1976 is remembered for, among other things, the long hot summer, the US Bicentennial and the birth of punk. It was also a hugely significant date for the pharmaceutical industry, as it saw the launch of the biggest blockbuster the sector had seen until that point.
Mark Spedding 
23 Feb, 2010
Ulcer Wars: A Tale of Three Brands
Tagamet (cimetidine), the first H2-antagonist, was a revolutionary medicine
in at least two ways. First of all, it cured ulcers. Nearly forty years on,
this doesn’t seem such a big deal, but prior to the launch of Tagamet, ulcer
patients had little that could address the genuine agonies they suffered other
than bland, milky diets, the minimal symptomatic relief offered by antacids
and, ultimately, the prospect of major surgery. Tagamet closed hospital wards
that were no longer needed – something which very few pharmaceutical brands
can ever claim.
The other revolution was within the industry itself. Tagamet came from what
was then SmithKline & French, a company which ranked about 20th in the
global league and which was widely seen as a spent force. However, in the mid-sixties
they had shrewdly recruited Sir James Black, the most famous pharmacologist
in the history of the industry, who, with the discovery of beta-blockers for
what was then ICI, was already responsible for one of the biggest breakthroughs
in pharmaceutical history. Black had a suspicion that histamine was implicated
in the release of gastric acid, and that blocking its release could help stop
the formation of gastric ulcers. His suspicions were correct, and in 1968 a
crucial assay revealed that the compound which soon became known as cimetidine
worked to block the release of gastric acid. The research proceeded and, within
two or three years of its 1976 launch, Tagamet was the world’s biggest prescription
medicine, and SKF was the biggest pharma company. The industry as a whole took
note: it saw that the notion of a “blockbuster” had been completely redefined.
Every company had always wanted one, but now, when they saw just how big a
drug could be, and how this could transform even a relatively lowly company,
the hunt for a blockbuster became bigger too, and the stakes so much higher.
Tagamet had five years of unchallenged success. The challenge that came in
1981 came from what, at the time, seemed as implausible a source as SKF had
been just a few years earlier. The Ulcer Wars were about to start.
Glaxo was a household name in the UK in 1981, but more for baby milk products than pharmaceuticals. The company’s Allen & Hanburys division was responsible for the beta-agonist Ventolin (salbutamol), which was prescribed widely for asthma in the UK and Europe, but this was a modestly-priced product so it was never a blockbuster in sales terms, particularly as it never took off to the same extent in the USA. As a company, Glaxo was seen – as SKF had been in 1976 – as a minor player whose best days were behind it. However, the company had plans for this to change in a big way.
Glaxo launched the second H2-antagonist, Zantac (ranitidine) in 1981. This
too was a revolutionary product – not in medical terms, but in its implications
for the industry. In medical terms, Zantac was a typical me-too: it had real
but modest advantages over Tagamet in terms of efficacy, side-effect profile
and a dosing range (150 or 300mg compared to 200, 400 or 800mg) that looked
less daunting to patients. However, in industry terms, everything changed with
Zantac. It was the first pharmaceutical brand where the marketing, more than
the medicine, was the real driver of success.
The marketing of Zantac was characterised from the outset by complete self-confidence.
Communications made the most of its clinical advantages over Tagamet; in particular,
the side-effect profile, as Glaxo left many customers with the impression that
the rare Tagamet side-effect of gynaecomastia (in lay terms, man-boobs) was
much more common than was actually the case. In addition, Zantac was promoted
from the outset to primary care. Tagamet had been a hospital-only drug in its
first few years. This added to the general sense of confidence that Glaxo were
transmitting, and which the market shared.
Glaxo had taken a calculated risk. They had correctly anticipated this confident
approach would pay off, and (no doubt remembering how much money Ventolin might
have made, had it been priced higher) had thus priced Zantac at more than 50%
higher than Tagamet on a dose-per-dose basis. The pharma market was much less
price-conscious in the early 1980s than it became later, and the strategy worked:
the confident tone in which Zantac’s advantages were communicated left customers
with the idea that Zantac was worth the additional cost. Within a few years,
it was outselling Tagamet, and by the end of the 1980s it was also outdoing
its older rival in prescription volume too. A second “old hat” company had
become the biggest player in the industry. The difference was, this was based
on highly effective marketing of a me-too rather than launching a clinical
breakthrough into a market with no competition. By contrast, Tagamet marketing
throughout the 1980s was reactive and appeared so, which only helped to boost
the air of confidence and superiority associated with Zantac.
