VEL 1RO TAS BRIEF CASES JOHN A. QUELCH For the exclusive use of S. Alrubayyi, 2024. HARVARD | BUSINESS SCHOOL HEATHER BECKHAM Metabical: Positioning and Communications Strategy for a New

Weight-Loss Drug 4240 JULY 22, 2010 “I have tried countless diets and every new weight-loss pill that has come on the market. Nothing seems to take off those extra pounds. With diets, I am miserable because I am starving all the time, and none of the weight-loss pills seem to work. I might lose a couple pounds, but I never reach my weight- loss goals and I usually end up gaining more back. I would give anything to lose this extra 20 pounds, so that I can live a longer, happier life." "1 —Tamara Jinkens: focus group participant, age 42 Barbara Printup, senior director of marketing for Cambridge Sciences Pharmaceuticals (CSP), listened as overweight focus group participants recounted their lifelong struggles with weight loss. Printup had just been placed in charge of the upcoming U.S. product launch of CSP's newest prescription drug, Metabical (pronounced Meh-tuh-bye-cal). In clinical trials, Metabical proved to be safe and effective in stimulating weight loss for moderately overweight individuals. CSP was an international health care company with a focus on developing, manufacturing, and marketing products that treat metabolic disorders, gastrointestinal diseases, immune deficiencies, as well as other chronic and acute medical conditions. The company captured over $25 billion in sales in 2007. Printup had over 20 years of experience marketing prescription drugs for CSP. She had led six new drug campaigns and had just concluded work on Zimistat, CSP's most successful product launch to date. Final FDA approval for Metabical was expected in the coming year, and the product launch was scheduled for January 2009. It was now February 2008, and Printup's first order of business was to develop a viable positioning strategy and associated marketing communications plan for Metabical. HBS Professor John A. Quelch and writer Heather Beckham prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental. The narration includes occasional references to actual companies. Copyright © 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Saleh Alrubayyi in MBA 724 Integrative Marketing Communications Spring 2024 taught by Joseph Jones, North Dakota State University from Jan 2024 to Jul 2024. 4240 | Metabical: Positioning and Communications Strategy for a New Weight-Loss Drug For the exclusive use of S. Alrubayyi, 2024. Overweight Adults in the U.S. Researchers and health care professionals measure excess weight using the Body Mass Index (BMI) scale. The BMI scale¹, which calculates the relationship between weight and height associated with body fat and health risk, is appropriate for both men and women. It has three BMI categories of excess weight for adults: overweight (25 to 30); obese (30 to 40); and severely, or morbidly, obese (over 40). Health and Social Issues Excess weight is considered a public health crisis in the U.S., with approximately 65% of the entire adult population categorized as overweight, obese, or severely obese. Being overweight is related to a number of serious health complications, and according to the American Obesity Association in 2005, "the second leading cause of preventable death in the U.S.”² In addition to health risks, overweight individuals endure a significant social stigma as well as outright discrimination. Laziness and self-indulgence are common stereotypes associated with this group. Many overweight people feel like social outcasts. The professional life of an overweight individual could also be negatively affected, as excess weight has been found to adversely influence hiring decisions, wages, and promotions.³ Weight-Loss Drugs No prescription-drug options specifically for the overweight segment (BMI of 25 to 30) were available in 2008. Although a plethora of over-the-counter (OTC) weight-loss drugs existed, only the OTC drug Alli had been approved by the FDA for weight-loss use. Alli was a reduced-strength version of the prescription drug Xenical¹. Alli users took one pill with each meal. Negative side effects of the drug included gastrointestinal conditions such as loose stools, increased defecation, incontinence, and abdominal pain. These side effects worsened when the patient's diet included too much fat. Other, more-serious side effects of Alli and Xenical were also being investigated. Printup had recently learned that FDA regulators were reviewing over 30 reports of liver damage, including six cases of liver failure, in patients who had taken Alli and Xenical between 1999 and 2008.5 All other OTC weight-loss solutions (e.g., hoodia, chromium, green tea extract, conjugated linoleic acid, chitosan, bitter orange, etc.) were categorized as herbal or dietary supplements by the FDA and were, therefore, unregulated by the agency. The drug industry faced several safety concerns with regard to weight-loss drugs and had been accused of deceptive marketing claims that dampened enthusiasm for the products. Given that 1 BMI = body weight in kilograms divided by height in meters squared. 