-ormation such as annual reports and
websites are in-ormati9e used sources.
2ases will be acFuired -rom lar0e blockbuster dru0s which lost their patent a-ter the
introduction o- the <axman-atch &ct in 1,:7. %lockbuster dru0s are dru0s that ha9e
re9enue o- more than one billion dollar per ;ear @#aHnikanth and ?asudhaA 200,B. &n example
o- such a dru0 is 4ipitorA which lowers the cholesterol. +n 2007A 4ipitor had re9enue o- J12
billion. The di--erent cases are chosen on the basis o- their brand name dru0 and their patent
expir; date. The brand name dru0 should ha9eA as mentioned abo9eA a minimum sales 9alue
o- one billion dollar per ;ear. &-ter acFuirin0 a list o- blockbuster dru0s and their patent
expir; datesA which are in the pastA the cases are randoml; searched -or in the !22 database.
&-ter acFuirin0 the a9ailable cases in the !22 database the cases will be e9aluated on the
content o- the case. +t should be clear -rom the case what kind o- strate0ies the pharmaceutical
compan; considered and what strate0; is used to o9ercome patent expir;. "-ten se9eral
2:
strate0ies are considered to use and sometimes more than one strate0; is used to o9ercome
patent expir;. The strate0; which is used b; a pharmaceutical compan; should be clear -orm
the case in order to be chosen -or this research. <hen the case is not that extensi9eA it is not
9er; use-ul -or this research and there-ore eliminated. +n summar;A the cases are chosen based
upon their blockbuster status and the use-ulness o- the content o- the particular case.
4imitations o- selectin0 the case studies in this wa; will be discussed in the chapter 7. (ue to
the -act that the cases are care-ull; selected based on use-ulnessA the results are 9aluable and
use-ul.
5.1.5 *ales 9alue
&-ter the case method is conducted the sales 9aluesA or re9enuesA o- the particular dru0s will
be e9aluated. <ith extendin0 market exclusi9it; pharmaceutical companies mi0ht maintain
their hi0h sales 9aluesA whereas losin0 its patent can result in a lar0e sales loss to 0eneric
dru0s o- up to :0M @ForteA Papoutsis and &nadiotouA 2005B.
4ookin0 at maintained sales 9alue in this researchA the sales 9alue o- the ori0inal brand name
dru0 and the combined sales o- the ori0inal brand name dru0 and the brand extension are
compared. +n 0eneralA sales 9alues o- the brand name dru0 one ;ear be-ore introduction o- the
brand extension strate0; is compared with the combined sales 9alue o- the ori0inal brand
name dru0 and the brand extension o- one or two ;ears a-ter the introduction. *ometimes
more ;ears will be taken into account to make it a more thorou0h e9aluation. The purpose o- a
brand extension strate0; in the pharmaceutical industr; is to o9ercome its patent expir; and
the loss in the sales 9alue which come with that. & brand extension strate0; is seen as
success-ul when the sales are maintained or when the drop in sales is not as hi0h as expected.
a9in0 a -ixed estimate -or success o- a brand extension strate0; is di--icult due to the -act
that the literature does not ha9e such standards. There-ore literature is used in which is stated
that brand name dru0s lose a lar0e portion o- their sales to 0eneric dru0sA a possible drop in
sales could increase to :0M. These predictions are used to set a standard. &n exampleC For
2laritinA an antihistamine dru0A the anal;sts predicted a decline in re9enues o- 78M in two
;ears @%err;A 2007B. +n usin0 a brand extension strate0;A a pharmaceutical compan; is
attemptin0 to minimise the loss in sales 9alues. +t is not reasonable to sa; that a strate0; is
e--ecti9e when the sales 9alues are maintainedE a decline in sales 9alue is almost ine9itable. +n
usin0 the predictionsA the writer came up with the -ollowin0 standard which will be used to
2,
e9aluate the sales 9aluesC <hen the sales 9alue o- a brand name dru0 to0ether with its brand
extension accounts -or 60M o- the ori0inal sales 9alue o- the brand name dru0 prior to patent
expir; or introduction o- the brand extensionA the brand extension strate0; is considered
e--ecti9e. <ith this standard a sales 9alue decrease o- up to 70M is accepted. owe9erA when
the sales decline is hi0her than 70MA the brand extension strate0; is considered ine--ecti9e. +n
conclusionA the sum o- the sales 9alue o- the brand name dru0 and its brand extension to0ether
ha9e to account -or at least 60M o- the ori0inal sales 9alue o- the brand name dru0 prior to
patent expir; or introduction o- the brand extension in order to place the label Ne--ecti9e. on
the brand extension.
"3#2 D+/+ +,+7(010
The data anal;sisA the anal;sis o- the casesA is an important part o- the research. <ith this
anal;sis crucial in-ormation is obtained to -ind the answer to the Fuestion what kind o- brand
extension strate0ies pharmaceutical companies use when their brand name dru0 -ace patent
expir;. The -irst part o- the anal;sis o- the workin0 casesA obtained -rom !22A is within-case
anal;sis. <ithin-case anal;sis is done to 0et -amiliar with the case itsel- and with the
enormous amount o- in-ormation in the case @!isenhardtA 1,:,B. The case stud; will be
thorou0hl; e9aluated to 0et a 0ood indi9idual representation o- each case. +n this -irst stepA
cases can be eliminated due to the -act that there is not a clear strate0; arisin0 -rom the
within-case anal;sis. <hen this is happenin0 a new workin0 case will be selected -rom the
!22 databaseA based on the method described abo9eA in order to come to the -i9e cases used
in this research. <hen there is a clear strate0;A the next step in the anal;sis is to link the
considered and -ollowed strate0ies o- the pharmaceutical compan; to a brand extension
strate0;A as depicted in Table 5. +n the within-case anal;sis this will be done per case. The
third step is a cross-case anal;sis in which strate0ies can be compared in order to come to a
-inal brand extension strate0; -or each indi9idual case. This cross-case anal;sis is used to see
similarities and di--erences between cases @!isenhardtA 1,:,B. The considered strate0ies will
be showed and the -inal -ollowed strate0ies will be described. erea-terA the -irst part o- the
h;potheses can be tested with the results.
&-ter anal;sin0 the casesA the second part o- the research Fuestion has to be answered as well.
This Fuestion is to see what the impact o- the brand extension strate0; has on the sales 9alues
o- the brand name dru0. This is done b; e9aluatin0 sales 9alues o- the brand name dru0 in
50
Fuestion. &nnual reports o- the pharmaceutical companies and other external sources are
e9aluated to acFuire sales 9alues o- the brand name dru0s.
To e9aluate the sales 9alue o- the particular brand name dru0 under stud; there can be seen
what the chan0e was in sales 9alue durin0 the time that a brand extension strate0; was used.
The sales 9alues o- a brand name dru0 -rom one ;ear prior to the introduction o- the brand
extensions strate0; will be compared with the combined sales 9alue one or two ;ears a-ter the
introduction o- the brand extension strate0; o- both the brand name dru0 and the brand
extension. This 0i9es a 0ood understandin0 on whether the -ollowed brand extension strate0;
is success-ul in maintainin0 the sales 9alues. &s mentioned be-oreA a sales 9alue decrease o-
up to 70MA or maintained sales o- at least 60MA is seen as a success-ul brand extension
strate0;. &-ter the sales 9alue e9aluation the second part o- the h;potheses can be tested with
the results.
51
4 RESULTS
The -i9e randoml; chosen casesA assessed on use-ulnessA will be thorou0hl; described in this
chapter. There will be started with a within-case anal;sis. +n the within-case anal;sis both the
cases and other sources are consulted to see whether other strate0ies were considered andKor
used which were not described in the cases. &ll in-ormation is incorporated in the para0raphs
below. *econdl;A a cross-case anal;sis will -ollow. This cross-case anal;sis e9aluates the
considered strate0ies and the chosen strate0ies b; the pharmaceutical companiesA which 0i9es
a nice o9er9iew. Finall;A in the sales 9alue e9aluation the chosen strate0ies are e9aluated on
their success. +n both the cross-case anal;sis and the sales 9alue e9aluation the h;potheses can
be tested.
