SMITHKLINE's 18% INCREASE IN DYAZIDE PRICES

SMITHKLINE's 18% INCREASE IN DYAZIDE PRICES at the beginning of September follows the pattern of response by many brandname marketers to new generic competition. The primary difference between SmithKline's response and previous price hike responses for major products such as Indocin and Inderal is the size and timing of the SmithKline action. Because of the indeterminate monopoly period which SmithKline enjoyed (due to the bioavailability issues associated with the triamterene/hydrochlorathiazide combo), the firm was unable to calculate in price increases to offset unit drops prior to onset of generic competition. Other marketers have been able to plan ahead for a recognizable date of competition when the patent expired. Ayerst, for example, had a two-step price increase in the first half of 1985, before the mid-year patent expiration for Inderal. Similarly, Merck maintained sales share for Indocin in its first year facing generic competition in 1984 by raising prices prior to the May expiration. One market survey service indicated that Merck offset an erosion in number of prescriptions by raising the price per capsule by about 8% ("The Pink Sheet", Feb. 25, 1985, p. 14). While SmithKline was not able apparently to predict the date of generic competition for Dyazide, the firm had already raised prices for the product 11% in late March. The compound price increases on Dyazide this year, however, mean that the product is now selling at a level about 31% above 1986 prices. SmithKline has been pricing Dyazide aggressively in recent years, with consumer groups alleging annual increases of about 21%; but the 1987 increases will outstrip even the recent increases. By Aug. 31 telegram, SmithKline announced the new prices for Dyazide as $24.99 for 100's, $240.42 for 1,000's. [EDITORS NOTE: A previous story in "The Pink Sheet" prior to the Aug. 31, change reported SmithKline as quoting the respective average wholesale prices at $24.90 and $239. A SmithKline spokesman maintains that those prices were estimates of the price level to pharmacies prior to the recent increase.] Some financial analysts apparently used SmithKline's price increase as an indicator of the market share for the Bolar/Schein generic. SmithKline's price increase precipitated a 10.4% increase in Bolar's stock for the week ended Sept. 4. That increase comes on top of a 34% increase in the first week after the ANDA approval on Aug. 21.