MedImmunes FluMist - Case Study Example

MedImmune's FluMist Introduction: A Case Study YOUR FULL YOUR INSTITUION OR SCHOOL MedImmune's FluMist Introduction: A Case Study MedImmune is a global biotechnology company that was formed in the late 1980's. In 2002, the publicly-traded organization acquired an important new flu vaccine technology then in development by purchasing another vaccine company, Aviron, Inc. While it already has several products on the market, MedImmune is currently focused on the U.S.-based manufacturing, marketing and distribution of its newest product, FluMist, which is currently awaiting final FDA approval (Calkins 2004: 1,3). The purpose of this case study is to assess the flu vaccination industry and its structural conditions in general, critically evaluate the competitive position of the FluMist vaccine, and provide an operational and marketing strategy for the rollout of the product. Industry Conditions The current structural conditions of the U.S. flu vaccine industry consist of five primary components. The first is research and development of the vaccine itself. Over 100 million Americans are considered at-risk candidates for a flu vaccine, and pharmaceutical companies must constantly develop effective treatments to combat the new strains that present each year. After a vaccine is developed, it must then be approved by the FDA. This approval process occurs only after numerous clinical trials and takes years to obtain; of course, manufacturers are free to begin planning production in anticipation of approval, but are not permitted to distribute the drug to the public until it is approved. Once an effective remedy is permitted by governmental authorities, it must then be manufactured in sufficient quantities to meet the demands of the market. In recent years, there have been shortages of flu vaccines as more Americans have sought prophylactic treatment and meeting this demand is a structural challenge. Once the product is made, it must be stored and distributed properly. These vaccines have to be refrigerated to preserve their efficacy and shelf life, and this is a major structural consideration for manufacturers as they manufacture and deliver the product to the medical professionals who administer the drug. Finally, the primary method of administering the vaccine is through injection. This means that the vaccine is provided to the public through healthcare professionals. The U.S. flu industry is an attractive market due to two key factors; the size of the market and the ease of payment. The flu is a widespread disease. The Centers for Disease Control and Prevention (CDC) estimate that 10 to 20 percent of the U.S. population contracts the flu each year, and that 36,0000 individuals die from complications related to it (Calkins 2004: 1). This creates a large market for an effective remedy. Further, the vaccine has usually been accepted by insurance companies as a necessary precaution for their insured. Accordingly, even though the product is not expensive by medical standards, many who receive the treatment do not pay for it out of their own pocket. Having a vital product that appeals to a large market, and one that is paid for by institutional purchasers, makes the industry's future prospects very bright. With the advent of FluMist, the structural conditions of the industry are poised to change. As discussed further in this paper, FluMist provides a technological breakthrough by using a live attenuated influenza vaccine (LAIV), and will allow a nasal administration instead of the traditional injection (Calkins 2004: 2). The successful marketing and widespread adoption of the product will impact the storage and administration aspects of the industry's structure dramatically. FluMist: Critical Evaluation The competitive position of FluMist is potentially significant, though it will have to be marketed appropriately to maximize that potential. While there are some hurdles that will have to be overcome, FluMist is truly a revolutionary product. First, FluMist represents the "first innovation in flu vaccines in more than 50 years" (Calkins 2004: 2). The discovery of how to create a vaccine that is sensitive to heat means that the virus is killed when it is exposed to the body heat of humans. There is no chance that an individual can contract the flu from the vaccine, yet the process causes the body to produce the necessary antibodies to resist the virus for that year (Calkins 2004: 2). This technological impact on the market is huge. Flu vaccinations are given to those segments of the population that are considered at-risk or high-risk. This includes the elderly, children less than five years of age, and persons with certain chronic diseases (Calkins 2004: 2). Given the previously-stated fact that over 30,000 Americans die from flu-related complications every year, the use of this methodology could dramatically increase the number of individuals who actually receive the vaccine. Even though the flu is an annual ordeal for hundreds of millions of people, the average vaccination rate is about 37% (Calkins 2004: 4). Through effective marketing of the benefits of this technology, that percentage could be increased; resulting in a larger market and more effective control of the disease. A second positive aspect unique to FluMist is the method of administration. Heretofore, flu vaccinations have been administered solely by injection. FluMist represents a less invasive form of delivering the dosage because it is a nasal spray. Any individual, particularly children who might be reluctant to undergo an injection, will have that fear obviated by FluMist. It is as simple to use as