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The First P: Product Strategy for Old and New Drugs What is a Product? A good, service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received in exchange for money or some other unit of value. Tangibility----------------Intangibility a capsule of Xanax MTM Product variation in pharmaceuticals Product item - single like Tylenol Product line – closely related - OTC pain killers - Tylenol, Tylenol PM, Tylenol Flu Product mix – all product lines offered Antibiotics, analgesics, beta blockers, etc. Types of Medications Sold Differ in terms of: Effort used to purchase - doctor visit?, OTC Attributes used to purchase Frequency of purchase 4 types: PRODUCT TYPE Convenience goods Covered Non-formulary brand DECISION TYPE Routinized - aspirin Formulary/Generic Complex The Product Life Cycle Stages a product goes through from its inception to its disappearance from the market: Introduction: Gain awareness Growth: Stress Differentiation Maturity: Maintain Brand Loyalty Decline: Harvesting, Deletion The PLC Introductory Stage Growth Stage Maturity Stage Decline Stage Total Market Sales Time Product Life Cycle Length: varies Shape High learning – long intro Low learning – quick intro Fashion – quick, recurring Fad – very short Market size Rate of Adoption Innovators Early Adopters Early Majority Late Majority "The Chasm" Technology Adoption Process Laggards Strategies for the PLC Lengthen life by: Modifying product Modifying market Finding new users Increasing use Creating new use situations Repositioning the product Reacting to competitor’s position Reaching a new market Catching a rising trend Changing the value offered Introductory Stage Strategy Sales Costs Profits Customers Competition Low sales High cost per customer Negative Innovators Few if any Introductory Stage Strategy Strategies Product Price Distribution Advertising Sales Promotion Create awareness and trial Basic Charge cost plus Build select dist. Awareness among early adopters, dealers Heavy to entire trial of FPCGs Growth Stage Strategy Sales Costs Profits Customers Competition Rapidly rising sales Avg. cost/customer Beginning and rising Early adopters Growing numbers Growth Stage Strategy Strategies Product Price Distribution Advertising Sales Maximize mkt. share Revise, extend, add services, warranties Price to penetrate mkt. Intensive distribution Mass mkt. Awareness, interests Promotion reduce Maturity Stage Strategy Sales Costs Profits Customers Competition Peak Sales Low costs/ customer High profits Middle majority Stable- beginning to decline Maturity Stage Strategy Strategies Product Price Distribution Advertising Sales Promotion Maximize profit and defend market share Diversify brands, items Match best competitors Intensive Stress brand differences Increass to encorage brand switching Decline Stage Strategy Sales Costs Profits Customers Competition Declining sales Low cost/ customer Declining Laggards Declining number Decline Stage Strategy Strategies Product Price Distribution Advertising Sales Promotion Minimal Reduce expenses, milk Phase out weak models Cut/ raise price Go selective; phase out outlets that are not profitable Reduce to level to maintain loyal customers Branding strategies Manufacturer brands Multi-product branding Multi-branding Private branding Single Multiple Generic Brand Equity Drivers Patents Initial choices for brand elements: names, URLs, logos, symbols, characters, spokespeople, slogans, jingles, packaging and signage. Product + services + all marketing activities and supporting programs Other associations transferred indirectly by liking to other persons, places or things Direct to Consumer Advertising Legal in only 2 countries USA New Zealand Controversial !!!!!! Other forms of promoting drugs Advertising in medical journals Placement and promotion of favorable studies in medical journals Visits of sales representatives to doctors Provision of free samples of drugs for doctors to give to their patients Gifts for doctors and subsidized 'educational' events and conferences. DTC Facts Encourages consumer to see doctor to take care of conditions early, avoiding later hospitalization One study of 64 drugs found a median increase in sales of $2.20 for every $1 spent on DTC advertising In 2005, the top 20 DTC advertised drugs accounted for more than 50 percent of all spending on DTC advertising. Not many drugs are advertised. Most drug ads aimed at chronic conditions like high blood pressure, high cholesterol, allergies and asthma How much is spent on DTC? A November 2006 report by the U.S. Government Accountability Office report stated that drug companies spent $4.2 billion in 2005 on DTCA. In comparison the drug industry spent $7.2 billion in 2005 promoting drugs to physicians and $31.4 billion on research and development. However, the GAO found that the amount spent on DTCA "increased twice as fast from 1997 through 2005 as spending on promotion to physicians or on research and development." [1] It estimated that spending on DTCA was growing at approximately 20% per year. FDA Requirements for DTC To be accurate and not misleading; To make claims only when supported by substantial evidence; To reflect balance between risks and benefit To be consistent with the FDA-approved labeling. PHRMA’s Assertions about DTC Increases awareness about diseases Educates patients about treatment options Motivates patients to contact their physicians and engage in a dialogue about health concerns Increases the likelihood that patients will receive appropriate care for conditions that are frequently under-diagnosed and under-treated Encourages compliance with prescription drug treatment regimens. What do you think? How should doctors be informed about new drugs? Does the consumer have a right to know what the potential treatments for their condition(s) are - without waiting for a doctor to tell them/ What is the pharmacist’s obligation to the patient regarding treatment - knowing the condition a patient has, should the PharmD talk to the doctor, the patient or both? What is the FDA’s responsibility? Class Exercise: Groups 1. 2. 3. 4. 5. Drug company Patients Physicians Pharmacists FDA