"4#1 W1/$1,-5+0% +,+7(010
7.1.1 !--exor @!--exor )#B
%ased onC /ikkilineniA 200,
The dru0 !--exor is -rom <;eth pharmaceuticals. +n 1,,5A <;eth launched both !--exor and
!--exor )#. !--exor is used -or treatment o- maHor depression disorder @/((B in adults. +ts
acti9e in0redientA or 0eneric nameA is ?enla-axine. !--exor )#A as mentioned be-oreA was
launched in the same ;ear as !--exor. !--exor )# is used to treat anxiet; disorders associated
with depression like 0eneralised anxiet; disorder @1&(BA social anxiet; disorder @*&(BA and
panic disorder in adults. !--exor )# is used to treat other diseases and there-ore it is more a
kind o- new indication strate0; than an )# althou0h it is named !--exor )#. !--exor )# was
released slower in the bod;A howe9er it was promoted -or other diseases and there-ore it is a
new indication strate0;. This extension is not seen as a considered strate0; when -acin0 patent
expir; because this strate0; is used 9er; earl; in the product li-ec;cleA in the same ;ear as the
launch o- !--exor. The promotion o- !--exor )# was 9er; extensi9e. There were campai0ns
on T?A radio and print. "n top o- that websites were created to promote the dru0. &
remarkable campai0n was the launch o- an educational campai0n on mental health in colle0e
campuses in late 2002. This was done to create awareness amon0 studentsA who were an
important se0ment because the; led 9er; stress-ul li9es. This on-campus campai0n was
52
considered to be the bi00est marketin0 e--ort b; an; compan; to promote an anti-depressant
dru0 in colle0e campuses. !--exor )# became the best-sellin0 dru0 in the anti-depressant
market with net re9enues o- more than J2 billion -rom 2002 till 200: @/ikkilineniA 200,B.
Patent expiry Effexor !" and its considered strategies
+n 200,A !--exor )# was nearin0 its patent expir; date which was in 2010. !--exor )# was a
ke; re9enue earner o- <;eth and a top-sellin0 dru0 in in the world. <;eth wanted to maintain
the sales and there-ore wanted to switch consumers -rom !--exor )# and other anti-
depressant dru0s a9ailable in the market to a successor dru0A PristiF. PristiF was launched in
/a; 200:A which was almost two ;ears be-ore patent expir;A and was promoted as a
re9amped and more e--ecti9e 9ersion o- !--exor )#. <;eth is hopin0 that it will e9ol9e as a
blockbuster dru0 like !--exor )# did @*aulA 200:B. PristiF is a new compound which is called
des9enla-axine extended releaseA a deri9ati9e o- 9enla-axine. PristiF was promoted throu0h
se9eral marketin0 campai0nsE to both ph;sicians and consumers. +n the marketin0
communication o- <;ethA <;eth stated that PristiF was superior to all other anti-depressant
dru0s in the marketA includin0 its own !--exor )#. PristiF is a dru0 which ser9es the same
market but is si0ni-icantl; di--erent -rom its predecessor !--exor )#.
'onclusion
<;eth pharmaceuticals did not consider 9arious wa;s to o9ercome the patent expir; o-
!--exor )# in 2010. +t had a clear strate0; -or its blockbuster brand name dru0. <;eth
wanted to continue the success o- !--exor )# and there-ore introduced a successor dru0A
PristiF. PristiF can be seen as a second 0eneration dru0 because it ser9es the same market but
with a di--erent dru0. The second 0eneration strate0; is a strate0; in which a new dru0 is
launched to 0et additional market exclusi9it;A which is the case -or PristiF.
7.1.2 Pro=ac
%ased onC !atonA 2008E "-ek and 4au-erA 200:
The dru0 Pro=ac is -rom the pharmaceutical compan; !li 4ill;. Pro=acA an anti-depressant
dru0A was -irst marketed in 1,:7. +ts 0eneric nameA or acti9e in0redientA is -luoxetine. +t was
launched as a selecti9e serotonin reuptake inhibitor @**#+B. This dru0 selecti9el; blocked the
reuptake o- serotonin into the pres;naptic neuron and had little e--ect on other
neurotransmitters. The dru0 was not onl; e--ecti9eA but Pro=ac also allowed non-ps;chiatrist
55
ph;sicians to prescribe the dru0. (ue to the -act that also non-ps;chiatrists ph;sicians were
able to prescribe the dru0 the costs o- treatin0 depression and other mental illnesses are
decreased and at the same time the number o- patients who had access to treatment is
increased. *imultaneousl; with the launch o- Pro=ac the whole compan; was -ull; educated
about depressionA serotoninA and the practise o- ps;chiatr; in 0eneral. <ith this thorou0h
education !li 4ill; was better able to con9ince the ps;chiatr; leaders about Pro=ac and
educate them as well. "n top o- these peopleA the F(&A insurers and patients were educated
about Pro=ac. These educational e--orts o- !li 4ill; attracted media attention and the public
0ot excited about the dru0. "nce Pro=ac was launchedA the sales took o--A with ;earl;
worldwide sales around J5 billion.
!li 4ill; conducted a lot o- post-marketin0 clinical trials which resulted in se9eral new
indications which Pro=ac could be marketed -or. *e9eral new indications wereC obsessi9e-
compulsi9e disorderA bulimiaA panic disorderA se9ere premenstrual s;ndrome in womenA and
0eriatric and childhood depression. &lthou0h these new indication were not strate0ies to
o9ercome patent expir;A the; used them to increase the sales 9alue. +t were not strate0ies to
o9ercome patent expir; because these new indication were launched more than three ;ears
prior to patent expir;.
Patent expiry Pro:ac and its considered strategies
Pro=ac was 0oin0 o-- patent in 2001. There were two patents -or Pro=acE the -irst patent expir; was in
2001A which co9ered the acti9e chemical in0redientA -luoxetine h;drochloride. The second one expired
in (ecember 2005A and co9ered the method o- use o- the chemical in0redient. The patent expir; o-
2001 was important because -rom that ;ear on 0eneric dru0s could come into the market. To extend
the patent as much as possible and to protect the sales o- Pro=ac there was a need -or a successor
strate0; -or Pro=ac. !li 4ill; introduced a 'ew &ntidepressant Team @'&TBA a cross--unctional team o-
4ill; research and de9elopment @#U(B and marketin0. The 0oal o- the team was to -ind and de9elop a
new dru0 that would better meet the needs o- patients su--erin0 -rom depression. There were -i9e
alternati9es consideredC #--luoxetineA olan=apine--luoxetine combination @"F2BA 8T2 anta0onist
**#+ @**#+-8T2BA %usiness (e9elopment "pportunitiesA and 2;mbalta @duloxetineB. #--luoxetine
had the same e--ecti9e in0redient as Pro=ac but has a di--erent ph;sical con-i0uration or shape.
owe9erA this alternati9e has -ailed in clinical trials. The #--luoxetine strate0; can be seen as an )#
strate0;. "F2 combined the acti9e in0redient in >;prexa and the acti9e in0redient in Pro=acA the trade
name would be *;mb;ax. *;mb;ax can be seen as a second 0eneration strate0;A a new dru0 -or the
same market. **#+-8T2 was intended to selecti9el; block the stimulation o- serotonin at 8T2 in
57
order to eliminate the side e--ects @increased anxiet;A restlessnessA insomniaA a0itationA and sexual
d;s-unctionB. The **#+-8T2 can be seen as an )# strate0;. %usiness de9elopment opportunities
were tar0eted upon in-license compounds -or the treatment o- depression -rom other pharmaceutical
companies. These business de9elopment opportunities cannot be placed in one o- the -our brand
extension strate0ies. 2;mbalta is a serotonin and norepinephrine receptor inhibitor @*'#+B that was
de9eloped -or the treatment o- maHor depression disorder @/((B. "n top o- thatA people at !li 4ill;
thou0ht that it could also be de9eloped -or the treatment o- pain. The potential o- this dru0 is that it can
be used both -or depression and pain. 2;mbalta is a new -ormulation o- Pro=ac and there-ore can be
seen as a second 0eneration strate0;.
+n 2000A be-ore the '&T launched their possible extensions and one ;ear be-ore patent expir;A !li 4ill;
alread; introduced two new indication dru0s o- Pro=ac in order to broaden their consumer 0roup.
