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Redefining Marketing and Development Innovation: GSK's Success with Advair

Executive Summary

Before its launch, GSK's Advair, which combines the active ingredients of what were its own two most popular asthma drugs, faced a skeptical managed care audience which believed the company wanted to simply charge more for what appeared to them a mere increase in patient convenience. The pre-merger Glaxo thus created a two-pronged positioning strategy. To create unrestricted access on managed care formularies, Glaxo launched a risky outcomes-based study to prove the value of dual therapy based on experience with the precursor products, not with the still-unapproved Advair. Then, to position the new dual therapy for the broadest asthma market, rather than restricting it for moderate and severe disease, Glaxo crafted a pricing strategy which discounted Advair to the combination of precursor products but priced at a premium, reflecting its advantages, to its main single-agent competition, Merck's Singulair. The two key lessons for the industry: first, the value of effective and timely life-cycle management as the basis for the creation of a new product; and second, the combination of preclinical and clinical data on the new product, plus "directional" data from the older one, can create arguments that managed care groups will find almost impossible to ignore.
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