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Propecia – Helping Make Hair Loss History

Case Overview: November 1997, Tom Casola, PROPECIA brand manager for Merck planned to launch with regulatory changes by the FDA in two months (likely launch Date: January 1998) PROPECIA (Expected FDA approval December 1997) represented a major breakthrough in the treatment of Male Patter Hair Loss (MPHL) “balding”. Merk’s 1st consumer-driven product (prescription needed) Direct-to-Consumer Ads key to building demand PROPECIA (Finasteride) originally developed for treating enlarged prostates at a 5mg dose vs 1mg for MPHL. Works by blocking the conversion of testosterone into DHT = stops the deterioration of follicles Benefits: 83% of participants maintained current hair count •66% of men experienced visible re-growth within the first year Side Effects •Various sexual side effects experienced by fewer than 2% of men taking the drugs (compared with ~1% in a placebo) •In Pregnant Women – could cause birth defects in male fetuses if ingested or absorbed through skin Alternatives / Competition: (see p. 4) 1. Hair replacement surgery $2,000 to over $10,000 (~50% of the $1. 5B in category sales), 2. Mechanical solutions “Hairpieces” lasting 1-3 yrs ~500 – 3,500 3. Topical Interventions $20 – $40/mo a.

Rogaine (minoxidil) the first product clinically shown to stimulate hair growth The 6M Model for communications planning: Strategic / Tactical 1. Market Opportunity: At least half of the male population – T. Casola (US) a. 40 million American men b. $1. 5 billion in category sales (US) c. 100% lifetime incidence for White men (50% under 50yrs) i. % MPHL lower in other races ie. 25% of blacks 2. Mission: To educate the consumer on the product, ease fears, set right expectations, have them get a prescription and purchase (make sure Doc has enough info to be comfortable prescribing the drug) a.

Move the customer along the hierarchy of effects model… (see p. 11 tech note) 3. Message: This is the most effective treatment available, less time-intensive, no pain or recovery time, side effects are rare (temporary when they do occur) 4. Media: All forms to reach >1/2 male population – TV (incl. Product Plcmnt), Radio, Print, WWW Proposed Marketing Launch Plan: Direct To Consumer (DTC) – “a large # of people who ask their Doc for a drug will get it” (~80%) •Product Claim Adds – (Option freshly FDA approved) to educate the consumer – TV (eg. Golf channel), Magazines (eg. Maxim), radio etc. consistent with Merck values, particularly – ethics & integrity, satisfying customer needs (self-confidence), scientific excellence) •Offer selected interviews to news media (Merck execs & scientists) to explain the “breakthrough drug” (free advertising) •Infomercial – to generate press coverage ie. free advertising (see p. 6 tech note), long explanation of benefits, science, then side effects •Google Ad Words – to intercept those people searching for operations / other alternatives •Consumer promotions premium pricing – volume discounts for up to 4 mo supply (start to see results in 3 mo. limited time offer – get people to take action Marketing to Physicians •Primary Care Physicians (PCPs) – only (20%) ~1. 5 min for primary detail of face-to-face interaction •Dermatologists (10,000) – have existing Merck sales reps make a visit when they have time 5. How much $ (Marketing Budget): a. Rule-of-thumb (typical methodology) should be used as a “reality check” i. Budget as a % of expected sales ii. Competitively based Share of Voice (SOV) b. “Objective and task” methodology (right way) i. The size and Heterogeneity of the Target Audience (the larger the audience the greater the cost) ii.

Nature of Message iii. Receptivity of the Audience: they are clearly willing to try anything iv. Amount of Clutter – there is only one pill 6. Measurement: determine which means are the most effective a. Spending on lengthy Physician based marketing campaigns is arguably a waste (ie. Rogaine) Case Questions (from GC) to discuss: 1. When and what type of ads should Tom Casola run after launch? Under what circumstances would you use each type of ad? Is there a point where you would consider a switch in Propecia’s advertising strategy? (See 4. Media above)

Advertising types reviewed in the case: (p. 8 & 9) Product Claim Ads: (Option freshly FDA approved) –Branded advertising campaign informing potential customers of PROPECIA, what it does and side effects. Concern over potential detriment of side effect disclosure (required). Perfect for drugs w/ consumer-driven demand where side effects are not overwhelming. Reminder Ads: Branded campaign that does not mention what drug does… can cause confusion (people may think PROPECIA is an antidepressent or question why Merck is afraid to disclose use / side effects).

Help-Seeking adds: unbranded help-seeking ads which encourages men to see their doctor if concerned about hair loss – likely to be much more beneficial to Rogaine which has 95% mkt share. When Propecia gains significant market share this could be more cost-effective. 2. Define Propecia’s potential customer base. What is Propecia competing against in the consumer’s mind? What can be learned from Rogaine’s experience in the marketplace? (See 1. Market above) main competitor would be Rogaine, also FDA approved.

Rogaine as a prescription drug failed to meet expectations (perhaps because they marketed it to Physicians as a typical prescription drug co. would? ), so they have to be different and aggressive to compete with Rogaine’s 95% brand awareness. Any chance Propecia could be approved for OTC?? 3. What message should Propecia covey to potential customers? How does this message affect the retention of patients? •FDA approved •daily pill instead of a lengthy application 2x/day, •cheaper than surgery and potentially more effective (as long as you start early) . What role does a physician play in this context? Is the role different for conditions such as high cholesterol, high blood pressure or diabetes? How much detailing effort is necessary? Please justify your answer anticipating management concerns. They physician fills-out the prescription and should reiterate that the drug is safe for consumption. Role is different with other afflictions/drugs as the Doctor is usually making the diagnosis / recommendation. Balding is consumer-driven and not something a Doctor would typically bring-up.