PFIZER’S DILEMMA WITH CELEBREX AND BEXTRA
Lee J. Handke & Rebecca J. Morris (faculty supervisor)
University of Nebraska at Omaha
Case Objectives and Use
This case permits students to examine the forces of change that were reshaping the business environment for companies in the pharmaceutical industry in the twenty-first century. The case also illustrates the pressures and tradeoffs that must be weighed in strategic decision making situations. Students are also challenged to recognize the limits of acquisition strategies in an industry that values continuous product innovation. With a focus on a controversial decision, the case permits students to examine the financial consequences to ethical decisions.
This case was developed for use in undergraduate and graduate strategic management courses. The case may also be utilized in social issues/business ethics courses at the undergraduate and graduate levels. Due to the complexity of the issues covered in the case, it is best positioned later in the course sequence.
Case Synopsis
On September 30, 2004, pharmaceutical giant Merck announced the withdrawal of their pain relieving drug Vioxx from the market due to concerns about possible cardiovascular side effects. The action by Merck sent their stock down 27%, erasing $25 billion from its market value in one day.
In 2005, Pfizer was expected to have $50 billion or more in sales and perhaps $15 billion in profit, making it the world’s biggest and most profitable drug company. Two of Pfizer’s blockbuster drugs were Celebrex and Bextra—drugs in the same class as Vioxx. There was credible evidence emerging that Celebrex and Bextra had similar cardiovascular and stroke risks to Vioxx. Lawyers had begun advertising in mainline media sources recruiting patients to represent in suits against Merck and Pfizer for damages caused by these drugs.
Hank McKinnell, the brash CEO of Pfizer, would need to weigh his options carefully. His decision was further complicated by the fact that Pfizer would lose patent protection for drugs representing over 60 percent of Pfizer’s US sales by 2010. Pfizer also had few new blockbuster drugs on the horizon. Should Pfizer stand firm behind Celebrex and Bextra, or should they withdraw their drugs in the face of mounting evidence of serious side effects?
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The authors developed the case for class discussion rather than to illustrate either effective or ineffective handling of the situation. The case, instructor’s manual, and synopsis were anonymously peer reviewed and accepted by the North American Case Research Association (NACRA) for its annual meeting, October 27-29, 2005, North Falmouth, MA. All rights are reserved to the authors and NACRA. © 2005 by Lee J. Handke and Rebecca J. Morris. Contact person: Rebecca J. Morris, College of Business, University of Nebraska at Omaha, 6001 Dodge Street, Omaha, NE 68182, 402-554-3542,