Posted: May 25th, 2022

Marketing cymbalta case study 8 pages

Eli Lilly


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Eli Lilly is searching for a successor to Prozac, which is marketed as an antidepressant. They began with five major candidates, but are presently focused on Cymbalta, which is more of a pain medication. However, it is believed that there is a link between pain and depression. The issue is that the link is not universally recognized, and this leaves the company in a position of trying to decide how it wants to market the new drug. It could market it as an antidepressant that approaches the issue from a pain perspective, or it could market it for the relief of chronic pain, without any real focus on antidepressant capabilities.

Both approaches have their merits. Eli Lilly is undertaking this initiative to replace Prozac, which has allowed it to dominate the antidepressant business for the duration of that drug’s patent. With patent protection set to expire, the company is now going to face significant competition from generics. The key for Lilly is not that it needs to replace its anti-depressant drug, it is that it needs to replace that revenue stream. It just so happens that the company has specifically targeted the antidepressant business for its new drug. It set up a task force to find this drug, and narrowed the list down to five candidates. The most promising of these is Cymbalta, and the group is now trying to figure out the best to market that drug.


1. The first approach is to market Cymbalta against other antidepressants. The apparent advantage of this approach is that the drug is clearly differentiated. Antidepressants do not typically have pain relief components, so Cymbalta would be approach depression from an entirely different perspective. That could potentially give it competitive advantage if the marketplace buys into this.

The other approach is to go against other pain medications. Cymbalta has some advantage there, in that it is a newer drug that has proven effective. There are disadvantages, however, in that it does not target a new niche, but rather seeks to compete in an old one. The link between pain and depression is downplayed here. The attractiveness of this option, which on the surface has fewer advantages, is that the pain market is bigger than the antidepressant market. It is more competitive as well, but if Cymbalta can become established this is going to be good with respect to replacing the Prozac revenue. Targeting the osteoporosis market, for example, would give the produce access to 20 million patients — and growing.

A third option that was floated with the pursue FDA approval for the use of Cymbalta to treat fibromyalgia or DPNP. These are rarer conditions, so the market is not as big for drugs that treat these. DPNP, however, can relate from diabetes, and that is a big market. These markets are perhaps less competitive, but again pursuing a niche pain market is perhaps more limiting than the general approach, even if targeting a big condition like diabetes.

2. There are several factors that can adversely affect each strategy. The first factor is the size of the market. Each alternative has a different target market. FDA approval is typically for one specific use, so it is important to understand the market ramifications of each option prior to seeking regulatory approval. The size of the market has to be considered on the gross market size level, but also versus the competition. This requires an analysis of how well the company thinks Cymbalta can do in any given market. The potential total market will then be weighed against the cost of bringing the drug to market.

Costs are another issue. The regulatory process may be different depending on what ailment the drug is being sought for. It is believed, for example, that DPNP will be the fastest with respect to regulatory approval because there is no current treatment on the market. By getting to market more quickly Lilly can start earning before Prozac goes generic, or shortly thereafter. In another market, approval could take that much longer. While it is not always a great idea to take the short-term money, the timing of the cash flows matters when doing a net present value calculation on each of these options.

The chances of gaining regulatory approval is another variable that should be taken into consideration. The drug can be used to treat a number of things, but the FDA needs to see efficacy in order to give its approval. The marketing team will not be able to determine if one of these alternatives is more or less likely to succeed, but the pharmacological team should know. The odds of gaining approval is another important consideration because it affects the expected net present value of the decision. A drug with 50% chance of final approval is not as useful as a drug with 90% chance, even if the 50% treatment has a bigger market.

The competition also matters. For example, to treat DPNP there is no competition. This means that Cymbalta would expect to see a domination of that market if it proves to be effective. In the generic pain market, there is a lot of competition. Low priced NSAIDs, for example, are a common means of dealing with pain. This means that it will be difficult to convince people to give up their current pain medications. Where it serves as an alternative to addictive pain medications, there is opportunity but ultimately this pathway will bring about significant competition and it is unclear how many competitive advantages Cymbalta has, or if those advantages would be enough to win much of the general pain business.

3. There are several threads of market research that would need to be conducted. On the patient side, it is important to understand the size of the market, and what its characteristics are. The size is probably the easiest to determine. The characteristics begin with demographics, but the study should go deeper. First, does a given condition’s demographics have the insurance needed to pay for the drug? This will start to determine the actual market size. Another issue is the matter of polypharmacy. If Cymbalta is going to win customers from other painkillers, the marketing team should understand contraindications and the relevance that they play. If too many people who would otherwise be in the target market would have contraindications for other drugs they are taking, then they can be ruled out of the target market. Information like this can help to determine how much of the potential target market is realistic. The size of the market is important because the company also needs to have an advertising strategy. A very large potential market might make advertising easier because mass market ads can work. More specialized conditions require more focused marketing. The efficiency of the marketing — the cost to acquire a new customer — is an important variables, in particular if there is reason to believe that there might be constraints on the prices.

