ReviewEssays.com - Term Papers, Book Reports, Research Papers and College Essays
Search

Marketing Strategies in the Competition Between Branded and Generic Antibiotics

Essay by   •  February 8, 2011  •  Research Paper  •  2,382 Words (10 Pages)  •  2,207 Views

Essay Preview: Marketing Strategies in the Competition Between Branded and Generic Antibiotics

Report this essay
Page 1 of 10

MARKETING STRATEGIES IN THE COMPETITION BETWEEN BRANDED AND GENERIC ANTIBIOTICS

Clamoxyl in 1996

We are in France in October 1996. Sales of Clamoxyl have dropped by 30 % in three months since the CNAM has sent a letter to urge doctors to prescribe generic drugs instead of the more expensive (but therapeutically equivalent) branded drugs in order to reduce the deficit of the social security system.

As the Marketing Director of SmithKline Beecham Laboratories (SB), the laboratory that launched Clamoxyl in 1974, I wonder what I can do to reverse that trend or at least lose as little money as possible.

1. Analysis of the situation

1.1 Product

Clamoxyl was the first amoxicillin available in France. Because of its efficiency against the most common bacteria and its few side-effects, Clamoxyl had an immense success. And in spite of the loss of its patent protection in 1980, Clamoxyl was still the highest selling antibiotic in 1996. Actually, the progression of generics halted after 1985 and the market share of Clamoxyl remained stable for about ten years, when it started to decrease again. Whereas some of its decline was due to competition from generics, part of it was also due to increased competition from other families of antibiotics, helped by their higher promotional investments. Still, in the year ending in August 1996, Clamoxyl remained the most prescribed antibiotic in France, captured 34% of the amoxicillin market and 8.8% of the total antibiotic market. Its turnover (75.4mЂ) accounted for 33% of SB's antibiotic sales and 18.2% of its total sales. It exists in numerous forms (tablets, capsules, syrups...) and dosages (from 250 mg to 1g). The cost structure is relatively insensitive to volume changes, so we will focus our analysis on market shares more than on volume of sales.

1.2 Positioning/Competitors

There are two kinds of competitors:

1) Those who commercialize amoxicillin generics (totally similar to Clamoxyl) and copies (some changes in the non-active ingredients). They appeared on the market after 1980 when Clamoxyl lost its patent, but don't have as many forms as Clamoxyl.

The main brands are:

- Bristamox (15% of market share in 1995)

- Amodex (10%)

- A-Gram (16%)

Others have less than 8% of market share. All of them have a very small margin, small volumes and high distribution costs. They save on advertising and cost 30% less than Clamoxyl. But until July 1996 and the CNAM letter, they hadn't taken off in France. Most of them don't break even, but if the trend goes on, they'll soon have higher volumes and replace Clamoxyl. Indeed, according to exhibit 12, Bristamox and Clamoxyl had almost the same market share in September 1996.

2) The other competitors are families of antibiotics that heal the same kind of infections: cephalosporins and macrolides. But they don't act as quickly and as efficiently as Clamoxyl. Macrolides only stop the proliferation of streptococci when Clamoxyl kills them, and cephalosphorins are slower to act against bacteria.

Amoxicillin have more than 30% market share in the antibiotic market, with a 3 points gain between 1995 and 1996 at the expense of the other families. It proves that the superiority of the amoxicillin over other families is recognised.

1.3 Price

Clamoxyl has a 30% premium on other brands. Its retail price was 4.85 Ђ in 1995, for a wholesale price of 2.80, and a net margin of 1.40 Ђ. It is reimbursed by the CNAM at a 65% rate (like others antibiotics), and the remaining 35% are reimbursed by complementary health insurances policies, held by most people in France. Its price is 20% lower than in other countries because of the regulation of the French market by the CNAM.

2. Consumer behaviour

By "consumer", we can mean either the patient or the doctor. Actually, in 1996, pharmacists were not allowed to substitute drugs and propose generics to patients.

The doctor prescribes a drug, the patient goes to the pharmacy, and the pharmacist gives what is written on the paper, whatever the patient says. So everything happens in the doctor's office. If the doctor prescribes Clamoxyl, it is very unlikely that the patient will ask him a generic by himself, since people are usually not aware of drug prices and not accustomed to the idea of price haggling over medical products. And if the doctor prescribes a generic, it could worry the patient who's already sick, has probably never heard its name (contrarily to Clamoxyl) and needs to be comforted for both his illness and the weird drug he doesn't know. So it will take more time to the doctor to get rid of that patient, and could even damage his image ("who is that doctor who said I had an otitis and didn't give me Clamoxyl, that has worked so well the last three times??").

For the consumer "doctor", we understand that it's easier to prescribe Clamoxyl, but financial penalties and/or social responsibility toward the social security system could help changing their habits and spend more time with the patient to explain that generics are therapeutically similar to Clamoxyl.

For the consumer "patient", the difficulty is that he doesn't pay for drugs and is not aware of the price differences. All that he knows is that Clamoxyl is efficient and has already healed many of his relatives, if not he. But once he'll be convinced that generics are totally equivalent to Clamoxyl (by ad campaigns on TV for example), it will no longer be a problem for them to accept generics and forget about Clamoxyl... and doctors won't hesitate anymore to prescribe them.

3. Analysis of the alternatives

Four marketing options have been considered to respond to the 30% drop of sales of Clamoxyl between July and October 1996 (despite a 3 points gain of all amoxicillin market share in the antibiotic market):

1) Change nothing and hope Clamoxyl's brand equity would be strong enough to protect it from generic competitors.

2) Milk

...

...

Download as:   txt (14.5 Kb)   pdf (170.2 Kb)   docx (15.6 Kb)  
Continue for 9 more pages »
Only available on ReviewEssays.com