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Executive Summary

ICI is going to compete with itself in the U.S. on its major product, atenolol. As part of a four-month roll-out of atenolol alternatives and services, ICI is launching a generic atenolol at a 16.7% discount from the list price of Tenormin. The mid-July launch anticipates by two months the Sept. 17 patent expiration of the beta blocker's angina indication and follows by two months the establishment of a new value-added program associated with the brand name version. ICI has assigned primary responsibility for the generic to its Puerto Rican subsidiary. The product will be called "Atenolol from IPR," and will be formulated, manufactured, and packaged by IPR Pharmaceuticals, the newly renamed ICI operation in Puerto Rico. The renaming has two apparent effects: (1) to outsiders, the subsidiary will not be as quickly or readily identified with ICI; and (2) within ICI, it creates a sense of the subsidiary as a new and competitive entity within the corporate body. "IPR Pharmaceuticals and ICI Pharma [ICI's U.S. pharmaceutical business unit] will regard each other as competitors in the U.S. market," the parent company explained. The Puerto Rican subsidiary, however, will continue to supply atenolol to ICI Pharma for marketing as Tenormin in the U.S. There will be no difference in the product per se; the differences will be in the marketing approaches, prices and value-added services. Marketing for Atenolol from IPR will be handled by HMS Sales & Marketing, an independent, Jacksonville, Fla.-based marketing firm. HMS was founded in 1990 by Lawrence DuBow, former chairman of NWDA and former president of Lawrence Pharmaceuticals which was acquired by FoxMeyer in 1986. IPR is attempting to build strong ties to the wholesale trade to make its generic the stock atenolol item before other generic competitors can reach the market. ICI is running advertisements from July through November in eight trade publications: Pharmacy Times, American Druggist, Chain Drug Review/Mass Market Retail Pharmacy, Drug Store News for the Pharmacist, Drug Topics, Wholesale Drugs, NARD Journal and Pharm/alert. ICI also said that "all the major wholesalers have been approached" as part of its plan to sell to "all 83 pharmaceutical wholesalers in mainland USA." Tenormin accounted for $ 500 mil. in sales in the United States in 1990, with approximately $ 1 bil. in sales overall. The brandname drug's current average wholesale price is $ 77.71 for 50 mg tablets/100 per bottle, $ 767.84 for 50 mg tablets/1,000 per bottle, and $ 116.56 for 100 mg tablets/100 per bottle. Atenolol from IPR will be sold in identical dosages and quantities. According to ICI, 100 count 50 mg tablets of Atenolol from IPR will carry an AWP of $ 64.73. The traditional markdown for the first generic competitor is steeper than that discount. ICI's decision to market its own generic several months ahead of the expiration of its Tenormin patent is a new wrinkle on the nascent trend of authorized generic competition. SmithKline Beecham established a marketing and distribution agreement with Rugby Labs in August 1990 which allowed the generic firm to distribute a generic version of Dyazide before its regulatory exclusivity ran out; Syntex has been aggressively marketing itself as a future contract manufacturer of generic Naprosyn in anticipation of its patent expiration ("The Pink Sheet" Aug. 27, 1990, p. 3). ICI's strategy differs from SmithKline Beecham in that it will sell packaged atenolol only to wholesalers and not to a generic distribution company. The company said that generic distributors are not eligible purchasers of atenolol from IPR. To create an added distinction between the generic and the brandname Tenormin, ICI has developed a patient education program called the Wellspring program. It will be available only for the branded Tenormin product. The Wellspring program was unveiled two months ago on May 16. It is designed to provide consumers of Tenormin with "ongoing information and individualized patient contact to educate patients about high blood pressure and its treatment," according to ICI Americas. Brandname users enrolled in the Wellspring program receive a newsletter, samples and discount coupons "for health-related products and services," and a toll-free telephone number at which patients can reach a customer service representative who will answer their questions about Wellspring. ICI claims that, because of the reminders and increased awareness provided by Wellspring service, "people enrolled in Wellspring refill their prescriptions earlier than patients who are not enrolled in the service." ICI Americas said that about 70,000 patients are currently enrolled in the Wellspring program out of approximately 1 mil. people presently taking Tenormin. The program and generic atenolol are available only in the United States. Tenormin is a once-a-day drug, making the price difference between brandname Tenormin and generic atenolol approximately $ 48 per year for a patient on a 50 mg per day regimen. Although Tenormin's patent for its angina indication expires Sept. 17, its patent for the treatment of hypertension -- which the company described as "by far the biggest market" for Tenormin -- will not expire until Jan. 20, 1993. Before this latter date, independent generic firms producing atenolol cannot label or promote the drug for the treatment of hypertension. However, patent protection on one indication for a major product with others off patent has only had a limited effect in retarding competition.

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