Metabical Assignment

Project description
Questions for the case:

1.What is the decision-making process for Metabical? Who is involved in the process?
2.How should Printup think about the segmentation of potential Metabical consumers? Who is the optimal target consumer?
3.How should CSP identify and employ the differential advantages that Metabical offers to position itself in the marketplace?
4.Given the positioning strategy you use how would you communicate to each of your target audiences?

JOHN It. QUELCH

HEATHER sscxuau

Metablcal:

Pncmg, Packaging, and Demand Forecastlng for a
New Weight-Loss Drug

In April 2008, after 10 years of testing and $400 million in research and development costs,
Cambridge Sciences Phar’maceuticals’ (CSP) newest prescription drug, Metabical (pronounced Meh-
tuh-bye-cal), was about to receive its coveted Food and Drug Administration (FDA) approval CSP
was an international healthcare company with over $25 billion in sales in 2007. The company, based
in Cambridge, Massachusetts, focused on developing, manufacturing, and marketing products that
treated metabolic disorders, gastrointestinal diseases, and immune deficiencies, as well as other
chronic and acute medical conditions. Metabical was part of a strategic initiative that would allow
CSP to enter the $3.74 billion market for weight-control products in the United States.1

CSP’s chief marketing officer, Bernard Long, said of the new product:

Metabical is revolutionary. It will be the first and only prescription drug to receive FDA
approval to meet the needs of the millions of individuals struggling with moderate weight-loss
goals. Previous prescription weight-loss drugs had negative side effects that, in the agency’s
judgment, outweighed the benefits provided to individuals who were not considered obese.
Metabical will be approved for use by those looking to shed between 10 to 30 pounds. Initial
reviews from the medical community indicate a strong endorsement of Metabical. Our product
will offer moderately overweight adults a medically proven, effective method to reach a
desirable weight and improve their overall health.

Barbara Printup, senior director of marketing for CSP, was in charge of managing the upcoming
January 2009 launch of Metabical in the United States. Printup had spent over 20 years in the
pharmaceutical industry and specialized in developing marketing strategies for new drugs. She had
1 According to Mintel Intentional Group’s Weight Control Products – US – March 2007 Report, total US. retail sales of weight
control products in 2007 were estimated at $3.717 billion.

HBS Professor John A. Quelch and writer Heather Beckham prepared this case solely as a basis for class discussion and not as an endorsanent, a
source of primary data, or an illustration of effective or ineffective management. The authors thank the following for their valuable cmtributions
to the mom of this cue: Cynthia Banditrat of Pfizer, Inc. (H35 MBA 2009), 5.3. Brakewood of Merck a Co. (HBS MBA 199i), and
Shanaya Deboo of Pfizer, Inc. (HRS MBA 2002). This case, though based on real events, is fictionalized, and any resemblance to actual persons or
entities is coincidental. There are occasional references to actual companies in the narration.

Copyright 6 2010 President and Fellows of Harvard College. To order copies or request permission to reproduce materials. call HIM-5454685,
write Harvard Business Publishing. Boston, MA 02163, or go to http://www.iispharvartiedu. This publication may not be digitized,
photocopied, or otherwise reproduced, or transmitted, without the permission of Harvard Business School.

just concluded work on her sixth new-drug campaign, Zunis’ ‘ tat, which was CSP’s most successful
product launch to date. It was now nine months from launch, and Printup was eager to finalize her
launch plan in anticipation of the FDA’s formal announcement of approval. In addition to
developing initial demand forecasts for the product, she still had to determine the optimal packaging
and pricing strategy for the drug.

Obesity Epidemic in the United States

The alarming rise in overweight Americans was of grave concern to those in the government and
medical communities. According to tk Centers for Disease Control and Prevention (CDC), heart
disease, high blood pressure, type two diabetes, cancer, gallbladder disease, osteoarthritis, sleep
apnea, and respiratory problems were just a few of the negative health risks that were directly linked
to excess weight. The Surgeon General issued a warning that “even moderate weight excess (10 to 20
pounds for a person of average height) increases the risk of death, particularly among adults aged 30
to 64 years.”2

In 1998, The National Institutes of Health (NIH) abandoned traditional height/ weight charts to
determine healthy weight and adopted the Body Mass Index (BMI) scale. The BM] scale3 calculated
the relationship between weight and height associated with body fat and health risk, and was
appropriate for both men and women. Three categories of excess weight were established for this
scale. Those adults with BMls over 25 were considered “overweight”; adults with BMls over 30 were
categorized as “obese”; and those with BMls over 40 were categorized as “severely (or morbidly)
obese.”

