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The Name Game: Why Pfizer's Generic Version of Viagra Will Be Renamed "Avigra"

Pfizer (PFE) will launch a generic version of Viagra in New Zealand and give it a new name, "Avigra," a move that will be closely watched as Viagra begins to lose its exclusive patent rights to the drug next year.

Viagra is one of the strongest brands on the planet -- there is barely a human alive who doesn't know what that made-up word stands for. It pioneered the category and is often used as a generic term for any type of erectile dysfunction drug.

Pfizer's decision to compete with its own product by introducing a new brand name for the identical pill, meanwhile, is almost unheard of. Avigra will be a fascinating experiment in branding and pricing strategy, and rival companies will observe it for clues as to how to compete when generic Viagra comes to the U.S. and other large regional markets.

Pfizer working all the levers
Pfizer has been maneuvering furiously as it prepares Viagra to meet the onslaught of cheap generic competition. It's launching a chewable version, Viagra Jet, in Mexico. It's received permission to sell the drug without a prescription in some U.K. locations. And it has raised the price of the drug to squeeze as much as possible from the franchise before it crumbles. It hasn't fully succeeded: Viagra sales were down 2 percent to $470 million in Q1 2011, leaving it neck and neck with Eli Lilly (LLY)'s Cialis, which sold $434 million, up 6 percent.

The Avigra stratagem is Pfizer's most innovative tactic yet: The second-brand drug will retail for about half the price of "Viagra Classic"; more than other generics but at a large enough discount to tempt consumers who are sensitive to price, a Pfizer official told BNET:

The length of Viagra's patent period varies depending on the country the medicine is sold in. New Zealand has a patent period of 20 years from the date a drug is first registered in the country. However, New Zealand does not have a patent extension provision that covers delays from registration until the medicine is available for prescription. Because New Zealand is one of the few countries without a patent extension provision it means most countries throughout the world still have many years of patent remaining on Viagra.
By keeping Viagra near its true price it lowers the risk of illegal distribution of Viagra to neighboring countries like Australia where the patent does not expire until 2013.
By establishing a second brand of Viagra in a generic market for erectile dysfunction medicine, it allows the thousands of Kiwi men who are taking Viagra an opportunity to change to a more affordable option that's also made by Pfizer, the company that discovered Viagra.
Divide and conquer
The spokesman added, "Viagra will still be available in New Zealand at a competitive price for those men who prefer to remain on it."

The dual-brand/price strategy will give men an interesting choice:

  • The reassuringly expensive original brand;
  • the discount version endorsed by the same company;
  • or a bunch of even cheaper knockoffs from no-name companies.
Given that men are risk-averse when it comes to their, er, bodies, Avigra -- the compromise brand -- may do well.

The Avigra/New Zealand experience will also function as a trial run for a much larger challenge at Pfizer, the patent loss on Lipitor, the company's $10 billion cholesterol colossus. You can expect any sign of success from Avigra to be copied when Lipitor goes generic in November.

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