Question

Pfizer, the manufacturer and marketer of Ibrance pays about $15/thousand impressions, or 1.5 cents per consumer reached, or $3 per targeted consumer reached, and they report that a significant number of consumers do respond to the ads, by calling the 800 number, by talking to their doctors and by buying Ibrance. And it does not hurt that Ibrance costs $12,000 for a typical course of treatment.

But how does Pfizer justify spending an estimated $90 Million per year on Ibrance Advertising? What level of response does Pfizer need to generate in order to justify the advertising expense? How many prescriptions do they need to sell to cover the cost of generating them? Please show your math.

Answer 1

The questions depend on how much Pfizer makes on sale of one prescription of Ibrance. If we assume that the entire $12000 for a typical course of treatment goes towards its profit, then also Pfizer has to generate 7500 prescriptions as sales from advertising cost just to break even. The cost of Ibrance will also have to be studied. Say the cost is $2000 per prescription, then Pfizer has to generate $90 million / $10000 = 9000 prescriptions as sales from the advertisement campaign. This is over and above the sales made by other means. Generating 9000 prescriptions per year may be a little daunting considering that typical course of treatment costs $12000! The drug is not affordable to the general public and the consumers may want to buy cheaper alternatives.