PHARMACEUTICAL MARKETING AND NOTE: ALL DRUG PRODUCTS are reclassified

ENTREPRENEURSHIP according to their internationally-accepted

[PRODUCT MIX, DECISION & STRATEGIES] generic names or International Non-propriety
Names (INN) and incorporated in the Essential
Instructor: Ma’am Xenia Louise Joy B. ASSIN Drug List formulated by DOH
Notes Written By: Jehiel Penuel Jabano

International Non-
WHAT IS A PRODUCT? Generic Names
Propriety Name (INN)
[Old Label]
ê Anything that can be offered to a market for [New Label]
attention, acquisition, use, or 1. Unilab
Unilab Methyldopa
consumption that might satisfy or delight Alphamethyldope
a need or want of the target clientele. 2. Unilab Amoxycillin Unilab Amoxicillin
ê It is more than a simple set of tangible 3. Unilab Anti-Diarrheal Unial Attapulgie
Suspension Suspension
features. 4. Unilab
Unilab Chlorphenamine
Chlorpheniramine
PRODUCT PLANNERS Melate
Maleate
ê Ex. Brand associates, brand men, product 5. Unilab Dicyclomine
Unilab Dicycloverine HCL
managers HCL
ê They think about the product on three levels. 6. Unilab Ergonavine Unilab Ergometrine
ê They may offer additional services and Maleate Maleate
benefits that make up an augmented 7. Unilab Glyceryl
Unilab Guaifenesin
product Guaiacolate
Unilab Phenoxymethyl-
9 This is achieved by looking at the 8. Unilab Penicillin VK
penicillin Potassium
buyer’s total consumption system.
ê According to Kotler, product managers has
PRODUCT FORMATS
to turn the core product in to a tangible
ê Drug products available in both the
product. It includes characteristics like:
traditional and non-traditional markets and
§ Features
manufactured by either the local or
§ Styling
multifunctional drug companies, comes in
§ Brand name
several product formats catering to
§ Packaging
specific market segment and sub-market
§ Quality level
segments.
Augmenting Product Offer and Making it
NOTE: The decision to make the drug product
Competitive can be achieved in the form of:
available in one, two, or multiple format is a crucial
issue in satisfying the needs and wants of the
After-sales target clientele.
Packaging Advertising
services
Sales & Customers’ Financing
Product Format available in the Marketplace
Promotions advice Scheme
for different types of consumers:
Delivery Other valued
Warehousing (1) Capsules (9) Soft Gel (17) Spray
arrangements amenities (2) Tablets (10) Powder (18) Inhaler
(3) Suspension (11) Granules (19) Vaporizer
DRUG PRODUCTS (4) Liquid (12) Gelatin (20) Medicated
ê Consumers see them as complex bundle of (5) Drops (13) Lotion (21) Frozen
(6) Concentrate (14) Balm (22) Refrigerated
benefits in which satisfies and delight their (7) Vials (15) Ointments (23) Non-refrigerated
needs and wants. (8) Ampules (16) Creams (24) Pellets
ê When developing new and existing drug
products: Example: 1. Ampicin, a broad spectrum antibiotic
(a) First identify the core consumer is available in various commercial
needs the product will satisfy. format as follows:
(b) Design the tangible product. (a) Capsules
(c) Find ways to augment the product, (b) Suspension
(c) Drops
this is to create the superb-value or
(d) Injectables
bundle of benefits that will best satisfy 2. Neozep comes in commercial format
and delight target consumers in the as:
pharmaceutical arena. (a) Tablets
(b) Liquid
Classification of Drug Products in (c) Medicated cold rub
Pharmaceutical Marketing: (d) Nasal Spray
(1) Branded Drugs
(2) Generic Drugs
(3) Ethical or Prescription Drugs
(4) Over-the-counter (OTC) Drugs
(5) Ethical-OTC Drugs
(6) Propriety Drugs
BRAND OR GENERIC NAME DECISIONS
BRAND
4 Name, term, sign, symbol, design, or
combination of these intended to
identify the goods or services of one seller
or group of sellers and to differentiate
them from those of competitors.
BRAND NAME
4 Part of a brand that can be vocalized
4 It is utterable
4 Ex. Allerin Expectorant, Calcibloc, Anadol
Tablets, and Asmasolon
BRAND MARK
4 Part of a brand which can be recognized
but is not utterable such as:
(a) Symbol
(b) Design
(c) Distinctive coloring
(d) Lettering
4 Ex. Biomedics B, the distinctive UAP of
United American Pharmaceuticals, the
Caduceus of United Laboratories, Inc.
TRADEMARK
4 It is a brand or part of a brand that is
given legal protection.
4 Protects the sellers’ exclusive rights to
use the brand name or brand mark
COPYRIGHT
4 Exclusive legal right to reproduce,
publish, and sell the matter and form of
literary, musical, or artistic work.
BRANDING
ê Plays an essential role in adding value to the
product.
9 This creates a perception of high quality
and expensiveness.
Advantages of Branding to the Buyer:
(1) It reminds the buyer that he/she acquires the
same quality every time he/she purchases the
same brand.
(2) It facilitates the shopper’s efficiency.
(3) Triggers recall of what the buyers see on TV,
hears on the radio, read in the newspapers
and magazines, or see in posters, banners,
mobiles, stickers, and other merchandising
paraphernalia.
Advantages of Branding to the Seller:
(1) It helps the seller speed up processing of
sales orders and track down problems.
(2) Provide legal protection to unique product
features which would otherwise copied by the
competitors.
(3) It helps the sellers’ segment market.
9 This is with regards to attracting loyal
and profitable set of customers.
Other Advantages of Branding:
(1) It results in more product variety and choice
for consumers
(2) Adds value to customers and society.
ACCORDING THE GENERICS LAW AND IN
THE ISSUANCE OF LABELLING GUIDELINE
BY DOH:
ê Drug products are labeled in boxes,
literatures, and other promotion materials by
indicating:
§ Internationally accepted generic
name, followed by the brand name
under the generic name.
NOTE:
It should be in the same letter type
and boldness.
Generic name per generic labeling
guidelines is enclosed in a box.
PURELY GENERIC DRUG PRODUCTS
4 It follows the same labeling guideline in
the Generics Law and issuance of
Labeling Guidelines by DOH.
4 These are identified by the brand mark of
the manufacturer.
NOTE: The manufacturing clause is
indicated at the bottom of the drug
label.
4 They carry the active ingredient or
internationally accepted generic name in
its label.
4 The brand mark and the generic name
makes it a branded generic product.
GENERCICS MENU CARDS
4 Issued to the drugstore owners
nationwide by DOH, through BFAD.
4 It lists down all the generic drugs
available in the store.
4 It is arranged by therapeutic segment.
4 It lists the corresponding retail prices.
4 These are placed in conspicuous places
in the drugstore.
à This allows buyers to choose from the
generic equivalents of the products they
wish to buy.
BLANKET FAMILY NAME
ê It reduces the cost of introducing products.
9 This is because the brand name is
widely recognized, accepted, and
preferred by the target consumers.
ê It also reduces the cost with regards to
advertising and other promotional activities.
ê Ex. Evervon C Tablets, Enervon C Drops,
Enervon C Liquid.
BRAND EXTENSION DECISION
ê A brand extension strategy is any effort to
use a successful brand name to launch new
or modified products.
ê Ex. Neozep Tablets, Neozep Syrup, Neozep
Otic, Neozep Nasal Spray, and Neozep
Medicated Cold Rub.
 9 This uses the strength of Neozep which
is popularly known as “Cold Specialist”
9 This brand extension saves the
company high cost of promoting new
brand names for the products.
MULTIBRANDING DECISION
ê In multibranding strategy, the seller develop
two or more brand in the same product
category or the same generic equivalents.
Desirable Qualities for a Brand Name:
(1) It should suggest something about the
product’s benefits and qualities that the
intended markets could associate with easily.
(2) It should be easy to pronounce, recognize,
and remember.
(3) It should be distinctive to readily arrest
attention.

