Adaptation and Standardisation, Coursework Example

In the contemporary age of globalization, multinational and international companies are expanding their reach from their countries of origin into markets around the world. Questions about how to market products in different parts of the world raise the issue of whether to develop standardized approaches to marketing or to find ways to adapt marketing efforts to individual markets. The benefits to adopting a standardized approach are readily apparent; utilizing standardized marketing allows a company to streamline their marketing strategies, potentially saving time and money, while also reinforcing the strength of branding and product identities. Proponents of adaptation argue that standardization is not always desirable or effective, as it can fail to account for such factors as cultural differences and idiosyncrasies of individual markets. Vrontis and Thrassou (2007: 7-20) recommend a more measured approach, one that balances the best attributes of standardization and adaptation. For some companies and products, a standardized approach may best serve their needs, while others may find that the complexities and intricacies of different markets all but demand an adaptive approach. This paper examines the explosive growth of medications used to treat Attention-Deficit Hyperactivity Disorder (ADHD) with an emphasis on Shire PLC, a UK-based pharmaceutical company and manufacturer of several leading ADHD medications. The diagnosis and medical treatment of ADHD worldwide is growing exponentially, and Shire –along with its competitors- is not only serving existing markets; it is also actively seeking to develop new markets. Shire’s marketing strategy combines elements of both standardization and adaptation, and its successes and failures shine a light into the complexities of the pharmaceutical industry and the regulatory environments that shape the company’s decisions.

Background and Overview: The Birth and Growth of the Market for ADHD Medications

ADHD was first identified and diagnosed as a specific psychiatric disorder in 1980. It is generally charcaterised by a number of symptoms and behaviors; according to the NHS information website on ADHD these symptoms include short attention span, restlessness or constant fidgeting, being easily distracted, and impulsive behaviour (nhs.uk, 2013). It is more commonly seen and diagnosed in boys than in girls, and the onset of ADHD typically occurs between three and seven years of age. While the statistics vary, ADHD is believed to be prevalent in a small but statistically significant number of children; according to the NHS ADHD is seen in 2-5% of school-aged children (nhs.uk, 2013). ADHD can be difficult to diagnose, and the criteria used to establish diagnoses vary in different countries and regions in the world (Lang and Scheffler et al., 2010: 71–78). It is most commonly diagnosed in the United States, though at least one study of this phenomenon concluded that the aforementioned variables in diagnostic and assessment criteria may be responsible for this variance, and further concluded that once these differences are accounted for, ADHD prevalence is similar on a worldwide scale (Lang and Scheffler et al., 2010: 71–78).

A landmark 1990 study entitled “The Multimodal Treatment Study of Children with ADHD” concluded that medications such as Adderall (which was brought to market by Shire PLC) are more effective than psychiatric therapy, and that combining the use of such medications with therapy does not increase their effectiveness (ivn.us, 2012). Studies such as this have underpinned a burgeoning market for the development and sale of ADHD medications, though their use has been fraught with controversy from the start. The most common ADHD medications, Ritalin and Adderall, are both stimulants; the latter is a combination of several different forms of amphetamine salts (Scheffler and Hinshaw et al., 2007: 450–457). While it may seem counterintuitive, the use of stimulants in patients diagnosed with ADHD seems to have a calming effect for many of them, allowing them to more easily concentrate, control impulsivity, and reduce other behavioural symptoms associated with ADHD.

While the use of Adderall and other stimulants has proven to have a positive effect on such behaviours for many patients, critics charge that ADHD is being over-diagnosed and that physicians are too quick to prescribe and dispense potentially dangerous pharmaceutical drugs. The pharmaceutical companies that develop and market drugs such as Adderall are accused by critics of placing the health of children at risk for the sake of profit (Wolfe, 2013); Shire and its competitors respond by proffering studies that support the use of stimulants and other medications for the treatment of ADHD (Shire.com, 2013). Some of the most vocal critics of the use of pharmaceuticals for ADHD assert that the condition does not exist, but is simply a construct of drug companies and the medical establishment that medicalises behaviour issues that are nothing more than statistical outliers, and that should not be viewed as medical disorders (Wolfe, 2013).

