3. HECO U1 - Pharm Business Firm1

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THE PHARMACEUTICAL

BUSINESS FIRM

BUSINESS – organized effort of individuals to

produce and sell the products andservices that satisfy society’s needs.

- also called company enterprise orfirms.

DESCRIBING PHARMACEUTICALBUSINESS FIRM

1. Production Firms

2. Manufacturing Firms

3. Trading Firms

4. Service Firms

FORMS OF BUSINESS ORGANIZATIONS

Business Firms are organized into 3distinct Groups

1. The major forms

2. The minor forms

3. The modified corporate form

The Major Forms of BusinessOrganization

1. Sole Proprietorship

2. Partnership

3. Corporation

-Owned by one person

- Most common in retailing, serviceand agriculture

-This furnishes its own capital(savings or supplied by familymembers.

Financing Pharmaceutical Business Firms

1. Sole Proprietorship

1. Ease and low cost of starting2. All profits to the owner

3. The owner is in direct control

4. Tax savings are realized

5. There are minimum legal restrictions

6. Freedom to terminate the business

7. Prompt action in site selection, acquisition or lease

8. One man show

ADVANTAGES OF SOLE PROPRIETORSHIP

1. Owners have unlimited liability2. There is lack of continuity

3. Difficulty in raising capital

4. Difficulty in hiring employees

5. High risk for failure

6. The jack-of-all- traits/ limited management skills

7. Predisposed to ill-health and dreaded disease

DISADVANTAGES OF SOLE PROPRIETORSHIP

Is an association of two ormore persons who place theirresources together to obtainprofit

Partnership

1. General Partner- co owned by 2 or more gen. partnerswho are liable for everything the business does

2. Limited Partner- contributes capital to business buthas no management responsibility or liability beyondthe amount he/she invested in the partnership.

3. Universal Partner- common property of all partners

4. Capitalist Partner- contribution to the business are in

the form of money or currency.5. Industrial Partner- own labor or industry to the

partner

Kinds of Partnership

6. Silent Partner - limited partner who does notparticipate actively.

7. Secret Partner- anonymous partners

8. Dormant Partner- do not participate in day to dayactivities but contribute to capital/ bear losses or any.

9. Nominal Partner- allows his/her name to be identifiedwith the business. No investment, no interest in thebusiness.

Kinds of Partnership

1. Ease of formation

2. Additional sources of capital/ availability of capitaland credit.

3. Combined business skills and knowledge (division

of labor and efficiency in operations)

4. Possible tax advantages (no state and federal tax)

5. Employee incentives

6. Similar benefits as that of sole proprietorship

ADVANTAGES OF A PARTNERSHIP

1. Unlimited Liability

2. Divided Authority

3. Lack of Continuity4. Frozen Investment

5. Effect of Management disagreement

DISADVANTAGES OF A

PARTNERSHIP

-Is an artificial being, invisible,intangible and existing only incontemplation of the law.--juridicialbeing

-The capital of a corporation is

obtained by the scale of shares ofstock from the members of thecorporation.

CORPORATIONS

1. Limited Liability2. Specialized management

3. Transferability of ownership

4. Continuous existence

5. Greater ease of raising capital

6. Possible tax advantages

Advantages of Corporation

1. Complicated to organize

2. Government controls

3. Charter restrictions

4. Double taxation

5. Impersonality and lack of secrecy

6. Dividends

Disadvantages of Corporation

The Minor Forms of Business

Organization1. The joint stock company-capital is divided

into small units permitting a number ofinvestors

2. The joint venture- established for a specificproject and for limited time

3. The business trust- trustee is appointed tomanage the business and its operationthrough a trust relationship

The Modified Corporate Form of

Business Organization

1. Cooperatives- association of individualswhich purpose is to perform business for itsmembers

a. Credit union cooperative- accepts deposit from

its members and lends money to its members atreasonable rates

b. Producer’s cooperative- mutually assist oneanother in the procurement of raw materials,machinery, equipment and other needs to producegoods/services.

c. Marketing cooperative- assist its members in

marketing their products.

d . Consumer’s cooperative- provide its members

with quality goods and services at reasonable price

e. Service cooperative- to make services availableto its members

2. Mutual companies

a. Mutual savings banks-- firm owned by

depositors

b. Mutual insurance company – organizationowned by policy holders

Forms of BusinessOrganizations

Modified

Corporate

proprietorshipCorporate

Joint stock

Company

Partnership

Corporation

Venture

Business Trust

Mutual

The Pharmaceutical HealthCare Industry

QUESTION:

QUESTION: 1.Which among the key world

market, has the greatest drugsales?