These new indications were Pro=ac weekl; and *ara-em. Pro=ac weekl; was introduced -or
chronicall; depressed patients and *ara-em was introduced -or women @DramerA 2000B. %oth dru0s
were not extendin0 the patent o- Pro=acA which expired in 2001. $etA the extensions were -ocused on
broadenin0 the consumer base.
+n 2007A both 2;mbalta and *;mb;ax were launched. %oth are considered second 0eneration dru0s.
<ith this strate0; !li 4ill; hoped to o9ercome the patent expir; o- Pro=ac. The introduction o- these
second 0eneration dru0s was three ;ears a-ter patent expir;.
'onclusion
!li 4ill;A or the '&TA considered -i9e strate0ies with the '&T and -inall; introduced two o- them in
2007A 2;mbalta and *;mb;ax. +n 2001A !li 4ill; launched Pro=ac weekl; and *ara-em. These are the
same dru0s as Pro=acA onl; -or other patient 0roups. Pro=ac weekl; and *ara-em are considered as
brand extensions because the; were introduced to protect the sales o- Pro=ac. 2;mbalta and *;mb;ax
were introduced in 2007 and are second 0eneration dru0s which did extend the patent and there-ore are
considered as brand extensions. &lthou0h *;mb;ax and 2;mbalta were launched a-ter patent expir;
the; are considered strate0ies to maintain sales.
7.1.5 Prilosec
%ased onC +krama and Purka;asthaA 200:E 2onle;A 2008
The dru0 Prilosec is -rom the pharmaceutical compan; &stra>eneca and was launched in
1,::. The acti9e in0redientA or 0eneric nameA o- Prilosec is omepra=ole. +nternationall;A
Prilosec is known as 4osec. Prilosec is an acid-pump inhibitorA which treats acid re-lux-
58
related indications. !xcessi9e acid emission can lead to the -ollowin0 disordersC duodenal
ulcersA 0astric ulcersA 0astroesopha0eal re-lux disease @1!#(A or commonl; known as
heartburnBA and patholo0ical h;per secretor; conditions. Prilosec is treatin0 the abo9e
mentioned disorders and is pro9ed to be hi0hl; e--ecti9e. Prilosec was -irst onl; marketed to
specialists. &-ter almost ten ;earsA in 1,,7A the compan; launched a direct-to-consumer
@(T2B campai0n. Throu0h this campai0n the dru0 acFuired more than 50 per cent o- the
antiulcer prescription market in 1,,:. &stra>eneca introduced a patient -riendl; marketin0
campai0n b; namin0 Prilosec the NPurple Pill.. &d9ertisin0 with this name was 9er;
success-ul. +n 2000A Prilosec contributed more than a third to the re9enue o- &stra>enecaA
which meant that Prilosec was a 9er; important blockbuster dru0 -or the compan;.
Patent expiry Prilosec and its considered strategies
Prilosec was -acin0 patent expir; in "ctober 2001. owe9erA in 1,,:A 1,,, and 2000A
&stra>eneca -iled suits a0ainst se9eral 0eneric manu-acturers -or patent in-rin0ement. O+n
"ctober 2002A the 3* (istrict 2ourt -or the *outhern (istrict o- 'ew $ork ruled that two
&stra>eneca patents @N250 and N808B PQR are 9alid until 2007.S @&stra>enecaA 2002B.
&stra>eneca appealed a0ainst the rulin0 o- non-in-rin0ement. &lthou0h the patents are
extendedA other 0eneric manu-acturers were permitted to brin0 the 0eneric dru0s to the
market. +n (ecember 2002A the -irst 0eneric omepra=ole was launched. &nd durin0 2005A
three other 0eneric 9ersions were launched as well @&stra>enecaA 2005B. %ecause 0eneric
9ersions were launched in the marketA the ori0inal date o- patent expir; is applicable here. The
0eneric 9ersions introduced can ha9e a ne0ati9e impact on the sales 9alues. There-ore the
initial patent expir; o- 2001 will be used in this research as the patent expir; date o- Prilosec.
+n 1,,8A &stra>eneca alread; brou0ht to0ether a 0roup o- marketersA law;ers and scientists to come up
with a solution -or the approachin0 patent expir; o- Prilosec. The; called themsel9es the N*hark Fin
proHect.. The; came up with nearl; -i-t; solutions @arrisA 2002B. +n earl; sprin0 2001A &stra>eneca.s
2!" had se9eral options le-t to considerC +ntroducin0 a second 0eneration prescription dru0 branded
as 'exiumA introducin0 an &stra>eneca 0eneric omepra=oleA andKor an "T2 9ersion o- omepra=ole.
'exium is a new -ormulation o- Prilosec.s acti9e in0redientA called esomepra=ole ma0nesium. <ith
'exium the patent term could be extended. The last two options were un-amiliar territor; -or
&stra>eneca and had no chance o- extendin0 the patent term. "n top o- thatA marketin0 an "T2 or
0eneric dru0 is a di--icult task and si0ni-icantl; di--erent -rom marketin0 a prescription dru0 to
doctors.
56
+n the endA the -inal decision was to 0et appro9al o- the F(& to market the second 0eneration dru0
'exium and extend the patent. +n 2000 &stra>eneca 0ot appro9al to market 'exiumA in 2001 the; had
appro9al in the 3*& and launched 'exium in 52 countries. &stra>eneca launched a marketin0
campai0n in which the; wanted to switch consumers -rom PrilosecK4osec to 'exium. "n top o- this
launchA the proHect team was able to keep 0eneric dru0s out o- the market until 2005. +n 2005A
&stra>eneca 0ot appro9al -or an "T2 9ersion o- omepra=oleA named Prilosec "T2A which was priced
under other 0eneric 9ersions o- Prilosec. +n the case o- +krama @200:B it is written that Oanal;sts -elt
that the compan; had succeeded in its li-ec;cle mana0ement strate0;.S @+krama and Purka;asthaA
200:B.
'onclusion
Finall;A &stra>eneca considered three strate0ies and decided to use two o- them. The -irst strate0;
used was a second 0eneration strate0;A 'exiumA which was launched in 2000A one ;ear be-ore patent
expir;. Therea-terA in 2005A &stra>eneca used another strate0; to maintain salesA Prilosec "T2A an
"T2 strate0;. owe9erA the "T2 9ersion o- Prilosec is not considered as a strate0; to o9ercome
potential sales decline caused b; the patent expir; o- Prilosec because Prilosec "T2 was launched in
2005 which is two ;ears a-ter the introduction o- the other brand extension strate0; 'exium. "n top o-
that Prilosec "T2 does not pro9ide patent term extension. There-oreA 'exium is considered the
strate0; which &stra>eneca used to o9ercome patent expir; which is a second 0eneration strate0;.
7.1.7 >antac
%ased onC &n0elmar and PinsonA 1,,2 and 1,,5
>antac is a dru0 -rom the pharmaceutical compan; 1laxo*mithDline and was launched in
1,:1 in the 3nited Din0dom and in 1,:5 in the 3*&. >antac.s 0eneric nameA or acti9e
in0redientA is ranitidine h;drochloride @ranitidineB. "ther brand names o- >antac areC &ntakA
&=antacA #aniplexA >anticA *ostrilA #anidrilA Tri00erA 3lsexA >inetacA 2oralenA TuantorA
#anidinA and #anix. >antac is used as an antiulcer dru0. >antac was the second dru0 in the
market and there-ore had to pro9e itsel- to be considered b; consumers. Ta0ametA the -irst
dru0 in the antiulcer marketA was doin0 a 0ood Hob and was not impressed b; >antac. *e9eral
months be-ore launchA >antac started to introduce the dru0 to doctorsA tellin0 that the dru0 had
no ad9anta0es o9er Ta0ametA but worked -aster. The introduction campai0n positioned >antac
as a much -asterA simpler and more speci-ic dru0A a new and more ad9anced antiulcer dru0.
>antac acFuired market share all o9er the world. &-ter the launchA in 1,:7 and 1,:8A research
was published in leadin0 medical Hournals. This research indicated that patients who
57
experienced an ulcer recurrence durin0 the ;ear that -ollowedA despite continuous treatmentA
was twice as hi0h -or the dru0 Ta0amet as -or >antac. >antac had a 0lobal market share o- 72
per cent in 1,:,A which was 0ood considerin0 the competition in the antiulcer market. +n
1,::A PrilosecA as described in the pre9ious para0raphA was launched b; &stra>eneca. +n
1,,2A >antac was still the number one dru0 in the pharmaceutical industr;. owe9erA the
battle between Prilosec and >antac was belie9ed to continue -or the next -i9e to ten ;ears.
