Posted: May 1st, 2025

Case Study & Powerpoint

CASE STUDY

Prepare a written 3-5 page analysis of the attached Case study – Salix Pharmaceutical. Be sure to use the format of the attached case analysis.      -THEN-

POWERPOINT

Health care providers increasingly are relying upon marketing as a means of overcoming growing competition. Competition-oriented marketing necessitates a comprehensive analysis of the competitive setting. Prepare a 8-10 slide (not including title and reference slide)  that explains why competitor analysis is so instrumental in the strategic management process. List the pros and potential barriers of the competitor analysis and competition-oriented marketing campaigns.

2
CASE
Salix Pharmaceuticals,
Inc: Succeeding
on the Road
Less Traveled
I Have My Life Back!
“I started having problems with stomach pain and severe diarrhea,”
explained Rex Young, a 37-year-old public high school teacher
from Riverside, California. “Each day I was making between 25
and 35 trips to the bathroom. This just was not conducive to
teaching in high school and because I didn’t know what it was,
I got dehydrated and ended up in the hospital. I was diagnosed
with ulcerative colitis. Dr. Vinod Mishra, my gastroenterologist,
first prescribed a treatment of prednisone (steroid) to fight the
inflammation, along with a drug called ASACOL. The prednisone
didn’t work very well at all. I had a bad reaction to it and had
to quit after four days. The ASACOL seemed to work OK for the
first year. However, at the end of the year, I had another very
severe exacerbation. I was facing radical surgery – a colostomy –
that would remove my lower intestine.
This case was written by Leonidas Kyriazis, MBA, and Linda E. Swayne, PhD, both
from The University of North Carolina at Charlotte. It is intended as a basis for
classroom discussion rather than to illustrate either effective or ineffective handling
of an administrative situation. Used with permission from Leo Kyriazis.
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SALIX PHARMACEUTICALS, INC.
451
“My doctor asked me if I wanted to try a new drug he had just heard about called
COLAZAL from Salix Pharmaceuticals. I was willing to try anything to avoid the
surgery and all the unpleasantness of a colostomy for the rest of my life. COLAZAL
was amazing! I saw results within the first two weeks and at the end of the first
month I was pretty much back to normal. I have been taking COLAZAL now
for about two and a half years, in a regimen of 6 pills per day and I am in complete remission. I had a sigmoidoscopy/colonoscopy about three months ago and
Dr. Mishra says that my intestine virtually looks like it has never been afflicted.
He could not be more pleased with the result. Since I started taking COLAZAL, I
gained back weight to where I was before I got sick – my wife says maybe a little bit
more – and I was able to return to a normal life. I can say without hesitation – that
COLAZAL saved my career and gave me my life back. I bought stock in Salix.”
Salix Pharmaceuticals, Inc.
“Rex’s story, and many other stories like his, make all the challenges of founding Salix worth while,” stated co-founder Randy Hamilton. He continued, “Salix
is a pharmaceutical company with a mission to provide products to gastroenterologists and their patients.
The strategy to achieve this goal,
as we’ve defined it, is through
’search and development’ rather
than the traditional ’research and
development.’ We’ve searched
the world for chemical compounds that could be developed
into therapeutic drugs to treat
intestinal disorders.”
Lorin Johnson, co-founder, continued the story: “In the fifth century BC,
Hippocrates suggested that his patients chew the bark of the willow tree to relieve
pain and fever. Native Americans used willow tree bark to alleviate toothaches
and other pains. The French pharmacist, H. Leroux, identified the chemical with
the therapeutic properties and named it salicin after the scientific name for the
willow tree (Salix alba).
“In the twentieth century, salicylic acid derivatives (aspirin) were used globally
to regulate blood vessel elasticity, reduce fevers and aches, prevent cardiovascular
ailments, affect blood clotting, or ease inflammation. Salix Pharmaceuticals was
named after our first compound that was derived from the willow tree.”
Randy commented, “Our focus on gastroenterology has been a successful niche
strategy. We’ve really helped a lot of patients to have normal lives and we’ve become
a successful public company.” He continued, “Now we have to keep growing. Can
we do that by sticking with gastroenterology? We’d like to in-license additional
drugs to be used in gastroenterology – but can we find them? And, if we can find
them, can we afford them? Or maybe we should look for new customers here in the
US with other specialists – our XIFAXAN could be marketed to general practitioners.
Or maybe we should investigate other inflammatory diseases since that’s Loren’s
expertise. We are definitely feeling some pressure to grow the company . . .”
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CASE 2: SALIX PHARMACEUTICALS INC.
The Beginning
Salix was created in 1989 by Randy W. Hamilton and Lorin K. Johnson – friends
who had both worked for California Biotechnology, Inc. (CalBio), an organization
that focused on biotechnology research. Before joining CalBio, Randy was Director
of Strategic Planning and Business Development for SmithKline Diagnostics. At
35, he was Manager of Business Development for CalBio, responsible for the
commercial aspects of several of the company’s development projects, including
human lung surfactant, drug delivery systems, genetic marker diagnosis, and
growth factors. In addition, he was responsible for establishing strategic relationships within the Japanese pharmaceutical industry and developing other global
relationships.
Lorin earned a PhD degree from the University of Southern California and
was a post-doctoral fellow at the University of California, San Francisco, before
becoming Assistant Professor of Pathology at Stanford University Medical Center.
He co-authored more than 70 journal articles and book chapters and co-invented
16 issued patents. Then, he joined CalBio as Director of Scientific Operations
and Chief Scientist at the age of 37. His research focused on anti-inflammatory
therapeutics.
After being caught in management changes at CalBio, Randy and Lorin began
talking about starting their own business. A wave of biotechnology research
startups had begun targeting basic research. However, Randy and Lorin chose
a different path. Lorin stated, “These new biotechnology companies didn’t have
any products when starting out and they had to raise a lot of money. We thought
maybe we could short-circuit the need to raise a lot of money – and the timeline
it took to bring the products to market.” He continued, “At one point, we thought
that we might produce our own research products but we soon realized that it
was better to market products that were more advanced in the life cycle.”
Because Lorin was experienced in researching inflammation at the cellular
and molecular level, Randy and Lorin decided to start the company around
that research. Inflammation and inflammatory diseases had many manifestations such as arthritis, asthma, and psoriasis. The intestinal tract had two primary inflammatory diseases – ulcerative colitis and Crohn’s disease (both a form
of inflammatory bowel disease). Randy summarized, “We looked at these various
segments and early on we became interested in inflammatory bowel disease. We
began a worldwide search for products that were in an advanced stage of development and we might be able to obtain the marketing rights.”
The First Drug
With their worldwide knowledge of the pharmaceutical industry, Lorin and Randy
identified a compound called balsalazide disodium developed by Biorex, a small
research company in London. Lorin realized very quickly that it could become a
promising product, and they decided to try to acquire the rights to develop this
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THE BEGINNING
453
drug in the United States. Randy remembered, “We thought if we were going to be
at all successful in convincing this company to license a product to an unknown,
early startup company, we needed to visit them face to face. We used frequent
flyer miles to fly to London. We met with Biorex and really got to know them.
We weren’t trying to sell our company – we didn’t really have a company at the
time – but we believed that they needed to be comfortable with us. Right after
meeting with them, we put together a proposal.” He continued, “Biorex was a
startup company in 1950. They looked at us and we reminded them of themselves.
They understood what it was like to start a company when all you have to offer
is desire and a willingness to work hard. They were willing to take a risk with
us because they saw themselves in us.”
When Randy and Lorin returned to California from London in 1989, they carried an agreement that gave them the right to the in-license of their first product.
