Statin Wars - the statin oligopoly

Oligopoly Watch has a great piece on this:

The leading drug category in terms of sales is statins - cholesterol lowering drugs such as Lipitor, Zocor, Lescol, Crestor, and Pravachol.

These are important drugs in terms of pharmaceutical company revenues, because rhey are used by a remarkable high and growing percentage of the population and because they are basically lifetime drugs requiring daily use.

Sales of statins grew by 12% in 2004. In that significant market segment ($15 billion), Pfizer's Lipitor had 50% of the market in 2004, while Merck's Zocor had around 30%.

A very tight oligopoly indeed!

In fact, Lipitor and Zocor were the #1 and #2 selling drugs for any condition. In one critical industry segment, then, two companies had 80% of the market. In 2004, Merck introduced a new statin drug, with the brand name Vytorin, which by 2005 has over 10% of the market and climbing - just in time as Zocor loses its Zocor patent in 2006 and is likely to see generic competition.

This statin oligopoly has real power.

Although there is a real generic drug solution (lovastatin) that is efficacious, a Consumer Reports study (The Statin Drugs: Prescriptions and Price Trends) estimates that US taxpayers alone could save over $8 billion if suitable generic drugs were used in place of the leading patented drugs for Medicare and Medicaid patients alone.

Pfizer and Merck have managed to dominate the market, through an energetic marketing campaign and a massive sales effort directed at physicians.

At the same time, Pfizer managed to raise prices for Lipitor by 5.8% in 2005.

The piece notes that, through segmentation, Big Pharma is creating a number of smaller tighter oligopolies.