2 "American Obesity Association Fact Sheet" (2005, May 2). Retrieved 4/1/10 from American Obesity Society website: http://obesity1.tempdomainname.com/subs/fastfacts/obesity US.shtml. ³ Puhl, Rebecca. “Understanding the Stigma of Obesity and Its Consequences.” Retrieved 4/1/10, from Obesity Action Coalition website: http://www.obesityaction.org/magazine/oacnews3/Stigma%20of%20Obesity.pdf. 4 Xenical and all other prescription weight-loss drugs were recommended only for patients with BMIs of 30 or greater. 5 On August 24, 2009, the FDA announced it was reviewing adverse event reports of liver injury in patients taking the weight- loss drug orlistat, marketed as the prescription drug Xenical and OTC medication Alli. At press time of the case, the FDA's analysis of this data was still ongoing, and no definite association between liver injury and orlistat had been established. "Early Communication about an Ongoing Safety Review Orlistat" (2009, August 24). Retrieved 3/18/10, from FDA website: http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationforPatientsandProviders/DrugSafetyInformation for Heathcare Professionals/ucm179166.htm. 2 BRIEFCASES I HARVARD BUSINESS SCHOOL This document is authorized for use only by Saleh Alrubayyi in MBA 724 Integrative Marketing Communications Spring 2024 taught by Joseph Jones, North Dakota State University from Jan 2024 to Jul 2024. For the exclusive use of S. Alrubayyi, 2024. Metabical: Positioning and Communications Strategy for a New Weight-Loss Drug | 4240 herbal remedies and dietary supplements did not require stringent FDA testing and approval, health complications from their use might not be discovered until after the product hit the market. In one high-profile example, the dietary supplement ephedra was linked to several cases of sudden cardiac death and other serious health risks. Consequently, the FDA instituted an outright ban on the purchase or sale of ephedra. Deceptive marketing claims also hurt industry credibility. In early 2007, the Federal Trade Commission required manufacturers of the popular OTC weight-loss drugs TrimSpa, Xenadrine EFX, CortiSlim, and One-A-Day WeightSmart to pay $25 million to settle allegations that the products' weight-loss claims were unsubstantiated. CSP believed that its prescription drug, Metabical, was far superior to any weight-loss solution on the market at that time. Metabical CSP's Metabical would be the first prescription drug approved by the FDA specifically for overweight individuals (i.e., those with a BMI of 25 to 30). Researchers at CSP created a drug that combined a new appetite-suppressant compound, calosera, with a revolutionary fat-blocking and calorie-absorption agent, meditonan. The combination of calosera and meditonan produced dramatic weight loss for overweight individuals. It worked in a low-dose formulation, thereby reducing stress on heart or liver functions that other weight-loss drugs tended to produce. Metabical also contained a controlled-release feature that required only one pill be taken per day. Negative side effects of the drug occurred when users consumed high levels of fat and calories. These side effects were similar to the gastrointestinal discomfort caused by Alli, only less severe. Clinical trials proved Metabical to be effective in achieving significant weight loss for overweight individuals. The majority of trial participants reached their weight-loss goals by week 12. These studies revealed that overweight individuals with BMIs of 28 to 30 lost an average of 26 pounds when taking Metabical, compared with an average loss of 6 pounds for patients within the same BMI range who took a placebo (control group). For participants with BMIs of 25 to 28 weight loss averaged 15 pounds for Metabical users versus an average of 2 pounds for those in the control group. Because Metabical had a few negative side effects associated with excess fat and calories in the diet, it also helped with behavior modification and healthier eating habits. On average, individuals who took Metabical maintained, for three years, weight-loss levels within 10% of what the clinical trial participants