Exubera Fiasco: What Went Wrong?

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Case Details:

Case Code : MKTG199
Case Length : 18 Pages
Period : 2006-2008
Pub Date : 2008
Teaching Note :Not Available
Organization : Pfizer, Inc.
Industry : Pharmaceutical
Countries : Europe/USA

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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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Pfizer's Exubera Strategy Questioned Contd...

Exubera was launched in May 2006 in some European countries and in September 2006 in the US. At that time, it was hailed as a major advancement in the treatment of diabetes mellitus9 (diabetes) since the introduction of injectable insulin in 1921. Some medical experts predicted that it would revolutionize diabetes care. Exubera was also the first inhaled insulin to be approved by the US Food and Drug Administration10 (FDA) for use with both type 1 and type 2 diabetes. The drug also received marketing approval in Europe. The withdrawal of Exubera came as a major blow for Pfizer which was already under heavy pressure to introduce a new blockbuster drug11 in view of the impending expiry of the patent of its blockbuster cholesterol lowering drug Lipitor.12

Pfizer initially expected that Exubera's annual sales would reach US$ 2 billion by 2010, which would make up for some of the revenue loss resulting from the patent expiry. Exubera was also expected to revive Pfizer's stagnating sales. Pfizer had projected Exubera as a potential blockbuster like Lipitor, which was the world's highest-selling drug with sales of US$ 12.7 billion in 2007.

But Exubera had fetched only US$ 12 million in sales for the year 2007 before it was withdrawn. The Exubera fiasco, in total, cost Pfizer US$ 2.8 billion in pre-tax charges.13 Many reasons were given for the failure of the drug.

Though Exubera was expected to help patients avoid the pain of insulin injections, it turned out to be a rather trying experience for patients and an expensive alternative to the injectable form. It was not more effective than the injectable insulin and had the added disadvantage of being 30 percent more expensive than the latter.14 It was also not easy for the patients to adjust the dosage of the drug like they could with injectable insulin.

Also, unlike injectable insulin, the drug could not be administered discreetly due to the bulky size of the inhaler used for it. There were also concerns that the drug would decrease the functioning of the patient's lungs because of the way it was administered. The multi-million dollar advertising campaign in the US which Pfizer had started in the latter half of 2007, too failed to boost the sales of the new drug...

Excerpts >>

9] Diabetes mellitus is a syndrome characterized by a disordered metabolism and high blood sugar levels called hyperglycaemia which results from low levels of the hormone insulin in the body. There are two commonly found types of diabetes. In the Type 1 diabetes, the body is not capable of producing insulin. In Type 2 diabetes, the body is not capable of producing or using insulin well.
10] Food and Drug Administration of the US is the government agency responsible for regulating food (human and animal), dietary supplements, drugs (human and animal), cosmetics, medical devices (human and animal), biologics, and blood products in the US. It approves drugs for certain indications and provides guidelines for use of the drugs.
11] A blockbuster drug is one which has annual sales of more than US$1 billion.
12] Lipitor was the brand name of the drug Atorvastatin. It is a member of a drug class known as statins used for lowering cholesterol. The patents of the drug will start expiring from 2010.
13] Divya Pamnani, "Trends in Diabetes Research," www.expresshealthcare.in, August 2008.
14] Arlene Weintraub, "Pfizer's Exubera Flop," www.businessweek.com, October 18, 2007.


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