Case Analysis on the Statin Market (Anti-cholesterol Drugs)

This is an individual assignment. Read the case, Crestor (by Tim Calkins), available from the hbsp course packet. Moreover, refers to Ching, Clark, Horstmann and Lim (2016) for additional supporting information.

Ching, A.T., R. Clark, I. Horstmann and H. Lim (2016), "The Effects of Publicity on Demand: The Case of Anti-cholesterol Drugs," Marketing Science, vol.35(1), pp.158-181. https://pubsonline.informs.org/doi/pdf/10.1287/mksc.2015.0925

Please also read Ch3, 11, 12 of Principles of Marketing.

In order to plan how to market Crestor, it is important to understand why Lipitor succeeds. The questions below are designed to help you develop a better understanding about the market. ** Provide justifications for your answers. Refer to the evidence presented in these two articles (or additional research that you conduct) to justify your answers. ** When you refer to information from these readings (or sources that you rely on), you need to cite them and refer to table#, figure#, page# of the source). Your answers may need to extend what you have learnt from these readings and previous classes, and require you think outside the box. ** You may use bullet points to explain your answers. But your answers must be detailed enough (not subject to multiple interpretations) for the TA to understand in order to receive points. ** Q1. Figure 1 of Ching, Clark, Horstmann and Lim (2016) shows that the statin market has grown very rapidly from 1993 to 2004. What are the main factors that drive the expansion of the statin market? (5 points) Q2. It turns out that the increase in statin sales is mainly due to Lipitor. Propose a detailed explanation to reconcile why Lipitor primarily attracts new patients, and that patients who have been using other statins are reluctant to switch to Lipitor? (5 points) Q3. Landmark clinical trials. In the statin market, a firm only needs to show clinical evidence that its statin can reduce LDL (the bad cholesterol) and is safe to gain government approval to sell it. However, even after gaining approval, firms continue to conduct much larger scale clinical trials to provide direct evidence that their drugs can reduce heart disease risks (see section 4.2 of Ching, Clark, Horstmann and Lim, 2016). Because such clinical trials usually involved many patients and took years to complete, their cost are much higher than standard clinical trials. This is why these trials are classified as landmark clinical trials. What motivates firms to spend so much resources on them? (5 points) Q4. Prior to the entry of Lipitor (April 1997), the incumbent drugs, Zocor and Pravachol, have already published their landmark clinical trials which show that these two drugs can reduce the risks of heart diseases. Lipitor did not publish its first landmark trial until April 2001. Despite this, Lipitor is able to beat its rivals and became the best-selling statin by 1999. This fact is puzzling because the goal of taking statins is to reduce the chance of having heart attacks, strokes, etc. Propose detailed explanations to rationalize this puzzle. (5 points) Q5. Suppose that you are a consultant and need to advise Hitchfield on how to launch Crestor. As you can see from the case, Hitchfield has no choice but positioning Crestor to be "superior" to all other statins, especially, Lipitor. (i) Based on the information provided in the case and your analysis above, how would you do the segmentation and targeting? (2 points) (ii) What messages would you advise the sales representatives for Crestor to emphasize? (2 points) (iii) Do you expect Crestor can replicate the success of Lipitor and become the market leader in the statin market in two years? Why? (6 points)