That six months could add several billion extra dollars to Pfizer's Lipitor revenues, but it's still only six months' of cash flow. Investors want long-term cash flow. There's a potentially much more important reason Pfizer wants to turn its No. 1 selling product (a staggering $13.2 billion in annual sales, and that's down from its highs) into the lipid-lowering equivalent of Tixylix. Pfizer wants to see if it can turn its prescription brands into the equivalent of trusted over-the-counter brands such as Advil and Tylenol. Sure, no-name generic companies will flood the market with equally effective copies of Lipitor, but some consumers may be willing to pay a few cents or a few dollars more for the "real" Lipitor they've come to trust. This is the so-called "branded generics" strategy that Eli Lilly (LLY) is so curious about.
A strong brand name is not good enough to gain extra sales or command a price premium, however. (Example: Apple (AAPL) has a strong brand name in computers, but its laptop market share is so laughable there's serious talk that Apple might get out of the computer business entirely in order to concentrate on mobile devices.)
What is often the key to long-term consumer loyalty in a category subject to commodity price competition is the availability of convenient or appealing formulations that have a marketing hook. Hence, the Flintstones and vitamins; fruit-flavored Tums, and so on. Even your grizzled correspondent is willing to throw Boehringer Ingelheim a few extra cents for "Cool Mint" Zantac simply because they're easier to swallow than traditional "white"-tasting pills.
If Lipitor chewables are successful, there's no reason Pfizer couldn't extend them into a generic version for adults when the brand loses its protection in 2011. And Pfizer need not stop there. We know the company has experimented with an over-the-counter version of Viagra and is even reportedly considering a different formulation of the drug for non-prescription sales. The same principal applies: Anyone will be able to sell generic Viagra but only Pfizer will provide "Viagra Lite," or "Viagra One-A-Day," or "Very Cherry Viagra Blast With Calcium Supplement!" or whatever they dream up.
*I'm speculating as to the brand name. Related:
- Partying Like It's 1999: Why Big Pharma's Latest "Me Too" Drug Launches Are Doomed
- Mylan's Revenge: New Suit Threatens to Double Patent Defense Costs for Big Pharma
- Lilly's Plan to Launch "Branded Generic" Drugs: A Blueprint for Lower Profits
- Why Pfizer's Generics Unit Faces an Uphill Battle
- Pfizer's Viagra Will Not Be Sold Over the Counter in Europe
- Pfizer's Pyramid of Doom, Or How the Drugmaker Oversold the Market for Cholesterol Drugs by 28 Million Americans