This is the first installment of a randomly occurring episode providing my perspective on the sale and marketing of some of the greatest pharmaceutical products I’ve had the pleasure to represent. I hope you find these interesting.

I’ll start with the best-selling drug in the 80s and the product that is primarily responsible for the growth of Glaxo, Inc. from a smallish fringe company to one of the largest drug companies in the world: ZANTAC. Zantac treats ulcers and heartburn by inhibiting stomach acid production (histamine or H₂).  As great as Zantac was, it was Tagamet, the first H₂-antagonist, that really broke new ground. Tagamet was approved by the FDA in 1977 and quickly brought an end to gastric surgery as the preferred treatment for duodenal and stomach ulcers. Tagamet was discovered by super-scientist Sir James W. Black who eventually won the Nobel prize in medicine for the discovery of Inderal, the first true Beta Blocker, and then Tagamet. American pharmaceutical company Smith Kline & French launched Tagamet with great fanfare and it quickly became the industry’s first true blockbuster, eventually earning more than $1 billion in sales in one year.  But with the introduction of Zantac by Glaxo a few years later (1983), Tagamet’s industry-leading days were numbered.

Now Zantac is a better drug than Tagamet. Elegant chemistry and a switched out chemical ‘ring’ confer upon Zantac an improved tolerability profile, fewer side effects, fewer drug interactions and overall greater potency. These are improvements to be sure but it’s questionable that these niceties should have allowed Zantac to virtually crush Tagamet in the marketplace. The real difference was a bold clinical program, aggressive marketing strategies, and unrelenting sales teams.

Glaxo was an old British company most famous for making dried milk baby formula in the early 1900s. In the 40s Glaxo acquired another British Company named Allen & Hanburys which brought a heritage in respiratory products and the first inhaled beta agonist, Ventolin (albuterol), which is still the standard of care today for asthma attacks. Research was progressing nicely on Zantac and hopes were high, but Glaxo had no presence in the largest drug market in the world, the United States. So, CEO Sir Paul Girolami (lots of Sirs, don’t you think?) made 3 critically important decisions that took Glaxo from unknown in the US to the largest pharmaceutical company in the world (in sales) in the 80s.

• In 1980 he purchased outright a fledgling pharma company in southern Florida named Meyer Labs. Their products (mostly vitamins) were inconsequential as Sir Paul was more interested in their already-formed sales force. The 150 Meyer sales reps are among the luckiest people on the planet as they were handed the keys to a formidable respiratory portfolio, top shelf antibiotics, and ZANTAC, which launched in 1983.
• Girolomi pioneered a co-promotion strategy by paying the large, well-established sales force from Roche Pharma to help promote Zantac for the first 5 years. This co-promotion strategy worked so well that it became a model for the industry for the next few decades.
• Glaxo priced Zantac at a 20% premium to already pricey Tagamet. Price insinuates quality, and better products should cost more, but this controversial move proved to be genius, as it cemented the image of Zantac as a premium product.

The Glaxo sales force grew exponentially in the early 80s, and I joined the Company in 1984 at the height of the ‘H₂ Wars’ between Zantac and Tagamet (and two later entries: Pepcid by Merck, and Axid by Eli Lilly). Zantac quickly closed the sales gap with Tagamet, registering greater first-year sales than any other prescription product in the history of the pharma industry. SK&F also seemed inexplicably unprepared for the entry of Zantac. They mounted a weak defensive strategy and arrogantly assumed that Tagamet would continue to dominate. Once the Zantac steamroller gained traction, the Tagamet team reacted wildly, changing marketing strategies, even branding and logos every few months. Not good.

I should also mention that Glaxo was a pioneer in the emerging managed care marketplace with early dedicated teams and probably the most influential guy in the fledgling HMO industry, Steve Stefano. But the true drivers of success for Zantac were the early decisions made by Sir Paul and his board, and the unrelenting sales teams in the US led by a guy named Jim Butler. In my career I have been exposed to some of the most polished, professional, dynamic and charismatic leaders imaginable. Butler was not one of them.  He was more like your overweight uncle who sits on the couch at Thanksgiving, smoking and drinking, saying little. Now, he was not unprofessional, but he did lack a certain presence. In fact, it was clear that at most meetings the executives would minimize Jim’s time at the mike because it was painful. But we LOVED him. Everything he said and everything he did reinforced his admiration and appreciation for his sales team. He was the original servant leader, instilling a sense of pride in each of us. He was smart, and he truly did care. To wit: When I was Sales Rep in 1987, Jean was pregnant with my son John and an impending launch meeting for an oral antibiotic named Ceftin (cefuroxime) was planned a few weeks shy of her due date. One day I arrived home from work to find a message on the answering machine (no cell phones yet folks). It was Jim Butler’s administrative assistant with a request to give Jim a call the next day. A call from your General Manager (4 corporate layers above you) is a disconcerting thing to simmer with overnight, but first thing in the morning I call in, speak to his Admin, then get transferred to Mr. Butler.

Me: (Tentatively) Hello Jim. I received a message that you wanted to talk with me?

Jim: Yes

Uh, what’s up?

Your wife is due to give birth soon?

Uh, yes, in a month or so.

No launch meeting for you.

But…she will be fine. The meeting is two weeks before her due date.

