The document discusses the development of Viagra by Pfizer, including how it was discovered accidentally during trials for angina treatment. It describes Pfizer's efforts to maintain its patent and monopoly on Viagra in the face of generic competitors. The document also notes the massive costs and risks of pharmaceutical research and development.
The document discusses the development of Viagra by Pfizer, including how it was discovered accidentally during trials for angina treatment. It describes Pfizer's efforts to maintain its patent and monopoly on Viagra in the face of generic competitors. The document also notes the massive costs and risks of pharmaceutical research and development.
The document discusses the development of Viagra by Pfizer, including how it was discovered accidentally during trials for angina treatment. It describes Pfizer's efforts to maintain its patent and monopoly on Viagra in the face of generic competitors. The document also notes the massive costs and risks of pharmaceutical research and development.
The document discusses the development of Viagra by Pfizer, including how it was discovered accidentally during trials for angina treatment. It describes Pfizer's efforts to maintain its patent and monopoly on Viagra in the face of generic competitors. The document also notes the massive costs and risks of pharmaceutical research and development.
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Research and Development
New Product Development
Did you know, and not many people know this, Viagra was discovered in the UK? Well, to be more precise, the effects of the active ingredient in the drug were first noticed in the UK - in Sandwich, Kent to be precise.
Pfizer, the manufacturers of the drug, had been doing research into the heart condition, angina. The chemical they were using in the angina trials, sildenafil citrate, seemed to have the effect of stimulating blood flow to male genitalia. After further investigation and trials by Clive Gringell, a leading urologist based at Bristol's Southmead Hospital, Viagra was brought to market to treat erectile dysfunction (ED) - impotence.
The drug, needless to say, has beena huge success not only in treating the ED condition but also in generating a market for those wishing to take the drug to enhance their sexual activity. The drug has spawned a number of rival products most notably Cialis and despite the fact that Pfizer managed to get a patent that lasts until 2011, it has not stopped countless fakes of the drug and numerous law suits over the patent rights for certain elements of the drug.
The drug might have a patent (i.e. it prevents anyone else from producing a copy of the drug and calling it Viagra) but other aspects of the drug and its patent rights have been challenged. Those challenging argue that Pfizer were not the first to understand how the active ingredient in the drug worked so therefore cannot patent that. This allows rival firms to be able to use the same active ingredient along with other ingredients to produce something that does a similar job but is not the same as Viagra.
For Pfizer, despite the fact that Viagra came about by accident (as many successful products do), the costs of development have been massive - a feature of the pharmaceutical industry. They know that the revenue likely to be generated will be considerable and it has to be to cover the costs of development. But it also knows that when patents do run out, or rival firms develop similar products, that the price elasticity of demand for the drug will rise and the price is likely to fall as supply of such treatments increases. By this time, Pfizer will have hoped that the drug will have become a cash cow - a high revenue earner but costing little to promote and maintain - but equally it knows that it must ensure that it has other drugs in the pipeline to be able to take the place of Viagra.
For pharmaceutical companies the risks involved are massive. The stringent rules set up by regulatory authorities on the introduction of new drugs can be difficult and expensive to meet, the necessity of maintaining some element of monopoly power over the product in its early years is, therefore, essential. This can be difficult to achieve especially in countries where a commitment to intellectual property rights is not as developed as in the industrialised world.
In China, for example, Pfizer lost its patent rights in July 2004 (it is currently appealing). When this happens the opportunities for people to produce fakes increases because there is no law to protect companies like Pfizer. One estimate put the proportion of fake Viagra in the Chinese city of Shanghai at 90%!
The company are constantly working to maintain the balance of its product portfolio but the journey can be fraught with difficulties. Companies can bring drugs to market despite extensive trials only to find it has unexpected side effects which can lead to the product having to be withdrawn and opening up the manufacturers to expensive lawsuits. The arthritis drug Vioxx had to be withdrawn by Merck after it was linked to a rise in heart attacks in patients taking the drug.
Pfizer did have some further good news, however, it announced that a trial drug to treat a serious form of stomach cancer was showing considerable promise - if it lives up to expectations it could be the next 'cash cow' to take over from Viagra.
Questions
1. Explain why research and development is important to a business
2. Explain the role and importance of intellectual property rights (patents and copyrights) to a business
3. Analyse the factors affecting the amount of money a business may spend on R&D
