Product Team Cialis (Validus): Getting Ready to Market

Christopher Cashen – 5545586

Date: Monday 18th January 2010

MG511 Strategic Marketing Management

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Assignment Submission

Student Name: Christopher Brendan Cashen –

55455863

Programme: MMK1 - MBS in Marketing

Project Title: Cialis (Validus) Case Study

Module code: MG511

Lecturer: Ms. Joanne Lynch

Project Due

Date: 18-Jan-2010

Declaration

I the undersigned declare that the project material, which I now submit, is my

own work. Any assistance received by way of borrowing from the work of

others has been cited and acknowledged within the work. I make this

declaration in the knowledge that a breach of the rules pertaining to project

submission may carry serious consequences.

I am aware that the project will not be accepted unless this form has been

handed in along with the project.

Signed:_____________________

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Table of Contents

Introduction – Page:4

External Marketing Audit – Page: 4- 6

The Market – Page: 6-11

Competition – Page: 11 - 14

Internal Marketing Audit – Page: 14

Strategic Issues Analysis – Page: 14 - 21

SWOT Analysis – Page: 21-24

Marketing Objectives – Page: 24 -25

Marketing Mix Decisions – Page: 25 - 29

Organisation and Implementation – Page: 29 -31

Control – Page: 31 -32

Bibliography : 33- 34

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Introduction

Through extensive External and Internal analysis, the formulation for the best fit strategy has been

developed and refined to suit the resources, culture and infrastructure of Lilly ICOS LLC. The name of

the drug has been changed and the marketing approach developed as per the findings of the Macro

environment, the Market, Competition, Internal Marketing Audit, and a SWOT Analysis. A decision

on each of the marketing mix is taken to compliment the strategy chosen based on the

competencies and resources of the product team. There was also a suggested means of organisation

and control suggested as per recommendations given.

External Marketing Audit

Macro environment

Johnson and Scholes (1999) have stated that a framework for environmental analysis is imperative

to provide the strategist, not just the current state of the environment in which Lilly ICOS LLC are set

to perform in, but also how it is most likely to develop. With this is mind, the scanning and analysing

of the Macro environment is done with the likely future directions of each force.

Demographics

With regards to the major demographic developments and trends that pose opportunities and

threats to this company and any likely responses that Lilly ICOS LLC can execute with weight given to

these developments and trends are as follows: The media paints Viagra (the competitor) as

associated use with older men; however if we examine the Demographic indicators of ED patients

(Exhibit 6) we find that the age mean ranges from 50.7 (France & Spain) to 58.4 (US). This shows us

that there is considerable scope in appealing to younger demographic than is widely accepted as the

norm. On examination of future demographics within the countries that Cialis will be available

within, we find that the trend by 2050 will show far more of the population will be outside the

working age. In Australia, the ratio of people aged 65 or over will double by 2050 (Guest, R. & Mc

Donald, I, 2002). In Canada, one person in every 5 will be aged 65 or over by 2050 (Canadian

Geographic, 2008). In Brazil, 30% of their 215 million will be aged 60+, again by 2050 (Billari, F.

2009). In the E.U, the ratio of working people to pensioners will be 2:1 by 2050, showing a huge shift

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to those of 65+ (European Comission, 2006). In the United States the “elderly” population will

double by 2050 (again 65+) (PEW Research Centre, 2008). While some may argue that this may be

irrelevant to Lilly ICOS LLC today, there must a gradual progression in strategies in terms of the

emphasis on target markets and which strategy to intensify and at which time.

This is supported by the Employment demographics which suggest that on average (over the 6

countries that were researched) that 54.5% of ED patients are in full time employment, which may

of given rise to the common misconception by partners of patients with the ED condition that

particularly work related stress was a cause. The second biggest contributor with regards to

Demographics is that of Retired ED patients. Exhibit 6 shows us that this is the second biggest

demographic in Employment (Average 36.8% - US, France, Germany, Italy and the UK), with the

exception of Spain (approximately 1% are retired). This may require regional adaptation as a global

marketing campaign that targets retired individuals with the condition may have regressive

consequences in Spain.

Another interesting demographic statistic is that of martial status among ED patients, with an

average of 76.5% being married or living with a partner (of the 6 countries examined). This may give

insight of how to combine the marketing communications to target both parties in a relationship.

Economic

With regards to education and yearly income, there is a direct correlation between the level of

income earned and the education level completed. The US has 67% of ED patients completing Post

Primary with 35% earning upwards of $60k. There is a spread among European countries, mainly

primary education intensified (46.6% average), with an average of 68% earning lower than $25k.

This may give credibility to having a varied pricing structure, one for the US and one for the EU

countries. At present the average expenditure of Viagra (per year) is $66.30 – this means $10 per pill

with an average of 6.63 prescriptions per year. However this will be impacted by exchange rates in

the countries in which the product is sold. If exchange rates alter unfavourably then products could

increase artificially in price for the consumer and may affect future purchase patterns.

Political/ Legal

The factors affecting the Macroenvironment extend to that of political and legal drivers. As we are

aware, within the pharmaceutical industry, the FDA (The Food and Drug Administration) is the

regulatory board which determines whether Lilly ICOS LLC get approved for the Phase III submission.

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They also chart the clinical trials to which a drug needs for approval to enter marketplace which

costs in the region of $350 million to $500 million. The FDA have also sanctioned the Direct to

Consumer advertising, which is a major breakthrough for pharmaceutical companies. However given

the power of the FDA, cautioned must be exercised in the manner of advertisement as this sanction

could be reviewed if abused or used inappropriately. However Direct to consumer is not authorized

in the E.U, at the time of the case, however was legitimized in May 2009. Therefore Lilly ICOS LLC

must seek alternative means of targeting potential customers in the E.U countries (UK, Germany,

Italy, Spain & France).

There may also be the legal implications of deaths attributed to the drug (of which Viagra has had).

Therefore there must be a disaster recovery programme in place in order to cope with this

possibility. This should outline legal protocol, along with a previously agreed PR procedure in order

to recover. All of this must be done within a 72 hour time-frame, in order to assist in the opinion

formation of the public and any media reporting.

There is also the legal contributor of the agreement of the joint venture made between Eli Lilly and

ICOS, which stipulates that profits from the sale of the drug Cialis will be spilt 50/50 between the

companies in North America and Europe. However, profits in all other regions would be retained by

Eli Lilly, with a royalty paid to the joint venture.

Pharmaceutical companies come under huge price regulation (depending on country) and this will

impact the prices that are set by Lilly ICOS LLC. There is also significant regulation surrounding

patent protection, which in the future may lead to Cialis becoming available under the generic drug

competition legislation that exists under most countries competition laws.

Socio-Cultural

The public attitudes towards the ED condition have been outlined in Exhibit 1 under Patients,

Partners and Physicians.

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Exhibit 1: Socio-Cultural attitudes of Patients, Partners & Physicians

Patients Partners Physicians

- Sense of embarrassment, over half of

people (53%) surveyed that had ED did

not seek treatment for the condition.

- Younger men express higher levels of

embarrassment regarding talking

about ED; Lilly ICOS LLC need to

remove (as much as possible) the

taboo associated

- More elderly men believe it is a

normal phenomenon with ageing

- There is a “downward spiral”

dynamic characterising the ED

condition: Personal embarrassment,

questioning of role in relationship,

unfairness to partner, strained

relationship, self-identity suffering,

question their place in the world.

- Consumers that use Viagra are, in

large, willing to try new drug.

