'How Pfizer can sustain growth after Viagra'

Last week we witnessed a major turning point in the history of modern pharmaceuticals: Viagra came off patent in the UK.

Mark Ritson

For the past 15 years, the impotence drug has generated billions for its manufacturer Pfizer. In 1990, the company had been testing a new blood pressure drug called Sildenafil Citrate at its research facility in Kent. Although its effects on high blood pressure were disappointing, doctors involved in the patient trials reported a fascinating, if unexpected, side effect. Many of the test patients, who had previously struggled to achieve and maintain erections, were experiencing an unexpected revitalisation in the downstairs department.

Further tests confirmed the result and in 1998 Pfizer went to its naming bank, picked the name Viagra and launched the drug with a massive fanfare of publicity. Pfizer knew it had a wonder drug but also that without strong marketing its success would be severely limited by the social stigma of impotence.
So Pfizer created a new condition – erectile dysfunction – to imply that the problem was not the man but the penis, and that the penis could be easily fixed by Viagra.

The potential was huge. Approximately 10 per cent of the male population suffer from some form of erectile dysfunction; around 750,000 British men took Viagra last year. And because Viagra does not cure the disorder but merely treats it, Viagra’s lifetime value is just as impressive as its potential penetration. Add to that the unpalatable nature of the alternative treatments – either two vigorous hours with a vacuum pump before love making or multiple injections into the head of your penis – and it was clear that Viagra was a wonder drug. Within a year of Viagra’s successful launch Pfizer’s share price had doubled. Despite discovering the method for the mass production of penicillin, it was Viagra that made Pfizer’s corporate brand famous.     

But all good things come to an end. The European patent that has protected Viagra from copy-cat generic companies for more than a decade expired on Friday. It’s the kind of nightmare that would keep most marketers up all night. Imagine losing your ability to protect your product formula, brand equity, most of your key accounts and your pricing strategy overnight. That is what it means to lose patent protection.

Viagra will still be marketed by Pfizer in the UK and across Europe. But it will now face competition from more than 20 different generic manufacturers which will flood the market with identical versions of Sildenafil Citrate. The extra competition combined with the lower research and development costs of these generic players means that, aside from suddenly facing multiple competitors, the average price for treatment will drop from around £10 per pill to less than £1 within weeks.

Like all good big pharma organisations, Pfizer has been expecting and planning for the loss of patent protection for several years. It will attempt to keep Viagra in the market, albeit at a lower price, and encourage patients to continue to request the drug by name thus side-stepping the generic threat. For patients prescribed the drug via the NHS, however, one or more of the generics will replace Viagra on the government tender, saving the UK taxpayer millions of pounds but eliminating one of Viagra’s biggest sources of patients. Pfizer will almost certainly introduce its own generic version of Sildenafil Citrate, codenamed ‘White Diamond’, this week in an attempt to retain market share among the new generic options.

Whatever its strategy, the loss of Viagra’s patent protection will be very hard on Pfizer. When the company’s cholesterol treatment, Lipitor, lost its American patent in 2011 revenues declined by an eye-watering £4bn in a single year. There are only two long-term responses to the challenge of losing patent protection. First, optimise the brand while you have a patent. Unlike FMCG where brands often only reach their zenith 50 years after launch, big pharma marketers know they usually have only a 10-year window to make their profits and they act accordingly. Second, make sure your product pipeline is ready with the next big blockbuster. Once the profit potential of an off-patent brand like Viagra begins to diminish, there has to be a new brand with a protectable formula waiting to explode from your pipeline.

The big question keeping Pfizer up at night is not what it will now do about Viagra, but what it has that can possibly replace it.

Readers' comments (11)

  • was this written as a competition entry into "how many thinly veiled erection innuendo's can you fit into a single article"? Hilarious.

    Unsuitable or offensive? Report this comment

  • Hang on a sec Mark, are you actually saying a Brand doesn’t have pricing power??

    And there is no role for positioning if the product is undifferentiated??

    Unlike other drugs which are barely pronounceable, surely Viagra is a household name and brand equity ought to help?

    Unsuitable or offensive? Report this comment

  • How dare you!

    Do you have any idea how hard it is to construct a strong column each week?

    Unsuitable or offensive? Report this comment

  • Looking at the optimise the brand option, I came up with a new tagline for Viagara & the new one:
    “Multiple competitors? Multiple orgasms: Viagra.”
    “Don’t blow your wad. White Diamond: A pound a pill.”

    Unsuitable or offensive? Report this comment

  • Oh God - this article is fantastic. I think my favourite line was:

    "Whatever its strategy, the loss of Viagra’s patent protection will be very hard on Pfizer"

    Unsuitable or offensive? Report this comment

  • Christopher Columbus though he had discover India but actual it was South American
    Bit like Viagra which was to be a Heart drug but did he leave it at that no he continued to find places
    Expanding the world’s understandings.
    There are new continents, have they the hunger or more importantly the vision to explore them?
    I will let you know just put a proposal to them

    Unsuitable or offensive? Report this comment

  • Well.. let's watch Pfizer try and move the product to being over -the-counter...

    I also wonder whether the NICE guidelines, which were to only provide a small number on prescription (you had to pay for extras yourself) means that patients will still be asked to buy extras themselves..

    Finally, I bet Pfizer has protected all manner of brand elements to make sure that you cannot copy the look of the product, its packaging, etc.

    Unsuitable or offensive? Report this comment

  • Perhaps George Osborne should inject some into the economy.

    Unsuitable or offensive? Report this comment

  • "explode from your pipeline" childish but very funny!

    Unsuitable or offensive? Report this comment

  • Maybe Tempe spray(psd502) from plethora solutions created by 1 of the Viagra creators would be the next money spinner for Pfizer. Just a thought!!

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page

Have your say

Mandatory
Mandatory
Mandatory
Mandatory

Job of the Week

Top Jobs

social

+media Facebook Twitter LinkedIn
knowledge+bank