Advantages of Multibranding Strategy:

(1) It allows more shelf space at the selling area
of drug outlets.
(2) Very few consumers of a drug product are that
loyal to a brand, hence, they will not try
another, from the same company or another
company.
(3) Creating new brands develop healthy
competition within the manufacturer’s
organization which comprises several Product
Division or subsidiary companies.
(4) It positions brand on different benefits and
appeals. Each brand can attract a separate
following when positioned in several target
market segment.

Things to take note:

(1) Company’s new brand of drug products,
even if they are generically equivalent,
(a) It should not be eating or cannibalizing
the company’s current brand of ethical
or OTC drug in the same category.
(b) Ideally it should be eating the business
from competitors in terms of market
share and growth, or at least have a
larger combined revenues and profits
from both old and new brands.
(2) Each brand, while generically the same,
should be treated as a separate business
entity, and profit center

SELECTING A BRAND NAME FOR A DRUG

PRODUCT
ê Some drug companies follow a formal brand
name selection process through its Product
Management Group.
ê This is done by carefully:
(a) Reviewing the drug product and its
benefits.
(b) Reviewing the target market and
proposed marketing mix strategy.
(c) Screening hundreds of potential brand
names suggested from various
sources.
(d) Selecting the best one based on
o consumers’ reaction
o advice of company marketing
people through services of
advertising and research
agencies and outside brand
name consultants.
Packaging Decisions

 Packaging is a marketing activity of creativity, design, and producing the appropriate

container or wrapper for a drug product suitable to target markets relative to
competition’s products.
 Container or wrapper is the package.

 Primary Package
o Is the product’s immediate container. Ex Allerin Expectorant with its corresponding
label.
 Secondary Packaging
o Is the packaging material that protects the primary package and that is thrown
away when the drug product is about to be used by the target clientele. Ex. the
cardboard box containing the Allerin Expectorant is a secondary package that
allows for additional protection and promotion.
 Shipping Package
o Is used primarily to store, identify, and ship the product to target markets. Ex. a
corrugated box carrying six dozen bottles of Allerin Expectorant is a shipping
package.