They immediately incorporated their company and started looking for money to
pay the financial commitment to Biorex. Randy said, “Our total capital at that
point was $9,500. We were working out of a spare bedroom in my home, which
became the Salix world headquarters.”
They tried to acquire the necessary capital from venture capitalists (VCs). “We
thought that when we went out to VCs with a real product, they would be falling all over us to invest in Salix. We couldn’t have been more wrong! Venture
capitalists were more interested in technology than a product,” explained Randy.
“We met with over 120 firms and half of them showed some interest, but in all
cases the VCs demanded ownership of 50 percent of the company with the first
investment of funds, regardless of what the amount was! We had a pretty good
idea what balsalazide disodium was going to be worth and they weren’t investing
enough! So, we tried a different way.”
Lorin picked up, “We decided to contact some industry people we knew
to invest capital. We had two takers – John Chappell, a former chairman of
SmithKline, and Mark Schlesinger MD, a noted gastroenterologist. John and
Mark not only invested $150,000 that we could use to make the necessary milestone payments to Biorex, but also gave us confidence that the product we had
acquired was solid.”
Flourishing
John Chappell suggested that they try to procure the license for the global rights
to balsalazide disodium. Biorex was convinced and in 1991 Salix obtained global
rights for this product. In 1993, the fact that Salix had a worldwide product in
its portfolio opened doors. Astra, a Swedish company, and Menarini, an Italian
pharmaceutical company, purchased licenses from Salix to exclusively distribute
balsalazide disodium in specifically defined, non-competing, areas. The cash received
for the licenses enabled Salix to begin the costly process of having the product
approved for human use in Europe and the United States.
Because Salix needed additional money in 1996 to continue its testing activities, the company listed on the Toronto Stock exchange raising $10 million. That
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CASE 2: SALIX PHARMACEUTICALS INC.
same year, Salix identified a second product, rifaximin, and licensed its rights
from an Italian company, Alfa Wassermann. In 1997, balsalazide disodium was
approved in Europe; and Astra began promoting it there under the brand name
COLAZIDE.
A Bit of Good Luck
In 1999, Astra merged with Zeneca, the pharmaceutical division of the British
giant Imperial Chemical Industries, becoming the seventh largest pharmaceutical company in the world. Balsalazide disodium was a fairly minor product for
AstraZeneca. AstraZeneca contacted Salix and tried to sell back the license. Randy
remembered, “We said, ‘Wait a minute, you’re walking away from the deal. There
are payments that you really should be making. You can give it back to us but you
should pay us the money you owe us for the development and loan us the money
to find another partner.’ AstraZeneca gave it back and we owned the license to
an approved drug! In the furor of the merger, we were a minor issue. To avoid
any legal implications, the management of AstraZeneca just decided to throw us
into the big bucket of merger expenses.”
Lorin added, “They [AstraZeneca] actually paid us to fulfill the contract we had
and loaned us some money that allowed us to find another partner in Europe.”
Moving Ahead
In the spring of 2000, Shire Pharmaceuticals, a UK company, paid Salix $24 million
to acquire the rights to balsalazide disodium for Europe (except southern Europe
where Minarini maintained its license to be the distributor). In July 2000, the FDA
approved balsalazide disodium for use in the US market under the brand name
COLAZAL. Salix decided to distribute COLAZAL itself and listed on the NASDAQ
exchange to raise additional funds to hire a sales force. In 2001 COLAZAL was
launched in the US market.
In 2002 the company acquired from Dr. Falk Pharma the license for the granulated version of mesalamine and started the clinical tests for it to be approved for the
treatment of ulcerative colitis. In 2003, Salix acquired from aaiPharma the exclusive
rights to sell ASAZAN tablets and launched that product in 2004. Also in 2004,
Salix acquired from King Pharmaceuticals two corticosteroids – ANUSOL-HC and
PROCTOCORT – and launched them in the American market along with the FDA
approved rifaximin under the brand name XIFAXAN. All the Salix drugs were
marketed to gastroenterologists. The timeline is summarized in Appendix I.
Additionally in 2004, Salix signed a license agreement for Pharmatel of Sydney
to market COLAZAL in Australia and New Zealand. To market its products
outside the United States, Salix formed strategic alliances to avoid the significant
costs, risks, and infrastructure inherent in assembling an international sales force.
(See Appendix II for Salix strategic alliances.)
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THE PHARMACEUTICAL INDUSTRY
455
The Salix Strategy Emerges
Salix dedicated its efforts toward identifying and acquiring (in-licensing) latestage or early marketed proprietary pharmaceutical products that had an existing
base of safety and efficacy data for the treatment of gastrointestinal disease. Salix
focused on late-stage products attempting to reduce the risk, time, and expense
that it invested in products compared to traditional pharmaceutical companies.
Salix focused its time and energy on maximizing the commercial potential of its
licensed products. Operations that were not core for the business, such as manufacturing, were outsourced. Resources were not tied up in “bricks and mortar”
but rather invested in activities directed toward increasing product sales.
Salix was a marketing-focused organization and employed a direct sales force
to promote its products to the fastest-adopting, highest-prescribing gastroenterologists in the United States. Salix CEO Carolyn Logan believed, “Our specialty
sales force – and the high level of service they are able to provide – allows us
to capitalize on the opportunity to build a franchise with the gastroenterology
community. And, our sales force allows us to attain higher profit margins and
better control over distribution because we sell our own products.”
The Pharmaceutical Industry
The pharmaceutical industry actually consisted of all enterprises that were involved
in the invention of drugs, production of the active substances in drugs, formulation of drugs, and promotion of drugs to the public, as well as the specialists
who prescribed the drugs.
The Products
A drug was considered to be any article (other than food) intended to be used
in diagnosis, treatment, prevention, mitigation, or cure for humans or other animals. Drugs were classified as prescription, generic, or over-the-counter (OTC).
Prescription drugs were sold only in pharmacies and required a written authorization (a prescription) from a physician. Physicians prescribed a drug that they
believed would improve the health of their patients, although a drug that had
not been approved by the FDA was sometimes prescribed for a disease or illness.
Termed “off-label,” it was a prescription drug approved for the treatment of a
specific illness or disease, but prescribed for a patient with a different illness or
disease because some medical testing published in a medical journal had suggested it as a drug to try when other recognized treatments failed.
Generic (or generic equivalent) drugs contained the same active ingredient as a specific brand name prescription drug and required a prescription, but were only allowed
to be produced after the brand name drug’s patent had expired. OTC drugs were
freely available to the public and were sold in drug, grocery, and discount stores.
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CASE 2: SALIX PHARMACEUTICALS INC.
Exhibit 2/1: Average Retail Prescription Prices of Drugs
Year
Brand Name
Generic
2002
2003
$75.82
$84.21
$27.16
$30.56
Source: National Association of Chain Drug Stores, Facts & Resources, Industry Statistics
(see: http://www.nacds.org/wmspage.cfm?parm1=507).
BRANDED PRESCRIPTION VERSUS GENERIC DRUGS
New products that were the result of research and development (R&D) by pharmaceutical companies were usually covered by patents. Patented products enjoyed
exclusivity (monopoly) in the market to sell the active ingredient for a specific
indication (condition or disease) As long as the drug was protected by a patent,
monopoly pricing was in effect and the price was usually well above the price
of the same product after the patent expired. Exhibit 2/1 compares the average
price of patented, brand name drugs versus generic drugs.
PRESCRIPTION VERSUS OTC
The Food and Drug Administration (FDA) through its OTC Drug Monographs
defined 80 therapeutic categories and 800 significant active ingredients that could
be used by consumers in self-diagnosis and self-treatment without prescriptions.