Patent expiry ;antac and its considered strategies
>antac was -acin0 patent expir; in 1,,7A e9en thou0h 1laxo*mithDline was not -inished with
>antac. +n 1,:6A 1laxo*mithDline had -oreseen this upcomin0 e9ent and increased its number
o- researchers with 5000 in three ;ears to disco9er another winnin0 dru0. For almost twel9e
;ears >antac was a success-ul brand and de9eloped a power-ul brand with lar0e brand eFuit;.
This was important when -acin0 patent expir; althou0h it was not enou0h when 0eneric dru0s
came into the market with a lower price. +n 1,,6A one ;ear be-ore patent expir;A
1laxo*mithDline launched a milder 9ersion o- >antacA called >antac 78. >antac 78 was
a9ailable as an "T2 dru0. @%ased onC The new business road testA 2007B
'onclusion
FirstA 1laxo*mithDline considered onl; one strate0;A namel; a new winnin0 dru0. The;
increased the amount o- researchers to -ind this. owe9er when the patent expir; date was
approachin0 there was no new dru0 read; ;et and there-ore another strate0; was consideredA
namel; an "T2 9ersion o- >antac. Finall;A >antac 78A the "T2 9ersion o- >antac was
launched in 1,,6A which is considered as the strate0; -ollowed b; 1laxo*mithDline to
o9ercome patent expir; o- their blockbuster dru0 >antac. This strate0; is an "T2 strate0;.
5:
7.1.8 2laritin
%ased onC %err;A 2007
2laritin is a dru0 -rom the pharmaceutical compan; *cherin0-Plou0hA which is mer0ed with
/erck in 200,. 2laritin is launched in 1,,5 as a prescription dru0A while its patent was -iled
in 1,:1. +ts 0eneric nameA or acti9e in0redientA is loratadine. 2laritin is an antihistamine dru0
which is used a0ainst aller0ies. 2laritin is used to relie9e patients o- an anno;in0 cou0hA
runn; noseA and water; e;es. <hen 2laritin was launched *cherin0-Plou0h launched an
a00ressi9e marketin0 campai0n. 'ext to detailin0 and samplin0 there was also a (T2
marketin0 campai0n. This campai0n in9ol9ed primaril; print ads. &-ter 1,,7A 2laritin was
also promoted in tele9ision commercials. +n three ;ears. time 2laritin became the top sellin0
antihistamine in the 3*&.
Patent expiry 'laritin and its considered strategies
+nitiall;A *cherin0-Plou0h.s patent -or its dru0 2laritin was 0oin0 to expire in 1,,: due to the
-act that the patent was -iled -or in 1,:1. owe9erA because the <axman-atch &ct is
introduced in 1,:7A the patent was restored with two ;earsA to 2000. This patent restoration
was appro9ed because 2laritin was still in de9elopment in 1,:7. (ue to -urther paediatric
trials o- the dru0 and an addendum to the 1eneral &0reement on Tari--s and Trade the patent
was extended until (ecember 2002. +n (ecember 2002 the patent would expire and then the
road would be open -or 0eneric dru0s to enter the market. This could result in a lar0e decline
in re9enue. To o9ercome this patent expir;A *cherin0-Plou0h was considerin0 se9eral
strate0iesC 4aunchin0 a successor dru0A 2larinexA -ile -or an "T2 status -or 2laritin andKor
end the 2laritin era. The successor dru0 o- 2laritinA 2larinexA was desi0ned to work lon0er
and -aster than 2laritin and the 0oal was to switch consumers to this dru0. +n 2larinexA the
acti9e in0redient loratadine was made metabolic which made the dru0 work -aster and lon0er.
&n "T2 status -or 2laritin would not ha9e the possibilit; to extend the patentA howe9er it
could de-end 2laritin.s tur- due to the -act that consumers could ha9e easier access to the
dru0. $etA the "T2 9ersion could potentiall; compete with their successor dru0 2larinexA i-
that second 0eneration strate0; was used. !ndin0 the eraA would mean a hu0e loss -or
*cherin0-Plou0h. Finall;A *cherin0-Plou0h decided to tr; to de-end its position b; launchin0 a
second 0eneration dru0A 2larinex. (ue to problems in the manu-acturin0 -acilitiesA the
introduction o- 2larinex was dela;ed until Lanuar; 2002A this is less than one ;ear be-ore
5,
patent expir;. "n top o- this second 0eneration launchA *cherin0-Plou0h tried to de-end the
patent o- 2laritinA un-ortunatel; without success @#iordanA 1,,,B. %eside the second
0eneration strate0;A *cherin0-Plou0h launched the "T2 9ersion o- 2laritin @2laritin "T2B as
well.
'onclusion
*cherin0-Plou0h considered three strate0ies -rom which the; chose two. The -irst strate0;A
implemented in 2002A the ;ear o- patent expir;A was 2larinex. 2larinex is a second 0eneration
strate0; because the acti9e in0redientA loratadineA was made metabolic. *o the dru0 is a new
dru0 with a sli0htl; di--erent acti9e in0redient which makes the dru0 work lon0er and -aster.
The dru0 ser9es the same market and there-ore is considered as a second 0eneration strate0;.
The second strate0; chosen b; *cherin0-Plou0h is the "T2 strate0;. 2laritin "T2 was also
launched in 2002 and is launched in the "T2 market which made it easier -or consumers to
bu; the dru0. +n conclusionA in 2002A the ;ear o- patent expir;A *cherin0-Plou0h chose both a
second 0eneration and an "T2 strate0; to o9ercome patent expir; o- 2laritin.
"4#2 C'&00-5+0% +,+7(010
+n the -i9e cases described abo9e there were se9eral strate0ies that were considered b; the
pharmaceutical companies. There were some clear di--erences and some clear similarities in
the considered brand extension strate0ies b; the pharmaceutical companies. +n -our out o- the
-i9e cases there was a second 0eneration strate0; considered. +n three out o- the -i9e cases an
"T2 strate0; was considered. +n one out o- the -i9e cases an )#A a new indication and a
'/! was considered. The considered strate0ies b; the -i9e pharmaceutical companies are
summarised in Table 6.
&s can be seen -rom Table 6 there are not man; di--erent strate0ies that pharmaceutical
companies considered when the; -ace patent expir;. +n :0M o- the cases the; consider to
extend the patent o- their existin0 dru0 in launchin0 a second 0eneration dru0 and in 60M o-
the cases the; considered to lea9e the prescription dru0 market and 0o "T2. #emarkable is
that in both the antidepressant market @!--exor and Pro=acB and the antiulcer market @Prilosec
and >antacB the di--erent dru0s used di--erent brand extension strate0ies. +n the antidepressant
marketA !--exor used the second 0eneration strate0; while Pro=ac used both the new
70
indication and the second 0eneration strate0;. +n the antiulcer marketA Prilosec -ollowed the
second 0eneration strate0; whereas >antac chose -or an "T2 strate0;.
Table 6 2onsidered brand
extension strate0ies
The -inal strate0ies chosen b; the pharmaceutical companies are depicted in Table 7 and are
placed in the -ramework o- this research. & detailed moti9ation o- wh; pharmaceutical
companies chose -or the strate0ies depicted in Table 7 cannot be obtained -rom the used cases
directl;. owe9erA the pharmaceutical companies are most likel; to choose -or brand
extension strate0ies which are considered as most -inanciall; and practical -easible.
Pharmaceutical companies are most likel; to choose -or strate0ies which are expected to
succeed and be success-ul.