 Packaging is a highly important and valuable marketing tool for drug products. Ethical or
prescription drugs which are promoted to the physicians and dentists carry in its secondary
package and label, the symbol "Rx," as required by BFAD, which means for all intents and
purposes, that it can be dispensed only with a prescription in any drug outlets.
Reasons about dispensing Rx products in condition of without prescription.
1. Many of these Rx products are either ethical-OTC, semi-OTC or OTC classified already
by the consumers themselves who frequently buy the product and since there are no
complaints or reprimand whatsoever from BFAD inspectors, the habit becomes an
accepted practice in the drug industry.
2. BFAD admittedly lacks monitoring teams to go around the thousands of drugstores all
over the country on regular basis.
3. It has become very costly to consult a doctor for minor infections and ask for a
prescription of an antibiotic preparation, which are readily available anyway in all
drugstores without a prescription.

 Rising consumer affluence means that consumers are willing to pay a little more for the
convenience, safety, appearance, dependability, and prestige of better value packages for
drug products in the marketplace.
 OTC or Proprietary drug products, which are heavily advertised in radio, TV and print media
coupled with merchandising activities and in-store promotion campaigns at the drugstore
level in large chainstore operations and wholesaler outlets, enjoy a distinct type of
packaging suited for the consumers.
 But it should strictly follows the labeling guidelines in accordance with the provisions of the
Generic Drugs Act of 1988, the colors and total design are aimed at creating instant
 consumer recognition and appreciation when displayed at the point-of-purchase in drugstore
outlets and selling areas of groceries and supermarkets.

Developing a Good Package

- Establish the packaging concept
- Decisions
- Select and introduce

 Presently, drug products either generic or branded, OTC or proprietary or ethical oriented,
consider several different package designs for new and existing product lines, selecting the
best balanced choice;
1. That will satisfactorily cater to the needs of drug outlets in terms of convenience and
ease of handling
2. That end-users will favorably respond to at short notice
3. Physicians and dentists to prescribe with higher confidence
4. Pharmacists and allied professionals will readily endorse out of a high quality
perception of the drug product
5. That will generate greater product awareness, immediate trials and repeat purchases
associated with the distinct and unique power of good innovative packaging
 Drug products that are in the format of tablets or capsules are marketed either in foils or
blisters with attractive colorful boxes; others in plain glass amber bottles without boxes.
Liquid or syrup formats come in tamper-proof glass amber bottles with or without boxes.
Whereas some drug products also are available in plastic bottles especially vitamins and
other health food or nutritional lines.
 When drug products are appropriately packaged in desirable colors, design and text, and
are given preferential shelf space, they serve as "silent salesmen" that triggers purchase
decisions at the point-of-sale.

Three Levels of Product

Product Line Decision

 Another important product decision that follows branding and packaging for individual
drug products is the strategy of developing a product line.
 Kotler – is a group of products that are closely related, either because they;
o function in a similar manner,
o are sold to the same customer groups,
o are marketed through the same types of outlets,
o Fall within given price ranges.

 For examples, United American Pharmaceuticals, Inc. markets a line of Moxillins

(Amoxicillins) in various strengths and formats, such as the following: Moxillin 250 mg.
and 500 mg. capsules, for the adults market; Moxillin 125 mg. and 250 mg. Suspension,
for the children's market; Moxillin Drops 10 ml. bottle intended for the infants market.

Product Mix Decisions

 Also called product assortment, is the set of all product lines and items that a particular
seller offers for sale to buyers.
o Ex. Therapharma's product mix consists of major therapeutic product lines such
as anti-infectives, analgesics-antipyretics, cough-colds, vitamins and minerals,
anti-hypertensives, cardiovascular, steroids and many others. Each therapeutic
product line consists of several sublines. The anti-infectives segment breaks
down into ampicillins, amoxicillins, chloramphenicols, cotrimoxazoles,
aminoglycosides, penicillins, and tetracyclines, are available in various product
formats, sizes, and supply catering to different target markets.

 The width of Unilab Generics product mix refers to how many different product lines the
company carries. Table 9 shows a product width of Unilab Generics product lines.
 Product Mix Width and Product Line Length

PRODUCT MIX WIDTH

Anti-Invectives Cough - Colds Analgesics Vitamins – Anti - TB Steroidal

Antipyretics Minerals Antihistaminics
UL Amoxicillin UL Anti-cold UL Paracetamol UL Ascorbic Acid UL Pyrazinamide UL
Line Line Line Chlorphenamine
Meleate
UL Ampicillin UL Bromhexine UL Diclofenac UL Thiamine UL Rifampic9in UL
Line Sodium 50mg Line 300/450mg Dexamethasone
UL UL UL Mefenamic UL Ferrous UL isoniazid INH UL Prednisone
PRODUCT LINE LENGTH

Chloramphenicol Dextromethorpan Acid 500mg Cap Fumarate Tab

Line
UL UL Guaifenesin UL Ethambutol
Cotrimoxazole Line INH
Line
UL Erythromycin
Line
UL Gentamycin
Line
UL Penicillin G.
Line
UL Tetracycline
250mg Tab
UL Penicillin VK
Line
 PHARMACEUTICAL PRODUCTS LIFE CYCLE STRATEGIES

A new drug product may be characterized by several stages as follows:

1. Introductory Stage
2. Growth Stage
3. Maturity Stage
4. Decline Stage

Introductory Stage
Is a period of very low sales performance during the first few months to one year
or more after being formally introduced into the market depending on the
degree of awareness level, acceptance, and actual product trials.