More than 100,000 products were manufactured (mainly by pharmaceutical companies) for the OTC market. The pharmaceutical companies had some, but not
complete, freedom to decide whether a product would be sold as an OTC drug.
When the preparation contained an active ingredient that was one of those contained in the list of 800, it could be sold over the counter. If a product contained
an active ingredient that was not on the OTC list, it had to be registered with the
FDA and usually became a prescription drug. Pharmaceutical companies were
able to request that any prescription product be transferred to the OTC list, but
FDA approval for the change depended on the nature of the product and its
safety for public use.
Regulation
FDA Approval Process
To introduce a new drug to the US market, FDA approval was required –
a complicated, time-consuming, expensive process with no guarantees. Exhibit 2/2
outlines the process. The organization seeking approval (the “sponsor”) went
through two different evaluation stages:
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R E G U L AT I O N
457
Exhibit 2/2: New Drug FDA Approval Process
Pre-Clinical
Research
Clinical Studies
E
NDA Review
Phase 1
E
Phase 2
Synthesis
and Purification
Phase 3
Accelerated Development/Review
Animal
Testing
Short-Term
E
Treatment IND
Parallel Track
Long-Term
Institutional
Review Boards
Industry Time
FDA Time
IND
Submitted
Sponsor/FDA Meetings Encouraged
Advisory Committees
NDA
Submitted
Early Access:
E Subpart E
Review
Decision
Sponsor Answers
any Questions
From Review
1. The Investigational New Drug (IND) Review Process to determine whether
the product was suitable for use in clinical trials, and
2. The New Drug Application (NDA) Review Process to determine the benefit/
risk profile of a drug prior to its approval for marketing to physicians.
One of the most important parts of the drug approval process was the clinical studies that were designed to distinguish the drug’s effect from other influences on humans – for example, a spontaneous change in disease progression or
the effect of placebo (an inactive ingredient that looked like a test drug). In the
United States these studies were typically conducted under informed consent of
participants. There were three different phases of trials in the pre-approval stage
and one in the post-marketing stage:
• Phase I: The first trials in humans to test a compound for safety tolerance and
pharmacokinetics.1 These trials usually employed normal, healthy volunteers.
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CASE 2: SALIX PHARMACEUTICALS INC.
• Phase II: Pilot studies to define efficacy2 and safety in selected populations of
patients with the disease or condition to be treated, diagnosed, or prevented. Dose
and dosing regimens were assigned for magnitude and duration of effect.
• Phase III: Expanded clinical trials intended to gather additional evidence of
effectiveness for specific indications and to better understand safety and drugrelated adverse effects.
• Phase IV: Post-marketing studies were conducted to determine the incidence
of adverse reactions under normal prescribing conditions to a broad population
over time. These studies could result in serious consequences for the company
if they proved that serious adverse effects existed that were not identified in
Phases I through III.
Patents
New drugs were usually protected by patents. Once a patented drug exceeded its
protected time period, market exclusivity could be sought (the patent would expire;
however, competitors would still not be allowed to offer the product as long as
the exclusivity period lasted). When the patent protection and market exclusivity
were exhausted, other manufacturers could begin offering a generic version –
provided that the generic product was evaluated (tested) to be certain that it was
equally safe and offered the same efficacy as the branded product. Typically, the
manufacturers of generic drugs did not need to repeat all the studies originally
done for a drug’s approval. This kept the cost for the introduction of a generic
drug down, encouraged competition, and kept drug costs lower for patients.
Exhibit 2/3 lists the control stages that both brand name and generic drugs were
required to go through to be approved. A generic drug supplier was required to
go through the abbreviated new drug application (ANDA) review process for the
active ingredient(s). The possible generic was rigorously reviewed – its labeling,
chemistry, manufacturing, and controls and had to be identical (excluding the parts
indicating the patent protection) and the testing procedure had to be repeated
Exhibit 2/3: NDA vs. ANDA Review Process
Brand Name Drug
NDA Requirements
Generic Drug
ANDA Requirements
Chemistry
Manufacturing
Controls
Labeling
Testing
Chemistry
Manufacturing
Controls
Labeling
Testing
Animal Studies
Clinical Studies
Bio-availability
Bio-equivalence
Source: Food and Dug Administration (www.fda.gov)
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R E G U L AT I O N
459
similarly to the new drug application process. The difference for generics was
that the animal studies, the clinical studies, and the bio-availability were replaced
by bio-equivalence studies. Two products are considered bio-equivalent if, when
they were given to the same individual patient, the patient absorbed the same
amount of drug into the blood stream and at the same rate.
The procedure used to verify the bio-equivalence was to measure the concentration of the drug in the blood of the patient at different times after administering
it. If the measures were the same, the brand name and the generic drug were
considered therapeutically equivalent. Only when the drug was not absorbed into
the bloodstream – a rather rare case – would clinical studies have to be redone.
Market Exclusivity
Because the FDA approval process was lengthy (and totally out of the control
of the organization submitting a drug for review and approval), US lawmakers
decided to incorporate a provision into the Hatch–Waxman Act that allowed the
innovator to apply for an extension of the patent coverage based on the length of
the FDA approval process. According to the statute, no ANDA filings (request to
begin the generic drug approval process) could be submitted during a period of
exclusivity. A 5-year period of exclusivity (past the patent expiration) could be
granted for an ingredient that had never previously been approved by the FDA.
A 3-year period of exclusivity could be granted for a drug that contained an
active moiety3 that had been previously approved, when the application contained
reports of new clinical investigations conducted by the sponsor that were essential
to approval of the application. For example, the changes in the approved drug
product that affected its active ingredient(s), strength, dosage form, route of administration or conditions of use might be granted exclusivity if clinical investigations
were essential to the approval of the application containing those changes.
For the drugs whose NDA was submitted before January 1, 2002, six additional
months of exclusivity could be obtained under the Food and Drug Administration
Modernization Act of 1997, if the sponsor submitted requested information relating to the use of the active moiety in the pediatric (children) population.
Finally, a reason for a sponsor to be granted exclusivity beyond the patent protection period was if the drug was developed to cure diseases affecting less than
200,000 people. Such a drug could be designated an “orphan drug” by the FDA.
Sponsors of orphan drugs were granted 7 years of market exclusivity (beyond
the patent) as well as tax incentives for clinical research.
Generic
A drug could become generic after the expiration of the patent. Competitive firms
could produce the drug and sell at lower prices effectively competing with the
innovator. When a drug came “off patent” and became generic, it was usually
referred to by the name designating the active chemical ingredient. Thus, when
the patent for PRILOSEC (manufactured by AstraZeneca) expired, the generic
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CASE 2: SALIX PHARMACEUTICALS INC.
appeared in the market as omeprazole. A patent could expire but a brand name,
once registered and protected, belonged to the company that registered it.
Gastroenterology
Gastroenterology was the study of the diseases of the stomach and intestines.
Gastrointestinal disease afflicted more than 70 million Americans every year,
producing over 50 million physician visits. Nearly 80 percent of these visits were
conducted by general practitioners (GPs) prescribing drugs such as NEXIUM
(AstraZeneca), PRILOSEC (AstraZeneca), PREVACID (TAP Pharmaceuticals),
ACIPHEX (Eisai/Janssen), and PROTONIX (Wyeth). In addition, general practitioners treated diseases such as traveler’s diarrhea. More severe diseases such as
ulcerative colitis and Crohn’s disease (that are described as inflammatory bowel
disease), were treated by gastroenterologists (frequently shortened to GI doctors).
The total gastrointestinal therapeutic market was estimated to be $16 billion every
year. Exhibit 2/4 illustrates the prescription value breakdown of GPs versus specialists prescribing for gastrointestinal disease.
