How images can break or make corporations
HOW IMPORTANT is a chief executive's personality in the way a corporation works? Very, says Matthew Lynn in this book. In a game with billions at stake, it is a rare breed of people who have the vision and the nerve to stay the course and win. Roy Vagelos of the US-based Merck and Paul Girolami of UK's Glaxo were two chief executives who shaped the activities of their corporations in the 1970s and 1980s.
A pharmaceutical company can grow by hard-selling one chance product at a time, as Glaxo did. Or, like Merck, it can build a groundswell of goodwill and several saleable products. This book presents an insider's view of how Merck and Glaxo developed and marketed some of the world's largest selling drugs.
Glaxo succeeded by adopting a "me, too" approach, taking an existing product, running down its established competitor and turning its product into the largest selling drug ever. Ratitidine, an anti-ulcer drug, was first patented by Smithkline Beecham and sold as Tagamet. Glaxo's version, Zantac, had to differ from Tagamet to make a dent in the market. Girolami masterminded a hard-sell strategy -- Zantac was pegged as a "once-a-day" pill as against Tagamet's five-times-a-day prescription and, in keeping with its superior image, was 30 per cent costlier. By the mid-1980s, Zantac had left Tagamet far behind and its sales equalled those of all other Glaxo drugs put together. "For every dollar in sales it could achieve, more than 90 cents turned into pure instant profit," says Lynn.
Glaxo's success in UK and Europe was tainted by its poor performance in the US and Japan. Glaxo also lost a chance to consolidate its position in the industry partly because of this and partly because "it is a hollow enterprise, lacking purpose and... soul" despite a "brilliant attempt to impose the logic of an industrial corporation on a post-industrial industry".
Merck's ladder to the pinnacle of the industry comprised many rungs -- successful drugs, a humanitarian approach to marketing and putting health before profits. This outlook inspired a fierce loyalty among its employees. An example of Merck's philanthropy was its donation of medicines worth $20 million to several west African countries to cure river blindness. Merck's successes included Mevacor, an anti-cholesterol drug, and, more recently, Proscar, a drug to cure enlarged prostate glands. Lynn asserts that Merck, with its more humane approach, is better placed to come out on top in the long run. "It puts the product first and builds around it a streak of idealism."
Lynn falls short in locating how global trends in disease shape transnationals' drug research and does not situate the industry in the global industrial perspective. But the book is a useful commentary on how to develop and market drugs, whether they are a new find or a "me, too" drug.