Marketing alliances can hurt

As the costs of research and marketing rise, drug companies have tried to defray costs by working out co-marketing deals with other companies. Large global companies are no exception. In fact they have been in the forefront of such alliances.

An alliance can help a company reduce launch costs from the region of $ 1 billion for a large introduction. On the other hand, profits have to be shared.

Worse, as some companies have discovered, alliances can hamstring a management from modifying its strategy to keep pace with the changes in the industry. The result may be less restrictive alliances in future -- at least alliances that are less restrictive for licensors of new drugs.

Alliance
Sales
($ billion - 1999 est.)
Remarks
Losec / Prilosec
5.60
In 1998 Astra bought out of a restrictive joint venture with Merck. The reason - it wanted to merger with Zeneca
Epogen
4.25
Amgen and Johnson & Johnson are still trying to sort out which company will operate in which market
Lipitor
3.20
The Pfizer-Warner Lambert co-marketing of blockbuster cholesterol drug Lipitor is in the doldrums after Pfizer made an unsolicited $72 billion takeover bid for Warner-Lambert which has sought legal intervention to end its agreement with Pfizer. Pfizer complains that it has been forced to make its bid after Warner Lambert agreed to a friendly merger with American Home Products.
Prevacid
2.00
Takeda of Japan, which earlier needed the alliance with Abbot for the co-marketing of Prevacid, doesn''t need the alliance any more, but cannot disentangle itself from it easily.
Procardia / Adalat
1.98
Bayer of Germany licensed Pfizer to sell its nifedipine as Procardia in the US. Now Bayer has launched the same drug in the US market as Adalat, in competition with Pfizer.
Celebrex
n.a.
Monsanto drug subsidiary Searle is tied down to Pfizer with its co-marketing arrangement for Celebrex. Pfizer''s interest in acquiring Celebrex is seen as a possible obstacle to any rival move to take over Searle from Monsanto.