Blog #4 Current Events

For current events in the Pharmaceutical industry, the issue of high cholesterol and drugs used to manage it have been under the spotlight recently. Pfizer’s Lipitor, a very popular statin drug used to treat high cholesterol finally came off its patent a year ago, resulting in other pharmaceuticals developing their own version of cholesterol management. Lipitor was the biggest selling drug ever and gave Pfizer a multibillion-dollar cash flow every year until it became a generic. When Lipitor came off its patent, this became an opportunity for other pharmaceuticals to pull in some consumers with their own version of cholesterol control. The problem was though, how could they improve a drug that already seemed in its best form?

            Companies in the pharmaceutical industry are making a mad dash in the R&D department to develop the same type of Lipitor but improved with an extra focus on a protein called PCSK9 that would clear the “bad form of cholesterol.” But to make the drug with that extra part would mean administrating the drug in a shot. The price of administrating the shot and the unlikeliness of some consumers willing to get a shot make marketing the new drug difficult. It even makes some companies wonder if they should even continue with the drug. But the market is so large with most American adults having high cholesterol and with the Lipitor off patent, so not developing the new drug would be silly. 

Winslow, John. "The Wall Street Journal." Wall Street Journal. (2012): n. page. Web. 7 Nov. 2012. <http://online.wsj.com/article/SB10001424052970203347104578101082109438820.html?KEYWORDS=pharmaceuticals>.

Recession Impact of Pharmaceutical Industry

The pharmaceutical industry is not recession proof, but compared to other industries taking a major hit, it is not so bad for the pharmaceutical industry. Though, IMS Health recently reported that prescription drug sales slowed for the second consecutive year it is getting stronger from the start of the down fall in 2008. In the first quarter of CVS’ fiscal year 2009, the company reported 152.4 million retail prescriptions filled, compared with 139.5 million at the end of the same quarter in 2008 (Drug Topics Staff). The pharmaceutical industry is not recession proof, but there will always be a demand, it is one of those essential needs people will always pay for even if there is a recession. Pharmaceutical companies have taken notice of the current economic climate as well, by expanding patient-assistance programs. For example my company Pfizer, MAINTAIN (Medicines Assistance for Those who Are In Need) initiative, under which the company will cover the costs of more than 70 of its medications for up to a year for Americans who become unemployed in 2009, have no insurance, have been on a Pfizer drug for three months prior to becoming unemployed, and can attest to financial hardship (Drug Topics Staff). This will help have people keep the GDP up because this will help people buy pharmaceutical goods during the recession. Companies with geerics have also been doing well because generics are cheaper than name brand, so during a recession people will buy them more often. For Thomas Ohliger of Ohliger Drugs, he has had to make major cuts in staff, but “Thank God for generics,” Ohliger has said (Drug Topics Staff) . The pharmaceutical industry has advantages during the recession because there are many products and services to help save people money. Unlike another industry like hotels and luxury cars, pharmaceuticals can be useful in a recession. People can save money by going to discount stores, like Target or Wal-Mart for medication (Drug Topics Staff). Christopher Turf, RPh, a pharmacy manager for Pharmaca has said, “The pharmacist is going to have a lot more opportunity to guide people and to help them make decisions on whether self-care is appropriate or whether they actually need to be seen by their healthcare provider (Drug Topics Staff). This is good for the pharmaceutical industry because people will be looking toward the pharmaceutical industry for guidance and result in more sales of the goods. Turf has also said “…those interactions can be very valuable to both your business and your patients”(Drug Topics Staff).

Recession presents challenges for pharmacists (2009). Retrieved from; http://drugtopics.modernmedicine.com/drugtopics/Associations/Recession-presents-challenges-for-pharmacists/ArticleStandard/Article/detail/603267?contextCategoryId=48314

Blog #4: Companies Sharing Good News in Financial Reports

Many companies in the pharmaceutical industry are sharing good news in their financial reports for the first half of 2012. My company, Novo Nordisk, has lots of good news to share. They are doing very, very well and growing at a very large rate. Their financial statements for the first nine months of 2012 indicate that Novo Nordisk saw a 34% increase in operating profits. Their sales grew 18%. Net profit increased by 26% and earning per share increased by 31% (Novo Nordisk 2012).