- Bayer’s market research report 76%

of ED patients revealed they would be

interested in a new treatment.

- 90% of patients initiate the request

for the drug.

- Lack of information on ED prevalence

- Believe ED caused by stress and work

related stress, they believe that

diabetes is a main contributor to ED.

Partner knowledge mainly passive.

- Discussions between patient and

partner are uncomfortable and “off

limits.”

- They are not involved in the decision

process.

- They contribute to help the

realisation of the problem.

- Feel awkwardness and pressure with

regards to the patients consuming of

the drug, given the involuntary nature

of Viagra.

- Conjugal functioning is an important

aspect in people lives.

-Sexual activity is significantly higher

on weekends than weekdays and

typically occurred at night.

- Physicians want:

1) Efficacy; 2) Safety – account for 70%

of desirable attributes. – This leads to

bring in education regarding fewer

side effects etc, duration (a positive

attribute for the drug) is only deemed

to account for 10% of desired

attributes, behind efficacy and safety.

-Knowledge varies between PCPs and

Urologists

-Majority of PCPs don’t feel

comfortable talking about ED during

annual checks – even if individuals

have diseases associated with ED.

- Physicians are entrusted with the

health and welfare of patients and are

apprehensive given the deaths

associated.

- Physicians act as facilitators rather

than sellers (10% of sales)

- They generally don’t follow up on the

drugs success. They believe the

inability to perform sexually is

secondary to the potential risks

associated with the drug.

Technological

The investment level in R&D can be deemed a technological factor as to determine the

Macroenviornment. Eli Lilly currently invest the lowest nominal amount of all three companies

(Pfizer and Bayer). However they are the highest in terms of operations. If continued and

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progressed, then Eli Lilly will be in a perfect position to map out the likely breakthrough

technological advances associated with the pharmaceutical industry.

Exhibit 2: Research and Development Expenditure

Research and Development Expenditure (%of Net Sales)

Eli Lilly Pfizer Bayer

(2018.5/10862.2 x 100)

=18.58%

(4435/29574 x 100)

=14.99%

(2236.2/27915.2 x 100)

= 8.01%

The Market

Market Size:

The potential market is the150 million men globally experience chronic ED which includes the

30million in the U.S. This is again emphasised by the fact that 50% of all men between the ages of

40-70 experience some form. Pfizer’s Viagra has worldwide sales of $383,800,000. However in the

markets to which Cialis will enter (U.S, France, Italy, Germany, UK, Spain, Australia, Canada, Brazil

and Mexico), the value of the market is $321,600,000. Is it realistic that Cialis will become a $500

million annual sales drug for Lilly ICOS LLC within the 5 years forecasts set out my the GMR business

unit?

Growth Rate

The growth rate of Viagra within the USA is16.4% (CAGR). The average CAGR within the five

European countries that Lilly ICOS LLC intends to enter is 18.38%. Canada’s CAGR is 27.7%, Mexico’s

is 47.8%, Brazil’s is 37.1% and Australia’s is 15.5% The Total global CAGR is 18.6% of Viagra sales.

Trends:

Started with one company, attractive market therefore now 3 companies competing

Increasing quarterly in global sales

First started in and ED patient circle and is now a cultural phenomenon

Industry trend that pharmaceutical companies are looking for “blockbusters” (pg4), seeking high

gain returns

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The major trends within the erectile dysfunction market are, since problem identification and

despite many suffering the condition not seeking treatment; it has become a $1.3 billion market. The

market has become so attractive, given its value and the opportunities for growth, that there are

now 3 pharmaceutical giants (Pfizer, Lilly ICOS LLC and Bayer/Glaxosmithkline), with one taking the

market nicher as treatment alongside Diabetes. Other trends include a gradual quarterly increase

Consumer Analysis:

Who? 150 million men worldwide (Chronic) and 50% of all men (40-70)

What? Onset; Safety with Nitrates; Duration; Time on market

When? They purchase after consultation, with family doctor; urologist or men’s specialist;

Cardiologist; Psychiatrist or Internet Doctor and a prescription has been acquired.

Why? They have ED problems- which lead to feeling personal embarrassment; Question their role in

their relationships; Sense of unfairness to their female partners; strained relationships; Self-Identity

problems; questioning role in all contexts of life; questioning place in the world.

Where? From a local drugstore; directly from a Doctor; from a mail order drugstore; Not usual

drugstore; another party getting it; in other countries.

How? They intake prescription to engage in intimacy with sexual partner

Also with regards to further segmentation the use of the types of buying behaviour, the buying roles

of different parties and the powerbase with regards to the Health Care Transaction Model are

appropriate.

The Types of buying behaviour:

While it is important to give weight to the buying roles (discussed below), we must also take into

account the types of buying behaviour. The most obvious distinction to make is based on the

expense, complexity, risk and opportunity cost of the purchase decision (Wilson, R. Gilligan, C,

1997;). This recognition (adapted from Assael, 1987) gives a model to distinguish between four types

of buying behaviour, depending on the level of buyer involvement in the purchase and the extent to

which brands differ. (Wilson, R. Gilligan, C, 1997)

Given the high involvement of the decision to seek consultation on the condition (and the emotional

influence the condition has) and the few brands which exist in the marketplace (One at present, not

that consumers don’t see differences in brands), we can determine the buying behaviour of ED

sufferers as that of Dissonance reducing behaviour.

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Exhibit 3: Brand Vs Involvement behaviour

The purchase use and consumption of Cialis can be categorised into the subgroups of:

Buying Roles:

Identifying who plays each of these roles, and indeed how they play them, is important since it is this

information which should be used to determine a wide variety of marketing decisions. In the case of

advertising, the question of who plays each of the buying roles should be used to decide on who the

advertising is aimed at, the sort of appeal, the timing of the message, and the placing of the

message. (Pg. 169, Wilson, R. Gilligan, C, 1997)

Initiator – Partner/ Patient – This is the party to which first suggests buying the product or service. In

this instance, given the role of the partner in the initial stages of recognition, they along with the

patient themselves have been identified as the initiator.

Few

Brands

Many

Involvement

Low High

Few

Brands

Many

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Influencer – Partner & Doctor – Despite the knowledge or lack thereof, on ED prevalence and indeed

the causes of such, the downturn of physical intimacy of any kind, can lead partners to be an active

influencer in the buying process. Despite the “off limits” of the condition, their comments can affect

the decision made. I believe that Doctors have a definite role as an influencer, given their superior

medical knowledge, coupled with the information they have with regards to the deaths surrounding

other variants of the conditions drug i.e. Viagra.

Decider – Doctor/ Patient – This is the party to which ultimately makes all or part of the buying

decision. The two parties to which are most central to the deciding role are the Doctor and the

Patient. The Doctor because he has the overall say of whether to prescribe or not and the patient

because in 90% of prescriptions given to patients, 90% are patient initiated.

Purchaser – Patient – In Germany, Italy and Spain 90% of individuals pay for the drug in full, followed

by France in 81%. In the U.S there is a close relationship between the individual paying in full (46%)

and costs being shared (33%). In the UK only 40% of individuals pay for the drug in full, but it is

worth noting that 45% of purchases are covered in National or Private insurance policies,

accompanied by 15% of cost sharing purchases. Over the 5 countries (UK excluded as they don’t

register a %) there is an average of 12.6% of patients who get their medication free.

User/Consumer – Patient/ Partner – The parties to which consumes the product or service is, given

its benefits to both parties, are the patient and the partner. While the benefits to the patient are

extensive given the psychological aspects to treating the condition, the intimate nature is shared

with the partner.

