Case study on Eli Lily Pharmaceuticals losing their patent on Prozac. To gain an edge in the market it developed Cymbalta that treated both pain and depression.

1. Running Header: WEEK 4 – CASE STUDY ANALYSIS: CYMBALTA - VINODHINI GUHESAN 1
Case Study Analysis: Cymbalta
By Vinodhini Guhesan
University of Maryland University College
AMBA 650 Section 7621
January 28, 2014
Author note: This paper was prepared for AMBA 650: Marketing Management and
Innovation, taught by Professor Chadwick.

2. WEEK 4 – CASE STUDY ANALYSIS: CYMBALTA - VINODHINI GUHESAN 2
Introduction
Eli Lilly is a multi-billion dollar pharmaceutical company that has had
unsurpassed success in the treatment of depression from its patented drug, Prozac. As
Prozac edges closer to the end of its patent, Lilly is tasked with creating its next “uber”
money maker to prevent loss of its market share in the treatment of depression. Since
Lilly is currently positioned as the provider of optimal depression treatment in the eyes
of the consumer, it must find a drug which would strategically sustain its reputation and
market share. In addition, if Lilly can develop a drug that not only treats depression but
other health issues than it will be able to expand its business into new markets
strengthening its profitability.
Presentation of the Facts Surrounding the Case
Eli Lilly was established in Indianapolis, Indiana in 1876. Its initial success was
in the production of diabetes drugs and antibiotics. In 1988 Lilly released Prozac as the
first selective serotonin reuptake inhibitor (SSRI) that brought the company its greatest
success of all (Ofek & Laufer, 2008). Prozac is composed of the chemical compound
fluoxetine. This compound had less side effects and was less toxic than the tricyclical
acids (TCA’s) that were previously used to treat depression.
Prozac became the cornerstone of Lilly’s business. Lilly also continued to have
profits from other drugs for diabetes and cancer treatment. These did not create as
much revenue as Prozac. Lilly’s market share on treatment for depression with Prozac
yielded $2 billion in revenue annually.

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Depression is a “sustained emotional disturbance” that prevents one from
engaging in normal daily activities. (Ofek & Laufer, 2008, p. 3). The prevalence of
depression is that “10 to 25% of the population at any point in one’s life” will experience
it (Ofek & Laufer, 2008, p. 3). This high occurrence gives great scope for profitability if a
drug can provide treatment for depression.
Prozac was one of the first in a class of drugs termed selective serotonin
reuptake inhibitors (SSRI’s) that prevented the reuptake of serotonin by the
neurotransmitters. The SSRI’s also had lower rates of side effects than previous drugs
of the tricyclic antidepressants (TCA) class. This combination made Prozac an
immediate success in treating depression.
Lily was on the brink of losing its market share with Prozac as the patent on
Prozac would expire in December 2003. Other companies would be able to saturate the
market with generic versions of Prozac and usurp Lilly’s market share. In order to find a
replacement for Prozac years of time and money would be invested in research and
development (R&D) at Lilly. The R&D process does not always deliver a successful
product. Lilly had a significant disadvantage in losing the patent on Prozac.
Lilly formed a cross functional group termed the New Antidepressant Team
(NAT) to research a new drug to succeed Prozac (Ofek & Laufer, 2008). This team
combined marketing with R&D to take a more effective approach to drug creation. One
of the members of the team was John Kaiser who had worked as the global marketing
director for Prozac. The NAT came up with five options to explore. These were R-

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Fluxetine, OFC, 5HT2 antagonist SSRI, business development opportunities and
Cymbalta. Each option had its limitations and opportunities.
In addition the NAT also explored the health effects of depression so they could
bring about a drug that treated depression and its health effects to give Lilly a
competitive edge over drugs that only treated depression. It was during this research
that the NAT discovered that Cymbalta could treat pain in addition to depression. Pain
was a common symptom seen in patients with depression. Doctors in the past saw pain
as a physical manifestation of the depression that would be alleviated when the
depression subsided. The mind-body link of depression and pain was now more
evident in research findings. The NAT however saw that Cymbalta could treat both
depression and pain and therefore allow Lilly to gain market share. The decision
however lay with Kaiser and the NAT on how to proceed with Cymbalta as testing was
lengthy and expensive.
Identification of the Key Issue(s)
The issues of the case can clearly be defined as the pending expiration of Lilly’s
patent on Prozac, competition from other companies producing generic treatments,
difficulties in R&D for Lilly to produce a successor to Prozac, and the narrow options for
producing drugs to counteract brain activity causing depression. Understanding the
neurological and biochemical cause of depression and how drugs interact in the brain to
counteract depression will allow for a better understanding of the issues of the case.
Neurotransmitters are chemicals that carry data from one neuron to another in the brain.
Once the data is delivered the neurotransmitter is supposed to go back and be

