HappyDrugCo manufactures LittleHappy, a pill that is recommended to treat mild depression. This drug has been a blockbuster success for the firm but its intellectual property protection (i.e. its controlling patents) is expiring in three years.

It has another potential product in development, BigHappy, that it is considering launching a Phase III trial for. This product also treats mild depression. It had very positive Phase II results - in particular there was evidence of both a similar effect on depression symptoms and a reduction in some annoying (but not debilitating) side effects for LittleHappy.

Your team is considering two strategies for developing this product to launch BigHappy,, which of these two clinical strategies would you pursue. You are only able to pursue one of these two strategies.

The clinical strategy should inform your advertising, physician detailing, and other commercialization decisions. Please identify what you believe is the biggest commercial advantage and disadvantage of pursuing each strategy (Hint: An optimal answer will consider the incentives of all of the other players in the value chain)

Clinical Strategy 1: Your clinical scientists believe that they can do the clinical trial within 2 years that convincingly demonstrates BigHappy is effective at treating mild depression. However, this trial would not be able to provide evidence that BigHappy is significantly different from LittleHappy on any dimension.

Clinical Strategy 2: Your clinical scientists have a second plan to run a trial that demonstrates both that BigHappy is as effective as LittleHappy and confirms that reduction in side effects compared to LittleHappy. This trial would take four years to be done.