2013

Subject: Global Marketing LB5301 Case Study Analysis

By Sagar Deshmukh (12770415)

[ THE HEADACHES OF GLAXOWELLCOME ]

Case Study about positioning of Glaxos second generation Migraine tablet Naramig in U.S. market after Analyzing results of same launch in U.K. market.

The Headaches Of Glaxowellcome 2013

A. Introduction:

In 1995, a new UK based pharmaceutical company Glaxo Pharmaceuticals, acquired Burroughs Wellcome in a giant corporate takeover which gave birth to GlaxoWellcome Inc. This new acquisition made GlaxoWellcome Inc. one of the three biggest Pharmaceutical companies in the world with approximate market share of 4% worldwide (in Prescription pharmaceutical Market). It was rst pharmaceutical company to present and market a innovatory new range of prescription medications of migraine widely known as triptans. It has launched 1st generation of medication in 1993 as Imigran in UK and as Imitrex in US. Since then it has captured 91% market share of the prescription medication for migraines in the U.K. In 1997, Glaxo was taking decision to launch their second generation triptan as Naramig in UK. But their competitor Zeneca was supposed to launch their Migraine medication Zomig before Naramig and market it as second generation of triptan. To compete with Zomig, Sir Benjamin Palmer, the general manager of Glaxos CNS/GI Metabolic division, decided to go for Replacement Strategy for introducing their second generation triptan Naramig. This Strategy lead Glaxo for short term success against Zomig.

B. Problem Statement:
Now, in 1998 Glaxos US Division wanted to launch second generation triptan as Amerge. Even in US Market Zeneca would be launching their Second generation triptan before Glaxo. Mark Glackin, U.S. General Manager of Glaxos CNS/GI Metabolic Division, has to decide about Market positioning and Marketing Strategies for US Market against Zomig and to be the leader in Migraine triptans (in Prescription pharmaceutical Market).

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The Headaches Of Glaxowellcome 2013

C. Strategic Analysis:
To understand the Micro Marketing environment available in US for Second generation Migraine triptan we will do Porters Five Forces Analysis. (us-pharmaceutical-industryporter-5.html, 2012)

Threats of entry posed by new or potential competitors - LOW Closeness of substitute products - MEDIUM

2) Degree of rivalry among existing firms MEDIUM

Bargaining power of suppliers LOW

Bargaining power of buyers MEDIUM

Figure 1: Porters Five Forces Analysis

1. Threats of entry posed by new or potential competitors i.e. Zeneca Low

High barriers to entry: Glaxo had put a lot of capital into research and development, lengthy approval process, marketing before it is able to receive any returns. So they didnt want to lose their current market share. So to answer the threat of entry posed by Zenecas Zomig Glaxo decided to introduce their second generation triptan Amerge in US Market.
2. Degree of rivalry among existing firms Medium

Glaxos rival in Second generation Migraine triptan is Zenecas Second generation triptan known as Naramig. Zeneca was promoting their first Migraine medication as Second generation of Migraine triptan to compete against Glaxos existing triptan Imitrex. As Glaxo holds 91% of prescribed medication and they were the first company to introduce Specialist medication for Migraine, they have the reputation and edge over Zeneca. So degree of rivalry is Medium.

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The Headaches Of Glaxowellcome 2013

3. Bargaining power of suppliers - Low

In US, Large pharmaceutical companies like Glaxo generally enjoy substantial buying power. They can command the price they want. So supplier doesnt have much Bargaining Power here. (pharmaceutical-industry-united-states)
4. Bargaining power of buyers - Medium

Generally, Consumers of pharmaceutical industry have very little bargaining power as most of the medication is prescribed by the Hospitals and doctors. Consumers need to buy the drugs at any available price. But as DTC (Direct to Consumer) Marketing is Legal in US, Companies like glaxo can market their product directly to Consumers. So it gives consumers little more buying power as they can ask for particular drug to doctor. (pharmaceuticalindustry-united-states)
5. Closeness of substitute products Medium

Glaxo is facing rivalry with Zenecas Zomig as a generic competitor to their Readyto-launch Amerge. Generally, if product is new then consumer wont have choice for an alternative but here Amerge is already in Market covering majority of market so Zomig is not quite a big threat. Although Zeneca is marketing it as second generation triptan so it is quite close to be a substitute product.

To understand the Macro Marketing environment available in US for Second generation Migraine triptan we will discuss PESTLE Analysis. (a-pestle-analysis-for-thepharmaceutical-industry, 2011) PESTLE Analysis: PESTLE Analysis stands for Political, Economic, Social, Technological, Legal and Environmental. 1. Political and Economic: The U.S government has not engaged socialized medicine, but Medicare and Medicaid covers majority of citizens. Here the U.S. health care system follows an insurancebased coverage and every individual always buy insurance from a private insurance company and this company pays for their medical costs to hospitals or doctors. Privatization of Medical Insurance has made it a Key business offering due to such health care System in US. There is no pressure on Pricing of these drugs from Government Side. These triptans are available to all consumers on doctors Prescription only. 2. Technological: Glaxo has come up with advanced 2nd generation Triptan of their own as Amerge because Glaxo, as a company, wanted to bring new medications and improvements to their current product line.

