Lipitor: How Far Should Pfizer Push The Pill?

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Case Details:

Case Code : MKTG140
Case Length : 27 Pages
Period : 1995-2006
Organization : Pfizer Inc.
Pub Date : 2006
Teaching Note : Available
Countries : USA, Europe
Industry : Pharmaceuticals

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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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Background Note

Pfizer's beginnings were very humble. The Charles Pfizer & Company was set up in Brooklyn, New York, in 1849 by cousins Charles Pfizer and Charles Erhart (Erhart), two young entrepreneurs from Germany. Santonin, a palatable anti-parasitic was the company's first product. In 1862, during the American Civil War, Pfizer increased production of its chemicals and drugs, which doctors of the Union Army used, to treat wounded and sick soldiers. After Erhart's death in 1891, Charles Pfizer bought the company's shares from Erhart's son, William, to consolidate his ownership of the company.

By 1899, Pfizer had become a leader in the American chemicals business with a product portfolio comprising citric acid, camphor, cream of tartar, borax, and iodine. It had also begun to export to a number of countries.

In 1900, Pfizer filed an official certificate of incorporation in the state of New Jersey, with an authorized capital of US$ 2 million. In 1906, Charles Pfizer died, leaving behind a company with sales that exceeded US$ 3 million. In 1914, John Anderson was appointed as the company's first Chairman and he served in this capacity until 1929.

In 1936, Pfizer became the world's leading producer of Vitamin C. By 1939, Pfizer had come to be recognized as a leader in fermentation technology. During World War II, Pfizer became popular across the world as it was the world's largest producer of the 'miracle drug', penicillin...

Lipitor -The Super-Blockbuster

The Rise of the Statins

In the 1950s, a connection between heart disease and hypercholesterolemia was established. After the discovery of Low Density Lipoprotein (LDL) and High Density Lipoprotein (HDL), researchers linked elevated levels of LDL in the body to increased risk of heart attack, while elevated levels of HDL were found to be protective. Scientists found that an enzyme in the body known as HMG CoA reductase helped in the conversion of a compound HMG CoA into another compound that was a precursor to the development of cholesterol.

With this discovery, the search for potential drugs that inhibited the HMG CoA reductase and stopped cholesterol production in the body began. Such drugs were called 'HMG CoA reductase inhibitors' or 'statins'. In the 1960s, the first statin, Pravastatin was discovered by Sankyo Co., Ltd. (Sankyo) of Japan. Pravastatin was later launched in the US, under the brand name Pravachol, by Bristol-Myers Squibb (BMS)...

Illegal marketing?

In March 2006, the Fund of Teamsters Local Union 863 filed a class-action suit against Pfizer in the US District Court in New Jersey accusing Pfizer of illegally marketing Lipitor. The lawyers representing the plaintiffs claimed that Pfizer encouraged the use of Lipitor for patients with high blood cholesterol but otherwise at low heart attack risk and was thus 'unjustly enriched'. According to federal guidelines, in such cases, lifestyle modifications like diet and regular exercise were enough to reduce the risk of a heart attack. This prompted a federal investigation into the marketing of Lipitor by the US Attorney's Office in Brooklyn, New York. The Wall Street Journal reported that Pfizer was under increasing pressure because of off-label sales of Lipitor...

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