Gatekeeper – Doctor – As aforementioned, given the prohibitive role the Doctor can play in

prescribing.

Distribution Analysis:

The different types of physicians consulted vary from family doctor to Urologists,

Cardiologists, psychiatrist and internet doctors.

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Exhibit 4: Health Care Transaction Model (Powerbases within each stage):

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Lilly ICOS LLC Channel of Distribution:

Exhibit 5: Channel of Distribution

Lilly ICOS LLC are in charge of manufacturing the drug, at which point they distribute the drug to

wholesalers, on terms negotiated by the drug reps of Lilly ICOS LLC, as trained by the product teams

Global Marketing Sales Training (GMST). The margin received by wholesalers is around 1-2% of drugs

retail value (Pharmalicensing, 2008). At this point the emphasis is on the same drug reps to prove to

physicians that of the drugs worth, mainly based on the safety profile of the drug and its efficacy

Lilly ICOS LLC Wholesalers

(1-2%)

Drugstores

(18.6%)

Drug Reps

(GMST)

Physicians

Patients

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Exhibit 6: Physicians judging of Drugs

70

10

20

Efficacy/ Safety

Duration

Other

Channel Attractiveness:

Lilly ICOS LLC:

The manufacturing and supply systems and channels for prescription drugs are very tightly regulated

(PR News Wire, 2009) and therefore there is little alternative for drug companies in terms of

channel’s for pharmaceutical companies

Wholesalers:

The Channel is relatively unattractive for Drug Wholesalers, as the margin they make on prescription

drugs is rumoured to be as low as 1-2% (Pharmalicensing, 2008). However the terms are widely

accepted and agreed with the drug reps of each pharmaceutical company.

Drugstores:

The channel has proved very lucrative for drugstores when selling the drug, as most operate on a

18.7% (2007) mark-up of each drug sold (Fein, A. 2009).

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Patients:

This channel of distribution with regards to the patients and the nature of the drug has proved to

becoming less and less attractive. With an average of 22.8% of patients over 6 countries receiving

drugs from a unfamiliar drugstore (as per Exhibit 9b) and given the 96% soar in drugs purchased over

the internet (sometimes illegally and with prescription), perhaps this shows that where the

traditional channel has served well in large, on sensitive issue such as ED, perhaps the channel is less

than attractive (PR News Wire, 2009).

At this point, it is essential that the wholesalers have a base quantity of the drug in drugstores in

order to accommodate for the prescribing by physicians. Once physicians prescribe the drug to the

consumers, the consumers go through the various drug outlets (local drugstores, direct from doctor,

mail-order, another country) that have the drug.

Competition

Exhibit 7: Competition (Actual vs. Potential)

Competition In ED Market

Actual Potential

- Pfizer “Viagra”

- Bayer/ GlaxoSmithKline “Levitra”

- Alternative Medicines

- Entrant of Pharmaceutical company

Pfizer (Viagra)

Objectives - To maintain market leader status

- Maintain (& improve) channel relationships with doctors and drug

stores etc

- Reduce the no. of drop outs after 1st

year usage

Strategies - Employ aggressive marketing tactics, both in DTC advertising

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and channel marketing,

- Invest heavily in R&D and innovation in order to keep them

ahead of the competition,

- Target the partners in the ED DMU

- Use different mediums to target the different DMU members.

- Celebrity endorsement

Tactics - The use of ex-Soldiers as aggressive drug reps.

- To fuel/support the cultural phenonomenon

- TV. Spent $108m in 2000 on advertising. DTC advertising.

- Vigorous tone; present ED to partners as the male having an

underlying health condition.

- Tactic of celebrity being seen as living a fast life,

- Bob Dole to give creditability.

Strengths - No.1 pharmaceutical brand in the world.

- Consumers ask for the product/treatment by name (90%

initiation)

- Large investment in both R&D and advertising

- Strong CAGR of 18.6% globally. Viagra is a $1.3bn product.

- Have 8 billion dollar products, including Viagra.

Weaknesses - Side affects, death scares,

- high SGA (pg26),

- reluctance of physicians to proactively prescribe and follow up

on the drug.

- Image as a playboy drug, Image as an older man drug (even

when old, you don’t want to be told it).

- Mixed satisfaction with partners (pg10);

- high drop outs (pg8); 23% not satisfied in U.S. (pg8 for other

countries

Market Share - 9 million of 150 million ED patients worldwide

Size - Biggest in ED market ( Net Sales of $29,574,000)

- Pfizer have serious growth since 1999

Profitability See exhibit 8

Bayer (Levitra)

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Objectives - To treat ED as a subsidiary of diabetes,

- Improve weak U.S. performance and progress bottom line

Strategies - Target a niche segment of the market, judo strategy (staying

under the radar of the competition)

- Suggestions of a strong advertising campaign in order to

compete with the competition

Tactics Not yet established

Strengths - Product is successful at lower dosages

- More affective for diabetes users

- Promotion with GlaxoSmithKline

Weaknesses - Poor U.S. presence/performance;

- No clear strategy for the new drug

- Potential danger of alliance with GlaxoSmithKline (as per

ICOS)

Market Share Not established

Size Bayer (Net Sales $27,915,200).

Profitability See Exhibit 8

Alternative Medicines

Objectives - To offer a substitute to conventional medicine

Strategies - To attract people who are conscious of conventional medicine and

prefer natural/ organic substitutes

Tactics - To present a natural lifestyle, no prescription, therefore less medical

and chemical association.

Strengths - No prescription

- less stigma attached

Weaknesses - Less scientific support

- reduced credibilit.

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Market Share Unknown

Size Unknown

Profitability Unknown

Exhibit 8: Pharmaceutical companies profitability (Adapted from Exhibit 11 Net Income)

-500

0

500

1000

1500

2000

2500

3000

3500

4000

1996 1997 1998 1999 2000

Eli Lilly ($ millions)

Pfizer ($ millions)

Bayer ($ milions)

Barriers to entry:

- FDA costs - $350m - $500m

- Intense competition; there will now be three competitors in the market where it looks

increasingly likely that Lilly ICOS will challenge Pfizer for market leader. Pfizer are likely to

react swiftly to competitive challenge.

- High advertising costs; Pfizer reported to have spent $108 million on advertising in 2000.

- Difficult channels to enter; Physicians are still apprehensive with regards to the treatment of

the drug, knowledge among all parties is varied and largely incorrect.

- Company resources need to be big; This includes the marketing and sales departments with

huge financial, organisational and human resources demanded to reflect the size of the

markets.

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Internal Marketing Audit

Operating Results

These operating results reflect the endeavours at Eli Lilly from the period 1996 -2000. They do not

incorporate the introduction of Cialis, as part of the Lilly ICOS joint venture, nor ICOS independently.

Exhibit 9: Eli Lilly Operating Results

-2000

0

2000

4000

6000

8000

10000

12000

1996 1997 1998 1999 2000

Net Sales

R & D

Net Income

Product: ED

Customer: ED sufferers (see customer analysis)

Geographic Region- US, 5 major European, Canada, Mexico, Australia, Brazil.

Strategic Issues Analysis

What are our current marketing objectives?

o To reach sales of at least half a billion

o Achieve 5 year forecast as set out by the GMSO

o Marketing of negatives is widely used; affect the physician, patient and public in a

broad appeal while managing competitor reactions, and incorporating adaptive

messages to cater to the larger global market.

o Because such a high prescription rate after year 1, encourage consistent usage (25%)

o Ensure the implementation and control of the strategy

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How do we currently segment the market?

