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8/3/2019 3. HECO U1 - Pharm Business Firm1
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THE PHARMACEUTICAL
BUSINESS FIRM
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BUSINESS – organized effort of individuals to
produce and sell the products andservices that satisfy society’s needs.
- also called company enterprise orfirms.
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DESCRIBING PHARMACEUTICALBUSINESS FIRM
1. Production Firms
2. Manufacturing Firms
3. Trading Firms
4. Service Firms
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FORMS OF BUSINESS ORGANIZATIONS
Business Firms are organized into 3distinct Groups
1. The major forms
2. The minor forms
3. The modified corporate form
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The Major Forms of BusinessOrganization
1. Sole Proprietorship
2. Partnership
3. Corporation
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-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
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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
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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
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Is an association of two ormore persons who place theirresources together to obtainprofit
Partnership
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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
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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
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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
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1. Unlimited Liability
2. Divided Authority
3. Lack of Continuity4. Frozen Investment
5. Effect of Management disagreement
DISADVANTAGES OF A
PARTNERSHIP
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-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
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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
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1. Complicated to organize
2. Government controls
3. Charter restrictions
4. Double taxation
5. Impersonality and lack of secrecy
6. Dividends
Disadvantages of Corporation
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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
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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.
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The Modified Corporate Form of
Business Organization
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
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The Modified Corporate Form of
Business Organization
2. Mutual companies
a. Mutual savings banks-- firm owned by
depositors
b. Mutual insurance company – organizationowned by policy holders
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Forms of BusinessOrganizations
Major
Forms
Minor
Forms
Modified
Corporate
Forms
Sole
proprietorshipCorporate
Joint stock
Company
Partnership
Corporation
Joint
Venture
Business Trust
Mutual
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The Pharmaceutical HealthCare Industry
QUESTION:
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QUESTION: 1.Which among the key world
market, has the greatest drugsales?
A. EuropeB. United States
C. CanadaD. Japan
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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
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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
World
sales
43.05 100 World
sales
94.10 100 World
sales
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.
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QUESTION:
2. Which among the therapeuticcategories has the highest amountof sales in the world market?
A. CNSB. Cardiovascular
C. MuscoskeletalD. Respiratory
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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
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As of 2008
QUESTION:
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QUESTION: 3. Which among the drugs
with a patent expiry has thehighest amount of sales?
A. NorvascB. Adalat
C. CozaarD. Plavix
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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
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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
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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
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QUESTION:
5. What are the 4 top selling
brands in the world market?
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Brand Company Indication Sale in $ B
Lipitor
Norvasc
Pfizer, Inc. Cholesterol
Anti-hypertensive
6.449
3.582
Zocor
Cozaar/Hyzaar
Merck &Co. Hypertension
Hypertension
6.700
1.700
Zestril
Seloken
Astra Zeneca Hypertension
Hypertension
1.097
.722
Pravachol
Avapro
Bristol MyersSquib Co
Cholesterol
Hypertension
2.173
.510
WORLD DRUG MARKET
4 TOP SELLING BRANDS (2003)
T S lli M di i l B d 2006 2008
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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
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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)
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QUESTION: 6. In the Philippine Pharmaceutical
market, which has a greater amount ofsale?
A. Ethical drugsB. Proprietary drugs
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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
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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
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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
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QUESTION: 8. Which among the therapeutic
classification has the greatest marketshare in the Philippines?
A. VitaminsB. CardiovascularC. Anti-infectives
D. Cough and Colds
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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%
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QUESTION: 9. What is the top 1 ethical product inthe Philippines?
A. NorvascB. VentolinC. Augmentin
D. Plendil
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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
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QUESTION:
10. What is the top 1 brand inPhilippine drugstores and hospitals?
A. BiogesicB. VentolinC. Enervon C
D. Solmux
T 20 B d
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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
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QUESTION:
11. What is the top 1 OTC brandPhilippine drugstores and hospitals?
A. BiogesicB. VentolinC. Enervon C
D. Ceelin
T 10 OTC B d
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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:
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QUESTION:
12. What is the top 1 unbrandedmanufacturers in drugstores andhospitals?
A. PascualB. Ritemed
C. United HomeD. Abbott
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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
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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
0.4%
CLINICS W/BEDS
INDUSTRIALHOSP.
