Merck's New Product Development and Launch Strategy for Januvia


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Case Details:

Case Code : MKTG176
Case Length : 19 Pages
Period : 1999-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Merck & Co., Inc.
Industry : Pharmaceutical
Countries : Europe, USA.

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Merck is one of the world's top seven largest pharmaceutical companies, headquartered in Whitehouse Station, New Jersey, USA. In 2006, Merck posted revenue of US$ 22.64 billion and net income of US$ 4.43 billion (Refer to Exhibit I for Merck's logo and Exhibit II for key figures for Merck: 2004-2006). Merck's history can be traced back to 1668 when Frederic Jacob Merck opened a chemical firm in Darmstadt, Germany...

Merck Joins Race for Diabetes Drug

Though Merck had some blockbuster drugs in different therapeutic segments, it had left the diabetes drug market largely untapped. This market was enormous, presenting Merck with a huge opportunity. As of 2006, 230 million people in the world suffered from diabetes, and this figure was expected to cross 350 million by 2025. In the US, 7 percent (about 21 million people) of the population suffered from diabetes, of which 90-95 percent suffered from Type 2 diabetes. It was reported that almost half of the people suffering from the disease did not achieve adequate control of their blood sugar levels (Refer to Exhibit IV for key figures for Type 2 diabetes in the top seven pharmaceutical markets)...

Merck Gains Momentum

The team felt that compound MK-0431 was the most promising among the six compounds and the team started to hurry it through the drug development process. Merck's research chief directed the research team to move the project as quickly as possible by trimming time off the development process. The team was given a free reign from the top management to speed up the drug development process. But Merck was quick to clarify that the speed was not at the cost of patient safety. Merck said that it did not cut corners. The drug trials on humans started in 2002...

Merck Wins the Race

Wall Street analysts felt that both Januvia and Galvus would go on to become blockbusters with sales as high as US$ 2 billion annually. They expected both the brands to command a premium price. The first to reach the market with this new class of drug would have a bigger advantage, they said. On October 16, 2006, FDA approved Januvia for the treatment of Type 2 diabetes when diet and exercise is not enough. Pharmaceutical industry analyst for Decision Resources, Donny Wong said, "The whole industry thought Merck was six months behind Novartis. It came as a surprise that Merck was able to pull ahead."...

Launching Januvia

The drug was named Januvia to convey the idea of rejuvenation. (Refer to Exhibit VI for the logo of Januvia and Exhibit VII for a pack-shot of Januvia). It was launched at the wholesale list price of US$ 4.86 per tablet...

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