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Is Viagra Vulnerable?


Paula Garrett knew she had a winner a year ago. The marketing executive for Eli Lilly & Co. (LLY) was gauging consumer reaction to a yet-to-be released drug aimed at treating erectile dysfunction. The lights went back on in a conference room where three women had been viewing a prospective TV commercial for the drug, which Lilly had dubbed Cialis. The focus-group members, whose husbands all suffered from impotence, had watched attentively as a male voice-over gently advised: "Introducing Cialis. You can take Cialis anytime and have up to 36 hours to respond to your partner, without planning or rushing." As Garrett observed from the other side of a one-way mirror, the group's moderator tried to suss out the main source of the women's interest. "Tell me specifically," she asked. "What is it you like about Cialis?"

Suddenly, one of the women leaped out of her chair. She was about 60 years old and seemed as straitlaced as a Sunday school teacher. "Thirty-six hours!" she whooped, raising her arms like she was doing the wave at a ballgame. "Yeah!"

Garrett recalls laughing with delight. In her 15-year career in brand marketing, she has monitored hundreds of focus groups, for Procter & Gamble (PG), Coca-Cola (KO), and, since early 2001, Lilly as U.S. consumer marketing manager for Cialis. Yet she says she can't recall ever seeing anyone get this excited about a product. "It was a marketer's dream," she says.

Just how good a dream Lilly will discover soon. Sometime in the next several weeks, Lilly and its joint-venture partner, biotech lab ICOS Corp., expect to get final approval from the Food & Drug Administration to sell their Viagra slayer, Cialis, in the U.S. An ad campaign expected to cost at least $100 million in its first year would follow within days. There's a lot riding on Lilly's ability to turn Cialis (the name is derived from the French "ciel," or sky) into a billion-dollar drug. Lacking any new hits since Prozac lost its patent protection in mid-2001, the Indianapolis drugmaker expects its earnings to drop in 2003 for the third year in a row, to no more than $2.66 billion. And it is eager to turn around a stock that has sagged 21% over the past two years, to $63 a share.

SOMETHING DIFFERENT

The launch also will be the first test of whether Lilly, which has never attempted a mass direct-to-consumers campaign in the past, has mastered the marketing skills needed to compete in today's hypercompetitive drug market. The challenge for drugmakers is not much different from that confronting marketers of breakfast cereal, detergent, or soft drinks: Take a product that is fairly similar to those of rivals and find some point of difference that is meaningful -- or can be made to seem meaningful -- to potential buyers. In this case, the edge is that Cialis lasts for up to a day and a half, while competing brands are potent for only four hours.

Lilly executives, of course, believe they have succeeded, which is why they were willing to give BusinessWeek a peek at how they crafted the marketing plan for Cialis. They've been buoyed by the drug's initial success in Europe, Saudi Arabia, Brazil, and other markets. It had first-half sales of $58.9 million, passing Viagra for wholesale pharmacy orders in France and Italy. Analyst C. Anthony Butler of Lehman Brothers Inc. expects global sales for Cialis to hit $300 million in 2004 and as much as $2 billion six years out. Declares Lilly Chairman and CEO Sidney Taurel: "It's a blockbuster drug."

To get there, Lilly must best some ferocious competition. Already, rivals are suggesting to doctors that while Cialis may last longer, it also prolongs the nasty side effects that some users experience with impotence drugs -- headaches, muscle aches, and nausea. The world's No. 1 drugmaker, Pfizer Inc. (PFE), proved its marketing mastery with the first ads for Viagra in 1998. That campaign, built around testimonials by Bob Dole appealing mostly to older men, took the problem of erectile dysfunction out of the realm of the taboo. Today, Viagra ranks with Coca-Cola among the most widely known consumer brands in the world, with sales approaching $2 billion.

THE DROPOUTS

It's no wonder everyone knows Viagra -- Pfizer spent $87.3 million last year to advertise Viagra in the U.S. alone, says TNS Media Intelligence/CMR. And the market leader is ready to buy more TV time and ad pages to stay on top, says Janice Lipsky, Viagra's U.S. team leader. Concedes Leonard M. Blum, ICOS vice-president for sales and marketing: "There aren't many examples in our industry of products launched in second or third position that end up becoming the leader. It's a tall order."

Adding to Lilly's challenge, Cialis has been beaten to the U.S. market by Levitra, which is being pushed by a 50-50 partnership of GlaxoSmithKline PLC (GSK), the industry's No. 2 player, and Bayer. Employing TV ads that promise the virility of a professional athlete, those companies have redefined erectile-dysfunction pills into something approaching a lifestyle drug. Already, after just two months of marketing, doctors say many men are asking specifically for Levitra. The drug grabbed 13% of new erectile-dysfunction prescriptions in September, according to market researcher IMS Health Inc.

Stepping into this brawl, Lilly executives knew they could leave nothing to chance. The Cialis campaign got started in mid-2000, a full year before large-scale clinical testing of the drug had even been completed. Lilly embarked on a monumental research effort, parsing reams of market data and quizzing thousands of men suffering from impotence and their partners. The data pointed to some significant opportunities. While Pfizer's marketing juggernaut had persuaded more than 16 million American men to try Viagra, that was barely half the estimated 30 million who suffer at least some sexual dysfunction. Reach those other 14 million, it was clear, and you could develop a substantial business even if you didn't steal a single user from Viagra.