Exhibit 2/4: $16 billion Prescribing Specialists Market for
Gastrointestinal Tract
General Practitioners
77%
Gastroenterologists
23%
Source: IMS Health, IMS National Sales Perspectives,™ 2/2005 (see: http://www.imshealth.com).
The Prescribing Specialists
Various physicians prescribed drugs to improve the health and well-being of
their patients. Board certified physicians (those MDs who successfully passed the
exams in a specific specialty area) as well as any other licensed medical doctor
(one who passed the state exam to practice medicine in that state) could prescribe
pharmaceuticals for their patients (see Exhibit 2/5). General practitioners and
internal medicine were the largest physician groups; gastroenterology was one
of the smallest specialty groups.
Gastroenterology Diseases
Inflammatory Bowel Disease (IBD)4
For many patients, receiving a diagnosis of inflammatory bowel disease was a
relief because it meant that the blood in their stool was not a sign of cancer. The
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GASTROENTEROLOGY DISEASES
461
Exhibit 2/5: US Prescribing Physicians, 2004
Specialty
# of Writers
Patient Visits Rx Counts
Rx Sales
(in thousands) (in millions)
(in millions) (in billions)
General Practitioners
Internal Medicine
Cardiologists (heart, circulatory system)
Neurologists (brain, nervous system)
Gastroenterologist (GI tract)
Dermatologists (skin)
Oncologists (cancer)
All Others
All Specialists
147
115
24
13
12
12
12
848
457
319
85
25
31
36
14
1,033
1,000
786
133
44
38
48
23
1,228
$65.4
$55.8
$9.3
$6.4
$4.8
$4.4
$3.7
$86.9
1,183
2,000
3,300
$236.7
Rx = medical shorthand for a “prescription”
Source: Company Document
initial feeling was short lived however as the patients realized that they had a
disease that would require life-long medication and management. Approximately
one million people in America had IBD (ulcerative colitis or Crohn’s disease).
ULCERATIVE COLITIS (UC)
CROHN’S DISEASE (CD)
Transverse Colon
Appendix
Cecum
Right (Ascending)
Colon
Rectum
Left-Descending Colon
Ulcerative colitis is a chronic form of IBD
characterized by inflammation of the lining
of the colon, specifically the large intestine.
The disease affected roughly 500,000 people
in the United States, typically with onset
under the age of 40. Ulcerative colitis could
be cured with surgery to remove the colon.
Because this surgery had other consequences,
it was generally reserved for people whose
disease could not be adequately treated with
medications or for those people with signs
of pre-cancer in the colon. Rex Young’s UC
was successfully treated with COLAZAL.
Sigmold
Colon
Anus
The Colon
Crohn’s disease differed from ulcerative
colitis because it could affect the entire intestinal tract and could not be cured with surgery. Some people had long periods
of remission, sometimes years, when they were free of symptoms, although they
had to continue medications or their symptoms returned.
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CASE 2: SALIX PHARMACEUTICALS INC.
Other IBD Diseases
TRAVELER’S DIARRHEA
According to National Ambulatory Medical Care and National Hospital Ambulatory
Medical Care surveys, between 1992 and 1996 (the most recent publicly available
information) patients visited physicians over 15 million times on average each year in
the United States with complaints of diarrhea, vomiting, or gastrointestinal infections.
According to the Centers for Disease Control and Prevention, each year between 20
to 50 percent of international travelers (an estimated 10 million people), developed
diarrhea, with approximately 80 percent of the cases caused by bacteria. In 2003,
approximately 6.2 million people sought treatment in the United States for infectious
diarrhea and approximately 4.1 million of those patients were prescribed a drug.
HEPATIC ENCEPHALOPATHY
Hepatic encephalopathy was caused by disorders affecting the liver and was
characterized by intellectual deterioration and neurological abnormalities.5 It
occurred as an acute, potentially reversible disorder or as a chronic, progressive disorder associated with chronic liver disease. It was estimated that 60,000
cases of hepatic encephalopathy were diagnosed each year in the United States.
Hepatic encephalopathy was treated primarily by hepatologists, a subspecialty
of gastroenterology.
Salix Products
Colazal ® (balsalazide disodium)
COLAZAL was chemically similar in structure to salicin (found in the bark of the
willow tree). It was the first new molecular entity approved by the FDA in over
10 years for the treatment of mildly to moderately active ulcerative colitis and the
first new oral therapy approved by the FDA for this indication in seven years. In
clinical trials, it demonstrated at least comparable efficacy and had an improved
safety profile as compared to other oral products (see Exhibit 2/6 for competitive
products). Specifically, clinical trials indicated that other drugs caused strong side
effects for 40 percent of the patients whereas COLAZAL showed side effects in
a very small percentage (less than 8 percent) of patients.
COLAZAL’s chemistry allowed more than 99 percent of the drug to reach the
colon, so it worked faster and more effectively than comparable doses of other
available products. Because the systematic absorption was less than 1 percent,
its active ingredient was not active in the blood nor detected in the blood of the
patients taking the medicine. Responding to a FDA request, Salix was additionally
conducting pediatric studies to verify the utility of COLAZAL in the pediatric
population.
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SALIX PRODUCTS
463
Exhibit 2/6: COLAZAL® and its Competition
Producta
Marketer
Active
Ingredient
Notes
COLAZAL
Salix
Balsalazide
disodium
AZULFIDINE
Pfizer
(Pharmacia)
Sulfasalazine
(Bio-converted
to 5-ASA)
DIPENTUM
Pfizer
Calltech
AZACOL
P&G
Olsalazine
(Bio-converted
to 5-ASA)
5-ASA
Mild side effects such as: headache, abdominal
pain, diarrhea, nausea, vomiting, respiratory
infection, and arthralgia occur in no more than
8% of the patients. Withdrawal from therapy
due to adverse events was comparable among
patients on COLAZAL or a placebo.
Strong side effects due to sulfapyridine release.
Allergic reactions, anorexia, headache, nausea,
vomiting, gastric distress, and reversible
oligospermia occur in about one-third of the
patients.
Strong side effects (abdominal or stomach pain
or upset, diarrhea, loss of appetite).
PENTASA
Shire
5-ASA
ROWASA
Solvay
5-ASA
Not very effective colon-specific delivery.
Covered by a pH sensitive coating.
Coated microgranules for longer time delivery.
Not very effective colon-specific delivery.
Not very effective colon-specific delivery.
Covered by a pH sensitive coating.
a
All prescription drugs, none sold OTC
Source: Company documents
As more patients, similar to Rex Young, had dramatic results using COLAZAL,
sales grew (see Exhibit 2/7). The patent covering COLAZAL was to have ended
in 2001; however, market exclusivity was sought and granted by the FDA.
Exhibit 2/7: COLAZAL Sales and Prescription History
Year
2001
2002
2003
2004
Sales (in millions)
Prescriptions
$14.1
62,500
$33.5
208,000
$55.8
313,000
$85.4
374,000
Source: Salix Pharmaceuticals
AZASAN (azathioprine)
In November 2003, Salix acquired from aaiPharma LLC the exclusive right to sell
25-, 75-, and 100-milligram AZASAN tablets in North America. AZASAN was an
FDA-approved drug used to prevent rejection of kidney transplants and for treatment of severe arthritis. It was sometimes off-label prescribed by gastroenterologists for the treatment of Crohn’s disease and ulcerative colitis. Salix launched this
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CASE 2: SALIX PHARMACEUTICALS INC.