TEVA had some good news to report in their financials as well. In one year, their net revenue increased from $12,636 to $15,068. TEVA acquired a Danish Company on October 25, 2012 for $26 million (TEVA 2012).

Abbott Laboratories also had good news to report in their most recent financial statement. In 2011, their net sales worldwide increased form $35.2 million to $38.9 million. Their operating cash flow increased from $8.7 million to $9 million. Abbott grew global sales by 10.5% and increased ongoing earnings per share by 11.8% (Abbott Laboratories 2011).

On the other hand, Pfizer did not have much good news to share. In their financial reports for the third quarter of 2012, their reported revenues from 2011 to 2012 decreased by 16%. Their adjusted income decreased by 16%. Their net income decreased by 14% (Pfizer 2012).

Works Cited

 



Abbott Laboratories (2011). 2011 Annual Report. Retrieved from

      http://media.corporate-ir.net/media_files/irol/94/94004/Proxy_Page/AR2011.pdf.

Novo Nordisk (31 October 2012). Financial Report for Period 1 January 2012 to 30 September 2012.

      Retrieved from  

      http://webmedia.novonordisk.com/nncom/images/investors/investor_presentations/2012/

      Interim_report/PR121031_Q3_2012_UK.pdf. 

Pfizer (2012). Pfizer Reports Third-Quarterly 2012 Results. Retrieved from

      http://www.pfizer.com/files/investors/presentations/q3performance_110112.pdf.

TEVA (November 2012). TEVA Pharmaceutical Industries Limited. Retrieved from

      http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-reportsAnnual.

 

 

 

Consumer Behavior

The pharmaceutical industry is highly competitive an thus must be very sensitive to consumer behavior trends in order to sell their product. There has been a subtle drift towards generic brands of pharmaceuticals, but "perscription drugs are less sensitive to consumer income variations" because people would still need their medicine. Yet they are very meticulous of certain aspects of purchasing their drugs. The ease of convenience is very important in order to remain competitive in the pharmaceutical industry, customers are requiring additional services in order to remain loyal to what they purchase. That should lead companies to think about their marketing mix, focusing on place. The channels of distribution have grown increasingly important as people now require the additional ease of acquiring their own medicine, and have lately preferred to get their medicine from twenty four hour pharmacies and those that provide a drive threw service. Technically, if companies can perfect the place factor of the marketing mix then they would increase their sales tremendously. By targeting mail-order pharmacies the business could cut costs that could be redirected towards research and development which would give the company a competitive advantage in the market. Also the recently aging population would suggest that more people need more medicine and therefore targeting to sell drugs that they would need would increase sales, as the baby boomers grow in age. With this shift in the demographic pie, companies would better  target this market segment to increase revenue. To facilitate this looking into distribution channels would be effective, yet with the increase in demand for generic drugs this could affect sales. Except for the increase in third-party purchasers which would lower their revenues, so perhaps the companies should not completely follow this trend and continue to focus on research and development while still catering to their other market segments.



References
IBUS WORLD (2012). Industry at a glance: Pharmacies and Drug Stores. Retrieved from:
http://clients1.ibisworld.com.proxyau.wrlc.org/reports/us/industry/ataglance.aspx?indid=1054 

The CSR And Marketing of Teva Pharmaceuticals

Teva Pharmaceuticals has a respectable CSR policy. Teva strives to provide a safe working environment for its employees, and includes such measures as safety training and recognizing a Job Safety Analysis. To support the community, Teva goes green by limiting energy consumption and recycling and properly handling waste. Teva reaches out to the community by supporting non-profits and also donating money towards the Haiti Earthquake Relief Effort (CSR).