had experienced. Metabical's formulation was not very effective in helping individuals with BMIs of 30 or greater lose weight and was, therefore, not recommended for this group. Although pricing had not been finalized, CSP estimated the retail price for the drug would be approximately $3 to $5 per day, with the average course of treatment lasting 12 weeks. Many health insurance plans (both HMOs and PPOs) excluded anti-obesity drugs from coverage. The majority of weight-loss drugs were purchased by patients "out of pocket," without reimbursement from health insurance carriers. Initial reports confirmed that few prescription drug plans would cover the cost of Metabical. Printup had been thinking about a campaign to persuade managed health care plans to include Metabical in their prescription-drug programs. However, she planned to review the first six months of sales data before taking that step. Support Program CSP planned to create a comprehensive support program to complement the Metabical pill. Its goal was to enable individuals to achieve better results than they would from the pill alone. In HARVARD BUSINESS SCHOOL I BRIEFCASES This document is authorized for use only by Saleh Alrubayyi in MBA 724 Integrative Marketing Communications Spring 2024 taught by Joseph Jones, North Dakota State University from Jan 2024 to Jul 2024. For the exclusive use of S. Alrubayyi, 2024. 4240 | Metabical: Positioning and Communications Strategy for a New Weight-Loss Drug addition, the support program would teach lifestyle skills for healthy weight maintenance after the initial weight loss was achieved. CSP expected to spend $200,000 on the development of the support program, and Year 1 costs associated with producing the program were expected to be $2 million. In total, the program was estimated to account for just under 10% of the total Year 1 marketing budget. The support program would include reference materials; online weight-control tools (e.g., weight-loss tracker, food diary, nutritional and calorie calculator); personal support (e.g., community forums); meal plans (e.g., menu planner, grocery lists, and thousands of recipes); and exercise plans (e.g., weight-training and cardio routines of less than 20 minutes per day). Although OTC drug Alli also had an online support plan, CSP intended to make its Metabical support program more comprehensive by giving users access to it for 24 months. The support program had not been included in the extensive FDA clinical trial testing. As a result, studies had not yet measured the impact it would have on the product's efficacy. However, Printup surmised it would significantly enhance the ability of Metabical users to reach and maintain their weight-loss goals. The lingering question was how she would highlight the support program within the communications strategy. Market Research Between 1976 and 2000, the U.S. experienced an alarming rise in the number of overweight and obese adults. By 2000, 34% of the population was considered overweight, another 25.8% were classified as obese, and an additional 4.7% fell into the severely obese category. The percentage of the U.S. adult population that was overweight increased steadily with age for both men and women, with the highest incidence among men age 65 to 74 and women age 55 to 64. The population with less than a high school education had the highest prevalence of obesity. However, excess weight was a problem for all demographic segments. Exhibit 1 provides a summary of key demographic information. Health care providers were enthusiastic about the prospect of a drug that could aid in weight loss and help establish healthier diet and exercise habits. Interviews with health care providers revealed one of their top concerns with weight-loss drugs was the likelihood that patients would regain weight once they stopped taking the pills. One health care provider commented, "Many of my moderately overweight patients need help shedding unhealthy pounds. I see cases of diabetes and heart disease each day that are a direct result of being overweight. I have tried, with little success, to counsel these patients with diet and exercise plans. I am pleased that Metabical will provide these patients with assistance to reach a healthy weight. However, taking a pill each day is not a long- term solution. I am impressed with the tools and customized action plans provided in the proposed support program. All this helps with behavior modification and increases the chances that the weight loss will be maintained once the drug regimen is completed." Results from an extensive marketing survey of overweight individuals commissioned