A. EuropeB. United States

C. CanadaD. Japan

THE WORLD DRUG MARKET

Key World Markets Drug Sales in US$ Billion

1. United states 189.81

2. Canada 9.41

3. United Kingdom 14.58

4. European Markets 82.42

5. Japan 55.69

6. France 20.17

7. Germany 23.99

8. Mexico 6.28

Top 10 pharmaceutical markets in the world in current US$ billion

Country 1976 Country 1985 Country 2000

Value % world Value % world Value % world

USA 7.90 18.4 USA 26.45 28.1 USA 149.5 52.9

Japan 4.02 9.3 Japan 14.04 14.9 Japan 51.5 18.2

Germany 3.41 7.9 Germany 6.00 6.4 France 16.7 5.9

France 2.70 6.3 China 4.70 5.0 Germany 16.2 5.7China 2.60 6.0 France 4.47 4.8 UK 11.1 3.9

Italy 1.90 4.4 Italy 3.67 3.9 Italy 10.9 3.9

Spain 1.32 3.1 UK 2.35 2.5 Spain 7.1 2.5

Brazil 1.21 2.8 India 1.78 1.9 Canada 6.2 2.2

UK 1.03 2.4 Canada 1.69 1.8 Brazil 5.2 1.8

Mexico 0.77 1.8 Brazil 1.41 1.5 Mexico 4.9 1.7

Top 10 26.86 62.4 Top 10 66.56 70.8 Top 10 279.3 98.7

43.05 100 World

94.10 100 World

282.5 100

Top 10 pharmaceutical markets in the world, in current US$ billion

Source: World Drug Situation 1988 and IMS Health, IMS MIDAS Customized Insights (October 2001) The information contained in this study is a guide to sales and not a guide to consumption.

QUESTION:

2. Which among the therapeuticcategories has the highest amountof sales in the world market?

A. CNSB. Cardiovascular

C. MuscoskeletalD. Respiratory

The World Drug Market by TherapeuticCategories (as of 2003)

1. Muscoskeletal 21.6

2. CNS 62.08

3. Cardiovascular 65.594. Alimentary/Metabolism 48.28

5. Respiratory 29.11

6. Genitourinary 18.06

7. Cytostatics 16.10

As of 2008

QUESTION:

QUESTION: 3. Which among the drugs

with a patent expiry has thehighest amount of sales?

A. NorvascB. Adalat

C. CozaarD. Plavix

Drugs with Patent Expiry and Sales Figures

Brand Name 2000 sales in US$

Million

Adalat 1.176

Atacand .293

Cozaar 1.077

Flovent/Flixotide 1.307

Norvasc 3.341

Zestril 1.130

Bl k b t D ith P t t E i d

Block buster Drugs with Patent Expiry and

Sales Figures (2010)Brand Name Category 2010-2011 sales in

US$ Billions/

millions

Plavix Anticoagulant 6.1 B

Lipitor Anticholesterol 5.3 B

Seroquel Antischizophrenia (antipsychotic) 3.7 B

Actos Diabetes 3.3 B

Enbrel Antirheumatoid arthritis and psoriasis 3.3 B

Singulair Anti asthma and allergies 3.2 B

Levaquin Antibiotic (Pnuemonia) 1.3 BZyprexa Antischizophrenia (antipsychotic) 3.5 B

Concerta Anti ADHD 929 M

Protonix Anti GERD 690 M

4. Which among the following is the top 1

leading company listed with top leadingbrands as of 2008?

A. Sanofi- AventisB. RocheC. Astra Zeneca

D. Wyeth

QUESTION:

5. What are the 4 top selling

brands in the world market?