Exhibit 2/8: AZASAN and its Competitors (all prescription-only drugs)
Product
Marketer
Active Ingredient
Notes
AZASAN
Salix
Azathioprine
IMURAN
Prometheus
Laboratories
Gate
Pharmaceuticals
Azathioprine
Active ingredient the same as IMURAN, 25,
75, and 100 mg tablets.
Active ingredient the same as AZASAN.
PURENITHOL
Mercaptopurine
Very toxic. Indicated for remission induction and maintenance therapy of acute
lymphatic leukemia.
Source: Salix Pharmaceuticals
product in the United States in February 2004 ($211 million market). The competitive
products for AZASAN were IMURAN and PURENITHOL (see Exhibit 2/8).
Ms. Carolyn Logan, President and Chief Executive Officer, Salix Pharmaceuticals,
said, “We are extremely proud that Salix is the exclusive source for AZASAN
75-mg and 100-mg dosage strengths. We believe our product will differentiate
itself from the competition by offering more convenient dosing at a lower cost.
AZASAN offers the dosing precision and flexibility that are essential to successful
therapy. The most common dosage used by physicians is 100-mg and AZASAN
is the only azathioprine formulation available at this dose. We believe that the
convenience of AZASAN 100-mg should improve patient compliance.”
XIFAXAN® (rifaximin)
XIFAXIN was a gastrointestinal-specific oral antibiotic that was being marketed in
17 countries but was not approved for use in the United States. XIFAXIN potentially
had a number of other uses as outlined in Exhibit 2/9. Salix in-licensed the chemical
compound from Alfa Wassermann and submitted a new drug application (NDA)
for the treatment of traveler’s diarrhea to the FDA in December 2001. In May 2004,
the FDA granted marketing approval for XIFAXAN 200-mg tablets to treat traveler’s
diarrhea and Salix launched the drug for that purpose in the US market.
The advantages of XIFAXAN to treat the indications described in Exhibit 2/9
were two-fold. First, it offered site-targeted antibiotic delivery and, second, its
improved tolerability compared to other treatments. Because of its site-specific
delivery, less than 0.5 percent of XIFAXAN was absorbed into the bloodstream
when taken orally. In addition, the drug appeared to cause fewer side effects
such as nausea, headache, or dizziness than observed with currently available,
more highly-absorbed antibiotics. In addition, XIFAXAN was less likely to cause
harmful interaction with other drugs a patient was taking.
XIFAXAN was unique because there was no other US-approved oral antibiotic
with its potential lack of systemic absorption and safety profiles. Salix was conducting an ongoing series of studies to establish the drug in the American market
for a broad range of gastrointestinal bacterial infections beyond the treatment of
traveler’s diarrhea (see Exhibit 2/10). Off-label prescriptions for XIFAXAN were
being written by gastroenterologists for their patients with more severe IBD.
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SALIX PRODUCTS
465
Exhibit 2/9: XIFAXAN Estimated US Uses/Indications and Patient Visits
with a Drug Prescribed
Potential Uses/Indications
Type
Visits
w/Drug
Writers
Traveler’s / infectious diarrhea
Hepatic encephalopathy and
nonalcoholic steatohepatitis (NASH)
Uncomplicated diverticular disease
Small bowel overgrowth and irritable
bowel syndrome
Crohn’s disease
Clostridium difficile-associated diarrhea
Surgical prophylaxis
Traveler’s diarrhea prophylaxis
Acute
Chronic
4,000,000
224,000
Chronic
Chronic
2,400,000
3,500,000
General Practitioners
Hepatologists (a subspecialty
of gastroenterology)
Gastroenterologists
Gastroenterologists
Chronic
Acute
Acute
Acute
1,100,000
450,000
1,500,000
4,000,000
Gastroenterologists
General Practitioners
Surgeons
General Practitioners
Source: Verispan PDDA and literature MAT Nov. 2004
Exhibit 2/10: XIFAXAN Development Plan
Indication
Study
FDA Status
Traveler’s diarrhea and Shigellosis prophylaxis
Hepatic encephalopathy (orphan drug)
Crohn’s disease
Small bowel overgrowth
Pediatric
Completed
In progress
In progress
In progress
In progress
Accepted
Source: Salix Pharmaceuticals
XIFAXAN competed in a $2 billion antibiotic market comprising over 12 million
patients. The most common drugs used in the treatment of traveler’s diarrhea are
listed in Exhibit 2/11; two of them – XIFAXAN and CIPRO – were by prescription and the rest were sold over-the-counter.
Commented CEO Carolyn Logan, “XIFAXAN has the potential to be even
more successful than COLAZAL in terms of revenue. This belief is based on the
uniqueness of XIFAXAN as a gastrointestinal-specific antibiotic, combined with
results of our market research and discussions with leading medical authorities
highlighting the large number of diseases in which it could be used.”
The patent covering XIFAXAN expired in May 2001. However, market exclusivity was sought and granted.
ANUSOL-HC® and PROCTOCORT ® (hydrocortisone creams and
suppositories)
In July 2004, Salix acquired the exclusive US rights from King Pharmaceuticals
to sell ANUSOL and PROCTOCORT (cream and suppository) and launched
them in the US market through Salix’s own sales force. Both ANUSOL-HC and
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CASE 2: SALIX PHARMACEUTICALS INC.
Exhibit 2/11: Commonly Used Drugs for the Treatment of Traveler’s Diarrhea
Product
Marketer
Active Ingredient
Notes
XIFAXANa
CIPROa
Salix
Bayer
Rifaximin
Ciprofloxazine
KAOPECTATE
MAALOX
Pfizer
Novartis
LOMOTIL
Pfizer
IMODIUM
Teva Phar USA Mylan
Geneva Novopharm
Bismuth subsalicylate
Magnesium hydroxide,
aluminum hydroxidee
simethicone
Diphenoxylate and
Atropine
Loperamide
Prescription antibiotic.
The most commonly used
prescription antibiotic for
the treatment of traveler’s
diarrhea. Less tolerable than
rifaximin.
Over the counter
Over the counter
Over the counter
Over the counter
a
Prescription only.
Source: Salix Pharmaceuticals
PROCTOCORT were steroids offered either as a cream (for the relief of inflammation and itching at the anus) or suppositories (for hemorrhoids and other
inflammatory conditions).
Said Ellen Marth McKim, Salix Vice President of Marketing, “We believe
ANUSOL-HC and PROCTOCORT can serve an important role in helping gastroenterologists and other physicians to provide effective treatment. Salix has the
opportunity to grow the sales of these products based on several key attributes,
including the flexibility provided by the multiple dosage forms and the strengths
of the four products. These products represent the only branded product line
available in a suppository formulation for internal use supplemented by a cream
formulation for external use.”
Granulated Mesalamine
In July 2002, Salix acquired the exclusive development rights for the granulated
product in the United States from Dr. Falk Pharma GmbH. As part of the transaction, Salix received a right of first negotiation with respect to additional Falk
products in the United States. When the rights were acquired, Falk’s granulated
product was already approved in most of the principal markets of Europe. Salix
acquired the product with the hope that, if approved by the FDA in the United
States, the granulated product’s unique prolonged release mechanism providing
consistent delivery of the drug to the distal ileum and the entire colon would allow
the company to expand the range of treatment options for ulcerative colitis.
In December 2003, the FDA permitted the initiation of clinical trials for the product
under an investigational new drug (IND) application. In December 2004, Phase III
studies were initiated to investigate the product as a treatment for ulcerative
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P R O M O T I O N A L S T R AT E G Y
467
colitis utilizing a dosing regimen that represented significant improvements over
current therapies. Salix expected that the patent for the treatment of the intestinal
tract with granulated mesalamine would be active till 2018.
Promotional Strategy
Because Salix products were prescription drugs for the intestinal tract, its primary
effort was to focus on marketing and sales efforts to prescribing gastroenterologists.
The company believed that the gastroenterologist universe could be covered by
its sales force of 68 sales representatives. The highest prescribing decile of gastroenterologists (the top 10 percent) were visited weekly by a Salix representative
and the lower decile once or twice a month.
To maintain contact with the physicians, Salix organized various activities
such as:
• Regular visits by the sales representatives to the prescribing gastroenterologists
to keep them updated about the properties of its products.
• Participation in lectures and seminars to physicians about its products (see
Appendix III).
• Participation in congresses and professional activities where Salix presented
the advantages of its products (see Appendix IV).
• Grants to support symposia on subjects related to gastroenterology.
• Distribution of prescription pads and post-it notes printed with various Salix
brand names.
• Maintaining contact with the opinion leaders in the small community of
gastroenterologists.
• Sponsoring publications where its products were mentioned.
• Purchasing advertisements in gastroenterology-focused scientific magazines.
• Sponsoring studies about off-label usage of its products (see Appendix V).
Salix did not engage in any direct-to-consumer advertising (DTCA) other than
through its own Internet website that was open to the public. Salix offered patient
coupons to prompt new customers to try its products. The coupon was found to
be a more efficient incentive compared to the distribution of free samples (the
norm in the industry) as it reduced the material that was stocked and stayed
unused in the market and gave patients the opportunity to have direct contact
with the company through its Internet site.
Financials
Beginning in 1989 with $9,500 in working capital, Salix grew significantly by the
end of 2004 but would still be considered small in the pharmaceutical industry.
See Exhibit 2/12 for summary financial statements.
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CASE 2: SALIX PHARMACEUTICALS INC.
Exhibit 2/12: Salix Financial Statements (in thousands)
Balance Sheet
2001
2002
2003
2004
Cash & Cash Equivalents
Accounts Receivable, Net
Inventories
Investments
Prepaid & other Assets
$27,868
2,378
6,274
$48,696
5,980
10,210
7,052
$64,807
3,598
16,094
$48,108
10,457
26,655
4,000
1,871
Total Current Assets
37,304
71,938
84,499
91,091
Assets
784
Other Assets (Property, Intangible and other)
1,286
3,364
6,353
16,773
Total Assets
38,950
75,302
90,852
107,864
Liabilities & Stockholders’ Equity
Accounts Payable & Accrued Liabilities
Differed Revenue
8,094
2,902
11,705
3,208
13,360
3,557
21,177
Total Current Liabilities
10,996
14,913
16,917
21,177
Common Stock
Additional Paid in Capital
Other Comprehensive Loss
Accumulated Other Losses
17
73,461
(45,884)
21
131,300
(306)
(70,626)
36
165,281
(655)
(90,727)
37
171,214
(676)
(83,888)
Total Stockholders’ Equity
27,594
60,389
73,935
86,687
Total Liabilities & Stockholder’s Equity
38,590
75,302
90,852
107,864
Income Statement
2001
2002
2003
2004
Product Revenue
Revenue from collaborative agreements
$14,129
8,221
$33,456
$55,807
$101,697
3,799
Total Revenues
22,350
33,456
55,807
105,496
Cost of Sales
3,495
8,192
13,226
21,754
18,855
25,264
42,581
83,742
24,688
6,629
33,004
17,967
38,635
23,654
5,583
125
125
54,128
20,366
762
1,837
(547)
(1,090)
268
(598)
Gross Profit
Selling, general and administrative expenses
R&D Expenses
Amortization of intangible assets
License fees and costs related to
collaborative agreements
Interest Expense
Operating Expenses
36,353
50,006
62,682
76,495
Income Before Income Tax
Income Tax Expense
(17,498)
(24,742)
(20,101)
7,247
408
(17,498)
(24,742)
(20,101)
6,839
Net Income
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APPENDIX I
469
The Future
In 2005 Salix was a growing company with four FDA-approved products and
another in the approval process, $100 million in sales, and 130 employees (68 sales
representatives, 32 marketers, and 30 executive and administrative staff). The two
founders were still active members of the company. Said Randy, “This company
has been our life for 15 years. I’m not sure that’s where we were heading when
we started out. It’s been more than a job, it’s been an adventure!” Both laughed
as they thought about how many times they had said that to each other when
they worked into the night.
Lorin picked up, “We still think it’s our baby to a large extent. I think our child
has been off to college and maybe now is starting its first job!”
Randy concluded, “We’ve been successful with our ’search and develop’ strategy
specializing in gastroenterology products in the US market. Can we continue to
be successful? Is it time to change our mission or our way of doing business?”
Appendix I
Salix Timeline
1989
1991
1993
1996
1996
1997
1999
2000
2000
2000
2001
2002
2003
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Biorex licensed Randy Hamilton and Lorin Johnson the rights to sell
balsalazide disodium in the US and Salix was incorporated.
Salix acquired the worldwide rights to sell balsalazide disodium.
Astra and Menarini purchased licenses from Salix to exclusively distribute
balsalazide disodium in non-competing areas in Europe.
Salix was listed on the Toronto Stock Exchange raising $10 million to
continue its testing activities.
Salix acquired another in-licensed product, rifaximin from Alfa Wassermann.
Balsalazide disodium was approved in Europe; Astra began promoting it
there under the brand name COLAZIDE.
Astra merged with Zeneca (AstraZeneca) returning the license to sell
balsalazide disodium to Salix.
Shire Pharmaceuticals purchased the right to sell balsalazide disodium in
Europe (except southern Europe where Menarini maintained its license
to be a distributor).
FDA approved balsalazide disodium for use in the US, marketed as
COLZAL.
Salix was listed on NASDAQ (September).
Salix submitted a new drug application for rifaximin as a treatment for
traveler’s diarrhea.
Salix acquired from Dr. Falk Pharma the license for the granulated version of mesalamine and started the clinical tests for it to be approved for
the treatment of ulcerative colitis.
Salix acquired from aaiPharma the exclusive rights to sell ASAZAN tablets.
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CASE 2: SALIX PHARMACEUTICALS INC.
2004
2004
2004
2004
2004
Salix launched ASAZAN in the US market.
Salix acquired from King Pharmaceuticals ANUSOL-HC and PROCTOCORT
and launched them in the US market.
FDA granted the marketing approval to Salix for rifaximin using the brand
name XIFAXAN in 200-mg tablets.
Salix launched XIFAXAN in the US market to treat traveler’s diarrhea.
Salix licensed COLAZAL to Pharmatel to market in Australia and New
Zealand.
Appendix II
Salix Pharmaceuticals, Inc. Alliances
AAIPHARMA LLC
aaiPharma Inc. was a company focused on pain management. Its corporate headquarters was in Wilmington, North Carolina, although it had research and development as well as manufacturing sites in the United States, Europe, and Asia.
In November 2003, Salix acquired from aaiPharma LLC the exclusive right to sell
25-, 75-, and 100-mg azathioprine tablets in North America using the brand name
AZASAN. Under the terms of the agreement, Salix made aaiPharma an initial payment
and paid royalties on net sales in exchange for aaiPharma supplying the drug.
ALFA WASSERMANN S.P.A.
Salix inlicensed rifaximin from Alfa Wassermann, a privately held pharmaceutical
company headquartered in Italy. Alfa Wassermann’s therapeutic focus included
antithrombotics, antibiotics, gastrointestinal products, NSAIDs, immunomodulators, antihypertensives, and bronchopulmonary products.