The physicians are going to be a major target market. At the end of the day, patients have low information. While a few might actually research drugs, most do not, and simply accept what their physician tells them. As such, it is important for the company to understand what barriers physicians might have with respect to prescribing Cymbalta. To understand that requires some market research to determine the likelihood — in principle — of a physician prescribing this drug. It is important to remember that there are strict prohibitions against Lilly marketing for off-label uses. Even if it wants to know if doctors would consider an off-label use, it should steer clear of asking that.

Lastly, payers matter. These are usually government (Medicare, Medicaid) or private insurance companies. The payers are high information customers, and they determine whether they will cover a specific drug. If they choose not to, then that will constrain the potential market for the drug. In the case of a government payer, that constraint could be substantial. Medicare is a major payer for some conditions, but Medicare likes to cut costs. As an example, if Lilly gets the impression that it will be unable to sell Medicare and Medicaid on Cymbalta for pain because there are cheaper options, this will be a market impediment. Sometimes those payers need to be convinced — for example arguing that Cymbalta is less addictive — but this is definitely something that has to be taken into consideration. If there are no big payers, then whether or not patients and physicians like the drug is not going to matter much.

4. Success for Eli Lilly is whatever option best replaces the Prozac income stream. Prozac has a great brand, which will help it avoid the nastiest of drop-offs once generics hit the market, but there will be a decline. The key for Lilly is to replace that income stream. But the company has to take a long-term view, and do a proper estimate for each option. The company has not done enough market research to begin that processes yet, but it should be known that taking the short-term approach and pursuing DPNP for example is not necessary the approach that will yield the most value to the company’s shareholders. It is better to have a down year followed by 20 great ones than to start the 20-year period earlier but at a much lower level of free cash flow.

The COX-2 market is highly competitive, and the competitors are strong. As such, it is fairly difficult based on current information to determine the market potential for Cymbalta. It could be anywhere from 15-50%, but likely not higher unless it is demonstrably superior. The marketing costs will be high if competing in this business, and to attract payers the company will have to keep the price down. This is a high-volume, low-margin option.

The depression angle is the least supported by evidence. It might work, but with the link between pain and depression still somewhat tenuous, there is the risk that the drug is not even approved. If it is, there is the risk that the physicians and patients will not fully understand the sales pitch. That pitch seems a bit muddy at present, arguing that it is for pain but for depression. The market would need some convincing, but if that can be done there is definitely potential. The company’s experience with Prozac means that it should be able to understand and approach the depression market better than other markets.

The fibromyalgia and DPNP markets are attract because they are less competitive. It would be easier for Lilly to build market share in these markets. As such, they are attractive, despite their smaller size. DPNP has zero competition, and fibromyalgia has promise because depression doctors are familiar with it, and that is Lilly’s best market right now. So both of these options hold some appeal as well, because they are believed to be relatively easy targets.

The ideal vision of success for Eli Lilly is for the company to begin earning before Prozac goes generic. When it goes generic, there will be a hit to the revenues and earnings, which of course will displease the shareholders. Naturally, they would argue that the company knew Prozac’s patent would expire and argue that the company should have planned for that The share price will get crushed and the executives will take some heat if they do not have something ready.

The best vision of success, however, builds on that. A short-term approval is great for the impact on cash flow and profits, and without question that is great. But it is possible to receive FDA approval for multiple uses. This just takes time. If Cymbalta is legitimately a wonder drug, then the approach should be to start with a DPNP approval, which would come quickly, and then add approvals for other uses at a later date as they are able to receive approval. This is the ‘best of both worlds’ option.

Success, therefore, not only means to get revenue flowing before Prozac goes generic, but to follow that up with whatever approvals for this product have a positive net present value. If there are more than one, there is nothing to stop the company from pursuing multiple approvals, as long as each one is a viable, profitable business.

Alternatively, it could be viewed that the best net present value is the true success measure. This allows for the possibility that there are no profitable markets for Cymbalta. The company under this thinking about recognize that, and drop the product, or sell it, rather than pursue an unprofitable pathway. It makes sense to think about it this way because to do otherwise would incentivize the marketing time to launch this product at whatever it thinks might work, as opposed to having the willingness to walk away from a bad idea. It is better to walk away and spend a little than it is to throw good money after bad.

Overall, there are a few interesting possibilities. Clearly, there is market research that needs to be done in order to determine the best course of action for Eli Lilly. It needs to get a product to market, and it looks to be at least a little bit effective in a lot of areas because of how it handles pain. After the market research, the company should be able to crunch out a net present value analysis, and then choose the option that is expected to deliver the best one, taking into account the possibility that some options will result in no approval and other options might end up not being profitable because of the market conditions pertaining to those particular uses for the drug.

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