Growth Stage
Is a period of increasing sales and profit performance because the new drug
product has entered the growth stage. It has also tremendously gained wide
acceptance, patronage, and repeat sales in bigger volumes from either the
present or new markets being served.

The major strategies employed to sustain its rapid market growth are as follows:
 Continuous improvement or innovation of the product’s quality.
 Entering completely new markets, new segments, expanded
distribution channels, more incentives for trade outlets to carry and
endorse the product to clients.
 Lowering prices to previous levels in order to allow more buyers to shy
away from competitor’s products and increase frequency of usage.
 More aggressive and proactive promotions efforts.
 Fine-tuning product’s position in the market or repositioning
competitor’s products in the minds of target consumers.
 Additional logistics support to fight head-on and cripple emerging
products of competition.

Drug products in the growth stage, inevitably, attract new competitors due to
the tremendous opportunities for growth and profit.

Maturity Stage
Is a period characterized by the slowing down of the product's sales volume
reaching a plateau or remaining at constant volumes which may be attributed to
many similar products competing in the same market segment or significant
competitor's activities pouring in heavy investment-spending to gain control of
the desired market segment at all cost.

The strategies for drug products in the maturity stage are summarized as follows:
 1) Roll-back of prices by way of additional discounts, offering of product
deals in the form of free goods, additional allowances or subsidies, and
other amenities.
2) Increase advertising and other promotions support for the product.
3) Increase R and D budgets.
4) Periodically modify the market, the product and overall marketing mix.

Decline Stage
A period characterized by continuous drops in sales of most product formats and
brands, at a low level for many years. The sales decline may be attributed to a
number of factors such as rapid technological advances, keen competition,
changing consumer preferences for tastes, flavors, colors, adherence to safety
and efficacy, price consciousness due to inflation and deteriorating purchasing
power.

The major strategies employed for drug products in the declining stage are as
follows:

1) When sales and profits continue to decline, companies immediately

withdraw from the market, phase-out the drug product to avoid
further loses, in certain geographical areas or nationwide.
2) Reduce the number of product offerings, concentrate on potential
formats, sizes, and supply.
3) Discontinue operations in smaller market segments and marginal trade
channels.
4) Reduce promotions and overall marketing efforts and promptly re-
channeling resources to drug products either in the introductory or
growth stage.
5) Replace weak products with similar or related generic names or an
improved version under a new brand name and new positioning
scheme.
6) Sell drug product to another company or simply liquidate it at salvage
value.
Product Life Cycle

The horizontal line represents time, which could be months or years, However,
based on actual industry practice, years is being followed in classifying products
according to stages in the life cycle.

The vertical line represents sales, normally expressed in absolute amounts such
as Pesos in determining product performance for the year.

The dotted lines represents life, when products attain recovery v in sales
performance returning to the growth stage due to several factors mostly within
the control of the drug firm such as increased investments for the product.

The downward arrows (not shown in the diagram) may occur in either the
introductory,growth, or maturity stage, when the product's sales performance
are on a downtrend due to several factors mostly outside the control of the drug
firm, such as new entrants of technologically advanced competitor's products, or
aggressive marketing efforts.

Classifying products in accordance to product life cycle serves to accomplish the

following:
 1) Identify products and related lines that are continuously generating
sales for the period of product review
2) Determine allocation of resources on products with potentials for
growth;
3) Match or pinpoint direct competitors' products for market growth and
market share leadership.

When drug products die a natural death or reach obsolescence or sales

performance below zero level or negative growth rate for the period compared
to the previous year, drug companies find it very difficult to bring it back to life
or to the growth stage, because the target markets may have already negative
perceptions, feelings, or impressions in their subconscious minds for the product.
A drug company may, however, insist on re-investing for a "dead product" in the
marketplace if in their readings of the market, there exists such potentials for
revival and ultimately full recovery and growth.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO

PRICE MIX, DECISIONS AND STRATEGIES

PRICE
Billing Price
→ It is the amount of money charged for a product or service. More
broadly, price is the sum of the values consumers exchange for the → refers to the costs of products inclusive of raw materials, labor, and
benefits of having or using the product or service overhead
→ Price is also defined in many ways as follows:
1. the values placed on goods and services; Rental Allowance
2. the amount of money and/or goods needed to acquire some
→ Refers to the amount refers to the amount paid by manufacturers
combination of another good and its accompanying services; to trade outlets spaces, or floor display spaces monthly for product
3. the value expressed in terms of pesos or any other monetary displays either at the point-of-sale, or preferential shelf
medium of exchange.