There is no evidence that Lilly ICOS LLC have segmented the market in any manner thus far. Dividing

up the market up into reasonable segments is only a starting point. The firm must then develop a

series of strategic goals (as outlined in the above objectives) and strategies for effectively reaching

those identified segments. The identification of a segment allows Lilly ICOS LLC to identify a profile

of its typical desired customer, which in turn would allow the firm to identify a profile of its typical

desired customer, which in turn would allow the firm to develop a product configuration, pricing

scheme, promotional campaign, and distribution coverage plan to best meet the needs of that

identified typical customer (West, D. Ford, J. & Ibrahim, E, 2006).

The main variables used will be that of Geography, Demography, Psychography and Behaviour.

Geographically:

Given the global scale of Cialis targeting, a Global segmentation approach must be utilised. This

assumes that Lilly ICOS LLC sees the entire world as its appropriate playing field. The broadest array

of customers is Cialis’s potential market. The product is to be sold in The U.S, five major countries in

Europe, Canada, Australia, Mexico and Brazil. However the potential for cultural inappropriateness is

strong given the spread of countries and continents in this geographical segmentation. Perhaps

levels of modification for different regions or nations are required in order to avoid any cultural

impropriety. This would, in turn, call for a degree of market research to be conducted in Canada,

Australia, Mexico and Brazil, as these were excluded in the market research conducted by Lilly ICOS

LLC’s Global Market Research Division.

Demographically:

Given the benefits of elevating/ easing of ED condition to a male, it would be easy to subdivide the

demographic variable of gender. However, given the buying role that a partner has in the acquiring

and treatment of ED, this oversight would be retrograde to the overall marketing objectives of Lilly

ICOS LLC. Therefore the targeting of both patients and partners is paramount to the success of Cialis.

Age is another basis for demographic segmentation. With globalization forces at work, there is

increasing opportunity for similarity of youth segments, in terms of wants and needs driven along

with prevalence. The demographics of 20-39, coupled with 40-49, will represent the younger

demographic, coupled with psychographic and behavioural (see below). The more elderly consumers

provide a promising avenue for segmentation. As stated in the case conjugal functioning is an

important aspect of people’s lives during retirement. However given the orientation of the media on

similar drugs being associated with older men, it is important to give concentration to the younger

demographic, whilst still giving weight to 50-59 and 60+ age groups.

Psychographic:

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The bases for this segmentation centre on perceptual issues. Psychographics are often associated

with the acronym AIO, which stands for activities, interests, and opinions and segments which are

exactly the same in terms of demographics may be significantly different in terms of their

psychological make-up. This is extremely important segmentation base due to its excellent potential

for effective targeting of the segment due to an understanding of how the segment members live

their daily lives and the opportunity to tie products and services to their particular values and

aspirations. People’s attitudes/ opinions towards the drug and the barriers towards treatment can

be grouped together, in a geographic region, within the two predetermined age groupings in order

for effective targeting.

Behaviouristic:

These bases are built around groups in which consumers have similar understandings of, uses for,

and responses to ED drugs. Loyalty level is a perfect base for segmentation with regards to the

targeting of Cialis. While there are 5 different levels of loyalty (brand insistence, brand loyalty, spilt

loyalty, shifting loyalty, and no loyalty) table B within the case points towards current Viagra users,

juxtaposed with dropouts, on whether individuals would be willing to try this new drug Cialis. Of the

current user there are great results in the U.S (90%), France (97%), Germany (97%) and the UK

(100%). However Italy (58%) and Spain (70%), whilst still could be perceived as strong, show stronger

levels of brand insistence towards Viagra and would sufficiently adjust such targeting in these

regions.

The major concern with regards to these individual segmentation processes is that they can produce

a wide variety of segments which cannot be reached within a targeting strategy. They could also be

difficult to measure, in terms of time and money. The viable alternative is to combine collective

strategies to ascertain segment traits which could lead to a profitable strategy.

(West, D. Ford, J. & Ibrahim, E, 2006)

What are our core competencies?

“Need to create an organization capable of creating products with irresistible functionality, or …

that customers need but have not yet even imagined” (Prahalad and Hamel, 1990)

The core competencies of a business are embodied in Superior skills of employees, Technologies

they have mastered, Combination of these technologies and accumulation of market knowledge. It is

the Collective learning of an organization

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You can miss the strength of competitors in the business markets by looking only at their product

line, in the same way that you can underestimate the strength of a tree if you look only at its leaves.

Analogy of a tree: the diversified corporation is a large tree. The trunk and major limbs is core

products (with this in mind, with Eli Lilly & ICOS Joint venture [Lilly ICOS LLC] the core products is one

singular project is non existence, however the active ingredient of tadalafil may be perceived as the

major limb); the smaller branches are business units (These are made up of The team medical,

regulatory, legal, manufacturing, financial, marketing departments (along with the GMSO made up

of the Planning, Research and Sales training); the leaves, the flowers and fruit are end products (For

Lilly ICOS LLC, this is the product itself in Cialis). The root system that provides nourishment,

sustenance and stability is the core competence (Which in this case is the Marketing capabilities and

experience of bringing a product to market of Eli Lilly and the technical capabilities of ICOS, coupled

with the versatility and enthusiasm to progress and learn).

A firm should consider how quickly its best positioned rival could imitate its competence assuming it

knew how. A firm’s strategist should consider three questions.

How rare is your competence?

Rareness involves comparing the competence of your firm to those of other firms across various

industries. Lilly ICOS LLC have indeed helped themselves with regards to their joint venture, however

Bayer and GlaxoSmithKline have availed of such a structure, therefore the competency is not unique.

The marketing capabilities and experience of bringing a product to market are recognizable among

competitors, given the scale of production of all drug manufacturers. However, given the obvious

advantage the drug has (Cialis) over the competition, one could argue that the technical capabilities

of ICOS is rare and with regards to the versatility and enthusiasm to learn it would be passive to

state that these are not shared over the industry, given the obvious success that Pfizer have

experienced and the desire to rectify a declining situation in the case of Bayer.

How long will it take your competitors to develop the competence?

Even if a competitor sets out to copy a competence the advantage will not be completely eroded

immediately. It may take imitators months or years to train personnel, revise policies and make the

multitude of other changes necessary to create and sustain a competence. With regards to the

actual benefits of the drug over the competition, that could take more than 24 months to develop

after Initial legislation and Pre-Clinical trials have been completed and cost between $350 million to

$500 million. This does not take into account the time that is taken to improve the drug and at which

point Cialis may have established itself as the market leader. We cannot give a accurate definition to

23

the time that technical competence as a core competency can be develop, therefore we can

determine it could take a number of years to develop.

Can the source of your advantage be easily understood by them?

Often, it is difficult to pin point the source of a competitor’s competence. Skills may be deeply

embedded in a company’s culture such as the versatility of each company, and indeed the correct

structures being incorporated within the joint venture.

(Samdini, S. 2009)

What is our competitive advantage?

Whilst constructing the competitive advantage of Lilly ICOS LLC we must give weight to the strength

of Pfizer’s Viagra and determine, given their first-mover advantage, the most competitive positioning

and vantage point to define. While a play off the “scares” associated with ED drugs can be utilised,

this must be done so in full knowledge that Pfizer have attributes of a tiger competitor (Kotler,

2000). This is a competitor that reacts swiftly and strongly to any assaults. This is demonstrated by

“not sitting idly” when Lilly ICOS LLC were preparing the launch of Cialis. They further aggressively

promoted Viagra, suggesting that any action which may be perceived as attempting to paint the drug

in a negative light may be met with an immediate reaction. However the competition can be used to

strengthen Lilly ICOS LLC’s position rather than weaken the position. If the company can learn to live

with, what will ultimately become, “noisy neighbours” then the products competitive position will

benefit and will be clearly be better positioned in the future. There is a position where both

companies can achieve stable and profitable industry equilibrium without protracted warfare. While

we cannot ignore Bayer’s entry, we are (to date) unsure of what their competitive advantage can be.