The Pharmaceutical Market: Patent Protection and Regulatory Issues

The two most common stimulants used for treating ADHD have been marketed under the brand names Ritalin and Adderall. The former was developed by a competitor of Shire’s, while the latter was one of Shire’s most profitable products for many years (Financial Times, 2013). It has recently gone off patent protection in the United States, though Shire continues to market Adderall XR, an extended-release version of the drug designed to be taken once a day (Shire.com, 2013). The issue of patent protection is enormously significant in the pharmaceutical industry. In markets in the UK, EU, and US (as well as many other markets around the world), pharmaceutical companies that bring new drugs to market have a limited number of years in which their products are protected by patents. Once patent protections run out, other manufacturers are free to manufacture and sell generic versions of the same medication, though brand names typically remain the province of the original manufacturers (ivn.us, 2012). Pharmaceutical companies devote large swaths of their budgets to developing, testing, and marketing drugs, and it is during the period of patent protection that these companies endeavor to recoup the bulk of their expenditures and generate profits.

Once the patent protection for a particular medication expires the original manufacturer can still continue to market the brand name version of the drug. One recent example of this is the brand-name medication Viagra, a drug used to treat erectile dysfunction in men. Viagra is the brand name of the drug sildenafil, which can now be sold in generic form by other manufacturers. Viagra has been a hugely profitable product for Pfizer, and the company continues to produce and market the drug under its original name despite the onset of competing products (ivn.us, 2012). This competition is one of the notable characteristics of the pharmaceutical market, and regulatory schemes in different countries determine whether pharmacists can dispense generic substitutions for brand-name prescriptions. In the UK pharmacists must dispense medication according to physicians’ specifications; if, for example, a physician prescribes Viagra, the pharmacist must dispense the brand-name version and may not substitute the generic version, even if the generic version is more expensive.

Regulatory schemes in the US are more complex, and pharmacists operate under guidelines established by legislation, insurance company policies, and their own corporate or company policies. Depending on the circumstances, pharmacists may be restricted from dispensing generic medications as substitutes for brand name versions, or they may be allowed or even required- to substitute generic versions when they are available. These market conditions provide incentives for drug companies to continue advertising their products even after their patent protection has expired, through in most cases they are prohibited from making any claims that the brand name version is superior or more effective than the generic alternatives (ivn.us, 2012). In these instances the original manufacturers rely on brand awareness among physicians and patients, and they spend considerable sums of money to encourage physicians to write branded prescriptions. According to the news website ivn.com the so-called “Big Pharma” companies spent a total of $14 billion in 2011 on direct advertising to US doctors, equating to approximately $23,000 per doctor.

Another means by which pharmaceutical companies can extend the profitability and market viability of brand-name drugs is by offering new or revised formulations of the medications and introducing them to the market under a new name –and with new patent protection. It is not uncommon for manufacturers to offer these new formulations as patent expirations near; a typical approach to this is to offer an “extended release” version of the same mediation, which can be taken less frequently than the original formulation. This does not prevent the original formulation from losing patent protection, but it does offer the pharmaceutical companies the opportunity to sell a similarly-named drug that is patent protected, and to market the new version as being superior to the generic versions of the original formulation. Shire used this strategy with its flagship product Adderall; as that medication neared the end of its patent protection, the company renamed the original version “Adderall IR” (for “instant release”) and introduced “Adderall XR” (extended release). While competitors were able to sell generic versions of the active ingredients in Adderall, Shire was able to advertise the advantages of a once-a-day pill that its competitors could not offer.

Although Adderall IR and Adderall XR have both outlived their patent protection, Shire continues to manufacture and market these drugs. The company’s competitors are able to manufacture generic versions of the drug, but the brand recognition of the original version retains market value. In addition to manufacturing Adderall XR, Shire licences the name Adderall IR to other companies in exchange for a share of their profits. Despite the variances in the regulatory schemes and market environments in different countries, this approach to dealing with the patent/profit cycle is fairly standardised both in terms of how Shire markets its products and across the entire pharmaceutical industry (Financial Times, 2013). Pharmaceutical companies will continue to manufacture and market their brand name drugs long after the patents expire, provided that such drugs remain profitable for their respective manufacturers.

One of the other notable ways that pharmaceutical companies respond to the issue of patent expiration is to develop entirely new drugs to supplant or compliment their existing product line. Shire’s UK-based website offers information about the products in their pipeline, from drugs that are in the early stages of testing to those that are nearing the end of the approval process or that have already been introduced. The profitability for Shire of Adderall IR and Adderall XR have both declined recently (Financial Times, 2013); to offset this downturn, Shire has recently introduced an entirely new drug for the treatment of ADHD. This drug is being marketed in the UK under the brand name Vyvanse; it consists of a different formulation of ingredients that function similarly to Adderall while giving Shire a new protected product that they can market as an improvement over their earlier products (Financial Times, 2013). This approach to bringing new drugs to market to replace those going off patent is expensive, but also enormously profitable for the big pharmaceutical companies. At the same time, it demonstrates why these companies market their products so aggressively, as the stakes are very high. Not every drug will be successful or profitable (or even make it to market), so pharmaceutical companies have a significant incentive to squeeze as much profit out of every drug as they possibly can.