Brand Company Indication Sale in $ B

Lipitor

Norvasc

Pfizer, Inc. Cholesterol

Anti-hypertensive

Cozaar/Hyzaar

Merck &Co. Hypertension

Hypertension

Zestril

Seloken

Astra Zeneca Hypertension

Hypertension

Pravachol

Avapro

Bristol MyersSquib Co

Cholesterol

Hypertension

WORLD DRUG MARKET

4 TOP SELLING BRANDS (2003)

T S lli M di i l B d 2006 2008

Brands® Generic Name Companies Indications Sales $ billion

2006 2007 2008 A (P)

Lipitor® Atorvastatin Pfizer, Astellas Cholesterol 12.9 13.5 13.35 (13)

13.6 13.5 13.65

Plavix® Clopidrogel Bristol Myers Squibb, Sanofi

Aventis

Atherosclerosis 5.55 8.2 9.4 (8.9)

5.8 7.3 8.6

Advair® Fluticasone

Salmetrol

Glaxo Smith Kline Asthma 6.13 7.0 7.65 (7.5)

6.3 7.1 7.7

Nexium® Esomaprazole Astra

Zeneca

Ulcers 5.2 5.2 5.2 (5.2)

6.7 7.2 7.8

Top Selling Medicinal Brands 2006- 2008

NCE ® NME ® Sales Increase ® Sales Decline ®

Lipitor 13.35 Enbrel 7.66 Enbrel 2.46 Protonix 2.71Plavix 9.4 Remicade 6.2 Humira 1.5 Zyrtec 2.1

Advair 7.66 Rituxan 5.48 Remicade 1.2 Fosamax 1.49

Diovan 5.74 Avastin 4.82 Plavix 1.2 Tamiflu 1.29

Nexium 5.2 Herceptin 4.72 Avastin 0.89 Risperdal 1.26

Zyprexa 4.69 Humira 4.5 Diovan 0.74 Aranesp 1.1

Seroquel 4.64 Lovenox 3.99 Erbitux 0.7 Avandia 0.95

Abilify 4.5 Lantus 3.58 Zocyn 0.7 Pravachol 0.92

Singulair 4.33 Aranesp 3.1 Xolair 0.62 Norvasc 0.76

Effexor 3.9 Gardasil 2.8 Seroquel 0.61 Ambien 0.60

Top Ten Medicinal Brands Ranking in 2008 ($ billion)

QUESTION: 6. In the Philippine Pharmaceutical

market, which has a greater amount ofsale?

A. Ethical drugsB. Proprietary drugs

The Philippine Pharmaceutical Market

Total Pharmaceutical Market2004 = P80.083 Billion

2003 = P70,415 Billion

Ethical and Proprietary

2003 2004

Ethical P50,411 B P57,300 B

Proprietary P 20,004 B P22,783 B

Total P70,415 B P80,083 B

QUESTION: 7. Which among the companies has

the greatest amount of sales in in thePhilippine drugstores and hospitals?

A. UnilabB. Glaxo Smith KlineC. Pfizer

D. Wyeth

Drugstores and Hospital Sales

TOP 5 COMPANIES

1. United Laboratories 17,331 B

2. Glaxo Smith Kline 8,134 B

3. Pfizer, Inc. 6,421 B

4. Wyeth 5,145 B

5. Astra-Zeneca 3,671 B

QUESTION: 8. Which among the therapeutic

classification has the greatest marketshare in the Philippines?

A. VitaminsB. CardiovascularC. Anti-infectives

D. Cough and Colds

Therapeutic Classification

Sales in M Market Share1. Anti-infectives 69,600 16.7%

2. Cardiovascular 10,718 15.4%

3. Vitamins-Minerals 7,934 11.4%

4. Somatics 7,447 10.7%

5. Cough-Colds 5,081 13%

QUESTION: 9. What is the top 1 ethical product inthe Philippines?