Alfa Wassermann granted Salix the exclusive right in the United States and
Canada to develop, make, use, and sell or have sold rifaximin for the treatment of
gastrointestinal and respiratory tract diseases and agreed to supply Salix with bulk
active ingredient rifaximin at a fixed price. Salix agreed to pay Alfa Wassermann a
net sales-based royalty, as well as certain milestone payments. Salix was obligated
to pay royalties on the commercial launch of the product and to continue until
the later of the expiration of the period in which the manufacture, use, or sale
of the products by an unlicensed third party would constitute an infringement
on the patent covering the product, or 10 years from commercial launch. Salix
launched the sale of rifaximin under the brand name XIFAXAN in May 2004.
Either party could terminate the license agreement within 60 days following a
material breach. In addition, Alfa Wassermann had the right to terminate the agreement on three months’ written notice in the event that Salix failed to develop the
product in a timely manner. Salix could terminate the agreement on three months’
written notice in respect to any indication or any part of the territory covered.
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APPENDIX II
471
BIOREX LABORATORIES LIMITED
Biorex, a private, independent drug research company headquartered in London,
developed the chemical entity balsalazide disodium and completed limited Phase III
clinical trials in England. Biorex granted Salix the exclusive right to develop,
manufacture, and sell balsalazide disodium for all disease indications in the United
States for a period of nine years from the date of commercial launch or the term
of the applicable patent, whichever was longer. Salix paid Biorex initial fees at
agreement and was obligated to make additional milestone and royalty payments
for the drug. Salix undertook completion of preclinical testing, clinical trials, and
securing regulatory approvals for balsalazide disodium in the United States and
registered it under the brand name COLAZAL.
Under a separate agreement, Biorex granted Salix the exclusive worldwide right
(other than Japan, Taiwan, Korea, and the United States) to develop, manufacture,
and sell balsalazide disodium for all disease indications for a period of 15 years from
the date of commercial launch (subject to early termination in certain circumstances).
Under the agreement governing territories other than the United States, Salix was
obligated to pay to Biorex a portion of any gross profit on sales of balsalazide disodium outside the United States. During 2001, Salix acquired the exclusive right and
license to develop, manufacture, and sell balsalazide disodium in Japan, Korea, and
Taiwan. Salix paid no fees to Biorex on entering into this agreement, but was obligated to pay Biorex a portion of any upfront payments, milestone payments, and
gross profit on sales of balsalazide disodium in Japan, Korea, and Taiwan as well.
DR. FALK PHARMA GMBH
Dr. Falk Pharma, a privately owned company headquartered in Germany, was
one of the most widely recognized gastroenterology companies in the world.
In July 2002, Salix in-licensed rights to a granulated formulation of mesalamine
under an agreement with Dr. Falk Pharma. The agreement gave Salix the exclusive
rights to develop and market the product in the United States. In return Salix
would make upfront, milestone, and royalty payments to Falk. In addition, the
agreement provided Salix first negotiation rights to develop and market certain
additional Falk products in the United States.
MENARINI PHARMACEUTICAL INDUSTRIES S.R.L.
Menarini, headquartered in Italy, was the largest manufacturer and distributor
of pharmaceuticals in Southern Europe. Menarini had extensive experience in
developing and marketing therapies for gastrointestinal disease in its markets.
Salix granted Menarini certain manufacturing rights and exclusive distribution
rights with respect to balsalazide disodium in Italy, Spain, Portugal, and Greece.
Salix sold the bulk active ingredient balsalazide disodium to Menarini for marketing and distribution in its territories at cost plus a sales-based royalty. The
agreement with Menarini would continue until the earlier of the expiration of the
patents relating to the product or 15 years from the date of the agreement. Either
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CASE 2: SALIX PHARMACEUTICALS INC.
party could terminate the agreement within 30 days (in the case of a payment
breach) or 90 days (in the case of any other material breach).
SHIRE PHARMACEUTICALS GROUP PLC
Founded in 1986, Shire Pharmaceuticals Group was a global specialty pharmaceutical company with revenues of $1.2 billion in 2003. Shire was marketing products
to defined customer groups (physician specialists) and supported its growth by
acquiring or in-licensing additional R&D projects and marketed products.
In May 2000, Salix signed an agreement with Shire Pharmaceuticals Group
whereby Shire purchased the exclusive rights to balsalazide disodium for use as a
treatment for ulcerative colitis for Austria, Belgium, Denmark, Finland, France,
Germany, Iceland, Republic of Ireland, Luxembourg, Norway, The Netherlands,
Switzerland, Sweden, and the United Kingdom. Shire agreed to pay Salix $12.1
million in upfront fees and $12.0 million on achievement of certain milestones
(a portion of these payments was shared with Biorex). In May 2000, Shire paid
Salix $9.6 million in cash and $2.5 million by way of the issue of 160,546 new
Shire ordinary shares. In August 2000, Shire paid $4.4 million in connection with
the product license for balsalazide disodium in the United Kingdom.
KING PHARMACEUTICALS
King Pharmaceuticals, headquartered in Tennessee, was a publicly traded company
on the NYSE. King produced and marketed branded prescription products that fell in
a broad range of therapeutic categories including cardiovascular, orthopedic, endocrinology, neurology, women’s health, critical care, respiratory, and anti-infectives.
In June 2004, Salix paid $13 million cash for exclusive US rights for four products:
ANUSOL-HC (2.5% hydrocortisone cream USP), ANUSOL-HC (hydrocortisone acetate
25-mg suppository), PROCTOCORT Cream (1 percent hydrocortisone cream USP), and
PROCTOCORT Suppositories (hydrocortisone acetate rectal suppositories, 30-mg).
PHARMATEL PTY
Pharmatel, headquartered in Sydney, Australia, was a leading pharmaceutical
company in the area focused on gastroenterology and oncology.
In June 2004, Salix signed an agreement for Pharmatel to market COLAZAL
in Australia and New Zealand. As part of the agreement, Pharmatel was to fund
and conduct a study of COLAZAL in the treatment of irritable bowel syndrome.
Salix had the first right of negotiation for all Pharmatel gastrointestinal products
to be sold in the United States. Pharmatel made a one-time milestone payment
and paid royalties based on product sales.
RIMACO
In June 2004, Salix signed an agreement with Rimaco to serve as a distributor
of Salix products in Puerto Rico. Rimaco’s sales force would market and sell all
Salix products to physicians throughout Puerto Rico.
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APPENDIX III
473
Appendix III
Salix Pharmaceuticals Reports On Digestive Disease
Week Activities
RALEIGH, NC – May 19, 2004 – Salix Pharmaceuticals, Ltd. (Nasdaq: SLXP) today
reported on several Company-related events that took place at Digestive Disease
Week (DDW) earlier this week. DDW 2004 provided a venue for over 18,000
gastroenterologists and related healthcare providers to gain information on the
latest advances in gastrointestinal research, medicine, and technology.
RIFAXIMIN AS A PROPHYLAXIS FOR TRAVELERS’ DIARRHEA
Dr. Herbert L. DuPont, Chief of Internal Medicine Service, St. Luke’s Episcopal
Hospital, Houston; Director, Center for Infectious Diseases, University of Texas,
Houston School of Public Health; and Vice-Chairman, Department of Medicine,
Baylor College of Medicine reported findings of a study investigating the use
of rifaximin as a prophylaxis for travelers’ diarrhea. The efficacy and tolerability of
rifaximin as a prophylaxis for travelers’ diarrhea was assessed in 220 US adults in
a randomized, double-blind placebo-controlled study. Subjects received rifaximin
200 mg either once, twice or three times daily or placebo three times daily for two
weeks. Subjects were followed daily for three weeks for the occurrence of diarrhea,
mild diarrhea or severe diarrhea. Subjects also were followed for five weeks for
drug-related side effects. Over the two-week treatment period 85 percent of the
rifaximin-treated subjects compared with 49 percent of the placebo-treated subjects
remained free of diarrhea. Additionally, rifaximin also prevented the occurrence of
milder forms of diarrhea and prevented the occurrence of moderate and severe
abdominal pain and cramps and excessive gas-related symptoms. The incidence
of adverse events was comparable between each rifaximin group and placebo.