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reabsorbed by the original neuron (Ofek & Laufer, 2008). Within the neuron the
neurotransmitter is either repackaged or may be broken down by monoamine acidase
enzymes (MAO). Scientists believed that a decrease in the level of neurotransmitters
such as serotonin and norepinephrine in the brain can lead to depression. Drug
treatments that have been used to alleviate the symptoms of depression work through
different processes such as allowing the neurotransmitters to carry the message to the
other neuron by aiding in binding to the neuron’s receptors, to prevent the
neurotransmitter from being absorbed back into the original neuron, or from being
broken down once absorbed into the original neuron. Scientists believed that the high
prevalence of neurotransmitters in the brain would be the best manner in which to
counteract depression. Tricyclic antidepressants (TCA’s) and SSRI’s focused on
blocking the reabsorption of serotonin and norepinephrine resulting in increased
neurotransmitters in the brain. This caused the main issue to have limited options for
creating a drug to combat depression due to lack of a better understanding of the brain
activity that caused depression.
Prior to Prozac, TCA’s were used to treat depression. These drugs however were
dangerous in high dosages and had severe side effects. As the first successful SSRI,
Prozac’s use was ground breaking in treating depression and as a result made previous
chemical treatments for depression obsolete.
A key issue is that the patent for Prozac would expire for Lilly in December 2003.
Once the patent expired generic forms of Prozac could be manufactured and sold by
other companies. In addition there was a pending appeal in the Federal court to

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overturn the decision to uphold the patent on Prozac. If a decision was made as
expected in 2000, then Prozac would lose market share years before its patent was to
expire. This was almost two years earlier than the NAT expected to have a
replacement for Prozac available. With Prozac sales declining from the proliferation of
generic drug sales, Lilly’s market share would topple. Losing Prozac sales would mean
a $2 billion loss in annual revenue (Ofek & Laufer, 2008, p.1). In order to keep a strong
grasp of the market share for depression treatment medications, Lilly needed to create
another drug that would show progress beyond Prozac.
Lilly had set in motion the beginnings of exploring other options via R&D in hopes
of finding the next great treatment for depression. R&D had its tribulations in a lengthy
road of testing to get any drug to even be submitted to the FDA for approval. This only
added to the difficulties of finding a replacement for Prozac.
Finally the issues in choosing to pursue Cymbalta to replace Prozac would
involve some decisive action by the NAT. Kaiser and the NAT had to determine which
option they would pursue in terms of clinical trials of Cymbalta in higher dosages, test
Cymbalta’s use for both emotional and physical symptom relief only for depression and
submit to the FDA or delay submission to the FDA until both options of Cymbalta’s use
as an antidepressant and pain reliever could be tested thoroughly. The last option was
the most risky as more time on trials could mean other companies could grasp market
share well before Cymbalta is released. R&D required extensive time and money so it
was not feasible to test all three of the preceding options.

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Listing Alternative Courses of Action That Could Be Taken
The research on depression was improving. More viable treatments were
available that combined psychotherapy and chemical treatment to alleviate depression.
Lilly had to forge a treatment option that not only met the efficacy of Prozac but
surpassed it in providing greater relief from other symptoms of depression as well to
truly garner high market share.
Lilly formed a “cross functional” team termed the NAT to explore options to
replace Prozac (Olak & Laufer, 2008, p.2). There were 5 alternatives that the NAT was
researching which include R-Fluxetine, Olanzapin-fluoxetine, 5HT2 antagonist SSRI,
business development opportunities and Cymbalta. Each option had its faults and
benefits.
When exploring the other options it became clear that in order to keep the
reputation of delivering high caliber depression treatment medication required a
treatment that was exponentially better than Prozac. Prozac was effective but only
treated depression straight on. In order to truly forge ahead as a provider of innovative
drug therapy Lilly had to deliver a drug that did more than treat the emotional
deficiencies of depression. It became very evident that none of the other options except
Cymbalta could achieve that level of success. Cymbalta had the potential to re-assert
Lilly’s position in the market for treatment of depression as well as take Lilly into the
market for treatment of pain.

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Evaluation of Alternative Courses of Action
Prozac’s main component is fluxetine. R-fluxetine was composed by rearranging
the position of the molecules to a different form. Lilly hoped that this would allow for the
same efficacy as Prozac but go to market as a new drug. The patent for R-Fluxetine
was held by another company. Once the treatment went to trial on patients it was
evident that the drug was not optimal to use and so it was abandoned as a viable
treatment. Even if the drug had been successful in trial Lilly would have been limited in
their scope of business with R-fluxetine as it would most likely deliver the same benefits
of Prozac but not be unique enough to take the market share away from the generic
versions of Prozac that would saturate the market.
Olanzapin-fluoxetine combination (OFC) contained the main components of
Prozac and another drug, Zyprexa. It turned out to be useful in combating Bipolar
disorder another type of depression. As bipolar disorder was prevalent in a smaller
number of the general population than MDD depression it did not have the scope for
revenue as treating MDD depression did. In light of this OFC was not pursued.
Lilly had researched using a chemical known as 5HT2 antagonist SSRI that
would specifically block a serotonin receptor reducing the occurrence of certain side
effects in treating depression. Unfortunately, 5HT2 antagonist SSRI was eliminated as
a viable alternative “due to toxicity findings in animals” (p.8). Lilly certainly could not risk
putting out a drug that achieved some level of depression relief but was toxic.