In order to determine the competitive advantage of the company we must refer to the information

on the company’s environment and interpret the available information on the competitors.

In order to properly assess the company’s competitive advantage, it is necessary to construct a

Strategic Capability Profile based on the resources of the company and value chain activities.

24

Exhibit 10: Lilly ICOS LLC Strategic Capability Profile

Internal Area Resource/ Competence Evaluation

Firm Infrastructure The benefits of the joint venture are ensuring there is no

duplication of work, with both entities combining to the

singular vision of the product launch. The increase of

credibility for ICOS teaming with Eli Lilly, a

pharmaceutical giant, is significant. Both are innovative,

progressive and optimistic. They also have a nimbleness

and sense of urgency.

Significant Strength (+3)

Human Resources Staff of ICOS produced clinical results that far surpassed

what the market offered to date. They have very strong

technical staff. Accompanying this, the Marketing

competency at Eli Lilly and the Lilly ICOS LLC product

team is a source of great strength. Perfectly prepared

operationally.

Major Strength (+4)

Financial Resources Perfectly prepared financially to bring the product to the

market. Perhaps the Lilly ICOS LLC product team have not

got the depth in pockets that Pfizer have, therefore

cannot be considered a major strength and could be

perceived as a weakness. However given their Market

research function, a statement of perfectly positioned

must have taken into account the competitors financial

resources.

Neutral (0)

Intangibles The product team, to date, have no image strength as

the product has not been launched. While Eli Lilly are

well-established and have had strong products in the

past, the product team is competing with the strongest

pharmaceutical brand in the world.

Weakness (-3)

Marketing and Sales The product team have a well structured marketing and

sales component to the product team (GMSO) which

includes Market planning (GMP), Market Research (GMR)

and sales training (GMST).

Major Strength (+4)

Inbound & Outbound

Logistics

Little evidence of any activities at ICOS. However it can

be assumed, given the joint venture, that Eli Lilly would

have shared new distribution and practises with the

product team. However no value can be attributed

positive or negative to these practises.

Neutral (0)

25

Operations Paul Clark, CEO of ICOS, stated that they were positioned

perfectly, themselves, to bring the product to market

solely on its own. This combined in the Lilly ICOS LLC, can

only be deemed a source of strength for the product

team. They also submitted phase III to the FDA in record

time.

Minor Strength (+2)

(West & Ford, pp 84-89)

From the core competencies and the strategic capability we can determine that the competitive

advantage is that of the marketing capabilities within the product team, accompanied by the

structure of said marketing competence supported by the technical and clinically proven product

and its attributes, particularly that of longer lasting time and fewer side effects.

How are products positioned in the marketplace?

There are three available strategies which will determine positioning. These are; a “niche” strategy, a

“compete” strategy or a “beat” strategy. We must also incorporate the objectives set out by Lilly as

producing “blockbuster” drugs which reach annual sales of over $500 million in order to be

considered viable in the eyes of the pharmaceutical giant. This is an innovative drug which could be

categorised as “best in class” given its obvious advantage over Viagra, but equally could be

categorised as a “quality-of-life” drug, given the psychological easing and relationship improvement

potential it certainly has. It has been argued by Al Ries and John Trout (2001) that the battle is not at

the cash register when the consumer is going to make a purchase, but long before they even enter

the shop. They also argue that positioning is the strategic key. Given Pfizer’s Viagra having such a

high brand recognition, it may instinctively be the first product that comes to mind when looking to

alleviate the condition. In terms of the consumer, each has a ladder in their minds with regards to

products and services. With ED, at present, the top rung would be occupied by Viagra. By employing

a “beat” strategy, given the products more favourable medical benefits and lower side-effect profile,

along with bringing in the “best-in-class” aspects coupled with the “quality of life” attributes it

possess, Cialis could in fact become the top rung on the ladder and the first product in each

consumers mind when treating ED. They must present a clear and consistent message to the target

audience to avoid confusion or alienation of the Cialis brand. The image should be that of safety and

quality, avoiding the “playboy image” that word of mouth has spread and disassociate the image of

the older man. Lilly ICOS LLC could even play, somewhat boldly, on Cialis being a solution to the

scares reported in the media and that resonate in medical professionals.

26

While the product has not yet launched, it is important to state that Bayer look certain to assume

the role of Market Nicher within the ED market, given the likelihood of correlating their product with

Diabetics. Pfizer are undoubtedly the market leader, given the market share and advertising

intensity. Pfizer, at present, will dictate the nature, pace and base of any competition as per their

first mover advantage. However Cialis, and Lilly ICOS LLC, can assume the position of market

challenger, which may lend it to combat for increased market share through more aggressive tactics.

The bases for this is that Cialis, is based on the information from the case, is a better treatment for

the ED condition and therefore taking up a policy of defensive or not “rocking the boat” could lead

to acquiring a smaller share than is necessary as a market follower.

Additional Strategic Challenges facing Lilly ICOS LLC:

- Presentation of clear strategy to Brand council

- Define patient target market (including how they should segment the market)

- Is the pursuit of the six to seven million Viagra dropouts an attractive segment?

- Which product benefits are important to emphasise and to who?

- Europe Vs. US in strategy

- How to reverse the scepticism that physicians hold on drug and endorse Cialis

- What role should partners play in the marketing plan to be presented; can this be done

without alienating men?

- Can Lilly ICOS LLC cope with a “death scare” episode?

- How to innovatively market Cialis in the inevitable “fierce marketing war” in the U.S

particulary

- The pricing of the drug; should it priced higher than Viagra to reflect the more positive

attributes or lower to accommodate the exclusion from health insurance plans?

- What should the central theme of the TV adverts that should be produced over the

summer?

- Should Lilly ICOS LLC utilize celebrities/ sports related themes?

- Should they compete as a market challenger or market follower?

Evaluating Alternative Strategies

Strategy 1: Compete with Viagra as Market Challenger (Swinging for a home-run)

27

Pros

- More likely to reach $500m sales per year

- Leverage media reports and WOM into solution for condition

- “head-on” battle will force best practises and maximisation of resources

- Superior product in competing against Viagra is suited to this strategy

Cons

- Risky Strategy, could lead to attaining no market share

- Will inevitably result in a marketing war with Pfizer

- Pfizer’s experience in marketing may expose vulnerabilities in new market

- Physicians may be unwilling to prescribe a second drug for a condition they don’t perceive as

too serious

Strategy 2: Compete with Viagra as Market Follower (Try to hit first base)

Pros

- May compete under the radar of market leader Pfizer

- Less dependent on R&D expenditure

- Less chance of marketing war with competitors

- Ability to capitalise on market leader promotional activities

Cons

- Highly unlikely to reach $500m annual sales

- Is not taking advantage of firm infrastructure and resources available

- Has little/no future potential positioning strategies

- Is not in keeping with the culture within Eli Lilly (not “best in class” or quality of life

exploited)

- Widely considered a dangerous strategy if a new enterprise

28

Marketing Structure and Systems

Exhibit 11: GMSO Marketing Structure

Marketing Structures and Systems:

The marketing structures within place at Lilly ICOS LLC are in place to assist, not only marketing

practises and implementation, but to run alongside that of the ethical and regulatory obligations of

the product in question. This is done using a separate body within Eli Lilly called the Global

Marketing Sales Organisation (GMSO). The GMSO has 3 subsidiaries but will also conduct

brainstorming sessions as a whole called “deep dives”, though are centred, perhaps logically, on the

marketing of negatives.

Global Market Research:

This entity funnels idea for research projects based on the input of sales reps and identifies market

needs.

Global Market Planning:

Global Marketing Sales

Organisation

Global Market Planning (GMP)

Global Market Research (GMR)

Global Marketing Sales Training (GMST)

United States Brazil Mexico Australia Canada European Countries

29

These subsidiaries forecast market potential on potential project to validate moving forward or give

evidence to their termination. Projects which match the criteria as per the market planning activities

are then designated a fully dedicated cross-functional product team which includes medical,

marketing, registration and logistics functions. They combine with the overall marketing function of

the product team within the initial trials. They are assigned the task of translating medical

implications of various drugs into future success.

Global Market Sales Training:

The personnel within this team act as consultants once the product has been verified by the GMR

and the overall marketing body of the product team. They provide marketing research resources,

presumably in collaboration with the GMR unit, along with constructing five year forecasts which

could be used as a control mechanism to gauge product performance.

The GMSO also has six affiliate bodies as it organises promotional, sales and after sales activity

geographically and manages through “brand councils.” These council meetings are the opportunity

for each region (US, Europe, Canada, Australia, Mexico and Brazil) to be presented the vision of the

product team with regards to positioning and branding, whilst also detailing the key drivers for

success. The prepared sales forecasts, or targets as they will serve, and reporting formats are

declared for post launch. Each affiliate dedicates resources and personnel, within the received

budgets (which there is a flexibility to manage across the portfolio within the Eli Lilly portfolio). The

exact amount of spending is managed by the affiliate towards allocation of salespeople and choice of

sponsorship events. However given the tighter control under the ICOS joint venture, will there be a

disincentive on the part of the affiliates, given a stricter regime? This will have to be more closely

managed and explored for the success of the product.

SWOT Analysis

Strengths:

- Net Income as a % of sales of Eli Lilly is stronger (2000) than that of Pfizer or Bayer. This includes

high investment (as % of sales) in R&D and lower Sales General and Administrative (SGA) than the

competition.

30

- The joint venture of Eli Lilly and ICOS is a source of great strength for the product team. Eli Lilly are

a pharmaceutical giant and ICOS are an optimistic Biotech. Eli Lilly give strategic value to forging

successful partnerships, and have experience (along with resources) to bring drugs to the market.

ICOS have strong technical competence with proven strength in clinical results.

- The drug itself possesses more benefits than that of Viagra; including lasting up to 36 hours,

unaffected by food intake, rare visual irregularities etc.

- Record submission time of Phase III to FDA

- Perfectly positioned (both operationally and financially) to bring the product to the market.

Weaknesses:

- Underestimating the launch of the product given the time span of FDA approval. The hope is to

launch the product in 2002. However, Submission of phase III made on the 28th June 2001 in the US

and 28th July for the E.U, therefore if the FDA take 18 months, could leave approval dates at 28th

December 2002 (US) and 28th January 2003 (E.U) which shows a “hopeless optimism” (Piercy, 2002)

for implementation.

- Low Compound Annual Growth Rates (CAGR) in Germany (3.6%) and France (14.8% - Much lower $

millions value than comparable countries such as the US). This may lead to low return in these

markets.

- Bayer’s likely positioning as a “niche” drug treating diabetes along with ED, limits the strategies

that Lilly ICOS LLC can explore and employ.

- Despite strong financials with respect to R&D and SGA (Net income % as sales) there are significant

resources being wasted in constructing 5 year forecasts, given no targeting or positioning decisions

have been made. How accurate are these forecasts given the inevitable entry of Bayer?

- ICOS have no marketing competence to date. How much control will they realistically have on

marketing decisions given their lack of experience? Will their lack of marketing competence slow

down elements of the launch/ complicate processes?

31

- Sales in Canada, Mexico, Brazil and Australia will result in only a royalty being paid to the venture.

This could result in ICOS pushing for more concentration in the US and European countries which will

take away from the Global push of the product.

- The banned direct-to-consumer within Europe will lead to inconsistency in the marketing and

present greater difficulties in targeting within these countries.

Opportunities:

- High Compound Annual Growth Rates (CAGR) in the US (16.4% - not the strongest but has high

value in terms of sales $ millions), UK (26.3%), Italy (20.6%), Spain (26.6%), Canada (27.7%), Mexico

(47.8%) and Brazil (37.1%). There is a opportunity to gain market share in these regions.

- Promoting to couples (both married and living together) in a combined campaign

- The high dropout rates of Viagra after first year offers potential targeting for Lilly ICOS LLC

- Of current Viagra users an average of 85.3% expressed an willingness to try Cialis and 77.16% of

dropouts also expressing that willingness

- With improvement of the varied education of the condition; which is “passive” among partners,

somewhat unavailable or inaccurate for patients to the wide-ranging degree among physicians; Cialis

could prove to be highly susceptible to the market.

Threats:

- Little evidence of market research conducted in Brazil, Canada, Mexico and Australia.

- GlaxoSmithKline’s involvement with ICOS in the past may give competitor Bayer significant insight

to the marketability of the product, while also giving the competition understanding of the company

and its workings.

32

- Competitive reaction of Pfizer could prohibit Lilly ICOS LLC “Cialis” gaining required market share to

deem entrance a success. Can Lilly ICOS LLC compete with the advertising “blitz” that Pfizer have

exercised?

- The lack of market knowledge in Canada, Mexico, Australia and Brazil could lead to incorrect

market segmentation and positioning in these regions.

- A similar case to reports on deaths as a consequence of taking drug, could ruin the reputation the

drug

- Doctors refusing to prescribe drug, based on the apprehension seen prescribing Viagra. They may

see prescribing Viagra as “better the devil you know”

- The rate of dropouts after first year could lead to damaging customer lifetime value.

- There is the threat that the FDA will not approve their phase III submission.

- Sales reps don’t secure good terms with drug stores/Doctors

- There is no evidence (within the case) of successful launches under the “re-thought” marketing

practices of Eli Lilly, which will be incorporated into Lilly ICOS LLC product team

- The increased competition with 3 market entrants (Bayer, Pfizer and Lilly ICOS) may lead to

minimal market share.

- Threat of legal actions if deaths are attributed to drug.

- Unable to use DTC in Europe given regulation at time of case

- Patients purchasing drug over web without prescription

- Lilly ICOS LLC coming out worst in a “Fierce Marketing War” between the three competing

companies.

- Emphasising the wrong product benefits to the wrong parties

- The inclusion of partners in the marketing strategy alienating patients.

33

- Incorrect pricing of drug could make it unattractive

Marketing Objectives

Core Strategy

Position Lilly ICOS LLC “Cialis” as the Market Challenger to Pfizer’s “Viagra”, by adopting a firm

stance of a superior product. All tactics will be offensive to reflect the enormity of the task; however

will adopt a different marketing approach to Viagra by not adopting the same sales approach, or the

promotion of the product, but will be reflected by a similar pricing structure. In this essence, it is by

its nature, a “Guerilla attack,” given Lilly ICOS are a smaller firm in terms of resources, but will adopt

selective attack routes as per the aforementioned. (West & Ford, 2006). Instead of fuelling the

cultural phenomenon, Cialis will aim to act as the neutralising factor with regards to ED.