Table 7 Final
brand extension
strate0ies
71
+n Table 7 ;ou can see that in -our out o- the -i9e cases the brand extension strate0; o- second
0eneration is -ollowed. +n two out o- the -i9e cases an "T2 strate0; is -ollowed. +n one o-
them the "T2 strate0; is pursuit but next to a second 0eneration strate0;A so not as a stand-
alone strate0;. +n one case the new indication strate0; is -ollowed. From this anal;sis abo9e
we can accept ;pothesis 1aC 1n the three years prior to patent expiry, pharmaceutical
companies will use the !" strategy the least in comparison to the other brand extension
strategies researched here. From Table 7 can be seen that the )# strate0; is indeed used the
least b; pharmaceutical companies. !li 4ill; @Pro=acB introduced Pro=ac <eekl; and *ara-emA
two similar dru0s -or Pro=ac -or a new indicationA there-ore ;pothesis 2aC 1n the three years
prior to patent expiry, pharmaceutical companies will not use a new indication strategyA
cannot be accepted. &s mentioned abo9eA the second 0eneration strate0; is used the mostA
there-ore h;potheses 5aC 1n the last three years prior to patent expiry, pharmaceutical
companies will use the second generation strategy the most in comparison to the other brand
extension strategies researched hereA can be accepted. The F(2 strate0; is not used in the
cases studied here and there-ore h;potheses 7a: 1n the last three years prior to patent expiry,
pharmaceutical companies will not use the %&' strategyA can be accepted. The "T2 strate0;
is used b; 1laxo*mithDline @>antacB because the; did not had another strate0; which the;
could useA which is in line with ;pothesis 7cC 1n the last three years prior to patent expiry,
pharmaceutical companies will use the (T' strategy only when they do not use one of the
other brand extension strategies researched here. owe9erA *cherin0-Plou0h @2laritinB used
this strate0; on top o- the second 0eneration strate0;. *o in two cases the situation is di--erent
which makes it hard to sa; whether
7c
can be accepted. owe9er because the "T2 strate0;
is used either with another strate0; or when a dru0 had no other option
7c
will be accepted.
+n conclusionA
1a
A

5a
A
7a
A
7c
can be accepted.
2a
A on the other handA cannot be accepted.
<hether the strate0ies -ollowed are success-ul in maintainin0 sales 9alues will be e9aluated in
the next para0raph. &n o9er9iew o- all h;potheses and whether these are accepted can be
-ound in Table 15.
7.5 *ales 9alue e9aluation
+n this para0raph the sales 9alues or re9enues will be e9aluated -rom around one ;ear be-ore
the introduction o- the brand extension with the sales 9alues o- around one ;ear a-ter the
introduction o- the particular brand extension. *ales 9alues are obtained throu0h annual
72
reports and other external sources. (ue to the -act that not all 9alues were a9ailable in annual
reportsA there are some di--erences in the t;pe o- sales 9alues @e.0. worldwide 9s. 3* onl;B.
owe9erA -rom e9er; sin0le dru0 the sales 9alues are obtained -rom the same source in order
to be consistent. +t is tried to obtain worldwide sales 9alues -rom annual reports. +- this was
not a9ailable in annual reportsA the 9alues are obtained -rom other sources and when that is
not possible either sales 9alues o- onl; the 3* are obtained.
7.5.1 !--exor )#
The pharmaceutical compan; <;eth chose -or a second 0eneration strate0;A PristiFA to
o9ercome patent expir; o- !--exor )# in 2010. To see whether this strate0; was e--ecti9e it is
needed to look at the sales 9alues o- !--exor )# one ;ear be-ore the entr; o- PristiF and one
;ear a-ter the entr;. *econdl;A it is needed to look at the sales 9alues o- PristiF. PristiF entered
the market in /a; 200:. There-oreA the sales 9alues o- !--exor )# o- the ;ears 2007 until
200,A one ;ear be-ore entr; and one ;ear a-ter entr; o- PristiFA are e9aluated. &ndA -or PristiFA
the sales -rom 200: and 200, are e9aluated. To 0et a more thorou0h representation o- the
chosen strate0; the ;ear 2010A the ;ear that the patent o- !--exor )# actuall; expiredA is also
e9aluated. (ue to the -act that <;eth pharmaceuticals is acFuired b; P-i=er +nc. it was not
possible to 0et annual reports -or these ;ears. There-ore an external source is used to obtain
worldwide sales 9aluesA namel; dru0s.com. +n Table : ;ou can -ind the sales 9alues -or both
!--exor )# and PristiF.
Table : *ales 9alue !--exor )# @?erispanA ?"'&B
&lthou0h the patent expir; o- !--exor )# was in 2010A the sales 9alues o- !--exor )#
declined alread; -rom 200: on. PristiFA the re9amped 9ersion o- !--exor )#A was launched in
200: and started with a 0ood increase in sales 9alue in 200,. The sales 9alue o- !--exor )# in
2007A prior to the introduction o- the brand extensionA was approximatel; J2.8 billion. #ecallA
that a brand extension strate0; is considered e--ecti9e when at least 60M o- the sales is
maintained. The combined sales 9alue in 2010 was J1.: billionA which is 77A:M o- its ori0inal
sales in 2007A one ;ear be-ore the introduction o- the brand extension. This means that <;eth
75
did a 0ood Hob in de-endin0 the sales 9alue o- !--exor )# with the introduction o- a second
0eneration dru0A PristiF. There-oreA the second 0eneration strate0; -ollowed b; <;eth is
considered e--ecti9e.
7.5.2 Pro=ac
The pharmaceutical compan; !li 4ill; chose -or both a new indication and a second
0eneration strate0; @Pro=ac weekl;A *ara-emA *;mb;ax and 2;mbaltaB to o9ercome the patent
expir; o- Pro=ac in 2001. The new indicationsA Pro=ac weekl; and *ara-emA were introduced
in 2000 and are the same dru0 as Pro=ac. %ecause the new indications are the same dru0 the
sales 9alues o- Pro=ac <eekl; and *ara-em are included in the sales 9alue o- Pro=ac. The
second 0eneration dru0sA *;mb;ax and 2;mbaltaA are launched in 2007A three ;ears a-ter
patent expir; o- Pro=ac. The e--ecti9eness o- the chosen strate0ies will be tested in the same
wa; as -or !--exor )#C The sales 9alues o- Pro=ac in the ;ears 2001 until 2008 are e9aluated
and on top o- thatA the sales 9alues o- *;mb;ax and 2;mbalta are e9aluated -or the ;ears 2007
and 2008. The sales 9alues are obtained -rom annual reports and these are worldwide sales
9alues. +n Table , ;ou can -ind the sales 9alues o- Pro=acA *;mb;ax and 2;mbalta.

Table , *ales 9alue Pro=ac @annual reportsB
Pro=ac.s patent was expirin0 in 2001A to obtain sales 9alue be-ore patent expir; it is needed to
-ind an a9era0e sales 9alue be-ore 2001. There-oreA the sales o- 1,,, and 2000 are combined.
The combined sales were J8.1: billion. The a9era0e sales 9alue be-ore patent expir; is
there-ore J2.8, billion. &s can be seen in Table , abo9eA the sales 9alue o- Pro=ac declined b;
65M the ;ear a-ter patent expir; @2001-2002BA which is an enormous decline. (urin0 that ;ear
the two new indications were un-ortunatel; not maintainin0 the sales -or Pro=ac. There-oreA
77
the new indication strate0; -ollowed is considered ine--ecti9e. +n 2007A the two brand
extension strate0ies were -inall; introducedC *;mb;ax and 2;mbalta. 2;mbaltaA in particularA
was 9er; success-ul a-ter the -irst ;ear with more than J800 million increase in its sales 9alue.
To see whether the chosen strate0; is e--ecti9e it is needed to look at the combined sales o-
Pro=acA *;mb;ax and 2;mbalta in 2008 and compare it with the sales 9alue o- Pro=ac prior to
2001A the ;ear that the patent o- Pro=ac expired. (ue to the -act that there are no sales 9alues
-or 2008A the sales 9alue o- 2007 @-or Pro=ac onl;B is used to see whether the strate0; is
e--ecti9e. The combined sales 9alue is then J1.2, billionA which is 7,A:M o- the ori0inal sales
9alue o- Pro=ac @J2.8, billionB. This percenta0e o- the sales is maintained a-ter the patent o-
Pro=ac expiredA which is not enou0h to label this strate0; e--ecti9e @recallC the maintained
sales 9alue should be at least 60MB. <hen assumin0 that Pro=ac is not sold an;more in 2008A
the combined sales 9alue o- *;mb;ax and 2;mbalta is J755.6 million. This is 2:M o- the
ori0inal sales o- Pro=ac which is also not enou0h to consider the strate0; e--ecti9e. %oth the
new indication and second 0eneration strate0ies -ollowed b; !li 4ill; are thus considered
ine--ecti9e.
