RUNNING HEADER: CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA

Case Analysis: Eli Lilly-Developing Cymbalta

Sharika Bradley August 18, 2011 AMBA 650 - 9042

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA Identification of the strategic issues and problems Eli Lilly and Company has many issues facing them in regards to upcoming patent expiration for their flagship product, Prozac. Finding a successor to Prozac would not be

easy. The chosen successor would have large shoes to fill, starting with a $2 billion revenue gap to fill. In a few years, Eli Lilly will have to compete with companies who produced generic fluoxetine. The front-runner to be Prozacs successor is Cymbalta. Cymbalta embodied three key ingredients similar to Prozac; Cymbalta (duloxetine) appeared to have the three key ingredients of a potential successor to Prozac: 1) efficacy as good as or better than existing antidepressants, 2) no apparent safety or toxicity issues, and 3) the possibility of meeting a previously unmet patient need. (Laufer & Ofek, 2008, p.2)

The New Antidepressant Team, NAT, is faced with the decision of how to prioritize Cymbalta clinical trials and which clinical objective to approach first. Large scale clinical trails range from $25 million to $50 million and could last between 15 to 18 months in length. Given the cost and time frame of clinical trials of this magnitude, NAT only has the funds and time to pursue one objective before submitting Cymbalta to the FDA for marketing approval. The solution to Eli Lillys problem can be summed up into three options; Option 1 Invest in clinical trials to test and prove Cymbaltas depression efficacy using one daily dose. Option 2 Pursue and establish separate pain treatment, as well as, MDD treatment in twice-a-day dosing. Option 3 Delay FDA submission until both options are tested and established.

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA A major constraint for Eli Lilly and Company is determining the specific treatment and proper dosage for Cymbalta. Another major restriction is limited capital for clinical trials

and the time-consuming research and developmental processes. This paper will analyze the industry, the market, buyer behavior, and the options available to Eli Lilly and Company.

Analysis and evaluation Eli Lilly and Company Colonel Eli Lilly, a pharmacist, launched Eli Lilly & Company in 1876 with the purchase of a laboratory in Indianapolis, Indiana. The first successful launch was the creation of the gelatin-coating pills process. The creation of this process enhanced the ease of swallowing pills. In 1923, Eli Lilly and Company in conjunction with the University of Toronto introduced Iletin. Iletin was the first insulin developed to be mass-produced. Various products that improve diabetes treatment followed this development. Throughout the 1950s and 1960s, Eli Lilly produced various important and successful products. Prozac, an antidepressant drug, was launched in 1988; this launch led to much success for the company.

Pharmaceutical Industry - Depression Depression as an illness is characterized by a sustained emotional disturbance that interferes with daily activities such as the ability to work, study, sleep, or eat, for a period of time as short as two weeks or as long as five years or even longer. (Laufer & Ofek, 2008, p.3) Prior to the late 1800s, depression was not recognized as an illness. Many patients suffering from depression were sent to mental asylums or went untreated. It was not until

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA the late 1800s and early 1900s that a formal mental disorder classification and symptom identifications were developed. Before the use of antidepressants, treatment of depression included Freuds psychoanalysis, induced seizures, electric convulsive therapy, and psychotherapy. It was not until the early 1950s that pharmaceuticals became the primary source of treatment for depression.

There is much controversy surrounding the link between chronic pain and depression. It has been hypothesized that the key neurotransmitters of depression, norepinephrine and serotonin, play a role in pain regulation. The imbalance of these neurotransmitters reduces an idividuals pain tolerances and intensifies pain sensitivity. Also, primary care physicians (PCPs) estimated that approximately 50% of patients suffering from depression who came to their office also suffered from pain symptoms, most commonly tension headache, neck/shoulder pain, and back pain. (Laufer & Ofek, 2008, p.13) Although scientists hypothesize and patients complain, psychiatrists believe the pain is all in the mind of the patient. They believe if the underlying depression is treated than the pain will dissipate.

