The Wall Street Journal had an interesting story about how Pfizer plans to begin selling its highly successful Lipitor cholesterol-fighting drug directly to consumers, bypassing traditional pharmacies. The strategic move is necessitated by the fact that the company’s patent protection is about to run out, which means that most patients are likely to move to generic versions of the drug. Pfizer is partnering with a mail order pharmacy company to sell Lipitor at prices comparable to what people would pay for generics.
According to the story, “The effort may provide a new road map for selling prescription drugs, one no longer circumscribed by 20 years of patent protection and a 1984 law that sought to curb drug spending by authorizing generics following a patent's expiration.
“Pharmaceutical companies historically abandoned brand-name medicines once the patents ran out, turning to new products. Yet the industry is facing a so-called patent cliff, with medicines tallying more than $100 billion in world-wide sales set to face generic competition in the U.S. over the next several years.”
At the same time, Pfizer is working to expand the drug’s global reach: “Long term, Pfizer is kick-starting sales in fast-growing emerging markets like China, where the drug maker is betting that growing numbers of people diagnosed with high cholesterol will pay more for a so-called branded generic version of the drug than cheaper no names.”
According to the story, “The effort may provide a new road map for selling prescription drugs, one no longer circumscribed by 20 years of patent protection and a 1984 law that sought to curb drug spending by authorizing generics following a patent's expiration.
“Pharmaceutical companies historically abandoned brand-name medicines once the patents ran out, turning to new products. Yet the industry is facing a so-called patent cliff, with medicines tallying more than $100 billion in world-wide sales set to face generic competition in the U.S. over the next several years.”
At the same time, Pfizer is working to expand the drug’s global reach: “Long term, Pfizer is kick-starting sales in fast-growing emerging markets like China, where the drug maker is betting that growing numbers of people diagnosed with high cholesterol will pay more for a so-called branded generic version of the drug than cheaper no names.”
- KC's View:
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Can you spell “disintermediation”?
This is a serious effort, marked by the fact that Pfizer has spent more than $600 million in the past year to market Lipitor, which you would not think it would do if it expected sales to go into the toilet. And it could get a lot bigger, because there are a bunch of drugs about to go off the patent cliff and find themselves competing with lower cost generics.
If it works effectively, expect all sorts of companies to try to figure out how to disintermediate traditional retailers ... who will have to figure out an effective response.
I’m a Lipitor users, and it will be interesting to see if I get any sort of communications from Pfizer.