Bids or Quotations WHO DECIDES FOR THE PRICE OF A DRUG PRODUCT

→ used in government transactions in hospitals, industrial firms, and → Top management decides on drug pricing and sets the general
related health agencies pricing objectives and policies:
◆ Marketing Policy Board, Therapeutics Committee, drugstore
Catalogue or List Price owners, hospital chief pharmacists, supply/ purchasing
→ used by drug manufacturers when selling products to trade outlets officers
→ Product managers on assigned products in medium and large scale
drug companies, local or multinational, based on price studies,
Retail Price
recommend price proposals for final approval of higher
→ used by wholesalers and retailers when selling products to management.
consumers or end-users
→ Price Review Council that monitors and regulates pricing strategies
implemented by various divisions or sales departments.
Wholesale Price → Top executives usually are involved in pricing; likewise, the
→ When selling products in bulk quantities involvement of people in production, finance, and product
management group
Net Price
→ The cost of products inclusive of 10% Value-Added Tax (VAT) and
discounts
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO

PRICE MIX, DECISIONS AND STRATEGIES

MARKETING AND SALES MANAGERS ROLE
→ They are most in contact with the market and competition.
→ Market intelligence and price administration are directly under their
responsibility.
→ They have the primary responsibility for such tasks as:
◆ Initiation of price changes
◆ Price determination
◆ Formulation of price policies
◆ Price administration.
PRICING
→ Is considered as an art. In attempting to balance the various factors
to which no price weight can be attached
→ The objective is to optimize profit, or to reduce losses or maintain
market share at all costs.
→ This is done towards the attainment of short or long range goals, for
a specific product or product line.
→ On the other hand, pricing is considered a game. Companies are
practically guessing how the market will react to price changes such
as:
◆ possible shifting to substitutes or shifting to competitor's
products
◆ a price decrease may lead to increased demand
◆ end-users may eventually stop buying imported drug
products after devaluation.
→ Pricing decisions are made based on knowledge of the competitor's
situation. An intellectual guess estimates in terms of raw materials,
stocks inventory, financial capabilities, technical know how, sales
organizational strengths or channels of distribution
WHAT ARE THE FACTORS INFLUENCING PRICE?
→ Several factors primarily determine the price of a drug product as
follows:
A. THE MARKET FOR THE PRODUCT
1. Market Appeal
→ Cetrin Drinks commercially available in the traditional and non-
traditional markets, come in granules and powder format; attractive
packaging appropriate for consumer's preference, at the
point-of-sale
2. Market Characteristics
→ Cetrin Drinks, economically-priced as juice drink fortified with
Vitamin C to increase body resistance against infection.
3. Elasticity of Market Demand
→ Demand for Cetrin Drinks are directly influenced by change in price,
e.g., lowering the price will result to an increase in market demand
and increasing prices will mean a decrease in demand.
4. Expandability of Market Demand
→ Can be achieved by implementing sales promotions and advertising
campaigns as shown by the increase in sales and market growth of
Cetrin Drinks when repositioned as a therapeutic juice drink
→ Repacked and promoted through tri-media advertising and made
available not only in drugstores but also at the selling areas of
groceries and supermarkets
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO

PRICE MIX, DECISIONS AND STRATEGIES

→ Creating new users and encouraging frequent usage as a Vitamin C
drink, without dangers of overdosage because whatever excess in
the intake will be secreted through the urine.
→ Good for children and adults and appropriate as a health drink for
sports enthusiasts and healthy active people.

5. Pattern of Income Distribution

Pricing schemes based on income status such as the:
→ (a) affluent, elite, high-income market segment is characterized as
the non-price conscious buyers;
→ (b) middle income market segment and the
→ (c) poverty line or the low-income market segment characterized by
insufficient purchasing power even for basic commodities.

B. COSTS OF THE PRODUCT

1. Lower Production Costs

→ can be achieved in such factors as economies of scale, better
organizational capability, lower procurement costs of raw materials
component and highly able management.
WHEN IS PRICING A PROBLEM TO DRUG COMPANIES?