However, the Glaxo marketing machine did not rest on its laurels. It rapidly began to shape the market, initially into ulcer “healing” and ulcer “maintenance”, and then with a move into non-ulcer acid disorders such as reflux oesophagitis. Doses were matched to indications. Different campaigns and messages were developed for primary and secondary care. All of this is standard industry practice now, but it is fair to say that the approach to marketing which Glaxo adopted for Zantac in the 1980s actually created the shift to a marketing-led business model which has largely defined the entire industry ever since. Tagamet, then, revolutionised the treatment of ulcers, while Zantac revolutionised the pharmaceutical industry.
The marketplace had become more price-conscious by the late 1980s and early
1990s, but Zantac was largely untouched by this, even when generic cimetidine
preparations came onto the market. Its market-leader status and prestigious
values were so well-established that its advertising moved ever closer to the
almost-abstract approach associated with some successful consumer brands. Even
doctors who continued to be loyal to Tagamet started to prescribe the older
product for working class patients and Zantac for “people like us”. However,
Zantac’s day in the sun was soon to be over, and to some extent it sowed the
seeds of its own downfall.
Losec (omeprazole), which Astra launched relatively quietly in 1989, was another
drug indicated for the treatment of ulcers and acid-related disorders, but
it was different. The first in the new class of proton pump inhibitors, it
worked by blocking the production, rather than the release, of gastric acid.
In other words, if you were taking Zantac, there was still a chance of some
excess acid being released and causing you pain; the chances of this happening
on Losec were almost non-existent. This led to an interesting phenomenon. Patients
who were switched from H2-antagonists to Losec to get better disease control
not only noticed an improvement, they became very vocal about it. Doctors eventually
noticed that some patients were so impressed by this that it was hard to get
them off Losec even when it was clinically no longer needed (“Losec junkies”
was a term very familiar to market researchers of the era). Losec became one
of the rare pharma brands where the patients, in effect, became part of the
marketing effort.
Losec took a while to take off, partly because, as the first in a new class,
it was a hospital-only brand for a couple of years. It was under Glaxo’s radar
for a while, but when they noticed it, they started to attack it. At which
point, something interesting happened. The attack backfired. Specifically,
an attempt to associate Losec with severe side-effects was quickly noted by
doctors as being based on very weak evidence and became something of a PR disaster.
Astra became seen as the “plucky underdog” engaged in a battle with a company
whose sheer size, visibility and massively visible marketing spend were starting
to antagonise some its customers. Ultimately, Losec overtook Zantac, partly
because of its clinical superiority, partly because of a backlash against Glaxo,
and partly because of its own marketing flair, notably the “Everyday people
take Losec” advertising campaign, one of the most successful and vividly remembered
campaigns in pharma industry history.
By 1996, the Ulcer Wars which had started twenty years earlier were pretty
much over. This was partly because Losec had won on clinical terms, and partly
because the initial treatment of ulcers had shifted from using a single agent
(H2-antagonist or PPI) over a period of months to using them in combination
with antibiotics to wipe out the H. pylori infection which was now known to
be the major causal factor. 
There was and still is a huge market for reflux
disease, which is now dominated by Nexium, AstraZeneca’s own “son of Losec”.
However, it seems unlikely there will be any major new developments in this
area. PPIs are so effective, and so clean, there isn’t really any need, or
scope, to produce anything better. And, although they both lost patent protection
many years ago, Zantac and, to a lesser extent, Tagamet live on as consumer
brands.
The legacy of the Ulcer Wars is still very much with us, however. For SKF,
the body blow to their fortunes when Zantac started to outsell Tagamet was
a contributing factor in the decision to merge with Beecham in 1989. This,
along with the contemporaneous merger of Bristol-Myers and Squibb, was the
first of the big pharma mergers in the wave of industry consolidation that
has been happening ever since. Ironically, a decade or so later, the merged
organisation SmithKline Beecham joined with its old rival, by then Glaxo Wellcome,
to form today’s GSK.
The Zantac legacy is also still with us. As noted, the reasons behind Zantac’s
success were a major reason why pharmaceuticals became, and still is, a marketing-led
industry. One of the key elements of the marketing strategy for Zantac was
its price-premium over Tagamet, and this was widely imitated. However, the
relative price-insensitivity of the pharmaceutical marketplace did not last
much beyond the 1980s, as payor organisations began to notice just how much
Zantac and other new products were costing them. It could thus be argued that
Zantac’s exploitation of a price-insensitive market helped to create the highly
price-sensitive market we all now work in. 
It’s also evident that more and
more companies are aiming for a balanced portfolio of brands, rather than relying
on one blockbuster, as it is clear that is not a recipe for long-term stability.
And to think this all started because a pharmacology genius started to wonder
about histamine in the mid-sixties…
Your response:
Login to respond to this article: