Abbott Q3: How a Monopoly Over an HIV Drug Resulted in Lower Sales
A court decision recently approved Abbott’s monopoly over Norvir, a protease inhibitor that functions as a booster for its HIV drug, Kaletra. But that now-legal monopoly has not resulted in increased sales, according to Abbott’s Q3 2009 earnings report.
The monopoly allows Abbott to raise the price of Norvir when it sells the drug to GlaxoSmithKline and Bristol-Myers Squibb, who use the compound in their inhibitors, Lexiva and Reyataz, respectively. The price of those drugs is high, and the price of Kaletra is low.
So how did this seemingly perfect situation — for Abbott, at least — result in a sales decline of 8.7 percent worldwide, to $353 million? Turns out you should be careful what you wish for. Thailand, Mexico and Colombia all “persuaded” Abbott to reduce the price of Kaletra in those countries. Thailand threatened to compulsorily license the drug if Abbott demurred.
Thus a monopoly on a lifesaving drug turned out not to be the money-printing machine you’d predict.
And finally: BNET predicted this possibility in August 2008.
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Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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