There was more. Of those 16 million men who had tried Viagra, more than half hadn't renewed their prescriptions. That's a much higher dropout rate than with most drugs. To Garrett's marketing team, that suggested that Viagra was indeed vulnerable.

Meanwhile, an intriguing development was emerging from the lab. While Cialis, Viagra, and Levitra all work on the same principle -- they are so-called PDE5 inhibitors, which make muscles in the penis relax and allow increased blood flow for an erection -- some crucial differences were showing up in clinical trials. For one, unlike Viagra, Cialis remained effective even if the user ate or had a drink. That provided an edge, albeit a modest one, because Levitra offered the same advantage. More promising was that while both Viagra and Levitra enabled men to have an erection anytime from a half-hour to 4 hours after swallowing the pill, Cialis expanded that window to 36 hours. Would consumers perceive that to be a valuable benefit to their mating rituals? The answer seemed clear enough from the reaction of focus-group participants.

TARGETING ROMANTICS

With a promising point of difference uncovered, the next challenge was how to communicate it to consumers amid the marketing din emanating from Viagra and Levitra. From their very first sessions with patients, Lilly's market researchers detected sharp differences in the way men perceived Cialis and Viagra. In one-on-one interviews in mid-2000, Viagra users who had been informed of the attributes of both drugs were given a stack of objects and asked to sort them into two groups, one for Viagra and the other for Cialis. Red-lace teddies, stiletto-heeled shoes, and champagne glasses were assigned to Viagra, while fluffy bathrobes and down pillows belonged to Cialis. The implication: Viagra was for studs, Cialis for romantics.

The dichotomy was reinforced in one-on-one sessions with partners of men with impotence problems. With Viagra, women often confessed, they felt under the gun to perform. "It feels like there are three of us in bed," marketing manager Garrett recalls one saying. "Me, him, and the pill." On the other hand, women typically said that from what they had heard about Cialis, they could be more natural and wait to have sex until both of them were in the mood. With each session, Garrett and her colleagues grew surer that they had a message consumers would warm to.

Following hundreds of patient and partner interviews, focus groups, and polling, Lilly and its ad agency, Grey Worldwide, got down to devising advertising strategies. Given a real product difference to flog, none of the approaches took the celebrity-spokesman route. "What we want is just to lay the facts on the table, because the facts are very friendly in our case," says Lilly's U.S. team leader for Cialis, Matthew W. Beebe. Agency and client eventually narrowed the proposals down to three and produced TV spots for each in early 2002. Two were variations on the theme, "Choose the moment." The third was based on the old hit song by The Supremes, You Can't Hurry Love.

A JAZZ SOUNDTRACK

After further consumer research, though, You Can't Hurry Love was rejected. By tying Cialis to one song, Lilly's market researchers concluded, they would never be able to alter the pitch even after consumers got tired of it. Instead, they opted for an ad with scenes of couples snuggling and slowly caressing, to emphasize cozy, tender, or playful moments. A soundtrack of easy, laid-back jazz seemed to work best. Garrett's final tweak was to lengthen scenes in the ad so the camera now seems to linger with each couple, a subtle reminder that with Cialis there's no hurry. The tagline: "When a tender moment turns into the right moment, you'll be ready." The spots will saturate prime-time shows and weekend sportscasts almost as soon as FDA approval is obtained. "You won't be able to turn on your TV without seeing ads," says ICOS' Blum.

DUELING LUNCHES

But as Lilly waits, its rivals are not standing still. They're ratcheting up their own spending even as their thousands of sales reps work hard to derail Cialis' strategy. The reps are warning doctors -- often while sharing expensive meals paid for by the reps -- that while Cialis may be potent for as long as 36 hours, the drug's side effects might last that long, too. They also insist their own research shows that most men with impotence know well ahead of time when they might have sex, so the four hours that Viagra or Levitra provides them is usually sufficient.

Some doctors, such as Steven J. De Angeles, are proving receptive to the counterattack. "You could have 36 hours of misery," says the Chicago internist, whose office staff has been taken out to lunches costing more than $3,000 apiece by teams hawking Viagra and Levitra. Besides, he adds, unless they're going bar-hopping, men generally don't need that much time. De Angeles says he was won over by the marketers' arguments, not the gratis wining and dining. Lilly and ICOS hint that they'll use similar tactics to reach doctors once Cialis is approved.

Of course, from Lilly's perspective, any resistance from doctors makes it even more important that its ad campaign capture the attention of consumers. Company executives are confident that their message will cut through the clutter, proving that Lilly belongs with Pfizer and GlaxoSmithKline in the ranks of adept consumer marketers. If they're right, consumers won't be the only ones whooping it up. Lilly's shareholders will have a reason to do the wave, too.

Corrections and Clarifications

In "Is Viagra vulnerable?", Dr. Steven J. De Angeles was quoted as saying his staff had been taken out to lunches worth more than $3,000 apiece by sales reps from Pfizer Inc. and a partnership of GlaxoSmithKline PLC and Bayer. The lunch tabs were actually as much as $300.

By Michael Arndt in Indianapolis


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