HECO U1 - Pharm Business Firm1-2

7/27/2019 HECO U1 - Pharm Business Firm1-2

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THE

PHARMACEUTICALBUSINESS


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TYPES OF BUSINESS FIRMS

2. Financial Business

3. Information Business

4. Manufacturers

5. Real Estate Business

1. Agriculture and Mining business

6. Retailers and Distributors

7. Service Businesses8. Transportation Business

9. Utilities


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FORMS OF BUSINESS ORGANIZATIONS

Business Firms are organized into 3 distinct

groups

1. The major forms

2. The minor forms

3. The modified corporate form


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THE MAJOR FORMS OF BUSINESSORGANIZATION

2. Partnership

3. Corporation

1.Sole Proprietorship


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KINDS OF PARTNERSHIP

1. General Partner

2. Limited Partner

3. Universal Partner

4. Capitalist Partner

5. Industrial Partner

6. Silent Partner

7. Secret Partner

8. Dormant Partner

9. Nominal Partner


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2 TYPES OF CORPORATION

1. Public Corporation

2. Private Corporation

A. Closed Corporation

B. Open Corporation


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THE MODIFIED CORPORATE FORM OFBUSINESS ORGANIZATION

1. Cooperatives

a. Credit union d. Consumers cooperative

b. Producers cooperative e. Service cooperativec. Marketing cooperative

2. Mutual companies

a. Mutual savings banks

b. Mutual insurance company


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THE PHARMACEUTICAL HEALTH CAREINDUSTRY


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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 14.584. European Markets 82.42

5. Japan 55.69

6. France 20.17

7. Germany 23.99

8. Mexico 6.28


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DISTRIBUTORS/COMPANIES DOING OWN DISTRIBUTION

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


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MARKET DRIVERS

PHILIPPINE PHARMACEUTICAL MARKET

Independent Drugstore

Health Care Centers

MARKET DRIVERS IN THE HOSPITAL SECTOR1. Private Hospitals

2. PhilHealth Insurance

Program3. Public Hospitals

4. Clinical Pharmacy

Practice

5. Health MaintenanceOrganizations

Chain Drugstores


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SOURCES OF FUNDS FOR PHARMACEUTICALPRODUCTS

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%


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PharmacyBenefit

Manager5-15%

Retail Pharmacy15-25%

Brand name

Pharmaceutical

Companies

70-80%

Wholesale2-3%

Generic Manufacturers 6%

PATIENTS

FLOW OF FUNDS IN THE PHARMACEUTICAL MARKET


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Out-Patients

DRUGSTORES

Rx generated fromResidents MDs/

Consultants

Buys Rx

Out-Patient Department(OPD) Hospitals

FLOW OF RX IN THEHOSPITAL OPD


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In-Patient Department(IPD) Hospitals

In-Patient(Confined in Hospitals)

Hospital Pharmacy

Rx generated fromResidents MDs/

Consultants

Rx In Patients ChartServed by nurses

FLOW OF RX INHOSPITAL IPD


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Out-Patient In-Patient

Emergency Rooms(ER)

HospitalsDrugstores

Emergency Rooms(ER)

Hospitals

Emergency Rooms (ER)HOSPITALS

FLOW OF RX IN HOSPITAL ERS

Rx bought/served

Rx served

Rx generated from, Residents MDs/Consultants


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Channel 1 Consists of a drug

manufacturer selling directly

to the DOH or government

health units and hospitalswho will in turn make the

medicines available 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 HealthGovt. Health Units

Govt. Hospitals

End Users

LocalDrug

Trader

DIFFERENT FLOWS OFPHARMACEUTICALS


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Channel 2 Contains 2 middlemen level.

A sales representative of a

drug manufacturer selling to

dispensing physicians who inturn sells the medicines to

the patients (end-users)

charging the latter

consultation fees andmedicines given

Drug Manufacturer

Sales reps

DispensingPhysicians

END USERS


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Channel 3 Contains only 1

middlemen level,

either an independentdistributor or retailer,

who in turn sells the

drug products to end-

user

Drug Manufacturer

Independent

Distributors

END USERS

Retailers


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Channel 4 Contains 2 middlemen

level, namely the

wholesaler and retailer

drugstore outlets who in

turn sells to the end-

users. In some

companies, 3 middlemen

level when its theirsalesman that facilitates

the transactions.

Drug Manufacturer/

Distributors

Wholesaler

Retailer

END USERS


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Channel 5 Contains 3 middlemen

level, reflecting

jobbers who ells to thesmaller retailers

generally are not

served by the large

wholesaler drugstores

Drug Manufacturers/

Distributions

Wholesaler

End Users

JOBBERS

Retailers


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Drug Manufacturer

IndependentDistributors

CompanyWarehouse

Branch operations Franchise Operations

Mercury Drug Corp.

