The uncertainty over Bextra and Celebrex ended last week as we at iProceed had predicted. Read my previous article on Pfizer's wrong strategy for Celebrex and Bextra. If you have not been following the story on Cox-2 drugs, below is a brief background:
Merck, the maker of Vioxx, recalled the drug in September 2004 after dragging its feet for years. Only when the data was so overwhelming that FDA may have forced it to do so, Merck acted on its own. The very same day, Pfizer (maker of two competitive drugs Celebrex and Bextra) saw the huge upside for its business and started to aggressively market the drugs as alternatives to Vioxx. In early December 2004, Bextra received a black-box warning on its label. Bextra sales plunged. As Cox-2 drugs came under scrutiny, more disturbing news came about Vioxx, Celebrex, and Bextra, but Pfizer continued to stand by the safety of its drugs and refused to take any action. At a FDA panel hearing in February 2005, all three drugs were deemed as having side effects but the panel recommended that all of them be allowed to stay on the market. Later on it was learned that several panel members who had voted to keep drugs on the market had received financial compensation from either Merck or Pfizer or both. Last week, the FDA asked Pfizer to recall Bextra and put a black box warning on Celebrex.
As a management consultant, I had been watching the development from a risk management and strategy perspective. In my opinion, Pfizer simply did not learn from the lessons from Vioxx recall. While the Merck CEO, Raymond Gilmartin, has some defense in saying that he did not have a case study to look at (though there is enormous amount of research on product recalls), Hank McKinnell, the Pfizer CEO, did exactly what Gilmartin was doing, despite the fact that we were all watching how Merck's strategy was falling apart right in front of our eyes.
And how does McKinnell plan to rescue Pfizer? By laying people off and cutting costs left and right. Not necessarily the best way to create shareholder value. So what are the lessons from Bextra recall? The same lessons that we have seen from Vioxx recall. Below is a list of my thoughts:
Pfizer should have controlled its appetite for risk
Merck is a classic example of shareholder value destruction
Merck should be sold in pieces
Advertising strategy for prescription drugs
Pharmaceutical business model is failing
Pfizer pursues a wrong strategy for Celebrex
Merck, the maker of Vioxx, recalled the drug in September 2004 after dragging its feet for years. Only when the data was so overwhelming that FDA may have forced it to do so, Merck acted on its own. The very same day, Pfizer (maker of two competitive drugs Celebrex and Bextra) saw the huge upside for its business and started to aggressively market the drugs as alternatives to Vioxx. In early December 2004, Bextra received a black-box warning on its label. Bextra sales plunged. As Cox-2 drugs came under scrutiny, more disturbing news came about Vioxx, Celebrex, and Bextra, but Pfizer continued to stand by the safety of its drugs and refused to take any action. At a FDA panel hearing in February 2005, all three drugs were deemed as having side effects but the panel recommended that all of them be allowed to stay on the market. Later on it was learned that several panel members who had voted to keep drugs on the market had received financial compensation from either Merck or Pfizer or both. Last week, the FDA asked Pfizer to recall Bextra and put a black box warning on Celebrex.
As a management consultant, I had been watching the development from a risk management and strategy perspective. In my opinion, Pfizer simply did not learn from the lessons from Vioxx recall. While the Merck CEO, Raymond Gilmartin, has some defense in saying that he did not have a case study to look at (though there is enormous amount of research on product recalls), Hank McKinnell, the Pfizer CEO, did exactly what Gilmartin was doing, despite the fact that we were all watching how Merck's strategy was falling apart right in front of our eyes.
And how does McKinnell plan to rescue Pfizer? By laying people off and cutting costs left and right. Not necessarily the best way to create shareholder value. So what are the lessons from Bextra recall? The same lessons that we have seen from Vioxx recall. Below is a list of my thoughts:
Pfizer should have controlled its appetite for risk
Merck is a classic example of shareholder value destruction
Merck should be sold in pieces
Advertising strategy for prescription drugs
Pharmaceutical business model is failing
Pfizer pursues a wrong strategy for Celebrex