Differences and Similarities between the UK and US Markets

There are a number of significant differences between the UK and US markets, and Shire has adapted accordingly to the guidelines, limitations and restrictions in each. Among the most notable differences between the two markets is that the US allows direct-to-consumer (DTC) marketing, while the UK does not. The US is, in fact, one of only two countries that allow DTC marketing; the other is New Zealand (Pharmafield.co.uk, 2013). These market conditions mean that Shire can advertise their products directly to consumers through television commercials, internet advertising, and on other platforms and outlets. In the UK Shire and other pharmaceutical companies are much more tightly restricted in terms of how they can advertise their products. Shire can spend money on advertising their products directly to physicians, but their public advertising is limited to offering general information about the conditions their medications target, and cannot contain references to specific medications.

The US is, perhaps not surprisingly, the largest market in the world for prescription medications. There are a number of factors that underpin the strength and size of this market, including population size and the overall size of that nation’s economy. It is not just in total consumption, however, that the US leads; the per capita use of prescription medications is the highest in the world, and is significantly higher than it is in the UK (Scheffler and Hinshaw et al., 2007: 450–457). The use of ADHD medications in the US is no exception; Richard, Hinshaw, Modrek, and Levine (2007) assert that “the United States is an outlier among developed countries in its high usage rates of these medications among children.” The UK, by contrast, has markedly lower rates of use of ADHD drugs, a phenomenon Richard et al ascribe to, among other factors, “different diagnostic criteria.” Despite these different rates of use of ADHD medications, studies have shown that prevalence of ADHD is fairly consistent worldwide (Scheffler and Hinshaw et al., 2007: 450–457).

It seems safe to conclude that DTC advertising is one of the primary forces driving the size and growth of the US market for ADHD drugs, and Shire has long utilized a range of marketing techniques to increase its market share in the US. Shire was not the first company to develop stimulant-based drugs for the treatment of ADHD, though its product Adderall is one of the most well-known and commonly-prescribed medications in its class. Although ADHD was first established as a clinical diagnosis in the US in 1980 (followed several years later by the UK), a range of different disorders and conditions related to hyperactivity were identified in the early and mid-20^th century. Experiments in the use of stimulant drugs to treat these conditions were first tried in the 1950s and 1960s, and by the time ADHD was officially recognized in the US this class of drugs was seen by the medical establishment as a viable approach to treatment.

Selling Adderall: A Lesson in Marketing

Adderall is, at its core, simply a form of amphetamine. The amphetamine molecule was first synthesized in the late 19^th century and was commonly used as diet pill and to fight fatigue. By the time stimulant medications were determined to be viable treatments for ADHD there was no patent protection on the basic amphetamine molecule. In order to market a profitable and patent-protected drug, Shire developed a proprietary formulation that combined several different variations of the amphetamine molecule. After undergoing testing and gaining approval for the sale of this formulation, Shire originally marketed it under the brand name Obetrol for use as a weight-loss pill (Anxietyzone.com, 2013). When ADHD was designated as a legitimate diagnosis in 1980, Shire repurposed their drug for ADHD patients.

It is difficult to say with certainty how much money Shire has spent on marketing Adderall over the last two decades. The drug was never approved for use in the UK (though Shire has had several other ADHD drugs approved in the UK), and the US has been and remains the largest market for Adderall worldwide (Scheffler and Hinshaw et al., 2007: 450–457). It is also difficult to gauge how much of Shire’s marketing efforts related to Adderall are directly responsible for the ubiquity of the drug and its brand recognition, but there is no question that Shire has marketed Adderall and its analogues aggressively. DTC marketing in the US allows the company to design advertising campaigns around ADHD, and to use these same advertisements to encourage consumers to inquire about Adderall (or more recent ADHD medications) by name when they visit their health care providers.