7.5.5 Prilosec
The pharmaceutical compan; &stra>eneca chose -or a second 0eneration strate0;A 'exiumA to
o9ercome the patent expir; o- Prilosec in 2001. 'exium was launched in 2001. +n order to
state whether this strate0; is e--ecti9e the sales 9alues o- Prilosec are e9aluated -or the ;ears
2000 until 2002A one ;ear be-ore the introduction o- the brand extension and patent expir; o-
Prilosec until one ;ear a-ter patent expir;. Therea-terA the sales 9alues o- 'exium are
e9aluated -or the ;ears 2001 and 2002A the ;ear o- introduction o- the brand extension and one
;ear a-ter the introduction. &ll sales 9alues are obtained -rom the annual reports o-
&stra>enecaA which are a9ailable on their corporate website. The sales 9alues are worldwide
sales -i0ures and depicted in Table 10.
Table 10 *ales 9alues Prilosec @annual reportsB
78
&s can be seen in Table 10 abo9e the sales 9alue o- PrilosecA a-ter patent expir; in 2001A
dropped with 1:M in 2002. This is a decline o- J,88 million. The sales o- 'exium on the
other hand took o-- in that ;ear and increased with 27:M. This is an increase o- J1710 million
which more than o--sets the decline in sales o- Prilosec. #ecall that the maintained sales with
the brand extension should be at least 60M o- the sales 9alue o- the ori0inal brand name dru0
be-ore patent expir; in order to be labelled e--ecti9e. +n 2002A the combined sales o- Prilosec
and 'exium was J6.6 billionA which is more than the sales in 2000. From thisA the second
0eneration strate0; o- Prilosec can be considered e--ecti9e. +n the annual report o- 2002 the
-ollowin0 statement is madeC OThe stron0 0rowth o- 4exium more than o--set declines in
<osecKPrilosec.S @&stra>enecaA 2002C P51B. From this statement and the abo9e data it is clear
that the compan; is satis-ied with the results o- their chosen strate0;. There-oreA the second
0eneration strate0; -ollowed b; &stra>eneca is considered e--ecti9e.
7.5.7 >antac
The pharmaceutical compan; 1laxo*mithDline chose -or an "T2 strate0; -or their
blockbuster dru0 >antac which -aced patent expir; in 1,,7. The "T2 9ersion o- >antacA
>antac 78A was launched in 1,,6. To see whether this strate0; is e--ecti9e in maintainin0 the
sales 9alueA the sales 9alues o- the ;ears 1,,8 until 1,,: are e9aluated -or >antacA one ;ear
be-ore introduction o- >antac 78 until one ;ear a-ter patent expir;. *ubseFuentl;A the sales
9alues -or >antac 78 are e9aluated -or the ;ears 1,,6 throu0h 1,,:A the ;ear that the brand
extension is introduced and one ;ear a-ter patent expir;. %oth sales 9alues will be e9aluated
-rom the 3* onl;. These sales 9alues are obtained -rom an external source.
Table 11 *ales 9alues >antac @external sourceB
&s can be seen in Table 11 abo9e the sales 9alue o- >antac -or the ;ear 1,,8 was not
a9ailable. +t seems that there is no decline in sales 9alue -or >antac between 1,,6 and 1,,7A
howe9er in 1,,6 the sales 9alue is onl; a9ailable -or three Fuarters o- a ;ear there-ore there
should be a decrease. <hen the patent o- >antac expiresA 1,,7A there is a clear steep decline in
the sales 9alue. %etween 1,,7 and 1,,: the sales declined with 78M in the 3* onl;. &lthou0h
76
the; marketed >antac 78 "T2A this could not counterbalance the steep decline in sales -or
>antac. The sales 9alue o- >antac in the ;ears be-ore patent expir; was worldwide around J2
billion @ProkeschA 1,:,B. To consider the strate0; -or >antac e--ecti9eA the combined sales o-
>antac and >antac 78 should be at least 60M o- the sales 9alue o- >antac be-ore patent expir;A
which is J:00 million worldwide. 3* sales are on a9era0e around 78M o- total worldwide
sales @this calculation is made -rom annual reportsB. ThusA the 3* should ha9e maintained
sales o- around J560 million. The combined sales in the 3* are J518., million which is less
than 60M o- the ori0inal sales 9alue o- >antac. %ased on these sales 9aluesA the "T2 strate0;
-ollowed b; 1laxo*mithDline is considered ine--ecti9e.
7.5.8 2laritin
The pharmaceutical compan; *cherin0-Plou0h chose -or both a second 0eneration strate0;
and an "T2 strate0; @2larinex and 2laritin "T2B to o9ercome patent expir; -or their dru0
2laritin in 2002. %oth 2larinex and 2laritin "T2 were launched in 2002A the ;ear o- patent
expir;. <hether the strate0; is e--ecti9e can be seen throu0h e9aluation o- the sales 9alues o-
2laritin -or the ;ears 2001 until 2007A the ;ear be-ore and two ;ears a-ter patent expir; and
the introduction o- the brand extension strate0;. ThenA the sales 9alues -or both 2larinex and
2laritin "T2 will be e9aluated -or the ;ears 2002 and 2007A the ;ear o- the introduction o- the
brand extension and two ;ears a-ter patent expir;. The sales 9alues are obtained -rom annual
reports and are worldwide -i0ures. The annual reports are obtained throu0h compan;.in-o.
Table 12 *ales 9alues 2laritin @annual reportsB
&s can be seen in Table 12 abo9e the sales 9alue o- 2laritin declined with almost :0M in the
;ear a-ter patent expir; @2002-2005B. The sales o- 2larinex increased durin0 the -irst ;earsA
howe9er a-ter these ;ears it declined with -0A2,MA which is a 9er; small decline. The sales o-
2laritin "T2 increased with almost 500M. The sales a-ter patent expir; should at least be
60M o- the sales 9alue o- 2laritin be-ore patent expir;. The combined sales 9alue should
there-ore be at least J1.:, billion. The combined sales in 2007 o- 2laritinA 2larinex and
2laritin "T2 are J1.7 billion. The steep decline in the sales o- 2laritin a-ter patent expir; is
77
not compensated with the sales o- the brand extensions. &ccordin0 to Lon ess @2007BA the
strate0; -ollowed b; *cherin0-Plou0h -ailed due to the -act o- dela;s in 0ainin0 appro9al o-
the F(&. *cherin0-Plou0h had problems to switch consumers to 2larinex be-ore 0enerics
were comin0 into the market. Taken e9er;thin0 to0etherA the second 0eneration and "T2
strate0; -ollowed b; *cherin0-Plou0h are considered ine--ecti9e.
7.5.6 2onclusion
From the results abo9e it can be seen that the )# strate0; is not used as a brand extension
strate0;. The new indication strate0; is used one time. The second 0eneration strate0; is used
-our times. The F(2 strate0; is not used and the "T2 strate0; is used two times. +n the abo9e
sub para0raphs the sales 9alues are e9aluated and it is showed whether the combined sales o-
the branded dru0 and its brand extension is hi0her than the ori0inal sales o- the branded dru0
prior to patent expir; or introduction o- the brand extension.
&s mentioned abo9eA the )# strate0; is not used and there-oreA h;pothesis 1bC 'ombined
sales of the brand name drug and its !" are more than 5-= of the original sales value of the
brand name drug prior to patent expiryA cannot be accepted nor deniedA it simpl; cannot be
tested whether it can be accepted. The new indication strate0; is used one time and was not
e--ecti9e. The sales o- Pro=ac and its brand extension are onl; 2:M o- the ori0inal sales 9alue
o- the brand name dru0. There-oreA h;potheses 2bC 'ombined sales of the brand name drug
and its new indication drug are more than 5-= of the original sales value of the brand name
drug prior to patent expiryA cannot be accepted. The second 0eneration strate0;A which is
pursuit in :0M o- the casesA is e--ecti9e in 80M o- the cases. The combined sales 9alues o- the
brand name dru0 and its extension@sB are hi0herA in 80M o- the casesA than the ori0inal sales
9alue o- the brand name dru0 prior to patent expir;. <orthwhile mentionin0 is that in the case
that the second 0eneration is -ollowed in combination with another strate0; it is not e--ecti9e.