any other nasal spray, and the ease of use could result in a broader distribution among the at-risk population. Finally, MedImmune's strategic partnership with Wyeth is a key benefit to the product. It isn't enough to have an innovative product; that product has to appeal to the market and the market has to respond positively. As discussed further in the section on strategy, FluMist will be in the hands of a very large sales organization that is associated with one of the largest pharmaceutical companies in the world (Calkins 2004: 3). Access to this type of marketing power is an important component of the success of the vaccine. FluMist is not without its limitations, however. The first of these involves a fundamental structure of the industry; storage. Unlike traditional vaccines, FluMist is heat sensitive to the point that it must be shipped and stored in a frozen state. This is going to be a major consideration for healthcare providers, but not necessarily an impossible accommodation. Assuming that MedImmune can resolve the logistics of distributing the product while maintaining such low temperatures, the healthcare providers will have to have freezers as well. At first blush, this seems to pose a problem because of the perceived investment that these vaccine administrators will have to make. It should be noted, however, that while FluMist is the first flu vaccine to require freezing, it is not the only drug on the market that requires freezing. Accordingly, many distribution points will already have freezers in place and storing FluMist will not pose an undue burden upon them. The key to overcoming the perception of storage difficulty will lie within the company's marketing strategy. A second, and perhaps more significant, difficulty is the cost of the product. At full production capacity, FluMist is competitive with the cost of traditional vaccines (Calkins 2004: 2). At lower volumes, however, the product is priced significantly above that of the other vaccines and, when this is combined with the knowledge that the company has no assurance of insurance companies covering their new vaccine (Calkins 2004: 3), poses a major obstacle to the successful launch of FluMist. The need to create adequate demand will pressure the marketing department to effectively get this product into wide distribution as quickly as possible. On balance, however, the advantages of FluMist outweigh the potential problems. With a proper operational and marketing strategy, this innovative and non-invasive vaccine should live up to CEO David Mott's expectations of being a "blockbuster product" (Calkins 2004: 3). Operational and Marketing Strategy The strategy for maximizing the benefits of this product, while attenuating the structural difficulties, lies in a combination of tactics; both operational and marketing. From an operational standpoint, CEO Mott needs to assist the company's marketing efforts by addressing the fundamentals of business; product improvement and cost control. At this point, the FDA is pending final approval and there is little the company can do to expedite the process. One thing that can be done, however, is to fast-track additional clinical trials. FluMist is likely to be more effective than traditional vaccines; yet, no claim to efficacy can be made yet (Calkins 2004: 2-3). The ability to promote this product as more effective would empower the advertising immensely. MedImmune must immediately initiate, conclude, and evaluate the supplementary clinical trials to obtain the evidence needed to market FluMist as a superior product. Mr. Mott also needs to address the production costs. While peak efficiency makes the vaccine competitive, it is unrealistic to expect FluMist to drive the market that hard immediately upon release. While the marketing and advertising efforts get underway, management should focus on cost reduction and production efficiencies. This will give the vaccine time to penetrate the market and increase its chances of success dramatically. From a marketing standpoint, the Senior VP of Sales, Roger Sampson, has identified the nexus of the issue; positioning. FluMist has to be positioned correctly so that the marketing department can take full advantage of Wyeth's sales division. As this point, Sampson cannot position the product as superior to the other vaccines on the market. His product is safe to use, but so are all the others-nobody dies from getting a flu shot (Calkins 2004: 2). Accordingly, he must focus on the singular distinction of non-invasive administration. While he awaits the opportunity to promote superiority, he can make good use of the fact that FluMist doesn't require a needle. He has a high-profile, high-potential drug (Calkins 2004: 1); it needs to be defined in the market. That position is as the only available vaccine that doesn't require you to endure an injection. Much can be made of this by the direct-to-consumer advertising campaign. Showing mothers that they don't have to face screaming children will have a great impact. Informing senior citizens and people with chronic diseases that they don't have to deal with another needle will also energize the market. For Mr. Sampson, drawing out the plan to position FluMist as the only non-invasive vaccine available, while he awaits Mr. Mott's strategic efforts at efficacy promotion and cost control, will allow the marketing and sales departments at MedImmune and Wyeth to get busy so that the doses the company does have on hand for the current flu season fly off the shelves. List of References Calkins, T. (2004) 'MedImmune: FluMist Introduction.' Kellogg School of Management, Northwestern University 1-4 Read More