2. Higher Selling Costs

→ occurs when initiating massive advertising and personal selling;
when costs of operations increases; when you have to reduce price;
when expanding warehousing facilities and when there is an
increase in transportation costs.
3. Joint Costs
→ Where multi-products company prorates or allocates costs of
marketing and production.
1. When a company sets a price for the first time:
→ 1.1 Acquires a new drug product from an existing company locally
or abroad.
→ 1.2 Develops a new drug product out of research or innovation of
an existing drug product.
→ 1.3 Launch or introduce present drug products into new distribution
channels, geographical area, or new markets.
→ 1.4 Participates in government bids or negotiated contracts.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO
PRICE MIX, DECISIONS AND STRATEGIES
2. When inevitable circumstances lead a company to consider
initiating a price change:
→ 2.1 Repricing as a result of inflation, raw materials shortage, peso
devaluation, excess inventories, fuel and power rate increases.
→ 2.2 Total review of pricing in relation to its demand, costs, and
competitor's prices.
3. When direct competitors initiate a price change:
→ 3.1 The company decides to change own price upwards or
downwards and deciding by how much and for how long.
→ 3.2 The company initiates to maintain old price for a while to gain a
strong foothold in the market.
4. When a drug company produces several drug products that
have interrelated demands and/or costs:
→ 4.1 The problem is one of determining optimal price relationships
for the products in the line.
→ 4.2 Follow the multi-branding pricing strategy to different target
markets at different positioning approaches vis-a-vis multinational
or local emerging drug companies.
WHAT ARE THE PRICING STRATEGIES COMMONLY USED IN THE
DRUG INDUSTRY?
1. SELLING BELOW COST
→ This is not normally desirable but it sometimes becomes necessary
for a number of masons as follows:
→ The drug product is not selling resulting in an overstock situation or
excess inventory.
→ The drug product is expiring within three months to one year
→ New product introduction.
→ Low of leaders in retailing
→ Marketing costs are too high.
→ Increase is volume (level unit cost of production)
2. SELLING BELOW COMPETITION
→ This is done for the purpose:
→ Gaining fast entry into the desired market segment of sub-
segments by therapeutic category.
→ Getting a bigger slice of the market.
→ Satisfying management decision to dislodge competition out of the
market at all cost to regain market share.
3. COMPETITIVE SELLING
→ This is done by way of:
→ Following the Leader Pricing Policy, and this holds true for small
drug companies.
→ Launching or introducing specialty drug products.
→ Highlighting technological advantage in terms of bioavailability and
bioequivalent tests.
4. PRICING ABOVE COMPETITION
→ This is accomplished by emphasising value given and other non-
price considerations such as: quality assurance, warranties, after-
sales service, additional product features, more quantity or weight.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO
PRICE MIX, DECISIONS AND STRATEGIES
flexibility and capacity of product lines, or by a policy of covering the
premium market
5. STOPPING ENTRY OF COMPETITION
→ By setting a price at very low levels relative to competition or even
below costs by means of higher discounts, product deals (such as
Buy 10 Plus 1), allowances and subsidies, rebates or pin money for
reorders, gift certificates and other long-term amenities requiring
commitments from drug trade outlets and binding them to a Sales
Contract
6. PSYCHOLOGICAL PRICING STRATEGY
→ Each digit is believed to be symbolic and has visual quantities that
should be considered in pricing even for pharmaceutical products,
such as the number 8 or 6 or 3 that is round and even that creates
a soothing effect compared to 7, or 4 or 5 which is angular and
creates a jarring effect. Hence, Unilab Ascorbic Acid 250mg Tab. X
100's for example, is priced at P43.88 per bottle.
→ Small differences in price such as Unilab Amoxicillin 500mg
Capsule x 100's priced at P599.95 will more likely be seen as a
price bargain price and the P0.05 psychological price difference can
be much greater. The P 599.95 will be perceived within the P 500
range rather than in the P 600.00 range.
→ Reference prices might be formed by noting current prices,
remembering past prices, or analyzing the buying context. This may
be done by means of product displays next to more expensive ones
to imply that it belongs in the same class, or by stating higher
manufacturer's suggested prices, or by noting that the OTC drug
product was priced much higher originally, or by pointing to a
competitor's high price.
→ Higher-priced Vitamins and other health food related products were
perceived to possess higher quality.
7. PROMOTIONAL PRICING STRATEGY
→ Large chainstore drug outlets temporarily price OTC or proprietary
drug products below the List Price and sometimes even below cost
to dramatically increase sales.
→ Loss Leader Pricing, a few OTC/proprietary or prescription drug
products that are fast-selling, widely accepted, and frequently
bought, may be priced lower than competition or even at a loss for
the purpose of attracting more customers to the store in the hope
that they will buy other drug products at normal mark-ups. Many
drug chainstore firms adopt this pricing strategy during the grand
opening of a new branch or during "Sale" campaigns or special
seasons of the year.
→ These are bonafide bargains. "Promo Lure," are featured as
"specials” and run regularly to create an image of low price Margin