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Through business development deals with other companies, Lilly attempted to
purchase other components. It hoped by buying from another company it could cut
R&D and operational costs. The purchased components would then be used to create
a new drug to combat depression. Unfortunately the other companies did not sell their
components to Lilly to avoid market competition. Therefore this option was also a
failure.
Finally a drug Lilly had unsuccessfully developed to treat depression, Cymbalta,
was re-examined for use on depression once again. This failed to be effective in treating
depression at the low 20mg per day dosage. Lilly brought this drug back for evaluation
to gauge its efficacy at multiple dosages a day usage. As a drug that had already been
developed it required less operational expense than creating a new drug from scratch.
Typically physicians did not like to prescribe medications to be taken more than once a
day. Cymbalta would have to be tested at increased dosage and if successful would
need to counteract physicians’ resistance to prescribing drugs that required more than
one dosage a day. As all other options to replace Prozac had failed, Cymbalta was the
most viable option to pursue. The NAT set forth in further research of the drug.
Recommendation of the Best Course of Action
Lilly had become well known for Prozac. Consumer’s identified Lilly as having the
superior treatment for depression. Therefore Lilly needed to maintain its reputation as
the Prozac company with the best replacement to Prozac it could formulate. Cymbalta
was the solution Lilly needed to maintain its reputation as the market leader for
treatment of depression.

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Research within Lilly by Dr. Iyengar demonstrated that Cymbalta could relieve
pain. As pain was not the market that Lilly had a foothold in Dr. Iyengar’s research
yielding secondary data was not pursued further until the NAT intervened. Research
from a Dr. Kroneke showed support for patients with depression who also experienced
pain. In fact examination of patients that experienced depression demonstrated both
emotional and physical symptoms, the most prevalent of which was pain. This
plenitude of evidence to support the link between depression having both psychological
and physical symptoms was recognized by the NAT to be enough to pursue a body-
mind link in depression with Cymbalta as the key treatment to combat it.
Since evidence from research demonstrated that Cymbalta was effective in
relieving pain, this proved to be a marketing strategy to have a treatment that alleviates
the physical pain as well as emotional aspects of depression. Another advantage to
using Cymbalta was less severe side effects. In addition Lilly had the ability to also
market the drug for pain treatment alone. The drawback was that Cymbalta had to
overcome the resistance of some physicians toward the mind-body link of depression
and pain. In addition Cymbalta was not effective in a single 20 mg per day dosage. It
would have to gain acceptance from physicians at a twice a day dosage or higher once
a day dosage. These two factors caused the most friction in moving forward with
Cymbalta as the replacement for Prozac.
Kaiser put together research on other companies’ depression treatments. This
allowed Kaiser’s team to evaluate the competition against what they intended to
accomplish with Cymbalta. In addition the data on the competition would allow for

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Kaiser to position Cymbalta’s marketing strategy effectively to combat the competing
treatments.
Kaiser’s recommendation was to proceed with presenting Cymbalta as a solution
for both depression and physical pain caused by depression. This strategy would
differentiate Cymbalta from other depression treatments. If the pain angle is not used
and Cymbalta is presented only as treatment for depression than there is a greater
chance of it to be drowned out by the myriad of other depression treatments in the
market. The decision on which option to pursue with Cymbalta would be paramount to
the future success of Lilly.
Conclusion
Lilly played a pivotal role in the treatment of depression by producing the first
ever SSRI successful at treating depression. As the patent for Prozac came toward
expiration the organization was under pressure to produce the next big thing in
depression treatment. After exploring several options it became evident that Cymbalta
could bring about great success following Prozac. The uniqueness of Cymbalta was the
discovery that it not only treated the emotional symptoms of depression but also
physical symptoms as well. This could be a ground breaking treatment for depression
but could also be introduced as combating pain in other diseases such as diabetes.
Cymbalta would therefore create a new area for Lilly to enter in pain management for
even more revenue. An expansion of Lilly’s business into pain management would no
doubt solidify Lilly’s position in the pharmaceutical industry. The dilemma for Kaiser and
the NAT however was in which avenue to choose in the next step in clinical trials for

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Cymbalta. It was evident that applying clinical trials for Cymbalta to be both a treatment
for depression and pain would be the choice that would produce the most profitable
results for Lilly as it succeeded in both the depression and pain management sectors.
References
Kotler, P., & Keller, K. (2012). A framework for marketing management (5th edition)
Ofek, E. and Laufer, R. (2008, January 30). Eli Lilly: Developing Cymbalta. Harvard
Business School.