AstraZeneca, Prilosec, and Nexium: Marketing challenges in the Launch of a second-generation drug Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

AstraZeneca, Prilosec, and Nexium: Marketing challenges in the Launch of a second-generation drug Case Study Analysis

Evaluation of marketing options:

Considering the evaluation of marketing options, AstraZeneca can consider the option of drug licensing. This is because it brings significant improvement in the patients’ compliance without the requirement of any additional cost and also brings no change in the profit generated by the manufacturer. The adoption out-licensing approach is considered efficient because it significantly resolves the issue of the organization associated with declined sales by the launch of cheaper drugs by generic manufacturers. Thus, the out-licensing of such products with the generic manufacturers would assist the organization to deal effectively against the competitive threat and pricing issues of the drugs offered by them. (LaMattina, 2012)

Marketing Mix:

Product

The products mainly include the generic version of Prilosec and OTC version of Prilosec. The products are the same as the original Prilosec but differ in the pricing. Whereas, the OTC version tends to promote the use of the drug without the requirement of the drug by the patients, doctors, HMOs, and others.

Price

The price of the products would be lower as compared to the original and first introduced version of the patent product in the market. However, the active ingredient of the product is already approved by FDA and clinical trials have also been conducted to determine its effects on human health. Being the widely sold drug – Prilosec, the price of a generic product is lower as compared to patent drugs and the OTC version is less cheap than a generic drug.

Promotion

The promotional strategy would be based on direct-to-consumer campaigns. Because the DTC marketing approach had been known to market the products in an efficient manner. However, the regulations have been changed by the FDA regarding DTC marketing, but still, it is one of the effective approaches because it is expected to assist the organization in gaining significant market share.

Place

The products are to be launched in the United States. This is because of the significant growth of the American market. Similarly, the market share of the product is high in the United States which significantly provides the organization to increase its sales and volume.

Strategic Approach:

Although the availability of the option to consider the introduction of generic products in the markettends to provide the organization with a first-mover advantage in the generic market. But, the generic product offering would require the organization to lower the cost which would make it difficult for the organization to cover its return on investment. Similarly, the expiration of the patent would also allow generic manufacturers to manufacture the product at a much lower cost. But, the entrance of AstraZeneca in the generic market would provide the organization to gain a competitive advantage in the market.

Based on the fact, the prices of generic drugs offered by generic manufacturers tend to increase because of the lack of direct competition. Thus, the entrance of the organization in the generic market would not only provide it with a first-mover advantage but also pose a threat to the existing generic manufacturers. Therefore, the organization should seize the opportunity of entrance into the generic market. This would provide the organization with the advantage of establishing strong brand recognition and increase consumer loyalty.

Revenue growth:

Considering the recommended approach i.e. entrance in the generic market by the launch of a generic version of Prilosec, the probability of revenue growth is high. Because first-mover advantage provides the organization with increased sales due to low drug prices, increased brand recognition, large market share, and consumer loyalty. Thus, it might be possible that the revenue growth might not be high at an initial level due to lack of awareness among the drug users, but is expected to demonstrate a significant increase over time. The short-term insight of the generic version is less profitable but tends to be a sustainable approach for a long-term approach.

Conclusion

AstraZeneca has been a leading pharmaceutical organization to sell its drug Prilosec as a global drug with an estimated revenue growth of one-third of the total revenue of the organization. The expiration of the patent represented many challenges to be considered by the organization. The evaluation of each strategic option provided insight into their potential effects. Thus, the organization should seize the opportunity to enter the generic market and benefit the organization with a first-mover advantage and pose a threat of direct competition to the existing generic manufacturers...........................

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