Target Market

Physicians: This target will serve as the primary focus for the company given that the push strategy

will be used to create customer demand. They will be reached with a three prawn strategy; partly

through the sales reps within each geographic region, then the various sponsored activities

(exhibitions, and strategically fit causes) and supported by an online page (specifically for physicians)

which can trace how the product is being received anywhere around the world and converse with

colleagues and peers about various concerns. More details of this are outlined in the promotion area

of the Marketing Mix decisions.

Patients: This target will be the secondary to the physicians. However this is qualified secondary only

due to the regulations imposed over the European countries. There will be intensive concentration

in direct to consumer sanctioned regions in an attempt to overturn the 90% initiation of

prescriptions for Viagra. However the efforts with physicians will couple to effect the decision

process for patients. They will be targeted separately demographically (ages 20- 49 and 50+) and

34

behavouristically with a clear targeting of those who expressed interest in trying a new available

drug for the treatment of ED.

Couples (Patients and Partners): This target will be a focal point of advertising, given the potential

that they possess and the intensity in which patients are either married or living with their partners

(average of 76.5%).

Marketing Mix Decisions

Marketing New Start Ups

As outlined with regards to marketing new start ups (Chiagouris, Wansley 2003) Rule number 1 is to

“Always begin with a vision.” This vision is imperative in presentation of the “clear” strategy before

the brand council. The vision, therefore, is not to compete with market leader Pfizer, on mediums

they use, and approaches there competent in; but to change the rules of the game. There will be no

use of celebrity endorsement, the personal sales strategy will not emulate the hard sell utilized by

Pfizer and direct-to-consumer advertising (while not used globally) will only be used in innovative

means. In this respect, the vision is more of a push strategy than a pull strategy, as Lilly ICOS LLC

need to exploit the products advantage over the competition using the sales force (drug reps) and

trade promotions.

Product

Product factors

Relative advantage

The product Cialis has a relative advantage over the Viagra given the actual benefits to the patient

(as stated previously), but also to the doctor in the higher safety profile. Therefore on a relative

advantage basis, Lilly ICOS LLC product team have more to exploit.

Compatibility

The manner in which it is consumed is consistent with other drugs of its nature. The inconsistency

lies in the differences in the experiences. Viagra gives an involuntary body function, whereas Cialis

requires sexual stimulation. Therefore exisiting experiences change.

Complexity

35

The range of knowledge with regards to the condition is extremely varied.

Trialability

This determinant could not be encouraged by the Lilly ICOS LLC product team. That decision would

lie with the physicians. This could be pitched by Sales Reps to physicians as a means to get patients

to trial Cialis.

Observability

Given the psychological impact that the condition has the benefits are shared with patients and

partners alike. There, once an education has been established, the benefits of the physicians

suggested treatment can be seen once communicated by the patient and approached by the acting

physician.

(Lynch, 2009)

Brand name

The choice of brand name was consciously done to not arise any strong connotations. While this

neutral name may succeed in that, it may also become one which is difficult to remember in the

minds of patients (and physicians). With respect given to the decision and the basis of doing so, a

stronger name which resonates with greater vigour without possessing any offensive basis is

desirable. The recommendation made is to change the name of Cialis (which may be difficult to

pronounce) should be replaced with Validus, which is Latin for exceeding. On research to

translations, there appears no unpleasant or odious meaning in all available languages. However

strong consideration must be given to any future markets when assigning this name. This is done

commonly after phase III approval. As stated by Chiagouris and Wansley (2003) the most important

asset is the brand name and the danger with the former Cialis is taking a background role ultimately

leading to market anonymity.

Features (Which benefits needs emphasis and to which party?)

36

Exhibit 12: Product Features per target

Product features

Patients

Has fewer side effects

Requires sexual stimulation

Is not affected by food intake

Can last for 36 hours, removing immediacy of forced intimacy

Will prevent the downward emotional spiral felt by patients

Physicians

Validus has an excellent safety profile

Has fewer side effects

Is the most effective means for treatment

Is a prevalent condition which, if treated, can change quality of

health and living

Patients & Partners

Can last for 36 hours, removing immediacy of forced intimacy

Is a safer treatment than Viagra (i.e. what is currently available)

Will prevent the downward emotional spiral felt by patients

Media

ED is experienced across all demographics

The stigma associated is preventing treatment

The associations with the type of people who use the drug

(playboys) is inaccurate

Validus, if prescribed, can change quality of health and living

The former death scares associated with treatment of the

condition will not be experienced with this drug

Services accompanying

A proposal for commissioning of a helpline should be researched and incorporated by Lilly ICOS LLC.

This will erode the barriers to seek treatment as consultation with partners or physicians may be

embarrassing and difficult in nature. An anonymous consult that should be educated on the

prevalence, the contributors to ED, the ease of enlivenment once treatment sought etc in order to

reduce the stigma and provide a “neutralising” effect to the sensationalised media reports and

public image. However this should be done so in conjunction with health boards and competition

authority as part of the ED condition and not the commercial efforts of Lilly ICOS LLC. It may be

worth exploring an alliance with Pfizer and Bayer, which should translate into higher sales for Lilly

ICOS LLC, given the relative advantage that the product has over Viagra and the ultimate potential of

Levitra.

37

Promotion

Advertising

The use celebrity endorsement or not?

As per the guidelines of Chiagouris and Wansley (2003) with regards to marketing new starts, which

essentially Lilly ICOS LLC is, there is a need to monitor “but don’t copy the competition.” This is

important given that Pfizer have made excellent use of their celebrity’s which were particularly

effective endorsers because they are viewed as highly trustworthy, believable, persuasive, and

likeable (Bob Dole). At this time Lilly ICOS LLC, given the implications of a marketing war between

competitors, may not get the “fit” between the celebrity and the advertised product effectively and

could spark reactions to this copying of strategies (Silvera & Austad, 2003).

Patients:

However a variety of outdoor advertisements should be utilized, given the wide coverage and

location specific aspects of such a medium. If offers a means to target areas of densely populated

targeted audiences and reach them. This should be spread with both billboards and the use of

guerrilla tactics such as reverse graffiti, which would entail a cryptic message and a call to action

towards the website where amble information can be managed and available. This serves as a

relatively cost effective and targeted approach, given the difficulty in wide media such as television

and radio to define audiences as accurately as outdoor agencies can.

Partners & Patients:

This should be targeted through internet mediums such as advertising on popular sites couples visit.

This would require a variety in market research, which was also outlined as a rule by Chiagouris and

Wansley (2003).

Personal Selling

Physicians:

This is the linchpin of the marketing mix decisions taken for product team Validus. The sales reps of

the GMSO in each region will have to present materials supporting the safety profile of the drug and

its efficacy. It must be directed that a softer sales presentation must be made to offer a counterpoint

to Pfizer’s Viagra sales team. Sales rep must be available for physician’s questions at any time

(before, during or after sales presentation) and must direct them to the specialised site for

38

physicians solely. It is imperative that the Sales Reps outline the relative advantage that Validus has

over the competition while also explaining the pioneering of help lines for non-commercial reasons

and your desire to remove the culture phenomenon that manifests tension in the condition for the

patients and the treatment by a physician. The sponsorship of events and donations to strategic

causes should be pre-prepared for expression to the physicians.