That excess weight was a growing problem in the United States could be seen in almost every
demographic. By 2018, over 65% of the 230 million adults in the United States were considered
overweight, obese, or severely obese. Excess weight affected both men and women, young and old,
rich and poor, educated and non-educated. Exhibit 1 presents statistics on the pervasiveness of
overweight and obese individuals in the United States.

Competitive Landscape: Weight-Loss Options

Weight-loss options ranged from prescription drugs to over-the-counter (OTC) remedies to
various diet and exercise plans.

Prescription weight-loss drugs were approved for use in both obese (BMI 2 30) and severely obese
(BMI 2 40) individuals. There were two categories of prescription diet drugs: appetite suppressants
and fat-absorbing blockers. Sibutramine hydrochloride monohydrate (marketed as Meridia) worked
to suppress appetite through increasing levels of serotonin and catecholamine in the body. However,
serious potential side effects of this drug included hypertension, tachycardia, heart palpitations,
seizures, and serotonin syndrome (a potentially life-threatening condition caused by elevated
serotonin levels in the body). Orlistat (marketed as Xenical) blocked the body’s absorption of fat
Potential side effects included liver damage, kidney stones, severe stomach pain, and gallbladder
disease. Due to the serious side effects associated with both types of drugs, they were prescribed for
use only by obese and severely obese individuals (8M1 2 30).

2 Overweight and Obzsfly Health Concerns ( January 11, 2017). US Department of Health and Human Service, Retrieved 3/ 18/ 10,
from Office of the Surgeon General website:

http: / / wwwsurgeongeneralgov/ mph: / obesity / calltoaction / fact_cmsequences.htm

3 BMI = body weight in kilograms divided by height in meters squared

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There were no prescription-drug options available specifically for the overweight segment (BMl
between 25 and 30) in 2008. While a plethora of over-the-counter weight-loss solutions existed, only
the OTC drug Alli was approved by the FDA for weight-loss use. Alli users took one pill with each
meal. Alli was a reduced-strength version of the prescription drug orlistat and shared many of its
negative side effects. Printup learned FDA regulators were reviewing over 30 reports of liver
damage in patients taking Alli and Xenical between 1999 and 2008, including six cases of liver
failure.‘ 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. Various entities in the weight-loss industry had
faced safety concerns, and over the years, some had been accused of deceptive marketing claims that
dampened enthusiasm for the products. Since 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 was widely in use. In one high profile example, the dietary
supplement ephedm was linked to several cases of sudden cardiac death and other serious health
Consequently, the FDA instituted an outright ban on the purchase or sale of ephedra. Such
events hurt industry credibility. In early 2007, the Federal Trade Commission required
manufacturers of 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.

Due to the lack of regulation and safety concerns associated with OTC weight-loss drugs, many
overweight individuals gravitated to other options such as diet plans (e.g., Atkins Nutritional
Approach, The Zone Diet), exercise plans (e.g., fitness trainers at local gyms), meal replacement
products (e.g., Slimfast), weight management support programs/ meetings (e.g., Weight Watchers),
and pre-portioned packaged food delivery services (e.g., Jenny Craig Direct, N utrisystem).

All of these conditions resulted in an attractive business opportunity for CSP. Long felt Metabical
was well-positioned to capture share from those overweight individuals who were dissatisfied with
current offerings.

Metabical

CSP’s Metabical would be the first prescription drug approved specifically for overweight
individuals (i.e., those with a BM] between 25 and 30). Individuals in this category had weight-loss
goals of approximately 10 to 30 pounds. Metabical’s formulation was not very effective in helping
obese individuals lose weight and was therefore not recommended for their use.

Metabical was a dual-layer, controlled-release formulation. The first layer contained an appetite
suppressant, calosera, while the second layer contained a fat blocker and calorie absorption agent,
meditonan. CSP’s research and development team created these two ingredients and felt they were
far superior to the current obesity drugs orlistat and sibutramine. Calosera and meditonan worked in
low-dose levels and therefore were shown to have less adverse impact on heart, liver or gallbladder
functions than orlistat and sibutramine. The main negative side effects of Metabical were
experienced when users consumed high levels of fat and calories. These side effects were similar to
the gastrointestinal discomfort of orlistat, only less severe. The FDA would only approve Metabical
On August 24, 2009, the FDA announced it was reviewing adverse event reports of liver in patiens taking the weight-
loss drug adistat, marketed as the prescription drug Xenical and OTC medication Alli. At P165 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
Cmmunimhan about an Ongoing Safety Review Orl’stal (2009, August 24). Retrieved 3/18/10, from FDA website:
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