Term Paper on "Product Life Cycle of a New Drug"

Term Paper 4 pages (1503 words) Sources: 1+

[EXCERPT] . . . .

Crestor's Product Life Cycle: The Bloom Is Off The Statin Drug Rose

Appropriately enough when analyzing the life cycle of a medical product such as the cholesterol-lowering statin drug Crestor, it is worthy of note that a commercial product's life cycle is based upon a living organism's biological life cycle. "For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity)." (Marketing Teacher, "Product Life Cycle," 2004) Then, after a (traditionally) long period as an adult the plant begins to shrink and die out and decline.

Thus, after a period of development, a product is introduced or launched into the market. Hopefully, for its makers, it gains more and more customers as it grows in reputation and customers desire to use it more and more, and see its value in their daily lives. Then, eventually the market stabilizes and the product becomes mature. Competitors seize some of the market share and deploy other systems of maximizing their own value chains. After a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn. Of course, most products fail in the introduction phase. Others have very cyclical maturity phases where declines reverse, and the life cycles begin again as the product is promoted and regains customers and market share. (Marketing Teacher, "Product Life Cycle," 2004)

The drug Crestor, however, burst onto the market, rather than slowly unfurling in the public's view. Usually, at the beginning of a product life cycle, there are limited numbers of products available in few channels of distribution. But the demand for the drug was so tremendous, as it created an almost immediate impression. Although officially disclaimed, many consumers felt one could simply pop a pill to lower one's cholesterol. "Sometimes, people resist taking medicine to lower their cholesterol because they think all they need is willpower. They think if they just cut a little more fat out of their diet, and make it to the gym once more each week, that should do it. But studies have shown that, for many people, diet and exercise don't lower cholesterol enough. One reason is that most of the cholesterol in our blood is made right inside our bodies, by the liver," the area targeted by the drug. ("About Crestor," Official site, 2004)

This except of official advertising encapsulates the drug's appeal. What was there to lose, many patients reasoned, by taking the drug, as side effects seemed so minimal? According to the web site seem "the most common side effects are muscle pain, constipation, weakness, and stomach pain." ("Side Effects," Official site, 2004) Thus, from the beginning, Crestor relied upon captive product pricing and innate attraction in cholesterol-conscious consumers. Some products must create demand, but for Crestor the demand was there, thus it could charge a premium price with its captive audience. (Marketing Teacher, "Pricing," 2004)

When Crestor was first introduced, it had few competitors although the initial success of Crestor prompted the impetus amongst other, competing drug companies to create similar statin blocking drugs, again immediately prompting a swift spring into the next value cycle of phase of the product's development. Thus Crestor reached maturity relatively quickly, when "competitors are attracted into the market with very similar offerings." Mature products "become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand." (Marketing Teacher, "Product Life Cycle," 2004)

It was in advertising that the drug particularly excelled, even in comparison to its statin blocking competitors. Crestor's advertised image of healthy people engaging in moderate diet and exercise who could not lower their cholesterol because of genetics struck a chord in consumers, who often demanded that their doctors prescribe them the drug. Doctors often found it easier to cave in, partly because of the influence of drug representatives and partly because they felt more certain that at risk patients would take a pill than change ingrained poor diet and exercise patterns.

Crestor was an early force on the developing market, and technology is always an important source of competitive advantage. "Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments," or simply being a first mover in innovation as was Crestor. ("Value Chain,"2004) At the maturity phase, of product development, products that survive the earlier stages of the life cycle usually engage in price wars and intense competition occur. But the desire for statins seemed almost insatiable, with Crestor at the clear lead. (Marketing Teacher, "Value Chain, "2004) When the market reaches saturation, producers usually begin to leave the market due to poor margins and promotion becomes more widespread and uses a greater variety of media, but AstraZenica used the media more brilliantly than any competitors.

However, the recent drug safety scandals have caused many researchers and even the FDA to question the safety of stain drugs. In November, an FDA scientist testifying at the hearing in Washington identified drugs that need more studies regarding their product safety, "among them the cholesterol-lowering drug Crestor and the painkiller Bextra." While another FDA official told lawmakers that she disagreed, clearly the seeds are sown regarding product suspicion regarding Crestor. (CNN.com, 2004) Thus like a healthy athlete who drops dead from a freakish heart condition, allegations of product safety have stricken Crestor's market share in the drug industry. Safety concerns seem poised to cause an abrupt downturn in this drug's market share, shifting it into the decline phase.

Usually, a product's decline comes when more innovative products are introduced or consumer tastes have changed. Then, there is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting. But when a drug is developed, its initial profits often come early on in its life cycle, before generics rival the market at a cheaper price -- this was true of Crestor, but also its profits have come to a potentially quick decline, even before generics overtake the market. Crestor's popularity lay also in its hefty advertising budget, which may be cut because of demands for more study and potential shareholder losses.

Most damningly of all, Crestor seems poised to face costly litigation that could deplete any attempts to effectively manage its current downturn. One website called Drugrecall.com proclaimed, "Public Citizen consumer group has called for Crestor's withdrawal from the market and the director of the health research group, Dr. Sidney Wolfe, has predicted the company will be forced to withdraw the drug soon. An analysis by the group shows there were 29 reports of kidney failure or insufficiency among patients given Crestor in the first year of its U.S. approval. The limited number of prescriptions for Crestor makes the rate of kidney failure or insufficiency 75 times the rate for all other similar drugs combined, according to Public Citizen." (Drugrecall.com, 2004)

Is this fair? Is this true one might ask? In essence, from a marketing perspective, it does not matter in the sense that this is a flag that such claims must be combated by the drug's maker and will certainly hurt market share. Even if proved to be groundless, the cost of fighting frivolous lawsuits can be depleting to a product's market share and ability to maximize its strategic advantages upon the value chain. It is possible that in the future, of course, statins will be used once again, reinvigorating the Crestor life cycle. But it is unlikely that the product will have as positive a brand association in its second incarnation, if such a rebirth occurs, or if… READ MORE

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