C O N S U M E R
DISTRIBUTION CHANNELS ACCORDING TO SALES
QUESTION:
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QUESTION:
13. What is the top 1pharmaceuticalmarket player in thePhilippines today?
A. MercuryB. Med express
C. Multinational companiesD. Watsons
MARKET DRIVERS
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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
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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
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Market Drivers in the hospitalSector
1. Private hospitals
2. Insurance program
3. Public hospitals
4. More Clinical pharmacy practice
5. Health Maintenance Organizations
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QUESTION:
What are the 3 sources of funds of
pharmaceutical products in thePhilippines?
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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
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QUESTION:
What is the highest source of funds inthe Pharmaceutical Products ?
A. Out of the pocketB. Private InsuranceC. Phil health
D. Public programs
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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:
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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
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Pharmacy
Benefit
Manager
5-15%
Retail Pharmacy
15-25%
Brand name
PharmaceuticalCompanies
70-80%
Wholesale
2-3%
Generic Manufacturers 6%
PATIENTS
Flow of Funds in the Pharmaceutical Market
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QUESTION:
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Which of the following has the highestallocation of funds in thePharmaceutical Market?
A. Cost of goodsB. Sales and marketing
C. ResearchD. Taxes
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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
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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
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QUESTION:
What is the trend in the drug industryamong patient consumer?
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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
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O h i d d lf di i i
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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:
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QUESTION:
What is the most common ailment toself medicate?
A. HeadacheB. coldsC. diarrhea
D. fever
Self-medication practices on common ailments
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Self medication practices on common ailments
Rank Common Ailments
1 Headache2 Fever
3 Cold
4 Flu
5 Sore Throat
6 Itchiness
7 Skin Rashes
8 Diarrhea
9 Sore Eyes
10 Muscle Pains
11 Pimples
12 Minor Burns
QUESTION:
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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
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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:
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QUESTION:
What is the number 1 reason whypeople what to buy OTC?
A. Immediate reliefB. Avoid doctor’s fee C. Save money
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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:
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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
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Frequency in Buying OTC Drugs
Rank Frequency in Buying OTC
Drugs
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:
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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
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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:
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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
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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:
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QUESTION:
What is the primary basis of buyingOTC drug?A. Price
B. safetyC. Effectiveness
Primary Basis in Buying OTC Drugs
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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
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QUESTION:
What is the trend in the drug industryamong health insurance?
EMERGING TRENDS IN THE DRUG INDUSTRY
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EMERGING TRENDS IN THE DRUG INDUSTRY
Health Insurance
1. Increasing
Visibility of HMO
2. MD’s and
Hospital/Private
Entities Owning
HMOs
3. HMO Industrial
Establishments
Partnership
4. HMO Drugstores
Tie-ups
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QUESTION:
What is the trend in the drug industryamong community and hospital?
EMERGING TRENDS IN THE DRUG INDUSTRY
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EMERGING TRENDS IN THE DRUG INDUSTRY
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
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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
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A
B
C
D
E
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
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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
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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)
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Out-Patient In-Patient
Emergency Rooms
(ER)
Hospitals
DrugstoresEmergency Rooms
(ER)
Hospitals
g y ( )
HOSPITALS
FLOW OF Rx IN HOSPITAL ERs
Rx bought/served
Rx served
Rx generated from, Residents MDs/Consultants
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QUESTION:
What are the different models in
channeling drugs from manufacturersto end users?
Channel 1
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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
DOH.
Drug Manufacturer
Department of HealthGov’t. Health Units
Gov’t. Hospitals
End Users
LocalDrug
Trader
Channel 2
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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
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Channel 3
Contains only 1
middlemen level, either
an independent
distributor or retailer,who in turn sells the
drug products to end-
user
Drug Manufacturer
Independent
Distributors
END USERS
Retailers
Channel 4
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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
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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
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QUESTION:
What is the flow chart distribution ofdrugs of Mercury drug?
Drug ManufacturerFLOWCHART
DISTRIBUTION
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Independent
Distributors
Company
Warehouse
Branch operations Franchise Operations
Mercury Drug Corp.
Traditional Outlets Traditional Outlets
Non-Traditional Non-TraditionalEnd Users
DISTRIBUTION
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QUESTION:
What is the flow chart distribution ofdrugs of unilab?