A. NorvascB. VentolinC. Augmentin

D. Plendil

Top 10 Ethical Products1. Ventolin Anti-asthma P 1,230 M

2. Norvasc Cardiovascular 730 M

3. Augmentin Anti-infectives 642 M

4. Plendil ER Cardiovascular 558 M

5. Lipitor Cardiovascular 444 M6. Zinnat Anti-infectives 412 M

7. Plavix Cardiovascular 360 M

8. RM-Amoxicillin Anti-infectives 310 M

9. Neobloc Cardiovascular 309 M

10. Diamicron Endocrin 295 M

QUESTION:

10. What is the top 1 brand inPhilippine drugstores and hospitals?

A. BiogesicB. VentolinC. Enervon C

D. Solmux

T 20 B d

Top 20 BrandsHospital and Drugstore

1. Ventolin2. Biogesic

3. Enervon C

4. Ceelin

5. Solmux6. Augmentin

7. Norvasc

8. Alaxan

9. Neozep10. Plendil ER

11. Plavix12. Zinnat

13. Clusivol

14. Revicon

15. Ciprobay16. Diamicron

17. Promil

18. Neobloc

19. Centrum20. Unasyn

QUESTION:

11. What is the top 1 OTC brandPhilippine drugstores and hospitals?

A. BiogesicB. VentolinC. Enervon C

D. Ceelin

T 10 OTC B d

Top 10 OTC Brands

1. Ceelin P 1,015 M

2. Enervon C 883 M

3. Alaxan 847 M

4. Solmux 750 M

5. Biogesic 697 M

6. Neozep 642 M

7. Clusivol 467 M

8. Ponstan 432 M

9. Tuseran 378 M

10.Revicon Forte 350 M

QUESTION:

12. What is the top 1 unbrandedmanufacturers in drugstores andhospitals?

A. PascualB. Ritemed

C. United HomeD. Abbott

TOP 10 UNBRANDED MANUFACTURERS

1. RiteMed Phils. 583,469.383 M

2. Pascual laboratories 471,891.551 M

3. Euro-Med Lab 336,841.592 M

4. Bristol Myers 296,472.643 M

5. Abbott Lab 179,010.478 M

6. LVP Phils 153,526.506 M

7. United Home 114,104.099 M

8. Organon 70,063.946 M

9. Rhea 63,307.536 M

10. Pharma Wealth 63,307.536 M

DISTRIBUTION CHANNELS ACCORDING TO SALES

DISTRIBUTORS

TRADERS OR SUB-DISTRIBUTORS

DRUGSTORES 85.6% HOSPITAL 11.0% OTHER RETAIL 3.4%

INDEPENDENT27.9%

CHAIN57.7%

PRIVATE8.1%

GOVERNMENT2.9%

INDUSTRIALCLINICS w/o

BED3.0%

GOVERNMENTAGENCIES

CLINICS W/BEDS

INDUSTRIALHOSP.

C O N S U M E R

DISTRIBUTION CHANNELS ACCORDING TO SALES

QUESTION:

13. What is the top 1pharmaceuticalmarket player in thePhilippines today?

A. MercuryB. Med express

C. Multinational companiesD. Watsons

MARKET DRIVERS

PHILIPPINE PHARMACEUTICAL MARKET

1. Mercury Drug - 500 Branches andfranchises

@ with self service areas

2. Watson – over 100 outlets

@ with pharmacist counseling areas

3. DSAP@ difficulty in implementing S. act

4. Med Express

@ 3 in 1 dru store

MARKET DRIVERS

PHILIPPINE PHARMACEUTICAL MARKET

5. CEPPhA ( Continuing education Programfor Pharmacy Assistants)

@ drugstore front liners

6. Drugstore quality awards

@ quality and excellence in the area of….

7. Independent drugstore

8. Local and multinational companies

9. Healthcare centers

Market Drivers in the hospitalSector

1. Private hospitals

2. Insurance program

3. Public hospitals

4. More Clinical pharmacy practice

5. Health Maintenance Organizations

QUESTION:

What are the 3 sources of funds of

pharmaceutical products in thePhilippines?

How Funds Flow In

As with all health care services, fundingfor pharmaceutical products comes fromvariety of sources

1. Patients

2. Employers and private insurance

3. Government

QUESTION

QUESTION:

What is the highest source of funds inthe Pharmaceutical Products ?

