Spotlight On: Pfizer's Lipitor strategy

Will the post-expiry performance of Lipitor set a new trend?

Since loss of US patent exclusivity in November 2011, the performance of Pfizer’s Lipitor (atorvastatin) franchise has been heavily scrutinised on a week-by-week basis. Interest has been driven in part by the scale of the Lipitor brand – it being the best selling drug franchise of all time – but primarily by the aggressive strategy implemented by Pfizer to retain market share by discounting Lipitor to a similar (or cheaper) price than generic versions.[1]

As a defensive move, the effectiveness of the strategy is in little doubt to some. Speaking to Forbes in December, Rhonda Greenapple, CEO of market research company Reimbursement Intelligence, said "what Pfizer is doing is groundbreaking, because they are taking a very aggressive step to stop erosion of their brand and this will probably result in protecting billions of dollars in the first six months that would have been lost otherwise."[2]

Market share data suggests success...but difficult to define

This view has been backed up by market-share data from IMS. Figures released in mid-January demonstrated the initial effectiveness of the strategy, for whilst Pfizer was unable to counter an initial steep decline in its share of the statin market (Lipitor sales halved within a week of generic availability[3]), by the end of December, Lipitor revenues had begun to plateau at around the 38 percent mark (at which point Pfizer CEO Ian Read indicated performance was in line with internal expectations).

Commenting on the data, Michael Kleinrock, research director at the IMS Institute for Healthcare Informatics, said "it's been pretty stable after the first few weeks," adding "normally you see a free fall. It's still early days. It's clear that every company's watching to see if this works, because previously brand-name drugmakers have accepted rapid loss of sales as inevitable. This could have repercussions."[4] This would now appear to be a key question – will other companies follow suit?

A unique product demands a unique strategy?

Michael Latwis, principal corporate analyst at Decision Resources, is sceptical this outcome will materialise, suggesting that a specific combination of factors have both supported the decision by Pfizer to implement its strategy and defined the level of success achieved to date; "Lipitor is kind of unique just because of the size, its ten times the size of many other blockbusters, and there is just a huge amount of revenue there."

"Also, over the years, Pfizer has done a lot of work to really promote the brand awareness of Lipitor and they have referred to that a lot in talking about their strategy. A lot of Lipitor users want to stay on the drug and Pfizer believes that a lot of their customers are very brand loyal," Latwis said.

He added: "All those things together, because of the size, the consumer awareness, their ability to lock in some longer term contracts (via an agreement with Medco to secure three month supplies), has allowed them to hold onto a third of the market – it makes it a pretty reasonable strategy for Pfizer. If you can hold onto hundreds of millions of dollars in potentially lost revenue it does make sense, but I’m not really convinced a lot of other companies are going to try to do this – I think you need a combination of all those factors.”[5]

Morningstar analyst Damien Conover also indicated that the Lipitor brand is key to this strategy, which could "potentially set them up well if they can execute an over the counter switch."[6]

Market share drops, but historical rates beaten

In recent weeks, the retained share of Lipitor versus other atorvastatin products (the first-to-file launch from Ranbaxy and an authorised generic launch marketed by Watson) has begun to decline; by week seven post expiry, it commanded a 32 percent share.[7] This represents a steady decline over the previous month and further downward pressure will continue to be exerted by factors such as Express Scripts announcing that as of February, it will move branded Lipitor to a third-tier co-pay.[8]

That said, analysis by IMS indicates that against historical trends, Lipitor’s post-expiry market share continues to hold up well, noting that in comparison to six other products described for chronic conditions and which generated significant prescription numbers (each of which lost patent exclusivity in 2010/11), "Lipitor has performed better than the other products following the loss of its exclusivity, retaining 33 percent market share versus 21 percent on average for the other six products."[9]

Data such as this would indicate the possibility of similar strategies. Mike Rizzo, vice president of US managed markets at Double Helix Consulting, told FirstWord "it's not a game changer, but is a good targeted strategy in the unique instances when initially only one generic can enter for six months. I think a few others may follow."[10]

Generic industry response

The response from generic companies will be an interesting angle to watch, claims Latwis, who suggests that "Pfizer did catch a number of people off-guard. Generics companies would be better prepared in the future to deal with it. I don’t know if they can get some political pressure behind them, as it’s not really in the spirit of what the patent law is."[5]

One shared view is that if strategies of this type do become more commonplace, they will – as defined by the 180-day first-to-file legislation – only provide short-term market-share retention. Another view is that Lipitor is a unique product (given its size), and this may turn out to be a unique strategy. Not so according to Read, who suggested in the company’s fourth quarter analyst meeting that Pfizer would pursue this path again for other major patent expiries.

Sources

1. Pfizer, Lipitor for You Strategy
2. Forbes, What Managed Care Thinks of Pfizer And Its Lipitor Strategy (December 1, 2011)
3. CNBC, With new generic rivals, Lipitor’s sales halved (December 19, 2011)
4. CNBC, Lipitor sales level off after arrival of generics (December 12, 2011)
5. Michael Latwis, Decision Resources, Interview (February 03, 2012)
6. Damien Conover, Morningstar, Interview (February 03, 2012)
7. Bloomberg, Pfizer’s Lipitor plan may not be ‘worth it,’ Watson CEO says (January 24 2012)
8. Wall Street Journal, Express Scripts Lipitor Move Highlights Pressure on Pfizer (January 12, 2012)
9. The IMS Institute, Lipitor’s Market Performance: Six Weeks Post Expiry (January 16, 2012)
10. Mike Rizzo, Double Helix Consulting, Interview (February 06, 2012)

 

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