UNILAB United Lab Distribution
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UNILAB
Manufacturer
GMA
Warehouse
Provincial
Warehouse
• Drugstores
• Hospitals
• Industrial Clinics
• Non-traditional Outlets• Dispensing Physicians• Department of Health
END USERS
Flow Chart
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QUESTION:
What is the common flow chartdistribution of drugs of ?
Drug Manufacturer
Pharmaceutical
Company Distribution
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National Distributor
Private
Institution
Dispensing
Physicians
Government
Distributors
Wholesale/Retailer
(drugstores)
Government
Agencies
Pure Retailers(drugstores)
END USERS
Flow Chart
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BUSINESS CYCLES ANDINFLATION
PHASES OF THE BUSINESS
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PHASES OF THE BUSINESS
CYCLE
1. The prosperity phase
2. The crisis (or contraction or recession)
phase
3. The depression phase
4. The recovery (or expansion) phase
Characteristics of Prosperity
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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
labor
Increasing volume of
sales
Increasing volume of
credit extensions bylenders
Large demand for credit
Rising interest rates
THE PROSPERITY PHASE
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Great
Business
Activity
Business
Firms
Great
Demand
Raw MaterialsAnd other
Commodities
LABOR LANDCapital
Resulting to
Resulting to
• Higher outputs
• Higher sales
• Higher profits
• Higher Wages
• Higher Rent
• Higher Interest
Rate
• Higher Prices of Materials
and
Supplies
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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
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Reduced
Business
Activity
Business
Firms
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
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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
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Greatly ReducedBusiness
Activity
Reduced #Of Firms
Still Operating
LABORRaw Materials
And otherCommodities
Capital LAND
Resulting to
Resulting to
Very Low
Demand
• Minimal
output, sales, and
profit
• low wages, rent,
interest rates
• low prices of raw
materials and
supplies
R Ph
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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
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The Business Cycle
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RE
A
L
G
N
P
TIME
Prosperity
DepressionDepression
Prosperity
Control Of Business Cycles
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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
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1. Price level2. Market basket
3. Price index4. Inflation
5. Deflation
Types of inflation
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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
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Inflation rate
for year XCPI in year X – CPI in Year Y
CPI in year Y
X 100=
Where
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
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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
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Strategies
PRODUCT LIFE CYCLE
MATURITY
DECLINE
INTRO
GROWTH
OBSOLESCENCE
S
ALE
TIME
INCREASE
MODIFYING PRODUCT MIX STRATEGIES
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INCREASEUSAGE
PRESENT CUSTOMERS
PRODUCT
MIXSTRATEGIES
NEW USERSNEW MARKET
SEGMENTS
NEWPACKAGINGNEW FORMAT
RE-
POSITIONINGNEW
FORMAT
MAJOR STRATEGIES IN THE GROWTH STAGE
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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
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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
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LOW MARKETGROWTH
LOW MARKETSHARE
LOW VOLUME
LOW PROFIT
SLOW/NON-MOVING/LESS
DEMAND
LOWPRODUCTION
HIGH COST
PRODUCTS
IN THE
DECLINING
STAGE
PHASE-OUTDISCONTINUE
REDUCEPRODUCT
OFFERINGS
REDUCE/STOPPROMOTIONSMARKETING
EFFORTS
REPLACEWEAK
PRODUCTS
FACTORS ATTRIBUTED TO SALES DECLINE
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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
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INTRO
Low
High
Low
Negative
Negative
Few
Innovative
Very High
Very High
GROWTH
High
Very High
High
Peak Levels
Moderate
Growing
Mass market
Very High
Very High
MATURITY
Steady
Steady
Low/High
Declining
High
Many Rivals
Mass Market
Low/none
Low
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
Low
Declining
Laggards
Very Low/N
Very Low/N
PRODUCT LIFE CYCLE RESPONSES
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1. Strategy
2. Expenditures
3. Emphasis
4. Distribution
5. Price
6. Products
INTRO
Expand
High
Awareness
Patchy
High
Basic
GROWTH
Penetrate
High
Preference
Intensive
Lower
Improved
MATURITY
Defend
Falling
Loyalty
Intensive
Lowest
Different
DECLINE
Efficiency
Low
selective
Selective
Rising
Rationalized