A. Out of the pocketB. Private InsuranceC. Phil health

D. Public programs

Sources of Funds for Pharmaceutical Products

Total 536 per person, 10% of National

health expenditures

Out-of-pocket 32%

Private insurance 46%

Medicare/Philhealth 17%

Other Insurance 2%Other Public programs 3%

QUESTION:

The flow of funds in the pharmaceuticalmarket is dominated by ?

A. Branded ManufacturersB. Generic ManufacturersC. Wholesalers

D. Retailers

Flow of Funds in the Pharmaceutical Market

Pharmacy

Benefit

Manager

Retail Pharmacy

15-25%

Brand name

PharmaceuticalCompanies

70-80%

Wholesale

Generic Manufacturers 6%

PATIENTS

Flow of Funds in the Pharmaceutical Market

QUESTION:

Which of the following has the highestallocation of funds in thePharmaceutical Market?

A. Cost of goodsB. Sales and marketing

C. ResearchD. Taxes

Uses of Funds For Pharmaceutical Market

1. Cost of goods 30%

2. Research and Development 13%

3. Sales, marketing, administration 31%

4. Taxes 6%

5. Net Income 20%

Research and Development

Stages of Drug Testing# of compounds at each stage

Discover – Screen compounds to find a drug 5,000 – 10,000

Preclinical – Laboratory and animal testing 250

IND Investigational New Drug

Stage 1 (20-80 volunteers, safety and dosage) 20

Stage 2 (100-300) patients, test, efficacy, side effects 13

Stage 3 (Large randomized trial of clinical effectiveness) 8

NDA – APPLICATION File New Drug Application 2

FDA approval ( Launch new product) 1

up to 15 years 3-15 - $100M – $150M

QUESTION:

What is the trend in the drug industryamong patient consumer?

EMERGING TRENDS IN THE DRUG INDUSTRY

Patient

Consumer

1. Self diagnosis

Self medication

Self treatment2. Use of OTC drugs,

Herbals, Food

Supplements

3. Minimal purchase

and almost daily

basis4. Hospital confine-

ment, Medical &

Allied services

only in extreme

emergencies

O h i d d lf di i i

On the attitudes towards self-medication practices

Rank Self-medication practices

1 Necessary Remedy

2 Temporary Remedy

3 Safe and Convenient4 Illegal

5 Dangerous

QUESTION:

What is the most common ailment toself medicate?

A. HeadacheB. coldsC. diarrhea

D. fever

Self-medication practices on common ailments

Self medication practices on common ailments

Rank Common Ailments

1 Headache2 Fever

3 Cold

5 Sore Throat

6 Itchiness

7 Skin Rashes

8 Diarrhea

9 Sore Eyes

10 Muscle Pains

11 Pimples

12 Minor Burns

QUESTION:

In the choice of OTC drugs, what isthe number 1 factor that will influenceconsumer to buy?

A. Doctor’s advise B. Parent’s influence C. Knowledge about the drugD. Advertisement

Profile on the attitudes towards the choice of OTC

drugs on the different services of information

RANK Services of Information

1 Doctor’s advice

2 Advice of parent

3 Knowledge of OTC Drugs

4 Proximity of drugstore

5 Advice of a friend

6 Advice of Drugstore personnel

7 Advertisement

8 Drugstore Display

QUESTION:

What is the number 1 reason whypeople what to buy OTC?

A. Immediate reliefB. Avoid doctor’s fee C. Save money

Intention of Buying

Rank Intentions/Purposes of BuyingOTC drugs

1 To seek immediate relief of minor ailment

2 To save time and efforts going to a doctor’sclinic

3 To save money on prescription drugs

4 To avoid cost of consultation of doctors

QUESTION:

What is the frequency in buying OTCby an average consumer?

A. Only when necessaryB. One a weekC. Twice a weekD. Once a month

F i B i OTC D

Frequency in Buying OTC Drugs

Rank Frequency in Buying OTC

1 Only when necessary

2 Twice a month3 Once a month

4 Three times a week

5 Two times a week

6 Once a week

QUESTION:

What is the highest percentage ofbuying an OTC drug?