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The Headaches Of Glaxowellcome 2013 Glaxo had extended their line of product to suit consumers time to time. Imitrex is available in following format. Line Extension Injection Tablet Nasal Spray U.K. U.S. 3/1993 3/1993 5/1995 7/1995 5/1997 8/1997 Figure 2: Line Extension of Glaxos Triptan

But their new Triptan Amerge is only in Tablet form so they need to adopt new techniques to meet consumer needs. Glaxos research discovered that for this new triptan to be successful, patients and doctors would require it to be as effective as Imitrex/Imigran but with a longer duration of pain relief and a lower side effect profile (Figure 3). They need to use communication media to spread awareness about how Amerge (Naramig in UK) is better than Imitrex (Imigran in UK). (us-pharmaceutical-industry-porter-5.html, 2012)

Imigran vs. Naramig

M EASURE Speed of onset Peak efficacy Consistency of response Tolerability Incidence of chest pain Incidence of recurrence ORDER(best first) Imigran > Naramig Imigran > Naramig Imigran > Naramig Naramig > Imigran Naramig < Imigran Naramig < Imigran

Figure 3: Imitrex (i.e. Imigran) Vs. Amerge (i.e. Naramig)

3. Social: Migraine medication was not available till 1993 so most people take ineffective OTC (Over-the-counter) drugs to fight their migraine headache. So the fact was that roughly 90% of migraine patients were not being medicated with a triptan (See Figure 4). So, Glaxo should consider the market of next generation triptan drugs to have great potential.

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The Headaches Of Glaxowellcome 2013

Figure 4: Migraine Market

4. Legal: In US every medication is required to be approved from FDA before it can market and sell it to Consumers. This approval goes through four stages before FDA gives them approval. These four stages are, 1. 2. 3. 4. Preclinical Testing Clinical Trials, Phases Application Approval/Refusal

In U.S. direct-to-consumer (DTC) advertising is Legal. And DTC advertising in the U.S. has a large impact on sales as consumer would have choice of their drug. So the patients requests for specific medications which was marketed to them by specific pharmaceutical company, would definitely affect the companys sales to medical institutions. 5. Environmental: Environmental issue is a growing concern and the people are becoming more aware that so the need for businesses to be more positive in this field is high. So now Pharmacy companies need to link their business as well as marketing plans to environmental issue. This can be the opportunity to combine it to their Corporate Social Responsibility programmes. (us-pharmaceutical-industry-porter-5.html, 2012)

D. Recommendation:
Same as UK case, here Mark Glakin has 5 Positioning options. 1. 2. Clinical/Patient Based Segmentation Distribution Based Segment
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The Headaches Of Glaxowellcome 2013 3. 4. 5. An Alternative to Imitrex A Replacement for Imitrex Dont Launch Amerge at all

As there is major difference in UK and US Health Care System and different government regulations about marketing Amerge, Glaxo cant use same strategy as Naramig to market Amerge. So concluding from Environmental analysis I have done through Porters Five Forces analysis and PESTLE analysis, recommendation for marketing Amerge would be An alternative (Superior) to Imitrex. The reason for Alternative strategy is that it would take away the noise from competitor. This in turn could decrease the hype of the 2nd generation triptan. So Zenecas Marketing their triptan as 2nd generation triptan is useless. The flaw of this strategy is that if message about new Amerge is not clear then it will lead to confusing image of company. Glaxo can cover this drawback by effective use of Direct-to-consumer marketing (DTC) which is legal in US. Effective use of this method will provide clear image of Amerge as superior alternative for Imitrex.

E. References:
1. a-pestle-analysis-for-the-pharmaceutical-industry. (01, 2011). Retrieved from
http://www.strategic-planet.com/: http://www.strategic-planet.com/2011/01/a-pestleanalysis-for-the-pharmaceutical-industry/

2. us-pharmaceutical-industry-porter-5.html. (04, 2012). Retrieved from

http://hajirstony.blogspot.sg/.

3. arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31. (n.d.). Retrieved

from http://www.oxlearn.com/: http://www.oxlearn.com/arg_Marketing-ResourcesPESTLE---Macro-Environmental-Analysis_11_31

4. pharmaceutical-industry-united-states. (n.d.). Retrieved from

http://selectusa.commerce.gov/industry-snapshots/. James Cook University, Singapore Page 6

The Headaches Of Glaxowellcome 2013 5. Philip Kotler, G. A. (2008). Principles of Marketing. New Jersey: Pearson Education Inc.

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