by CSP in 2007 revealed considerable interest from the overweight market as well. Over 70% of the respondents indicated that they were dissatisfied with their current weight. In addition, 35% of respondents were actively trying to lose weight and 15% of the people in that subsegment were comfortable using drugs to help reach their weight-loss goals. When survey participants were asked specifically about a prescription weight-loss drug for overweight individuals, 12% said they would 4 BRIEFCASES I HARVARD BUSINESS SCHOOL This document is authorized for use only by Saleh Alrubayyi in MBA 724 Integrative Marketing Communications Spring 2024 taught by Joseph Jones, North Dakota State University from Jan 2024 to Jul 2024. For the exclusive use of S. Alrubayyi, 2024. Metabical: Positioning and Communications Strategy for a New Weight-Loss Drug | 4240 immediately make an appointment with their health care provider and request a prescription. Additional survey results are shown in Exhibit 2. Printup also commissioned a study to analyze psychographic segmentation of overweight individuals. The study revealed a wide variety of attitudes toward physical activity, portion control, food preferences, nutrition, self-image, and overall health. Gender played a significant role in shaping life views on weight and body image. Women demonstrated the most distinct segmentation and clustered around five discrete psychographic profiles. Exhibit 3 summarizes them. Furthermore, the February 2008 focus group produced valuable insight into the struggles of overweight individuals. A common theme was the dissatisfaction with current weight-loss options and the desire for a proven and safe way to drop excess weight. Focus group participants expressed the desire for a prescription-strength drug with FDA approval and clinical results to back up weight- loss claims. Marketing Communications Strategy The communications strategy of a prescription weight-loss drug such as Metabical had to address all participants in the decision-making process. Printup's plan focused heavily on both the end consumer (the patient) and the health care providers who would be prescribing the medication. Compliance (e.g., taking the pills each day, refilling prescriptions, and supplementing the drug with a reasonable diet and exercise regimen) was also an important part of Metabical's success, and Printup wanted to make sure her marketing communications strategy addressed these post-purchase activities. The initial Metabical marketing launch budget, shown in Exhibit 4, was based on CSP's most recent drug launch. Printup used this as a starting point and intended to fine-tune the estimates to reflect appropriate levels of spending for Metabical. In addition, Printup planned to conduct comprehensive testing of the advertising and promotion campaigns throughout the first year. Using the feedback from this analysis, she would adjust the budget accordingly. Advertising Direct-to-consumer (DTC) advertising was somewhat of a new phenomenon in the drug industry. In 1997, the FDA introduced guidelines that opened the flood gates to the ubiquitous drug advertisements the public would become accustomed to by 2008. Printup's strategy included a DTC television, online, radio, and print media blitz at the time of the drug's launch and heavy advertising throughout the first year to establish the Metabical name. Printup believed that over half of the total Year 1 marketing budget should be dedicated to DTC advertising. Patients' knowledge and awareness of Metabical was her number one priority. CSP's advertising agency had provided three initial concepts for the DTC ads: Losing weight is tough. You don't have to do it alone. Let Metabical and your health care provider start you on the road to a healthy weight and better life. Look your best. Shed excess pounds with Metabical and discover a happier, more attractive you. Metabical - all you need to succeed. Those extra 20 pounds could be killing you. Being overweight leads to heart disease, high blood pressure, diabetes, and gallbladder disease. It's time to get healthy - Metabical can help. Printup also considered featuring a well-known celebrity endorser, publicly known to have struggled with her weight, in the DTC ads. Celebrity spokespeople were quite common in the weight-control industry (e.g., Valerie Bertinelli for Jenny Craig) and were becoming more mainstream HARVARD BUSINESS SCHOOL I BRIEFCA ES 5 This document is authorized for use only by Saleh Alrubayyi in MBA 724 Integrative Marketing Communications Spring 2024 taught by Joseph Jones, North Dakota State University from Jan 2024 to Jul 2024./n