Persuasive Speech Outline Essay

This report is Part 1 of assignment for Marketing MBA 565-MBOL1 to Dr. Stephen Baglione

Exhibit A – Break-Even Analysis for Tylenol and the different pricing scenarios for Datril (per bottle of 100 pills)

Many other drugs also lose patent protection leading to the creation of substitutes that are cheaper.

Pharmaceutical companies are provided with temporary monopoly rights on the production of new drugs which result in a higher cost on consumers. If competing companies were allowed to produce generic forms of those drugs, consumers will be able to afford those medications even in cases where those consumers have no insurance coverage. The company responsible for developing and inventing the original medication could be offered incentives to invent in the future by either obtaining tax breaks or NIH funding for future research. They could even be offered a percentage of the sales of the generic drugs. Economist Gary S. Becker advocates dropping many FDA requirements that, in his opinion, provide no additional safety measures but rather delay the development of new drugs.[12] Betamethasone, for example, has been part of the standard prenatal care in Europe since the late 1970’s while it got adopted in the U.S. after 1997. On many occasions, the FDA ignores all scientific evidence concerning certain drugs because the manufacturer did not follow their mandated bureaucratic standards.

They have also attacked patent listings in the Food and Drug Administration “Orange Book” and have alleged monopolization through fraud on the Patent and Trademark Office and sham litigation. Yet other cases have condemned distribution agreements as unlawful exclusive dealing. These government actions have led to substantial private class action litigation against the pharmaceutical industry. The FTC has also challenged numerous mergers and acquisitions in the industry over the last decade. One common feature in all of these cases is the need to define a relevant market. In nonmerger cases, the FTC and private plaintiffsgenerally allege narrow markets, limited to a single drug and its generic equivalent in some cases and to generic drugs excluding the bioequivalent “brand-name” drug in other cases. In its merger challenges, on the other hand, the FTC has alleged markets ranging from those based upon a particular chemical compound, to broader markets based upon various drugs’ manner of interaction or dosage form, to still broader markets of all drugs used to treat a disease or condition. In numerous pharmaceutical merger challenges, the government has included in the market not only currently marketed drugs but also other drugs under development, alleging “innovation markets.”

During this time the first DTC print advertisement for Merck an “antipneumococcal vaccine, Pneumovax(pneumococcal vaccine polyvalent) was printed in Reader’s Digest (Ventola).” That created a chain effect and shortly later “Boots Pharmaceuticals ran the first DTC broadcast advertisement, which promoted the lower price of its prescription brand of ibuprofen (Rufen), compared with Motrin (Ventola).” Today, the US pharmaceutical industry spends $3.1 billion on advertising prescription drugs directly to consumers.

The grocery store shelves are filled with many varieties, sizes, and brands of the same item. There are numerous kinds of popcorn, large and small, produced by different manufacturers. Some people choose products based on need, some base their decisions on price and some base their decision on quality or brand loyalty. With all of these options it can be difficult to choose. You may want to save money but at what cost? In this experiment we will determine if generics are equivalent alternatives or if we really get what we pay for. (Bautista, 2006)

Six basic types of ingredients used to formulate OTC brands. Each ingredient targets one of five basic symptoms.

b. Does the issue of branded vs. private label enter into this consideration? Why or why not?

Marvin Koslow, vice president for marketing services at Bristol-Myers is going to choose a positioning strategy for Datril, an acetaminophen based analgesic, in order to solidify Bristol-Myers’ position in the analgesics market and gain share in the rapidly growing acetaminophen market. There are two possible options: ‘Pricing at par with Tylenol and it as a Tylenol substitute, featuring Bristol-Myers product’ and ‘low Priced alternative to Tylenol’. I strongly recommend that Bristol-Myers choose the former option with a modification.

* Barriers to Entry. A number of factors allow a pharmaceutical manufacturer to act as a

The problematic issue for Bristol-Myers was to position its new aspirin drug to the potential customers and decide a good price which can not only make it acceptable by the customers, but also give a fair profit to the company. In other words, the company had to formulate an effective marketing and promotional strategy for its new drug, Datril. The company was not merely willing to establish its new brand in the analgesic market; the main issue was to establish this new brand in the presence of a strong competitor, Tylenol.

Consumers do not always evaluate prices objectively. Often a referenced price is a known and available price, like that of a competitor. Pricing Datril at par with Tylenol and advertising it as a new substitute with same features may have been a fraught tactic in a short-run test environment. Market penetration and share take time and is unknown. Additionally, a price war could have ensued with Tylenol due to cost differences especially in advertising.

In the United States, a drug can only be advertised legally after being approved by the Food and Drug Administration (FDA). Once attaining at least one FDA-approved use, physicians can prescribe a drug for other unapproved uses, based on their clinical judgment; this is referred to as “off-label use” (McCambridge, 2008). In general, marketing drugs for off-label uses is illegal; however, pharmaceutical companies have gone to various lengths within their legal rights to accomplish exactly that.

Another one of Porter’s five forces is the threat of new substitutes, which is the main problem in the generics market. A new firm must be cognisant of the fact that every company in the industry will be able to produce the same