Eisai Cuts Aricept Prices to Foster Asian Sales

The PhRMA argument is that the US should pay for R&D in order to allow them to sell drugs at a discount in other countries. The opposing argument is that R&D is being done in other countries such that the US should not have to carry the load for the world. Of interest is the article below that indicates that PhRMA applies the same marketing economics to building markets in other countries that they do in the US. We expect that an international market for information will make the differences between prices in various countries more transparent and drive price concessions. The drug market is now very much international and must be viewed through a prism that is wider than the US experience.

Eisai has become the latest drugmaker to cut prices in an effort to push sales in emerging markets. On the heels of similar moves by GlaxoSmithKline and Sanofi–Aventis, the Japanese company is cutting prices on its Alzheimer’s remedy Aricept in at least six Asian countries.

The idea is to ratchet up demand by opening the door to less prosperous patients, says Eisai’s Yasushi Okada, who heads up operations in Asia, Oceania and the Middle East. “With the current prices, only a part of the wealthy people can afford to buy our products,” Okada tells Bloomberg. “I want to increase the patient accessibility of the medicines in Asia.”

Okada tells the news service that he expects growth in sales volume to outweigh the price cuts, delivering overall sales growth. And that’s the aim of GSK and Sanofi as well. GSK has announced major price cuts in emerging markets, with prices tiered according to the target population.

In some GSK markets, prices will be less than two-thirds of those in Europe; in the 50 poorest nations, they’ll be 25 percent of Western prices, Bloomberg points out. Meanwhile, Sanofi announced early this year that it would follow suit, cutting prices in Southeast Asia by as much as half.

Okada wouldn’t say just how much Eisai plans to cut the price tags on Aricept. In the coming quarters, however, we’ll be able to see how the cuts affect sales in those markets. For 2008, Aricept’s global revenues amounted to $3 billion; the company loses patent protection in the U.S. in November, so it stands to lose revenues here to generic competition. All the more reason to grow sales in emerging markets.

Craig S. Stern, PharmD, MBA
President
Pro Pharma Pharmaceutical Consultants, Inc.