Website:

There will be three websites:

1. Intranet (which will aid internal marketing – see implementation)

2. Physician website (as aforementioned)

3. Patients and partner website.

Number 2 & 3 will be used to bridge the gap in education over the prevalence of the condition, its

reasons and cures. It will attempt to correct inaccuracies that are widely believed and accepted to be

entrenched with ED. A market research programme must be commissioned and outsourced (for

credibility) to address the concerns held by each party and provide impartial information, statistics

and advice.

Testimonials:

Testimonials will be used in advertorials in highly targeted print media and online as the nature of an

advertorial can be used to educate with supplement information accompanying the testimonial from

regular people. This campaign will be “not sensational, just real” as it will present the stories of real,

everyday people, devoid of any celebrity status. This will act as a refreshing change from the norm

and typical tactics employed by Viagra. It may also diminish the barriers for patients in seeking

treatment and using Validus.

Public Relations

The introduction of a Disaster Recovery programme: This would mean appointing a “disaster team”

who would formulate a plan of action to recover from an unexpected event (death scare of Validus)

before such an event occurs. This would outline the procedures that should be taken, both in an

operations perspective and PR, where the nimbleness and reaction of the team within the first 72

hours will determine the future success of the drug. This would include a vast database of what

39

could go wrong, and prepare materials for distribution to press as these happen. If done correctly, a

disaster recovery programme can increase the value of a company and inspire deeper customer

loyalty (Meenaghan & O’ Sullivan, 1995)

Price

The price of Validus will emulate the pricing structure that exists within Pfizer in their pricing of

Viagra. This is done so to firstly achieve the target set out by the GMP and GMR of the GMSO to

achieve annual sales of $500m. It is also done in respect to the strength that Viagra has, despite the

relative advantage the drug has, supported by the income earning of ED sufferers.

Please see Figure X below for sales forecasts which show that Validus hitting the sales targets with

increasing market share over 5 years. This can also serve as targets in implementation.

Exhibit 13: Forecasted Sales & market share per year

Validus Forecasted Sales (priced at $10 per pill)

Year 1 Year 2 Year 3 Year 4 Year 5 Total Average

20% 20% 30% 35% 40% 29% Market Share

(Average)

$288,505,600 $342,167,318 $407,403,302 $838,087,071 $1,127,208,652 $600,674,388.60

Place

Distribution Channels & Management

Given the unattractiveness of the channel for wholesalers and the low margin that is obtained, a 1%

increase (or 1% drop in price to wholesaler) may give Lilly ICOS LLC more influence over the terms of

the arrangement. This would also encourage the wholesaler to distribute more extensively and offer

drugstores more favourable terms such as buying back stock unsold. This has been worked into the

sales projections as seen in Figure X – forecasted sales. This may result in a decrease in the net

income as a % of sales, but will help secure Validus status in the market. This is a common activity

within a push strategy, as it encourages wholesalers to promote further to retailers, encouraging

higher volumes of sales to drug stores.

40

Organisation and Implementation

4 Elements:

a. A specific action (what is to be done)

See Figure X below which outlines sales targets within each quarter to achieve an

average of $600m+ market each year over 5 years.

b. An accountability (who is to do it)

Each region has been spilt up, therefore each regions has specific targets

c. A deadline (when should it be done by)

The deadline is quarterly, therefore every 3 months the directors (Rob Brown and

Leonard Blum of GMSO) can monitor successes/ failures

d. A budget (what will it cost to do it)

This is designated by region and freedom given to calculate as seen by region managers.

(Lynch, 2009)

Exhibit 14: Projects Sales per Quarter

Projected Sales For Validus

Quar

ter

USA UK Germany Italy France Spain Canada Mexico Brazil Australia Total ($)

1 110812800 5800000 4680000 3800000 2360000 1920000 3640000 4320000 5440000 1480000 144252800

2 128986099 7325400 4848480 4582800 2709280 2430720 4648280 6384960 7458240 1709400 171083659

3 150139819 9251980 5023025 5526856 3110253 3077291 5935853 9436970 10225247 1974357 203701651

41

4 174762749 11685250 5203853 6665388 3570570 3895850 7580084 11692406 12116917 2280382 239453449

5 203423839 14758470 5391191 8038458 4099014 4932146 9679767 14486891 14358546 2633841 281802163

5

Quarters

(1 year

& 3

month)

Total ($)

768,125,306 48,821,100 25,146,549 28,613,502 15,849,117 16,256,007 31,483,984 46,321,227 49,598,950 10,077,980 1040293722

*Table based on 40% market share in Year1, 2, 3, 4 and 5. Growth rates remain consistent with

exhibit 13 over 5 years.

*Assumed Mexican growth rates will half to 23.9 in year 3.

*Assumed Brazilian growth rate will half to 18.5 in year 3.

*1% decrease for wholesaler’s margin attributed.

Projected Sales for Validus of Lilly ICOS LLC (By Quarter)

U.S U.K Germany Italy France Spain Canada Mexico Brazil Australia

110812800 5800000 4680000 3800000 2360000 1920000 3640000 4320000 5440000 1480000

128986099 7325400 4848480 4582800 2709280 2430720 4648280 6384960 7458240 1709400

150139819 9251980 5023025 5526856 3110253 3077291 5935853 9436970 10225247 1974357

174762749 11685250 5203853 6665388 3570570 3895850 7580084 11692406 12116917 2280382

203423839 14758470 5391191 8038458 4099014 4932146 9679767 14486891 14358546 2633841

Culture analysis

42

Exhibit 15: Culture Analysis for Lilly ICOS LLC

On the two dimensions and the four possible cultures that are possible to exist within the Lilly ICOS

LLC product team, the degrees of sociability and solidarity are difficult to define to one single

culture. Without the vulnerabilities within the GMSO, attributed by the freedom within each region

for promotional activities and accompanied by the loose ends with regards to budgeting means that

Lilly ICOS LLC could be defined as having a Communal culture. However the difficulties in getting

functional cooperation with regards to the spread of regions and the independence which each

region possesses, also the identity of the entity cannot be optimum given the nature of a joint

venture. In that light, we must then concede that the culture lies somewhere in between networked

and communal, which will require closer attention given the incapability to define the culture in one

way.

Control

Exhibit 16: Marketing Control System for Lilly ICOS LLC

43

A bi-yearly meeting with the GMSO and each region manager should be set in order to see if the

marketing objectives are being met within the set specific target (i.e sales targets). Given that each

region manager is given the task of assigning the responsibility within the area, the performance

must be measured by them and justified to the GMSO. If the GMSO feel that action is required if

targets are not met, then action must be taken in order to stay in touch with targets.

(Lynch, 2009)

Internal Marketing:

As outlined by Jobber (1995) the reasons for executing a internal marketing campaign is to aid

communication and help overcome any resistance to change. It informs ands involves all staff in new

initiatives and strategies. in order to succesfully implement an internal marketing programme

another process must be followed beginning with Objectives. The would like objectives and must

have objectives of migrating the potential of the value of Validus to the community (in large) must

be set prior to launch by region, in order to ensure the highest levels of identity and commitment to

the goals and values of the product team. Each region manager must establish, the most appropriate

strategy in which to communicate the goals and values, thus the “internal marketing” campaign. The

execution of this would be done using a variety of tactics; including an internal application of the

marketing mix, staff forums, presentations, an intranet and personal visits by directors of Lilly ICOS

LLC and newsletters. Evaluating these can be done by monitoring activity on the forum and intranet,

attendance at presentations and personal visits. If this is percieved to be unsuccesful, action must be

taken to correct the approach.

44

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