Market and Buyer Behaviors Most medical drugs are often unsuccessful commercially due to the lack of proper market potential assessment and/or not satisfying patients needs. The market demand, buyers behaviors, and values must be identified and addressed to ensure a pharmaceutical success. Buyers behaviors and values will be measured through physicians prescribing patterns and

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA patient segmentations. Cymbaltas, the potential Prozac successor, competitive edge will drive the market demand for each respective option discussed.

The most important factors physician utilize to determine which drug they prescribe to the patient are the side effects and drug tolerability. The efficacy for depression and pain ranked the most important among physicians followed by dosage. Physicians prefer prescribing single dose medication to cater to the patients convenience resulting in a high demand for single dose antidepressants. The patients needs were examined by physicians in a patient segmentation study. These patient segmentations identified patient demographical data, symptoms, pharmaceutical treatment, and response to antidepressant therapy. Virtually all patient segments had symptoms of pains. Based on patient profiles, 49.3% experienced pain symptoms, therefore pain treatment must be addressed to meet the patients needs.

S.W.O.T Analysis Strengths o It surpasses its predecessor. o Less expensive antidepressant. o It effectively treats Major Depressive Disorder, MDD. Weakness o The lack of funding to complete all clinical trails. o The uncertainty of a once-a-day dosage of 60 mg for Cymbalta. o The lack of proof that Cymbalta will address chronic pain. Opportunities

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA o To develop a product that would surpass its predecessor. o To produce a product that will meet the needs of the patients. o To develop a product unlike any other antidepressant on the market by addressing chronic pain as well as depression. Threats

o The introduction of a less expensive version of Cymbalta prior to Cymbaltas launch due to delay o The potential lack of acceptance of a multiple dose antidepressant.

Option Analysis Option #1 - Invest in clinical trials to test and prove Cymbaltas depression efficacy using one daily dose. This option would treat major depressive disorder and would offer a more convenient dosing for patients. From a marketing view, this option would place Cymbalta on par with its competitors but it will not set them apart. The single dose Cymbalta would likely be viewed favorably among physicians but will not validate the treatment of chronic pain.

Option #2 - Pursue and establish separate pain treatment, as well as, MDD treatment in twice-a-day dosing. This option will focus on clinical trials for an indication that could possibly form differentiation between Cymbalta and current antidepressants. This is significant because physicians viewed current antidepressants as similar and alike, with no particular product standing out among them. The lack of a single dose option will not be viewed favorably by physicians. However, the ability to effectively treat depression as well

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA as pain will meet the needs of the patients; this would result in a high consumer demand.

Option #3 - Delay FDA submission until both options 1 & 2 where tested and validated. By postponing the submission of Cymbalta to the FDA for marketing approval, both goals could be established before launched to the public. This option would meet the needs of the patients and would likely be preferred by physicians due to its single dose advantage. The ability to capitalize on both goals will allow Cymbalta to not only surpass its predecessor but also establish dominance in the market. Although, this option provides the most beneficial outcome it will also require the most time to validate. This will result in the loss of valuable marketing time and exposure; leaving the door open for other companies to gain a market advantage.

Recommendation Given the options set forth in the previous analysis, the recommended option for Eli Lilly and Company would be to pursue and establish separate pain treatment, as well as, MDD treatment in twice-a-day dosing (option #2). This solution will not only set Cymbalta apart but it will also ensure the consumers needs are met. By moving forward with a multipledose Cymbalta, Eli Lilly and Company will be able to capitalize on an untouched market sector-antidepressant medication that relieves chronic pain. While Cymbalta will achieve a high consumer demand, prescribing physicians will not fully endorse this solution. To counter this issue, it is strongly recommended that Eli Lilly and Company pursue a clinical trail for a single dose in the near future to further improve its marketability in market segments.

CASE ANALYSIS: ELI LILLY-DEVELOPING CYMBALTA References Laufer, R. & Ofek, E. (2008). Eli Lilly: Developing Cymbalta. Harvard Business School. Retrieved from

http://cb.hbsp.harvard.edu/cb/web/aggregation/my_library.seam?contextTyp e=course&contextObject=9581897 on July 27, 2011.