Stay home with her. That’s where you need to be. You’ll get the info later.

Uh, OK.

So, although I was disappointed to miss a launch meeting in Marco Island, it spoke volumes that he knew about our situation and decided to call me himself to break the news. Even if it was in his short, streamlined, to-the-point style. In a sales force of 1,000 Reps, I felt he cared about me and my family. And there are hundreds of similar stories that speak to his caring philosophy and the loyalty it engendered.

It’s really amazing how wrong things have gone in corporate America where loyalty in either direction is essentially non-existent. And in this case, it was the most powerful leadership quality this guy owned. And he also made sure that his team was rewarded for their work. ‘Rewarded’ is an understatement though. I’m reminded of Steve Martin’s character in that gem of a flick My Blue Heaven. After Martin inappropriately gives a flight attendant an extremely generous tip for her service, Rick Moranis remarks that he must really believe in tipping. Martin, in his New York Italian accent says simply “No, I believe in over-tipping.” So did Jim and the leadership team. In 1984 Zantac sales hit $500 million and they took the entire sales force on a week-long trip to Maui. It was billed as a National Sales Meeting, but it really was an amazing reward trip. And during that meeting he remarked that when we double sales we will come back. Everybody believed him, and everybody worked their tails off to get back. Just one year later sales exceeded One Billion dollars and, true to his word, we headed back to Hawaii; this time with our spouses accompanying us. Oh man! Now we had our spouses pushing us out of the door to get to work early in the morning, and even on weekends. About a year later: $2 Billion, then $3. Guess what happened? Yep. Hawaii trip #3 with spouses. Zantac passed Tagamet to become the #1 pharmaceutical product on the planet in 1987, holding that spot until the early 90s. Zantac profits drove Glaxo to the very top of the industry and the research investment made possible by Zantac ensured that it would stay there for many years.

By the way, I think it is important to put in perspective what a Billion dollars really is. It’s 1,000 million. That’s a LOT of anything. Here are a few ways to think about it:

• The height of a stack of a billion dollar bills is 67.9 miles or high enough to reach the outer layer of our atmosphere
• A billion dollar bills laid end to end will reach 96,900 miles; almost 4 times around the earth
• One Million seconds is 11 days. One Billion seconds is over 30 years!
• If you spend $20 per minute, 24 hours a day, $100 will get you 5 minutes of shopping. One Billion dollars will get you more than 95 years!

And drugs like Zantac sold multiple billions each year. Drug companies play in one of the riskiest economic environments, but when things go well, they go very, very well.

Some of you may be shaking your heads in consideration of these ‘obscene’ profits on the backs of the sick of this world. So allow me a bit of a commercial for the industry:

A 2001 study done by the Tufts Center for the Study of Drug Development placed the cost of developing a drug from research and development through FDA approval at $802 Million, over almost 11 years. An updated study done by the same folks in 2014 revised the cost up to $2.9 Billion. And this does not account for the fact that the overwhelming majority (about 99%) of molecules studied will fail in development. And of those that do reach the market, 7 of 10 will never recoup the average cost of development. Right or wrong, the industry win rate is exceedingly low, so when they win, they must win big. And the time available for winning is tight. Pharmaceutical products enjoy 17-year patent protection; however the clock starts ticking with registration of the exploratory molecule. That leaves an average of about 6 or 7 years of patent life left after FDA approval. And more often than not, a competitor will tweak the molecule (like Zantac to Tagamet) before patent expiration, essentially stealing projected sales. It’s a tough business, and in need of an overhaul in order to address exorbitant costs of some drugs. But one thing is for sure: the Pharmaceutical industry is the solution, not the problem. Zantac, despite astronomical sales, saved healthcare dollars. And think about the fact that, in addition to the devastating emotional pain, Alzheimer disease costs the US $88 billion each year. An effective treatment would not only be a game-changer for millions, but a cure at almost any cost would also make great financial sense.

Post-Script: Zantac was eventually dethroned when Astra introduced Losec, the first proton-pump inhibitor in the early 90s. (The FDA asked Astra to rename the product to end pharmacy confusion with Lasix. Hence the new name: Prilosec). There are 3 routes to acid production in the human body. H₂ antagonists like Zantac and Tagamet block the most productive route but proton-pump inhibitors (PPIs) block all 3 routes at the source. They are more potent than Zantac and the 6 PPIs on the market eventually replaced H₂ antagonists as drugs of choice. Given that there was significant early concern about the impact of acid blockade, it’s kind of amazing that H₂ antagonists and PPIs are now OTC products!

Post-Script 2: All of these drugs work to reduce stomach acid, the alleged cause of ulcers. But in the late 80s researchers began to make a connection between the presence of a common bacteria Helicobacter pylori and gastric distress. In fact, one researcher famously drank a vial full of h. pylori to test the hypothesis. In 1994 the National Institute of Health (NIH) agreed that most duodenal and stomach ulcers are caused by h. pylori and a one-week ‘triple therapy’ course should be employed: an H₂-antagonist or PPI to control acid, a simple antibiotic like amoxicillin to kill the bacteria, and bismuth (like Pepto Bismol) to aid in healing.  Amazing that such a painful and debilitating problem as ulcers can be treated so easily (and now, cheaply).

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