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Product life cycle - case study (1)

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Glaxo and Zantac; the stomach ulcer miracle!

10% of adults will suffer from a stomach ulcer at some time during their lives; a massive potential market and one that large pharmaceutical companies spent millions of dollars in pursuing. Several remedies were launched onto the market, but by far the most successful was Zantac produced, and then patented, by Glaxo. The returns for Glaxo were huge and fully justified the investment on research and development. Three years after its approval by the US Food and Drug Administration (FDA), Zantac had become the largest prescription drug in the world with annual sales revenue of over $1 billion.

However, for every Zantac there will be tens of thousands of costly failures.

For a detailed summary of the development of Zantac, read the article Zantac - protected and profitable. You can view this in the window below, or follow the previous link to open the article in a new window and then answer the questions that follow.


Question 1

Define the following terms:

  • Patent
  • Generic product.

Question 2

Outline the advantages and disadvantages of manufacturing 'me-too' products.

Question 3

Analyse the relationship between the product life cycle and the marketing mix for prescription drugs such as Zantac.

Question 4

Discuss the problems of financing research and development in the pharmaceutical industry.