Impotence Drugs Trigger a Marketing Battle

Drugmakers are spending big money to lure away rivals' customers as well as attract new ones.
Author:
Publish date:

Judging from the number of times the word "erection" has been used on television in recent months, you might think that episodes of

The Sopranos

or

NYPD Blue

are airing more than programming schedules indicate.

Not exactly. This expansion of TV's vocabulary represents government-approved commercials -- with government-required descriptions of side effects -- for impotence treatments, as the manufacturers of the newest drugs, Levitra and Cialis, step up their campaigns to take customers away from Viagra, which had a U.S. monopoly for more than five years.

The descriptive ads are only part of what is shaping up as a fierce and expensive marketing battle for drugs treating erectile dysfunction, better known to marketers as E.D.

"I haven't seen this kind of competition in a long time," said John Mack, editor and publisher of

Pharma Marketing News

, a monthly Internet magazine that analyzes marketing trends. "The acquisition of each E.D. patient is worth a lot of money. If the drug works for you, there's no incentive to switch."

The market, however, is still unpredictable, as Levitra, which reached the U.S. market in August, and Cialis, which joined the fray in November, seek new patients. That means companies are offering a lot of free samples, discounts and other marketing come-ons.

Drug companies frequently cite research suggesting that some 30 million American men suffer from erectile dysfunction, adding that 30% or more have tried the drugs. But determining how many men will take the drugs consistently is a tough task, given the flurry of product-switching, experimenting and hard-to-measure behavior of customers that can confound Wall Street as well as Madison Avenue.

"The market is really complex and dynamic -- and men are frequently coming in and out of it," said Janice Lipsky, U.S. team leader for Viagra, at

Pfizer

(PFE) - Get Report

.

Viagra reported a 12% slide in worldwide sales during the three months ended March 31, which included a 25% drop in U.S. sales that Lipsky called "sobering." Lipsky said there is considerable room for growth "as men become less and less embarrassed about discussing erectile dysfunction. But it can't happen overnight. It won't happen in six months."

Revising Strategy

Pfizer has adjusted its marketing campaign, and more changes are planned. Last month, Pfizer began offering an incentive to long-time Viagra users. After filling six prescriptions, some men can get the seventh prescription free. The program applies to men who pay for the drug out-of-pocket. For men whose insurance covers part of the drug's cost, the Pfizer program will pick up the difference. "It helps strengthen the relationship," Lipsky said.

Lipsky won't discuss new marketing efforts except to say that Pfizer will amplify its message to physicians about Viagra's long record of safety and efficacy and about its preference among managed care firms. Viagra has the best insurance coverage among the impotence drugs with 52% of prescriptions covered by third-party payers, she said.

At the consumer level, Pfizer plans to "increase access" to Viagra, but Lipsky wouldn't discuss details. She said this year's consumer media budget is "similar" to last year's.

One thing that won't change is Pfizer's TV strategy. Like other companies, Pfizer runs descriptive print ads outlining Viagra's benefits and side effects in great detail. Although she "would never say never," Lipsky said Pfizer isn't planning for TV ads with the "E" word. In fact, Pfizer's TV ads have never said what Viagra does.

Drug companies often run TV ads mentioning a drug's name without saying what it does. If they want to describe a drug's attributes in a 60-second commercial, they must get approval from the Food and Drug Administration so that the commercial includes a fair balance of side-effect information. These descriptive TV commercials have become increasingly common for formerly uncomfortable-in-polite-society topics such as women's health problems and depression.

Pharmaceutical-ad watcher John Mack, said he expects Pfizer to change its approach. Given the competitors' increasing sales, "it's hard to stick with the old ways of doing things," he said.

Getting Noticed

TV ads are just the tip of the marketing iceberg, but they attract attention. During the first quarter, IAG, a firm that analyzes and evaluates TV commercials, said impotence-drug ads placed first (Cialis), second (Levitra) and fourth (Cialis) among the top five prescription drug ads for viewers' ability to recall the ads and identify the products.

Of course, there's no guarantee that brand recognition will lead to a purchase. But companies wouldn't be spending so much money on ads if they thought they wouldn't work.