A. 5%B. Less than 5%C. more than 5%D. more than 10%

P t i B i OTC

Percentage in Buying OTC

Rank % in Buying OTC Drugs

1 Small percentage

2 Five percent

3 Ten percent

4 Fifteen percent

5 Over twenty percent

QUESTION:

What is the most convenient place ?to by an OTCA. drug store

B. Sari-sari storeC. Grocery/ convenient store

Places which are considered convenient or advantageous in

aces w c a e co s de ed co ve e t o adva tageous

buying OTC drugs

RANK Places considered convenient or

advantageous in buying OTC drugs

1 Drugstore

2 Sari-sari store

3 Grocery/Supermarket

4 Other Centers/Botica ng Bayan

5 Shell shops/Gasoline stations

QUESTION:

What is the primary basis of buyingOTC drug?A. Price

B. safetyC. Effectiveness

Primary Basis in Buying OTC Drugs

Rank Primary Basis of Buying

OTC Drugs

1 Effectiveness of the product

2 Safety of the product

3 Price of the product

4 Popularity of the product5 Presentation of the product

6 Manufacturer of the product

QUESTION:

What is the trend in the drug industryamong health insurance?

Health Insurance

1. Increasing

Visibility of HMO

2. MD’s and

Hospital/Private

Entities Owning

3. HMO Industrial

Establishments

Partnership

4. HMO Drugstores

Tie-ups

QUESTION:

What is the trend in the drug industryamong community and hospital?

Hospital/Community

Pharmacy

1. Establishing

Franchises to

qualifies entre-

preneurs

2. Hospital Pharmacy

open to general

public

3. 24-hours service in

community

pharmacy

4. One-stop-concept

Wide array of

assorted goods

THE PHARMACEUTICAL MARKETS

Traditional MarketsNon-Traditional Market

DOH/NGO’s

Drugstores

Hospitals

Industrial clinics

Medical ClinicsDispensing

Physicians

Groceries and

supermarkets

Trading stores andSari-sari stores

Municipalities

Regional Health

Office

Rural Health

centersBarangays & sitios

Botica sa bayan

The Target Consumers for Drug Products

Upper Class

Middle Class

Lower Class

1. Income Level

2. Age Classification

3. Gender

4. Educational Attainment

5. Geographic locations

Flow of Rx in the Hospital OPD

Out-Patients

DRUGSTORES

Rx generated from

Residents MDs/

Consultants

Buys Rx

Out-Patient Department

(OPD) Hospitals

ow o t e osp ta O

Flow of Rx in Hospital IPD

In-Patient Department

(IPD) Hospitals

In-Patient

(Confined in Hospitals)

Hospital Pharmacy

Rx generated from

Residents MDs/

Consultants

Rx In Patient’s Chart

Served by nurses

Emergency Rooms (ER)

Out-Patient In-Patient

Emergency Rooms

Hospitals

DrugstoresEmergency Rooms

Hospitals

g y ( )

HOSPITALS

FLOW OF Rx IN HOSPITAL ERs

Rx bought/served

Rx served

Rx generated from, Residents MDs/Consultants

QUESTION:

What are the different models in

channeling drugs from manufacturersto end users?

Channel 1

Consists of a drugmanufacturer selling

directly to the DOH or

government health units and

hospitals who will in turnmake the medicinesavailable to the end-users

practically for free. A local

drug trader may serve as the

intermediary level in behalf of the drug manufacturer in

transacting business with

Drug Manufacturer

Department of HealthGov’t. Health Units

Gov’t. Hospitals

End Users

LocalDrug

Trader

Channel 2

Contains 2 middlemen level.A sales representative of a

drug manufacturer selling to

dispensing physicians who in

turn sells the medicines tothe patients (end-users)charging the latter

consultation fees and

medicines given

Drug Manufacturer

Sales reps

Dispensing

Physicians

END USERS

Channel 3

Contains only 1

middlemen level, either

an independent

distributor or retailer,who in turn sells the

drug products to end-

Drug Manufacturer

Independent

Distributors

END USERS

Retailers

Channel 4

Contains 2 middlemen

level, namely the

wholesaler and retailer

drugstore outlets whoin turn sells to the end-

users. In some

companies, 3

middlemen level when

it’s their salesman that

facilitates the

transactions.

