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Lipitor: Business Model and Planning

Table of Contents

Introduction
Connected activities
Pricing
Capabilities
Works Cited

Introduction

Lipitor is a drug that reduces cholesterol levels and is produced by the Warner-Lambert company. This company has evolved significantly since its inception in the early 1850s and has become one of the top pharmaceutical companies in the globe. The three components that stand out the most from the Warner-Lambert business model include connected activities, pricing, and capabilities.

Connected activities

To be successful in the production and sale of Lipitor, Warner-Lambert recognized the need to enter into a partnership with another company, Pfizer. This recognition was of significance because the drug has a market of millions of patients and a medical community that is widely satisfied with the product. The partnership would help to boost Warner-Lamberts limited sales and marketing capabilities. The company had to balance its sales and marketing needs with instantaneous demands to reap high profits for the prosperous pharmaceutical business. To identify an appropriate partner, Warner-Lambert concentrated its search on firms that lacked a rival cholesterol-lowering drug.

The search resulted in the choice of Pfizer mostly because of its marketing capabilities, experience, networking prowess, and trustworthiness in the production of heart-related drugs. The partnership deal led to Pfizer paying $205 million in upfront money and landmark payments for the sale rights. Pfizer also had to share all future expenses of the drug as far as advertising, promoting, sampling and sales are concerned. In turn, Pfizer was to receive 48% of Lipitors net sales. This partnership has been instrumental in the promotion and high sales volume of Lipitor thus making Lipitor a great success in the pharmaceutical industry.

Pricing

One of the strategies that Warner-Lambert employs and which has ensured Lipitors continued success despite stiff competition is a moderate pricing strategy. Lipitor has been positioned to send a message of therapeutic dominance and ease of utilization but also with an affordable price that is lower than the price of competing companies in the pharmaceutical industry. For instance, in 1999, the average prescription price of Lipitor was $91 whereas the average prescription prices of Pravachol, Zocor, and Mevacor were $105, $125, and $137 respectively (Leafstedt, Marta, Marwaha, Schallwig & Shinkle 361). The low price strategy has continued to be maintained even after the drug received an exceedingly positive response and approval following its launch.

Capabilities

Lipitors greatest capability lies in the promotional tactics employed by Warner-Lambert in partnership with Pfizer. The companies used a marketing and medical team to purposely promote the product and create awareness of the drug in the medical society. Promotional efforts before the launch of Lipitor consisted of a national cholesterol education program that was executed together with the American Heart Foundation. The purpose of this education program was to sensitize medical practitioners as well as patients on the fact that cholesterol problems need to receive more aggressive treatment than before.

The education program led to the establishment of guidelines that addressed cholesterol-lowering goals. The promotional tactics positioned Lipitor as the most suitable drug to achieve the set goals. As a result, several scholarly articles were written on Lipitor and published in highly respected medical journals. Lipitor also formed a key topic of discussion in medical conferences. The efforts made in the campaigns bore fruits because the launch was enormously successful. Even before the launch, Lipitor had already taken a hold of 3% of all new cholesterol-reducing drug prescriptions.

Works Cited

Leafstedt, Matthew, Amy Marta, Jitendra Marwaha, Philip Schallwig, and Reka Shinkle. Lipitor: At the Heart of Warner-Lambert. Massachusetts: Massachusetts Institute of Technology, n.d.

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