Traditional Outlets Traditional Outlets

Non-Traditional Non-TraditionalEnd Users

FLOWCHARTDISTRIBUTION


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UNILABManufacturer

GMAWarehouse

ProvincialWarehouse

Drugstores Hospitals

Industrial Clinics Non-traditional Outlets Dispensing Physicians Department of Health

END USERS

United LabDistribution Flow

Chart


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Drug Manufacturer

National Distributor

PrivateInstitution

DispensingPhysicians

GovernmentDistributors

Wholesale/Retailer(drugstores)

GovernmentAgencies

Pure Retailers(drugstores)

END USERS

PharmaceuticalCompany DistributionFlow Chart


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PHASES OF THE BUSINESS

CYCLE1. The prosperity phase

2. The crisis (or contraction or recession) phase

3. The depression phase

4. The recovery (or expansion) phase


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CHARACTERISTICS OF PROSPERITY PHASE

High prices and great

business activity

Large profits for business

firms Production is at full

capacity

Increasing demand formany commodities

Increasing demand for

labor

Increasing volume of sales

Increasing volume of credit

extensions by lenders

Large demand for credit

Rising interest rates


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Great

BusinessActivity

BusinessFirms

GreatDemand

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 ofMaterials and Supplies

THE PROSPERITY PHASE


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CRISIS OR RECESSION PHASE

The demand for goodsdecreases

The margin of profitsgradually shrinks

The volume of salesdecreases

Trading slows down

The production of goods isreduced

The demand for labor,

capital, and land decreases

Prices go down

The ability of business firmsto meet their financial

obligations is impaired

Unemployment begins to

bother labor No further extensions of

credit or renewals of old

loans are made by banks


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Reduced

BusinessActivity

BusinessFirms

ReducedDemand

LABORRaw Materials

And otherCommodities

Capital LAND

THE CRISIS OR RECESSIONPHASE

Resulting to

Resulting todecreasing outputs sales,

and profits

decreasing wages, rent,interest rates, prices ofraw materials andsupplies


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DEPRESSION PHASE

Many business haveceased operations

Profits are minimal, if it isstill possible to make some

Banks have plenty of idlefunds

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 raw materials

and supplies are low


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Greatly Reduced

BusinessActivity

Reduced #Of Firms

Still Operating

LABORRaw Materials


Capital LAND

Resulting to

Resulting to

THE DEPRESSION PHASE

Very LowDemand

Minimal output,sales, and profit

low wages, rent,interest rates

low prices of rawmaterials and

supplies


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RECOVERY PHASE

As the supply ofcommodities in the market

gets exhausted, demand

for these begin to be felt

Optimism amongbusinessmen slowly

develops, prodding them to

increase business activity

The demand for labor

increases, resulting to a

decrease in unemployment

The purchasing power ofthe people rises

The low rates of interest willattract business borrowings

Prices slowly rise There is an increase in

production output

Idle plans are used and

plans for construction ofnew ones are considered


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Increasing

BusinessActivity

BusinessFirms

IncreasingDemand

LABORRaw Materials


Capital LAND

Resulting to

Resulting to

THE RECOVERY PHASE

increased

outputs, sales,and profits

increasedwages, rent,interest rates,prices of raw

materials andsupplies


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CONTROL OF BUSINESS CYCLES

1. The stabilization of business2. Control of credit

3. Control of public works

4. Business forecasting

5. Monetary readjustment

6. Payment of high wages

7. Economic planning


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TYPES OF INFLATION

1. Cost-push inflation is one characterized by continualdecreased in the aggregate supply, resulting to increase

in the cost of production

2. Demand-pull inflation is one caused by increases inaggregate demand

3. Inertial inflationis that steady inflation that occurswhen inflation is expected to persist and the ongoing rate

of inflation is built into contracts and peoples

expectations


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LOSERS AND GAINERS IN INFLATION

LOSERS

1. Fixed income earners

2. Pensioners

3. Creditors

GAINERS

1. Businessmen

2. Speculators

3. Debtors

CONTROLLING INFLATION

1. Monetary Policy

2. Fiscal Policy


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FACTORS ATTRIBUTED TO SALES DECLINE

1. Rapid technological advances

2. Changing consumer preferences

for taste, flavors and colors

3. Adherence to safety and

efficacy

4. Price consciousness due toinflation and deteriorating

purchasing power

Documents

HECO U1 - Pharm Business Firm1-2