There-oreA h;pothesis 5bC 'ombined sales of the branded drug and its second generation
drug are more than 5-= of the original sales value of the brand name drug prior to patent
expiryA can be accepted. The F(2 strate0; is not used and there-oreA h;pothesis 7bC
'ombined sales of the branded drug and %&' drug are more than 5-= of the original sales
value of the brand name drug prior to patent expiryA cannot be tested and thus it cannot be
said whether the h;pothesis can be accepted. The "T2 strate0; is used in 70M o- the cases
and is not e--ecti9e in either o- these cases. This means that the combined sales o- the brand
name dru0 and its brand extension is not hi0her than the ori0inal sales 9alue o- the brand
7:
name dru0. There-oreA h;pothesis 7dC 'ombined sales of the branded drug and its (T' drug
are more than 5-= of the original sales value of the brand name drug prior to patent expiryA
cannot be accepted. +n Table 15 below ;ou can -ind an o9er9iew o- all h;potheses and
whether the; are accepted as discussed here and in para0raph 7.2.
Table 15 "9er9iew h;potheses
7,
8 2"'243*+"'
Pharmaceutical companies -ace di--icult times when the patent o- their brand name dru0
expires. <ith the expir; o- a patentA a lar0e decline in sales is o-ten ine9itable. This decline in
sales is disad9anta0eous -or the return on in9estment. %ecause launchin0 a new dru0 in the
market is an enormous in9estmentA the total in9estment could turn out to be around J:00
millionA this ne0ati9e impact on return on in9estment is 9er; important -or pharmaceutical
companies. 4i-ec;cle mana0ement is becomin0 increasin0l; important -or pharmaceutical
companies to maintain the sales 9alues o- their blockbuster dru0s when -acin0 patent expir;.
+n this research the main research Fuestion isC
<hat kind o- brand extension strate0ies are pharmaceutical companies usin0 when
prescription dru0s are -acin0 patent expiration and what is the impact on their sales 9aluesG
+n accordance with the brand extension strate0; o- &nso--A which is used in this researchA
pharmaceutical companies ha9e the possibilit; to use -i9e brand extension strate0ies in the
three ;ears be-ore the date o- patent expir;. These -i9e strate0ies areC )#A new indicationA
second 0enerationA F(2 and "T2. +n the case stud; conductedA onl; three out o- these -i9e
brand extension strate0ies are used when a patent expir; date is approachin0. The three used
strate0ies areC The second 0enerationA new indication and "T2 strate0;. The second
0eneration strate0; is used most o-ten. From the brand name dru0s that used the second
0eneration strate0;A 80M o- them are showed to be e--ecti9e. +n these casesA the sales are
maintained or e9en increased when a pharmaceutical compan; used the second 0eneration
strate0; which indicates that the strate0; is 9er; use-ul. &lthou0h both the new indication and
"T2 strate0; are used b; pharmaceutical companiesA the; are shown to be ine--ecti9e in this
research. The impact o- the new indication andKor "T2 strate0; on the sales 9alues is mainl;
ne0ati9e.
+n conclusionA based on the results o- this researchA the second 0eneration strate0; is the most
e--ecti9e strate0; pharmaceutical companies can use to o9ercome patent expir; o- their
blockbuster brand name dru0s. <ith this strate0; there is the hi0hest chance o- maintainin0
the sales 9alues o- the brand name dru0.
80
6 #!2"//!'(&T+"'*
The pharmaceutical industr; is -acin0 di--icult times. &s studied in this researchA it is 9aluable
-or pharmaceutical companies to know what strate0ies are most e--ecti9e to a9oid a sales
decline when -acin0 patent expir;. &s concludedA a second 0eneration strate0; is an e--ecti9e
strate0; to use -or brand name dru0s. ereA implications -or mana0ers and researchers are
discussed.
"#1 M+,+2%'1+7 143715+/1&,0
/ana0ers o- pharmaceutical companies work in a complex industr;A where rules and laws are
o- a main concern. &ll steps taken b; pharmaceutical companies are monitored. +t is 9er;
important -or mana0ers to ha9e a clear 0oal -or their brand name dru0. <hat do ;ou want to
achie9e with the dru0G From this research it is apparent that pharmaceutical companies need
to start earl; with li-ec;cle mana0ement o- their brand name dru0 in order to o9ercome patent
expir; in a later sta0e o- the li-ec;cle. +t is necessar; to look at the patent expir; o- a brand
name dru0 immediatel; a-ter introduction o- the brand name dru0. <hen the patent expir;
date o- a brand name dru0 is mana0ed -rom the start onA it is more likel; to come up with an
e--ecti9e strate0; -or the brand name dru0 when patent expir; is approachin0. From this
research it is concluded that a second 0eneration strate0; is most e--ecti9e. owe9erA this does
not mean that a second 0eneration strate0; is the best option -or all brand name dru0s. &s
mentioned be-oreA a pharmaceutical compan; needs to start with li-ec;cle mana0ement o- the
dru0 as earl; as possible. !9er; dru0 is di--erent and there-ore the strate0; used can be
di--erent as well. +n conclusionA li-ec;cle mana0ement is important. 3n-ortunatel; there is not
one standard 0uideline + can pro9ide -or mana0ers. /ana0ers ha9e to build upon a brands.
eFuit; and on the pipeline o- the pharmaceutical compan;. The most important implication -or
mana0ersC *tart as earl; as possible with li-ec;cle mana0ement.
"#2 R%0%+'5$ 143715+/1&,0
#esearchers who are acti9e in research in the pharmaceutical industr; ha9e a lot o- interestin0
areas in which the; can do research. +t is a complex industr; and there is enou0h room -or
-uture researchA which will be discussed in the next chapter. The most important implication
81
-or researchers -rom this research is that thorou0h research o- blockbuster dru0s is needed to
-ind out what the maHorit; o- the brand name dru0s with a blockbuster status do to o9ercome
patent expir;. &nd in such research it is needed to -ind out what the reasonin0 is behind
decisions in -ollowed strate0ies. <hen such research is doneA e9en more can be said about
what pharmaceutical companies can doA or should do with their patent expiries o- their brand
name dru0s in the -uture.
82
7 4+/+T&T+"'* &'( F3T3#! #!*!&#2
The 0oal o- this research was to -ind e--ecti9e strate0ies used b; pharmaceutical companies to
o9ercome patent expir;. Patent expir; o-ten leads to lar0e declines in sales 9alues. %; -indin0
e--ecti9e used strate0ies the problem o- sales decline could be a9oided. &lthou0h the second
0eneration strate0; is clearl; the most used and e--ecti9e strate0; in this case stud;A there are
some limitations to this research and areas -or -uture research.
"7#1 L141/+/1&,0
This research has -our main limitations. First o- allA due to the -act that this research is a case
stud; it is hard to 0eneralise -or the whole pharmaceutical industr;. +n this research onl; -i9e
cases are studied which makes it hard to 0eneralise -or the whole industr;. +n order to do thisA
more blockbuster dru0s ha9e to be studied to ha9e a 0ood sample o- the pharmaceutical
industr;. *econdl;A in this research it is onl; researched what kind o- strate0ies
pharmaceutical companies are usin0 when -acin0 patent expir;. The wa; in which the; came
up with a strate0; and wh; the; chose the used strate0; is not researched. For exampleA -rom
this research it is not clear wh; two possible strate0ies are not used. <hen the reasonin0
behind the chosen strate0; is known it is more reasonable to set a standard -or choosin0 a
strate0; when pharmaceutical companies -ace patent expir; o- a dru0. <ith the current
researchA it is possible to state that the second 0eneration strate0; is the most e--ecti9e strate0;
that pharmaceutical companies can use. owe9er it would be 9er; 9aluable to ha9e a more
standardised 0uideline -or companies when the; -ace patent expir;. ThirdA a limitation is that
the sales 9alues obtained are -rom di--erent sources what makes it hard to compare the results.
Part o- the sales 9alues are obtained -rom the annual reportsA but others are -rom websites.
"ther sales 9alues are -rom the 3* onl;A whereas others are worldwide sales 9alues. +t would
be 0ood to ha9e exactl; the same sales 9alues o- all the cases which are consistent with each
other. Finall;A a limitation is that the standard used to label a strate0; as e--ecti9e is set b; the
author hersel-. This is done throu0h both usin0 the -acts o- what can happen to sales when
0eneric dru0s come into the market and with common sense. owe9er this could be
established more thorou0hl;.