As noted, Shire is prohibited from engaging in DTC advertising in the UK, though it can market its products directly to physicians. Shire sponsors information-based websites such as adhdandyou.uk, which provide an overview about ADHD and encourage visitors to the site to ask their physicians about available medications. The brand names of Shire’s ADHD drugs are not listed on the site, but the company’s name is featured prominently at the top of each page on the site. The site is divided into sections for parents, teachers, health care professionals, and individuals who have or believe they may have ADHD. Although Shire is prohibited from advertising their drugs in the UK, the site uses phrases such as “ask your physician about the latest medications available to treat ADHD,” a practice that is supplemented by the information campaigns and advertising aimed directly at physicians.

Adaptation and Standardisation

While Shire is prohibited from marketing its ADHD medications directly to consumers in the UK, this does not mean that people in the UK are unaware of the existence of these medications. The ubiquity of the internet makes it possible for users to simply explore US-based websites offering Shire-sponsored information, and to find an endless amount of other information and discussions about ADHD and ADHD medications. Shire has, by necessity, adapted to the different markets by using DTC advertising where and when it can, but the general content of the information provided by Shire is uniformly standardized for presentation in different markets. The descriptions of ADHD, including its symptoms, implications, and recommended approaches to treatment are virtually the same on Shire’s US and UK websites. The only significant difference is that its US websites also contain the specific brand names of its ADHD medications. Across all its advertising platforms in all its markets, Shire promotes the use of ADHD medications and encourages consumers to visit their doctors to inquire about available medications.

It must be noted that regulatory schemes and legislative restrictions do not provide the entire framework of each market in which Shire functions. Horton-Salway (2011) offers evidence that ADHD is represented in UK media in a manner which is often contradictory; the condition is presented in different contexts as either a psychological or biological disorder, and Horton-Salway asserts that these differences may reflect a cultural tendency to seek psychological therapeutic treatments for ADHD before choosing to use medications. Concomitant with these findings, however, it should be considered that the influence of DTC advertising of Adderall and other ADHD medications in the US has a significant influence on the cultural construct of ADHD. In short, it may be that ADHD is seen differently by those in different markets largely as a result of how these medications are marketed. What is clear is that Shire has successfully adapted to the restrictions and freedoms of different markets while concurrently standardizing their approach to positioning their drugs as a viable treatment for ADHD.

References

adhdandyou.co.uk. 2013. ADHD Treatment – ADHDandyou.co.uk – Shire. [online] Available at: http://www.adhdandyou.co.uk/adhdandyou/treatment/treatment.aspx [Accessed: 28 Dec 2013].

Anxietyzone.com. 2013. Anxiety Zone – Adderall. [online] Available at: http://www.anxietyzone.com/drugs/adderall.html [Accessed: 28 Dec 2013].

Horton-Salway, M. 2011. Repertoires of ADHD in UK newspaper media. Health:, 15 (5), pp. 533–549.

IVN.us. 2012. Big Pharma’s Corruption of American Health Culture. [online] Available at: http://ivn.us/2012/05/03/big-pharmas-direct-to-consumer-advertising-corrupts-americas-health-culture/ [Accessed: 28 Dec 2013].

Lang, H., Scheffler, R. M. and Hu, T. 2010. The discrepancy in attention deficit hyperactivity disorder (ADHD) medications diffusion: 1994–2003—A global pharmaceutical data analysis. Health policy, 97 (1), pp. 71–78.

nhs.uk. 2013. Attention deficit hyperactivity disorder (ADHD) – NHS Choices. [online] Available at: http://www.nhs.uk/conditions/attention-deficit-hyperactivity-disorder/pages/introduction.aspx [Accessed: 28 Dec 2013].

Pharmafield.co.uk. 2013. Pharmaceutical Field – Pharmaceutical direct-to-consumer advertising in Europe. [online] Available at: http://www.pharmafield.co.uk/features/2005/12/Pharmaceutical-direct-to-consumer-advertising-in-Europe [Accessed: 28 Dec 2013].

Scheffler, R. M., Hinshaw, S. P., Modrek, S. and Levine, P. 2007. The global market for ADHD medications.Health Affairs, 26 (2), pp. 450–457.

Shire chief to go as ADHD drug sales disappoint. 2013. Financial Times London, 26 October 2012.

Shire.com. 2013. Home | Shire. [online] Available at: http://www.shire.com/shireplc/en/home [Accessed: 28 Dec 2013].

Vrontis, D. and Thrassou, A. 2007. Adaptation vs. standardization in international marketing–the country-of-origin effect. Innovative Marketing, 3 (4), pp. 7–20.

Wolfe, S. M. 2013. Selling amphetamine emblazoned athletic shirts v overselling amphetamines: a tale of two entrepreneurs. BMJ: British Medical Journal, 347.