Marketing Case Paper: Nasonex, Schering Plough

Table of Content

Background2

Key Issues3

Alternative Solutions6

Key Recommendations10

Works Cited12

Background

NASONEX® is a prescription nasal allergy spray approved for the treatment of seasonal and perennial nasal allergy symptoms in adults and children 2 years of age and older. Taken just once a day? NASONEX® helps relieve nasal allergy symptoms. These symptoms are itchy nose? runny nose? sneezing and congestion. NASONEX® helps by treating nasal allergy symptoms caused by dust mites? pet dander? even tree and grass pollen. Improvement can occur within 11 hours of initial treatment (based on studies done in a park during the pollen season and in a controlled pollen exposure room). The maximum benefit of NASONEX® is usually achieved within 1 to 2 weeks. (Copeland 24-50)

NASONEX® is the only prescription nasal spray clinically proven to help prevent most seasonal nasal allergy symptoms in adults and children 12 years and older in addition to simply treating them once they occur. To help prevent most seasonal nasal allergy symptoms before they start? begin treatment 2 to 4 weeks before the anticipated start of the pollen season. It is important that you take NASONEX® regularly at the time recommended by your doctor? since its effectiveness depends on regular use.

Key Issues

In 1997 the leading anti-allergy medicine? CLARITYN® (loratadine) was a global blockbuster? contributing to more than 50 per cent of the profits of Schering Plough? the pharmaceutical company marketing the product. (AHA 9)

Schering Plough management was preoccupied with the upcoming expiry date of its patent: the imperative was to replace CLARITYN® with another blockbuster capable of replacing the cash flows inevitably eroded by the introduction of loratadine generic competition. The most promising candidate in the Schering Plough R&D pipeline was mometasone? a new steroid at the end of Phase II safety testing that could be clinically developed to obtain two products leading to two different treatments:

•NASONEX® - a nasal spray for the treatment of allergic rhinitis.

•ASMANEX® - an inhaled steroid for the treatment of asthma.

As Schering Plough Research Laboratories had discovered mometasone (the steroid molecule common to both products) it owned patent rights on the molecule and all its future clinical developments. The key issue was related to the cost of clinical development. The NPV of the Phase III clinical trials for ASMANEX®? including structural fixed costs? amounted to approximately $275m over a four year period. NASONEX® would have required less than one fifth of the expected ASMANEX® investment in clinical research and shorter trials? merely a few months long. In this context? the issue of irreversible investments assumed critical importance. Schering Plough might have been better off postponing the clinical development of ASMANEX®? making go-no-go decisions conditional upon the positive outcomes of the secondary value driver? NASONEX®. A project structure to evaluate the option of postponing the ASMANEX® investment was requested? valuing the cost of postponing some stages of clinical trials.

Schering Plough launched NASONEX® immediately and waited to invest in ASMANEX®. Today? NASONEX® is the global market leader in a niche sector (allergic rhinitis)? generating ...