CHEMOPREVENTION OF COLONIC POLYPS BY BALSALAZIDE DISODIUM
Mesalamine previously has been reported in retrospective studies to reduce the
risk of colitis-related neoplasia, and balsalazide disodium (COLAZAL®), a prodrug
of mesalamine, has been shown to prevent the growth of intestinal tumors in animals. Jonathan Terdiman of the San Francisco Veterans’ Administration Medical
Center and University of California San Francisco reported results of a prospective, randomized, double-blind placebo-controlled study conducted to examine
the effect of balsalazide disodium on the size and number of colorectal polyps in
situ in humans. In this study, 86 patients with colonic polyps were treated with
balsalazide disodium (3 gm daily) or placebo for six months. Though the change
in size and number of adenomas did not significantly differ between treatment
groups, a trend was seen toward reduced total adenoma volume in those receiving balsalazide disodium, suggesting that the rate of tubular adenoma growth may
be slowed by balsalazide disodium treatment. In addition, the slowing of adenoma
growth was enhanced by concomitant aspirin use. Additional studies of different
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CASE 2: SALIX PHARMACEUTICALS INC.
design and larger size are required to further investigate the chemopreventive
effects of this agent.
MEDICAL CROSSFIRE: DIAGNOSIS AND MANAGEMENT OF
GASTROINTESTINAL DISORDERS
Approximately 500 gastroenterologists and other health care professionals
attended a continuing medical education initiative – “Medical Crossfire: Diagnosis
and Management of Gastrointestinal Disorders“– supported by an unrestricted
educational grant from Salix. A panel of nationally recognized key opinion leaders
comprising Asher Kornbluth, MD, Gary R. Lichtenstein, MD, Mark Pimentel, MD,
Daniel H. Present, MD, Ellen J. Scherl, MD and Steven R. Peiken, MD addressed
current issues and challenges associated with the diagnosis and management of
gastrointestinal disorders.
Source: Salix website (http://www.salix.com/newsroom/20040519b.asp)
Appendix IV
Salix Pharmaceuticals Reports on American Academy of Family
Physicians Activities
RALEIGH, NC – October 14, 2004 – Salix Pharmaceuticals, Ltd. (Nasdaq:SLXP)
today reported on Company-related activities that will take place over the next
several days at the 2004 Annual Scientific Assembly of the American Academy
of Family Physicians (AAFP) in Orlando, FL. AAFP 2004 will provide a venue
for Salix to introduce XIFAXAN™ (rifaximin) tablets 200 mg to more than 94,000
primary health care providers.
Salix is supporting, by means of an unrestricted educational grant, a continuing
educational symposium for general practitioners entitled: “New Perspectives in
Managing Infectious Diarrhea in the Traveler: A Focus on Prevention and PostInfectious Complications.” A faculty of nationally recognized key opinion leaders
comprising Robert E. Rakel, MD, Herbert L. DuPont, MD and Henry Lin, MD
will address issues related to the epidemiology, diagnosis and current and new
management strategies for travelers’ diarrhea.
Commenting on the Company’s presence and activities at AAFP, Ms. Carolyn
Logan, President and CEO, stated, “Salix looks forward to this first opportunity to
meet face-to-face with and introduce XIFAXAN to family physicians. We anticipate
that these primary care providers will be very receptive to XIFAXAN, a nonabsorbed, gut-selective antibiotic, as a significant new addition to currently available
systemic antibiotic therapy for the treatment of travelers’ diarrhea.”
Source: Salix website (http://www.salix.com/newsroom/20041014.asp)
both02.indd 474
11/11/08 11:10:08 AM
NOTES
475
Appendix V
Salix Pharmaceuticals Announces Positive Results of
Balsalazide Disodium Study
STUDY RECEIVES ASTRO RESIDENT CLINICAL RESEARCH AWARD
RALEIGH, NC – October 13, 2004 – Salix Pharmaceuticals, Ltd. (Nasdaq:SLXP)
today announced results of a study entitled “Randomized, Double-Blind, PlaceboControlled Trial of Balsalazide disodium in the Prevention of Acute Radiation
Enteritis as a Consequence of Pelvic Radiotherapy.” Christopher Jahraus, MD,
a radiation oncologist with the Department of Radiation Medicine, University
of Kentucky College of Medicine, presented the abstract and oral proceedings
of the study results on Wednesday, October 6 at the 46th Annual Meeting of the
American Society for Therapeutic Radiology and Oncology.
Source: Salix website (http://www.salix.com/newsroom/20041013.asp)
NOTES
1. Pharmacokinetics: how the drugs move through the
body after they are swallowed or injected.
2. Efficacy: ability to control or cure a condition or
disease.
3. Moiety: ingredient or part. According to the FDA
“an active moiety means the molecule or ion, excluding those appended portions of the molecule that
cause the drug to be an ester, salt (including a salt
with hydrogen or coordination bonds) or other
noncovalent derivative (such as a complex, chelate,
both02.indd 475
or clahrate) of the molecule, responsible for the
physiological or pharmacological action of the drug
substance.”
4. Maria T. Abreu, MD, “The Clinical Course of IBD.”
(See Salix Newsletters at http://www.salix.com/
newsletter/newsl121504_pg2.asp#)
5. Medline Plus (full copy) US National Library of Medicine. (See http://www.nlm.nih.gov/medlineplus/
ency/article/000302.htm#Alternative%20Names)
11/11/08 11:10:08 AM
Case Study Analysis Guidelines
Required Sections
Guidelines
I. Cover Page
•
•
•
Cover page of the report
Running header
Your name, course section, and due date
II. Statement of
the Problem
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•
•
•
•
State the problems facing the manager/key person
Identify and link the symptoms and root causes of the problems
Differentiate short term from long term problems
Identify the decision facing the manager/key person
Provide a detailed analysis of the problems identified in the Statement of the
Problem
In the analysis, apply theories and models from the text and/or readings
Support conclusions and /or assumptions with specific references to the case
and/or the readings
Identify criteria against which you evaluate alternative solutions (i.e. time for
implementation, tangible costs, acceptability to management)
Include two or three possible alternative solutions
Evaluate the pros and cons of each alternative against the criteria listed
Suggest additional pros/cons if appropriate
Identify who, what, when, and how in your recommended plan of action
Solution and implementation should address the problems and causes identified
in the previous section
The recommended plan should include a contingency plan(s) to back up the
‘ideal’ course of action
Using models and theories, identify why you chose the recommended plan of
action – why it’s the best and why it would work
III. Causes of the
Problem
IV. Decision
Criteria and
Alternative
Solutions
V. Recommended
Solution,
Implementation
and Justification
•
•
•
•
•
•
•
•
•
•
VI. External
Sourcing
•
VII. Spelling
Grammar and
Presentation
•
•
•
•
•
•
•
•
2 external sources (in addition to your textbook) should be referenced to back
up your recommendations or to identify issues. This information would be
ideally sourced in current journals, magazines and newspapers and should
reflect current management thought or practice with respect to the issues
identified.
Your case analysis should :
3-5 pages
Include the 5 sections listed in the outline
Be double spaced and the pages should be numbered
Have 1 inch margins – top bottom left and right
Use 12 point font size
Be free of spelling errors
Use APA format