Drug Manufacturer/

Distributors

Wholesaler

Retailer

END USERS

Channel 5

Contains 3 middlemen

level, reflecting jobbers

who sells to the smaller

retailers generally arenot served by the large

wholesaler drugstores

Drug Manufacturers/

Distributions

Wholesaler

End Users

JOBBERS

Retailers

QUESTION:

What is the flow chart distribution ofdrugs of Mercury drug?

Drug ManufacturerFLOWCHART

DISTRIBUTION

Independent

Distributors

Company

Warehouse

Branch operations Franchise Operations

Mercury Drug Corp.

Traditional Outlets Traditional Outlets

Non-Traditional Non-TraditionalEnd Users

DISTRIBUTION

QUESTION:

What is the flow chart distribution ofdrugs of unilab?

UNILAB United Lab Distribution

UNILAB

Manufacturer

Warehouse

Provincial

Warehouse

• Drugstores

• Hospitals

• Industrial Clinics

• Non-traditional Outlets• Dispensing Physicians• Department of Health

END USERS

Flow Chart

QUESTION:

What is the common flow chartdistribution of drugs of ?

Drug Manufacturer

Pharmaceutical

Company Distribution

National Distributor

Private

Institution

Dispensing

Physicians

Government

Distributors

Wholesale/Retailer

(drugstores)

Government

Agencies

Pure Retailers(drugstores)

END USERS

Flow Chart

BUSINESS CYCLES ANDINFLATION

PHASES OF THE BUSINESS

1. The prosperity phase

2. The crisis (or contraction or recession)

3. The depression phase

4. The recovery (or expansion) phase

Characteristics of Prosperity

Characteristics of ProsperityPhase

High prices and great

business activity

Large profits for

business firms Production is at full

capacity

Increasing demand for

many commodities Increasing demand for

Increasing volume of

credit extensions bylenders

Large demand for credit

Rising interest rates

THE PROSPERITY PHASE

Business

Activity

Business

Demand

Raw MaterialsAnd other

Commodities

LABOR LANDCapital

Resulting to

• Higher outputs

• Higher sales

• Higher profits

• Higher Wages

• Higher Rent

• Higher Interest

• Higher Prices of Materials

Supplies

Crisis or Recession Phase

The demand forgoods decreases

The margin of profits

gradually shrinks The volume of sales

decreases

Trading slows down

The production of goods is reduced

The demand for labor,capital, and land decreases

Prices go down

The ability of business firms

to meet their financialobligations is impaired

Unemployment begins to

bother labor

No further extensions of

credit or renewals of old loansare made by banks

THE CRISIS OR RECESSION PHASE

Reduced

Business

Activity

Business

Reduced

Demand

LABORRaw Materials

And otherCommodities

Capital LAND

Resulting to

Resulting to• decreasing outputs sales,

and profits

• decreasing wages,

rent, interest rates,

prices of raw materials

and supplies

D i Ph

Depression Phase

Many businesseshave ceasedoperations

Profits are minimal,if it is still possible tomake some

Banks have plenty of

idle funds Banks are gradually

reduce interest rates

Credits starts to become

available

Unemployment is at its

highest level Many unemployed

persons are willing to

work at lower wages

The prices of rawmaterials and supplies

are low

THE DEPRESSION PHASE

Greatly ReducedBusiness

Activity

Reduced #Of Firms

Still Operating

LABORRaw Materials

And otherCommodities

Capital LAND

Resulting to

Very Low

Demand

• Minimal

output, sales, and

profit

• low wages, rent,

interest rates

• low prices of raw

materials and

supplies

Recovery Phase

As the supply of

commodities in the market

gets exhausted, demand for

these begin to be felt

Optimism among

businessmen slowly

develops, prodding them to

increase business activity

The demand for laborincreases, resulting to a

decrease in unemployment

The purchasing power of the people rises

The low rates of interestwill attract businessborrowings

Prices slowly rise

There is an increase inproduction output

Idle plans are used andplans for construction of new ones are considered

The Business Cycle

Prosperity

DepressionDepression

Prosperity

Control Of Business Cycles

1. The stabilization of business

2. Control of credit

3. Control of public works

4. Business forecasting5. Monetary readjustment

6. Payment of high wages

7. Economic planning

Basic Terms Related To Inflation

1. Price level2. Market basket

3. Price index4. Inflation

5. Deflation

Types of inflation

1. Cost-push inflation – is one characterized bycontinual decreased in the aggregate supply,

resulting to increase in the cost of production

2. Demand-pull inflation – is one caused by

increases in aggregate demand

3. Inertial inflation – is that “steady inflation that

occurs when inflation is expected to persist and

the ongoing rate of inflation is built intocontracts and people’s expectations”

