Pricing it Right: Three Caselets in Pricing

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Case Details:

Case Code : MKTG187
Case Length : 13 pages
Period : 2006-2008
Pub Date : 2008
Teaching Note :Not Available
Organization :; Apple, Inc.; F. Hoffman-La Roche Ltd.
Industry : Travel; Consumer Electronics; Pharmaceutical
Countries : Global

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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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Caselet 3: Roche's Pricing Strategy for Fuzeon

On January 29, 2008, a US-based pharmaceutical company Trimeris, Inc. (Trimeris) announced the global sales figures of its only commercially available drug Fuzeon. Fuzeon was a drug used for the treatment of HIV/AIDS44 patients which the company had co-developed and co-marketed with one of the world's leading pharmaceutical companies F. Hoffman-La Roche Ltd.45 (Roche).46 The sales of Fuzeon continued to be low with global sales of US$ 266.8 million in 2007, a growth of 7 percent compared to 2006. While the brand's sales outside of the US and Canada registered growth of 24 percent over 2006, sales in the world's most lucrative pharmaceutical market, US and Canada, declined by 7 percent.47

Some analysts argued that Roche's pricing strategy for Fuzeon was at the root of the brand's consistent poor sales performance since it was launched in 2003.

Roche launched Fuzeon, the first injectable anti-HIV drug, in the US and the European market in 2003. The drug was targeted at treatment-experienced patients48 with evidence of viral replication49 despite ongoing therapy. It was to be used in combination with other anti-HIV drugs...

44] HIV (Human Immunodeficiency Virus) is the virus that causes AIDS. A person infected with HIV is called HIV positive. In the long run, HIV leads to AIDS.

45] F. Hoffmann-La Roche, Ltd., headquartered in Basel, Switzerland, one of the world's top ten pharmaceutical companies.

46] In 1999, Trimeris and Roche formed a collaboration to develop and commercialize Fuzeon and its successor drug (T-1249) on a global scale. Under a collaboration agreement, Trimeris and Roche would share the profits (or losses) from the US sales of Fuzeon, while Roche would pay royalties to Trimeris on the European sales of this drug. (Source: Sabine Vollnmer, “New Prescriptions for AIDS Drug Fuzeon Fall,”, October, 2003.)

47] “Trimeris Reports 2007 FUZEON(R) Sales Results,”, January 29, 2008.

48] Patients who had had experience of all the other three classes of drugs for HIV.

49] Viral replication is the term virologists use to describe the act of producing offspring or multiplying of viruses during the infection process in the target host cells.


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