Pfizer's Torcetrapib Failure: The Risks of New Drug Development

            
 
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Case Details:

Case Code : MKTG172
Case Length : 26 Pages
Period : 2000-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Pfizer, Inc.
Industry : Pharmaceutical
Countries : USA, Europe

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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A Loss for Pfizer and Heart Disease Patients Contd..

Following the announcement, the share price of Pfizer fell by more than 11 percent, wiping out some US$ 21 billion in market value on December 4, 2006.13 The panic among investors was understandable as Pfizer's future growth prospects depended on the successful launch of Torcetrapib. Pfizer's dependence on the sales of Lipitor had increased over the years and as of end-2006, analysts felt that there were no drugs in its product pipeline that could compensate for the sales of Lipitor post-2010. To complicate matters further for Pfizer, for the five years from 2002 to 2006, Pfizer had been the worst performer of the major research-based pharmaceutical companies on the stock market.

Marketing Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Some of its blockbuster drugs including Zoloft and Norvasc were approaching patent expiry by 2006 and 2007 respectively.

Analysts felt that the Torcetrapib failure would be a big jolt for a large pharmaceutical giant like Pfizer (Refer to Exhibit I for a brief note on Pfizer). They expected the company to try and turn around its fortunes by taking aggressive cost-cutting measures, and by strategic acquisitions of smaller firms.

Analysts were also of the view that Pfizer's loss would translate into gain for its competitors. It could allow companies such as Merck & Co.14 (Merck) the opportunity to snatch back the market leadership of the lucrative cholesterol drugs market from Pfizer...

The outlook for companies such as AstraZeneca Plc.15 (AstraZeneca), Roche Holding AG16 (Roche), Abbott Laboratories17 (Abbott) and biotechnology firm, Isis Pharmaceuticals, Inc.18 (Isis), all improved at the news of the termination of Torcetrapib's development...

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13] Michele Boldrin, "Morals from the Torcetrapib Debacle," www.againstmonopoly.org, December 6, 2006.

14] Merck & Co., Inc., headquartered in Whitehouse Station, NJ, USA, is a global pharmaceutical company. According to IMS MIDAS Quantum, Merck had a global market share of 4.3 percent based on sale for the 12 months ending June, 2005.

15] AstraZeneca is a UK-based global pharmaceutical company. According to IMS MIDAS Quantum, AstraZeneca is the sixth largest pharmaceutical company in the world, with sales of US$ 24.2 billion in 2005.

16] Roche Holding AG is based in Basel, Switzerland. It is the holding company of F. Hoffmann-La Roche, Ltd. a Swiss global health-care company. According to IMS MIDAS Quantum, Roche has a global market share of 3.4% based on sale for the 12 months ending June, 2005.

17] Abbott Laboratories, headquartered at Abbott Park, Chicago, USA, is a pharmaceutical and health care company with around 56,000 employees. It was founded by Wallace Calvin Abbott in 1888 and operated in over 130 countries. According to IMS MIDAS Quantum, Abbott had a global market share of 2.8 percent in 2005.

18] Isis Pharmaceuticals, Inc., based in Carlsbad, California, USA, is a drug discovery and development company.

 

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