Measuring Inflation

Inflation rate

for year XCPI in year X – CPI in Year Y

CPI in year Y

X 100=

CPI = consumer price index

year X = year under consideration

year Y = year immediately preceeding year X

Thus, if CPI for year X = 130; and CPI for year Y =120

Therefore

Inflation rate for year X = 130-120/12o x 100% = 8.33%

LOSERS AND GAINERS IN INFLATION

LOSERS

1. Fixed income earners

2. Pensioners

3. Creditors

GAINERS

1. Businessmen

2. Speculators

3. Debtors

CONTROLLING INFLATION1. Monetary Policy

2. Fiscal Policy

Pharmaceutical Product Life CycleSt t i

Strategies

PRODUCT LIFE CYCLE

MATURITY

DECLINE

GROWTH

OBSOLESCENCE

INCREASE

MODIFYING PRODUCT MIX STRATEGIES

INCREASEUSAGE

PRESENT CUSTOMERS

PRODUCT

MIXSTRATEGIES

NEW USERSNEW MARKET

SEGMENTS

NEWPACKAGINGNEW FORMAT

POSITIONINGNEW

FORMAT

MAJOR STRATEGIES IN THE GROWTH STAGE

GROWTHSTAGE

ENTERING NEW MARKETSEGMENT

EXPANDED MARKET CHANNELSINCENTIVES FOR TRADE OUTLETS

PRODUCTPOSITIONING INCREASED

LOGISTICS

SUPPORTS

LOWERING

PRICESTO PREVIOUS

LEVELS

PRODUCT

IMPROVEMENTMODIFICATION

PROMOTIONSEFFORTS

STRATEGIES IN THE MATURITY STAGE

Roll back ofprices by way

of additionaldiscounts

Increasedadvertising

and otherpromotions

Increase R and Dbudgets

Periodically modifythe market, 4P’s

STRATEGIES IN THE DECLINING STAGE

LOW MARKET PHASE OUT

LOW MARKETGROWTH

LOW MARKETSHARE

LOW VOLUME

LOW PROFIT

SLOW/NON-MOVING/LESS

DEMAND

LOWPRODUCTION

HIGH COST

PRODUCTS

IN THE

DECLINING

PHASE-OUTDISCONTINUE

REDUCEPRODUCT

OFFERINGS

REDUCE/STOPPROMOTIONSMARKETING

EFFORTS

REPLACEWEAK

PRODUCTS

FACTORS ATTRIBUTED TO SALES DECLINE

1. Rapid technological advances

2. Changing consumer preferencesfor taste, flavors and colors

3. Adherence to safety andefficacy

4. Price consciousness due to

inflation and deterioratingpurchasing power

PRODUCT LIFE CYCLE CHARACTERISTICS

Negative

Innovative

Very High

GROWTH

Very High

Peak Levels

Moderate

Growing

Mass market

Very High

MATURITY

Steady

Low/High

Declining

Many Rivals

Mass Market

Low/none

1. Sales Performance

2. Market Growth

3. Market Share

4. Profit

5. Cash Flow

6. Competition

7. Customers

8. Expenses

9. ManagementSupport

DECLINE

Very Low

very Low

Very Low

Low/Zero

Declining

Laggards

Very Low/N

PRODUCT LIFE CYCLE RESPONSES

1. Strategy

2. Expenditures

3. Emphasis

4. Distribution

5. Price

6. Products

Expand

Awareness

Patchy

GROWTH

Penetrate

Preference

Intensive

Improved

MATURITY

Defend

Falling

Loyalty

Intensive

Lowest

Different

DECLINE

Efficiency

selective

Selective

Rising

Rationalized

3. HECO U1 - Pharm Business Firm1

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