Introduction

In June 2004 Natalie Jarrar, marketing manager for Abbot Laboratories, has learned that the FDA
(U.S. Food and Drugs Administration) had ruled that a generic levothyroxine drug manufactured by a
company called Sandoz was bioequivalent and therefore a viable substitute for Synthroid, the
original branded and most dominant drug used to treat hypothyroidism and the companies biggest
seller. Typically once a generic drug comes on the market the cheaper generic version quickly
captures the vast majority of the market.

This case report will look into what goal Natalie should take for Abbot Laboratories, who should be
the primary target in order to achieve that goal, should Abbot go for a secondary target and who
would this be, what strategy should they use with regards to pricing, packaging, distribution and
communication.

What is Synthroid?

Synthroid is a synthetic version of the body's own thyroid hormone. One of several such
medications, it is prescribed for patients with underactive thyroid glands also known as
hypothyroidism. In 2003 approx. 13 million people in the United States depended on thyroid drugs,
including 8 million who took Synthroid. Hypothyroidism is where the body fails to produce two
hormones called triiodothyronine (T3) and thyroxine (T4). It was one of the first thyroid drugs to
market in 1958 which meant it went on sale and remains on sale without the explicit approval of the
U.S. Food and Drug Administration due it being decades old and slipping through the regulatory net.
In 2003 it was the second most frequently prescribed drug in the U.S. maintaining approx. 90% of
the levothyroxine market reaching national sales of approx. $565 million.

What should Abbot Laboratory’s goal be for Synthroid?

Abbot’s goal should be to retain the maximum market share going forward due to the reasons
below.

(Kotler, Armstrong, Harris, & Piercy, 2013) states each product when launched will have a life cycle
consisting of 5 main phases namely; Product development; Introduction; Growth; Maturity and
Decline. Synthroid is in the growth phase of the product life cycle as sales are increasing along with
profits. Sales were $850 million in 2003 and rose to $873 million in 2004 and have been steadily
increasing.

The U.S. Market is growing with a vast number of undiagnosed patients who will be in need of
thyroid drugs in the future. In 2003 prescription sales were in the region of $466 billion which is
massive.

Abbot Laboratories is ranked 11th globally therefore it’s in a good position to expand into developing
markets. It has achieved economies of scale with regards to R&D, marketing, distribution and sales
which could make it easier to enter developing markets and increase its market share even further.
Developing markets such as Brazil, Russia, India and China (known as the ‘BRIC’ countries) are
increasing in size rapidly and ripe for the taking. As the threat of having Synthroid gradually removed
from the market looms by the FDA moving to these markets which have less regulations is a very
attractive option to increase market share globally It would be easy to move into market and gain a
large share though would require brand building strategies in which profitability was not solely
dependent on patents.
The price of the branded drug normally stays the same even when generics have entered the market
or even have been known to increase due to the ‘generic competition paradox’ (Tybout & Hennessy,
2013). This paradox is attributed to 2 market segments namely price-insensitive consumers with
extensive insurance cover and price-sensitive consumers with less insurance cover. The market share
can be retained and increased by the branded drug in the price-insensitive market in which insurers
rather than patients bear the full impact of the higher price.

It’s hard for patients to change to another thyroid drug. The process to change from Synthroid to
another generic is complicated and can take anywhere from 7 to 10 weeks with numerous
appointments, check-ups and tests to take into consideration. Doctors/pharmacists and patients
may not want the hassle and may stick to what they have been using over the years, i.e. Synthroid
(A) leaving the new generic out in the cold.

Bibliography
Kotler, P., Armstrong, G., Harris, L. C., & Piercy, N. (2013). Principles of Marketing 6th Edition.
Harlow: Pearson.

Tybout, A. M., & Hennessy, J. (2013). The Case of Synthroid (A): Marketing a Drug coming off Patent.
Kellogg School of Management, 4.