Teva Pharmaceuticals is a leading generics brand company and in marketing standards, produces the largest product portfolio in the pharmaceutical industry. Teva products specialize in treatments of neurological diseases, oncological diseases, and autoimmune diseases. In global standards, Teva is a main supplier of ingredients for pharmaceutical products (Marketing).

CSR: Social Responsibility. Received from
http://www.tevapharm.com/Social/Pages/Lobby.aspx

Marketing Strategy: Our Business. Received from
http://www.tevapharm.com/About/CompanyProfile/Pages/Our%20Business.aspx

Blog 3: Marketing Segmentation

The pharmaceutical industry can be divided into multiple segments. First of all, the pharmaceutical industry is segmented by customers. This is not difficult to guess, since not every medicine is designed for every customer, and customers have varying needs. Some medical products have warnings labels alerting consequences of consumption towards pregnant women or children, or even customers which health problems (Smith 2012). Some companies, like Teva, make products pandering to the needs of different types of consumers, whereas other companies make products for specific consumer needs. For example, Novo Nordisk makes products for patients with diabetes, including growth hormone therapy and hormone replacement therapy.  Additionally, another important part of the pharmaceutical industry is the cost of the product. Pharmaceutical products are always in high demand because people are always sick. For brand name products, this can lead to price inelasticity, in which they raise the price of their product, knowing that the consumers will still purchase the product. However, in order to reach a targeted market (and to compete with generic products at cheaper price points), products must be maintained at an appropriate price. Another segmentation in this industry is the geography and product distribution. Products should be readily accessible to consumers. The United States is one of the world’s top leading competitors in product distribution, along with Europe and Asia. United States used to be the lead competitor of product distribution, but in recent years, Europe and Asia have been dominating the market. These segmentations continue to morph and expand the pharmaceutical industry.

Smith, Brian. (April 2012). Super segmentation in pharma marketing. Retrieved from
http://www.pmlive.com/pharma_news/superior_segmentation_pharma_marketing_397304.

Blog #3 Differentiation

One of the biggest differentiations of pharmaceutical companies are their patents. Their patents hold the most value when it comes to product distribution, but when the patents begin to expire; competition heightens when generics appear on the shelves. A battle between brands versus generics ensues and differentiation becomes extremely important for the companies.

      Product strategy is a way which companies help their products have a longer market life. When a companies product’s sales begin to slow down due to generics coming out, the company will find other clinical usages for the drug, thus strengthen its market life. Also, advertising directly to consumers helps to promote the product so that patients would be encouraged to ask their physicians to prescribe them that product. For example, my company, AstraZeneca, has a drug called Nexium which topped advertisement to consumers at about 255 millions of dollars, increasing public awareness and sales. 

      Altering product form can also differentiate companies, just by simply changing the form of the medication; like from a liquid to a tablet. Giving consumers a variety of one product can help differentiate a company from a generic, as well as brand loyalty. Brand loyalty stems from experience of using a product and having a good reaction toward it. This gives the consumer a tendency to buy from the brand rather than the generic, in fear of the generic not having the same effect.

In the end, pharmaceutical company differentiation is really based on how the companies promote and differentiate their products. The more they make their drugs have more benefits, the more likely consumers will buy that drug.

Dubey, Rajesh. "Journal of Medical Marketing:Device, Diagnostic and Pharmaceutical Marketing." SAGE. SAGE, n.d. Web. 24 Oct 2012. <http://intl-mmj.sagepub.com/content/9/2/104.full.pdf html>.

Behner, Peter. "2012 Healthcare - Pharmaceutical Industry Perspective." Booz&co.. Booz&co, 07 2011. Web. 24 Oct 2012. <http://www.booz.com/global/home/what_we_think/featured_content/perspectives_12/health_pharmaceutical_2012/49983621>.