85
"7#2 F6/6'% '%0%+'5$
There are three main areas o- -uture research. FirstA accordin0 to Perr; @1,,:B it is necessar;
with a case stud; to test -or statisticall; 0enerali=abilit;. &s mentioned in the limitationsA there
is not enou0h data to 0eneralise the -indin0s -or the whole industr;. "n top o- thatA it would be
pre-erred b; the author to ha9e access to cases o- all blockbuster dru0s that -aced patent
expir; in the past. owe9er due to limited access to cases and the time constraint this was not
possible. This research is a 0ood startA howe9er an extensi9e research on all blockbuster dru0s
and their patent expiries would be interestin0 to research in the -uture. <ith this more
thorou0h research in the -utureA 0enerali=abilit; is also more -easible. & 0ood research will be
to extend this current research with more cases and stud; them in exact the same wa;. 2ases
could be obtained throu0h the database used hereA or b; conductin0 case studies ;oursel-.
<a;s to do this is b; inter9iewin0 mana0ers -rom pharmaceutical companiesA handin0 out
FuestionnairesA usin0 Fuantitati9e market dataA obser9ationA usin0 competiti9e dataA etcetera.
& second area o- -uture research is the reasonin0 behind chosen strate0ies and wh; some
strate0ies do not work that well as anticipated. &lthou0h the second 0eneration strate0; is the
most used and e--ecti9e strate0; in this research it could be the case that -or other dru0s this
strate0; does not work. Probabl; there is not one best strate0;A or a standard -or
pharmaceutical companies to -ollowA when the; -ace patent expir;. Pharmaceutical companies
possibl; ha9e to look at what there is in the pipeline and whether it makes sense to in9est in
the existin0 brand name dru0. There-oreA -uture research in the reasonin0 behind chosen
strate0ies is important to see whether it is possible to come up with a standard -or
pharmaceutical companies when the; -ace patent expir;. "ne wa; to research this is b;
inter9iewin0 mana0ers who were in9ol9ed in the strate0ies -ollowed b; pharmaceutical
companies. <ith inter9iewsA one can -ind out what the reasonin0 was and whether this is
0enerall; the same -or all pharmaceutical companies. +n that wa; the possibilit; exists that a
standard protocol can be made -or pharmaceutical companies who are -acin0 patent expir; o-
their blockbuster brand name dru0 in the -uture. & third topic -uture research is to look into
the laws that exist in this industr;. The <axman-atch act is le0islated to increase research
and de9elopment @#U(B and make it easier -or 0eneric dru0s to enter the market. owe9erA
what can be seen in practise is that the pipeline o- pharmaceutical companies is not that lar0e
an;more and that the return on in9estment decreases. %oth the decreasin0 new products in the
pipeline and decreasin0 return on in9estment do not stimulate #U(. There-ore it is important
to assess the laws which exist and look -or optimisation o- #U( in the pharmaceutical
87
industr;. The introduction o- 0eneric dru0s is indeed made easierA and that works. $etA because
the law is enacted to stimulate two thin0sA it should be researched what can be done in the
industr; to make it bene-icial -or both parties. +n other wordsC +n what wa; can the law be
re9ised in order to increase both the return on in9estment and #U( and not dilute the
encoura0ement o- introduction o- 0eneric dru0sG
These abo9e three areas o- -uture research can 0i9e mana0ers a better understandin0 o- their
-ield and what the possibilities are in their industr;.

88
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60
A!!ENDICES
A33%,-1. I !$+'4+5%6/15+7 1,-60/'(
The pharmaceutical industr; is a hi0h-risk industr; -or pharmaceutical companies. "nl; one
in ten thousand new compounds are actuall; launched in the market as a dru0. &nd onl; 50
per cent o- these dru0s will recei9e their in9estment backA a positi9e return on in9estment
@2onle;A 2008B. This hi0hl; competiti9e and research dri9en industr; is a complex industr;.
<hen a pharmaceutical compan; -iles -or a patent -or a new compound or -or the method o-
makin0 and usin0 this compound this does not 0i9e the compan; directl; the ri0ht to brin0 it
to the market as well. The Patent and Trademark "--ice @3*PT"B allows the patents on the
compounds and on the methods o- usin0 and makin0 them. The Food and (ru0
&dministration @F(&B appro9es the product -or sale to consumers @*chacht and ThomasA
2008B. These two di--erent institutes look at di--erent criteria. The 3*PT" looks at the
compound in li0ht o- ad9ancement o- public domain knowled0eA the F(& considers sa-et;
and e--ecti9eness -or consumer use. The two institutes can independentl; Hud0e whether the;
0i9e patent ownership or marketin0 appro9al -or the dru0. @*chacht and ThomasA 2008B. "n
a9era0e this process takes twel9e ;ears and costs are approximatel; J800 million. &ccordin0
to (i/asi et al. @2005B the costs o- a '/! is e9en moreA about J:02 million. To make a
positi9e return on in9estment a dru0 has to reach a minimum sales 9alue o- J720 million per
;ear durin0 its li-etime @2onle;A 2008B. &lthou0h it is a 9er; costl; process due to all the
researchA clinical trialsA appro9alA etceteraA both the patent and the market exclusi9it; 0i9es an
incenti9e -or pharmaceutical companies to in9est in the process @%err;A 2007B. The costl;
process is also an incenti9e to 0et a return on in9estment as lar0e as possibleA there-ore
pharmaceutical companies are 9er; reluctant to let 0o o- 9er; success-ulA blockbuster dru0s
@dru0s with sales 9alue o- at least J1 billionB. The; want to extend the li-etime o- these dru0s
as much as possible.
61
A33%,-1. II W+.4+,-H+/5$ A5/
+n 1,:7A si0ni-icant chan0es ha9e been made in the patent laws -or the pharmaceutical
industr;. The (ru0 Price 2ompetition and Patent Term #estoration &ct o- 1,:7 was le0islated
to make it easier -or 0eneric dru0s to be introduced. This act is also known as the <axman-
atch &ctA or the atch-<axman &ct.
The &ct encoura0es #U( -or new dru0s and at the same time it encoura0es introduction o-
0eneric dru0s. These two obHecti9es are two competin0 ones in the pharmaceutical industr;
because at the time that a 0eneric dru0 is enterin0 the marketA pharmaceutical companies will
see a decline in their sales 9alue which is not necessaril; an incenti9e to in9est in #U(.
owe9er in the <axman-atch act a trade-o-- is apparentC O+n exchan0e -or permittin0
manu-acturers o- 0eneric dru0s to 0ain F(& marketin0 appro9al b; rel;in0 on sa-et; and
e--icac; data -rom the ori0inal manu-acturer.s '(&A the ori0inal manu-acturers recei9ed a
period o- data exclusi9it; and patent term extension.S @*chacht and ThomasA 2008C p.25B This
trade-o-- 0i9es a pharmaceutical compan; an incenti9e to in9est in #U(. &ndA on the other
sideA because it is less costl; -or 0enerics to enter the market since the; can rel; on data -rom
the ori0inal manu-acturersA it encoura0es the introduction o- 0enerics.
"ri0inall; a patent term is set to twent; ;ears -rom the date the pharmaceutical compan; -iles
-or it. The <axman-atch &ct 0i9es pharmaceutical companies the opportunit; to -ile -or a
patent extension @restorationB which pro9ides an extension eFual to the time lost durin0
clinical testin0. This extension cannot exceed -i9e ;ears. *econdl;A the remainin0 term o- the
patent cannot exceed -ourteen ;ears. @*chacht and ThomasA 2008B. To acFuire such patent
term extension the pharmaceutical compan; need to -ile an application to the 3*PT". For
0eneric dru0s the wa; to 0et market appro9al is shorter and cheaper with the introduction o-
the <axman-atch act. The <axman-atch &ct created a new t;pe o- applicationA the
&bbre9iated 'ew (ru0 &pplication @&'(&BA -or market appro9al. &n &'(& can be -iled
when the 0eneric dru0 is the bioeFui9alent o- the brand name dru0. Throu0h this new
procedure the 0eneric manu-acturer can launch its 0eneric in the market as soon as a patent o-
the brand name dru0 expires @*chacht and ThomasA 2008B.
62