Last year, Pfizer spent $111.6 million promoting Viagra in the United States in print, on TV and radio and via the Internet, says TNS Media Intelligence/CMR, which tracks advertising spending. Levitra's marketers spent $47 million in about four months; and you can bet that Cialis' marketers will spend more than the $9,750 that crossed the media firm's radar last year.

Marketing experts point to the Super Bowl on Feb. 1 as the day when the marketing battle was joined. That's when a Cialis ad included information about the drug's benefits, most notably the FDA-approved claim that the drug provides a 36-hour window of opportunity, as well as the FDA-mandated discussion of possible side effects, including 4-hour erections.

The ad also attracted attention for the theme that even though a man buys the drug, the decision involves a partnership. Women are featured in the TV ads. "We are not marketing the drug as a performance enhancement," said Leonard Blum, vice president for marketing and sales for

Icos

(ICOS)

, the drug's developer. "We're saying you can wait to respond to your partner. You can have sex like it was before E.D."

Icos has paired with

Eli Lilly

(LLY) - Get Report

to market the drug -- and the strategy appears to have paid off. Cialis has moved into second place. Blum says the overall market for impotence drugs will continue to expand, but he added that his original marketing goal remains unchanged: Convince Viagra users to try Cialis.

Although Levitra has slipped into third place, the companies behind it say they are pleased with its performance. "This isn't a horse race," said Michael Fleming, director of U.S. product communications for

GlaxoSmithKline

(GSK) - Get Report

, which is co-marketing the drug with its developer

Bayer

(BAY)

.

Levitra's marketers recently changed their most visible advertising campaign. Early TV ads featured Mike Ditka, the former football player and coach, talking about the drug without saying what it does. The ad placed second among prescription-drug commercials in the recognition survey conducted by the IAG research firm.

Ditka has since been sent to the TV sidelines and replaced by a female actress who talks about Levitra's benefits for her partner while an announcer's voice-over mentions possible side effects (including extended erections). Fleming said the new commercial represents "a natural progression" in marketing strategy. "The focus is still on men," said Fleming. "They have to recognize the condition and take action."

Handicapping The Race

At this stage, Viagra still has a healthy lead, according to NDCHealth, a health care-data and information-services company. For the week ended April 23, Viagra had two-thirds of new U.S. prescriptions. Cialis placed second with 19.4% while Levitra had 14.1%.

For the same period, Viagra had 77.1% of total prescriptions, Cialis had 12.1% and Levitra had 10.8%. For total dollar sales, Viagra captured 78.2% of the market, Cialis had 12% and Levitra had 9.7%. (NDC tracks retail and mail-order prescriptions; the dollar figures represent the wholesale average cost of what pharmacies pay wholesalers).

"The

overall demand may not be as big as the companies had hoped it would be," said Albert Rauch, a drug industry analyst at A.G. Edwards. "But the market is growing." He predicted a yearly growth rate of 10%.

Rauch predicts Cialis will catch Viagra in U.S. market share -- with each capturing 40% to 45% in another two years. "We don't view Levitra as a blockbuster," he said. (His firm doesn't have an investment banking relationships with the companies. He doesn't own shares in Lilly; a recent research report says Rauch or a member of his family owns shares in Pfizer. Rauch has a buy rating on Lilly and a hold rating on Pfizer. He doesn't follow the other companies).

"I wasn't expecting the new drugs to create an immediate market demand," said Heather Brilliant, a drug industry analyst for Morningstar. "It just takes time. Over the next five years, the potential for U.S. market growth is 5% to 10% a year."

Pfizer "would get hurt the most" with a low overall growth rate, she said. "Levitra has done a little worse than I expected." Brilliant predicted that Viagra would hold more than half the U.S. market share over the years. She said Levitra and Cialis will essentially split the rest of the market. (On a five-star scale with five as the top rating, she gives Pfizer and GlaxoSmithKline four stars and Lilly three stars. She doesn't cover Icos or Bayer. She doesn't own shares, nor does her firm have an investment banking relationship with the companies.)