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Lecture

MGSC14H3 Lecture Notes - Wyeth, Bayer, Anacin


Department
Management (MGS)
Course Code
MGSC14H3
Professor
Peter P Constantinou

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Selling Headaches
Background Info:
Non-prescription pain reliever market in US = consists of only 3 drugs aspirin,
acetaminophen, ibuprofen
4 major pharmaceutical companies: Sterling Drug = aspirin market with Bayer
Aspirin; Johnson & Johnson = acetaminophen (Tylenol) and ibuprofen
(Mediprin); American Home Products = aspirin (Anacin), acetaminophen
(Anacin-3), and ibuprofen (Advil); Bristol-Meyers = aspirin (Burrerin and
Excedrin), acetaminophen (Datril), and ibuprofen (Nuprin)
No chemical or medicinal difference between different brands of acetaminophren
and ibuprofen and no significant difference between aspirins (coating, caffeine)
companies can compete over price or use advertising
o All use advertising
Anacin: “combination of highly proven and active ingredients ”were superior to
and different from aspirin (caffeine not improve its effect); Anacin = “fast, fast
relief”; “three out of four doctors recommended the ingredients in Anacin” not
disclose the ingredient = just aspirin
Bufferin was “twice as fast as aspirin”
St. Joseph’s aspirin was “faster than other leading pain relief tablets”
Bayers = “fastest relief of pain”
Acetaminophen advertising problems
o “Last year hospitals dispensed ten times as much Tylenol as the next four
brands combined” -- = not disclose that Johnson & Johnson supplied
hospitals with Tylenol at very low cost
= sued by American Home Products who was saying that
“hospitals recommend acetaminophen, the aspirin- free pain
reliever in Anacin-3, more than any other pain reliever” – the
hospital recommended acetaminophen = Tylenol
Ethical dilemma: Is it ethical for pharmaceutical companies to include false or
misleading statements in their advertisements?
Arguments that it’s ethical:
Companies have a responsibility to their shareholders to maximize profit
If pharmaceutical companies were to start competing over price, prices for all
pain relievers will be driven lower and lower all companies will lose profit
o Companies must resort to advertising to maintain reasonable profits
o Since there are no significant differences between different brands of
acetaminophen, ibuprofen, aspirin; it would be difficult for pharmaceutical
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