is less than normal price-cut is temporary. At Mercury Drug
branches. "Mura na, Bago pa
→ Special Event Pricing, is done during certain seasons to attract
more buyers, such as a Sumner Sale for antidiarrheal preparations;
Rainy Days Special for cough and cold lines Trade outlets conduct
special event pricing during special occasions like Christmas, New
Year, Valentine's, School Opening, and store anniversaries
→ Cash Rebates or Pin Money, offered to consumers by drug
companies who buy the drug products from wholesalers of
participating drugstore chains within a specified time period. This is
done by means of surrendering box tops, empty boxes, product
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO
PRICE MIX, DECISIONS AND STRATEGIES
flaps, or empty bottles retrieved or submitted in specified
Redemption Centers. For example: P100.00 rebate for every box
top of Unilab Ampicillin Caps x 100's
→ Low interest financing and longer Warranties to reduce the
customer's or trade outlet's price.
8. GEOGRAPHICAL PRICING STRATEGY
→ Drug companies charging higher prices to far away customers or
drug outlets to defray higher shipping, freight, and handling costs.
Other companies charge the same to all customers regardless of
location and this is true for United Laboratories, Inc. which adopts a
Uniform Pricing Scheme regardless of geographical locations.
9. FREIGHT ABSORPTION PRICING
→ Drug companies absorb all or part of the actual freight charges in
order to get the business away from competition or for market
penetration purposes due to increasingly competitive markets.
10. MARKET SKIMMING PRICING STRATEGY
→ New drug products are initially set at higher prices to "skim"
maximum revenue from the segments willing to pay the higher
price. After the initial sales slow down, drug companies lower the
price to attract the next price-sensitive layer of customers. In this
pricing strategy, the product's quality and image should support the
higher price and there are adequate benefits for those who want to
buy the product at that price.
11. MARKET PENETRATION PRICING STRATEGY
→ Drug companies set a low price on their new or innovative drug
product, introduced into the market in the hope of attracting more
buyers and gaining a large market share.
→ The low pricing scheme is designed to attract high volume of sales
with the belief that a low price generates a bigger market growth
and in keeping out competition.
→ EX: Medicol Tablet was launched in the market at a price lower than
Cortal tablet, the market leader in the early 60’s.
12. PRODUCT- BUNDLE STRATEGY
→ Drug companies combine several of their drug products and offer
the set at reduced price
→ For the purpose of encouraging drug outlets to buy product lines
they might not otherwise buy, however, the combined price must be
low enough to get them to buy the bundle.
13. DISCOUNT PRICING AND ALLOWANCES STRATEGY
→ These are price adjustments done by drug companies to reward
drug outlets for prompt payment of invoices, volume purchases,
warehousing, wholesaling to smaller outlets in the provinces or
remote areas.
Cash Discount
→ a price reduction for drug outlets and buyers who pay their sales
orders promptly or on cash basis.
→ EX: Payment within 15 days instead of the outlet paying on the 30th
or 45th day entitles the buyer to an additional 3% discount on top of
the regular discounts.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO
PRICE MIX, DECISIONS AND STRATEGIES
Quantity Discount
→ is a price reduction for buyers of large volumes of drug products, as
a means of offering an incentive to buy more than usual from a
given supplier rather than from other sourcesn
Trade Discount
→ is offered by the drug company to trade channel members, retailers,
and wholesalers of drug products who perform certain functions
such as selling, storing, and record keeping.
Seasonal Discounts
→ is a price reduction for buyers of drug products out of season.
Promotional Allowances
→ are to reward drug outlets for participating in sales promotions,
sales and advertising support programs
Other Discount Pricing
→ are: merchandising and promotional discounts, cumulative
discounts, display allowances, warranty allowances, gondola or
floor display rentals, channel Incentives. channel promotion to
distributor's sales force
14. Discriminatory Pricing Strategy
→ The drug company sells a product at two or more prices, where the
difference in prices is not based on differences in costs.
→ EX: Prices to Wholesalers or Distributors compared to small retail
stores.
Customer-Segment Pricing
→ where different customers pay different prices for the same
product.
→ For example, drug outlets will charge a 20% Discount for senior
citizens or 65 years old and above for the same product bought by
younger generations.
Product-Form Pricing
→ different versions of the drug product which varies in brand name
and marketing effort but with the same generic names and are
priced differently.
→ For example: Medical Tablets is priced half the price of Biogesic
Tablets. Both are paracetamol-based generic equivalent.
→ For discriminatory pricing to be an effective strategy for the drug
firm, it is mandatory that the market is segmentable and each of the
market segments demonstrating different degrees of demand.
→ Competitors should not be able to undersell the firm in the desired
segment being charged the high price.
15. Full Cost Pricing Strategy
→ a patronage mark-up equal to the cost of operating the store
16. Sealed Bid Pricing Strategy
→ setting a price lower than that set by or of the other drug firms.
These are done in bidding medicine requirements of government
hospitals and industrial firms.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO

PRICE MIX, DECISIONS AND STRATEGIES

17. Demand-Oriented Pricing Strategy 23. One Price Formula Strategy

→ setting a price based on customer perceptions and demand
intensity rather than on costs.
18. Perceived Value Pricing Strategy
→ Pricing based on the product's "perceived value the buyer's
perception of value and not the seller's level of cost.
→ Branded drug products are perceived to be of higher quality than
purely generic drug products.
19. Going rate Pricing
→ Can be applied to branded drug products, or premium market, or on
exclusivity and monopoly of drug product. The same pricing
structure in any geographic location nationwide.
24. Price Bargaining Strategy
→ a growing need for the negotiated price and the demise of the
established price.
→ This holds true in many government purchase requirements for
drugs, medicines, and supplies.
→ This holds true for many OTC/proprietary drug products.

→ price at the average level charged by the drug industry

25. Current Revenue Pricing Strategy

20. Break-even Pricing Strategy
→ setting prices to break-even on the costs of making and marketing a
drug product or to make the desired profit.
→ Also called target profit pricing.
→ setting the price to maximize current sales revenue; a matter of
finding the price/quantity combination yielding the largest sales
revenue.
26. Target Profit Pricing Strategy

21. Cost-plus Pricing Strategy → pricing objectives towards achievement of a satisfactory rate of
return.
→ adding a standard mark-up to the cost of a drug product's total unit
cost of product changes as output expands or contracts. This is
27. Costs-Oriented Pricing Strategy,
done by drugstore outlets.
→ setting drug prices solely on the basis of costs, such as mark-up
22. Buyer-Oriented Pricing Strategy pricing and cost-plus pricing.
→ This is a common practice among drugstore outlets
→ begins with analyzing consumer need and price perceptions. It
involves understanding what value consumer's place on the
benefits they receive from the drug product and setting a price that
fits the value.
PHAR 3210: PHARMACEUTICAL MARKETING AND ENTREPRENEURSHIP
MIDTERMS || March 2023
GROUP 2 - CASTILLO, DERUTAS, DELAROSA, GALLEGO, GARIO

PRICE MIX, DECISIONS AND STRATEGIES

28. Market Share Pricing Strategy

→ setting a price that maximizes its market share penetration even if it
foregoes, current profits; long run profitability rises with market
share, priceator below competitors to win a bigger share.
→ This is done by drug companies out to win government biddings
even at a loss.

29. Mark-up Pricing Strategy

→ by adding a fixed peso amount to the total cost of the drug product,
the fixed amount as a percentage of the product or the price of the
product, this is done by hospitals and drugstore outlets.

PRINCIPLES IN BUILDING A DRUG PRICE POLICY:

1. Price must give enough profit to the firm or drug outlet, which will
keep invested capital and employed labor.
2. Price should be such an amount which will result in placing at a
profit to the firm by making the largest number of units of production
in use.
3. Price should attract new capital to the industry under normal
conditions.
4. Increasing volume should make it possible for the drug
manufacturers either to increase the quality without raising or
reducing prices and without reducing the quality.
5. Average net profit over a number of years should form the basis for
policy validity instead of the profits for a single year.

REFERENCE

● Lao, F. (2006). Pharmaceutical Marketing in the Philippines.

PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS

PHARMACEUTICAL MARKETING • Conventions and workshops

• Has evolved into a truly creative and • Study grants
responsive marketing communications • Novelty items
program with all the component elements • Brochures/literatures/leaflets/teasers
of a sound marketing mix that delivers the
• Coupons
desired incremental productivity called for
by the needs of the times • Contests
• Posters
DRUG COMPANIES • Banners
• Feverishly communicate with terminal • Streamers
decision-makers in both the traditional and • Gift certificates
non-traditional markets, various publics, • Merchandise
and final consumers of drug products by • Social FAX telegrams
such mix of promotion tools and other • Rebates/pin
related tools within the categories to money/subsidies/stipends/allowance
include:
PROMOTION TOOLS PROFESSIONAL SERVICE REPRESENTATIVES (PSRS)
• Advertising • Are the company's emissaries, ambassadors
• Sales promotion of goodwill, extensions of the company
• Personal selling providing consultations and allied services
• Public relations to target prescribers and endorsers of
• Publicities ethical drug products.
• Sampling • Are for long-term gains in terms of
OTHER RELATED TOOLS continued product patronage, frequent
• Point-of-purchase displays prescriptions and endorsements for present
• Merchandising and newly-launched ethical drug products.
• Scientific medical fora and the like
PRIMARY TARGET MARKETS
• Poster session Physicians and dentists who prescribe ethical drug
• Trade show products to their patients either in hospitals, health
• Demonstrations centers, industrial clinics, or in their private practice.
Drug companies practically "fight to death" for
bigger share of prescriptions market
THE PROMOTIONS MIX • More than 30,000 physicians and dentists
FOR ETHICAL DRUG PRODUCTS nationwide tend to support certain drug
• Physician companies whose ethical drug products
• Allied professionals exemplify the highest quality of safety and
• Dentist efficacy beyond reasonable doubts and are
TOOLS IN TOTAL PROMOTION MIX adequately available and reasonable priced
with range of the greater majority of 65
• Sampling
million Filipino population.
• Detailing
• The conduct of company plant tours are
• Specialty advertising in journals and widely accepted in gaining greater
newsletters confidence of prescribers of ethical drug
• Scientific symposia products. Likewise, the continuing dialogue
• Fora medica with key officials of the company on issues
• Poster sessions of mutual interest and benefit, through
round-table-discussions (RTD) or focus
PRIORITY PROGRAM OF ACTIVITIES GEARED group discussions (FGD).
TOWARDS GAINING A STRONG FOOTHOLD IN
ETHICAL DRUGS MARKET

CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B 1

PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS
SECONDARY TARGET MARKETS
Pharmacists who dispense and endorse the
prescription drug products to end-users in
drugstores and hospital pharmacies
• With the advent of revitalized Generics Law,
pharmacists in drugstores can make or
unmake a prescription drug product
depending on what is actually available in
the store to serve or advice, provided to
patients or end-users carrying a
prescription. The patient may be shown the
generics menu cards conspicuously made
available in strategic glass counter
locations, provided by the DOH.
• The ultimate consumers of ethical drug
products has a wide array of choices and
risks in deciding for the final ethical drug
products to buy other than what is
prescribed.
$64 Questions remains:
• "Are all generic drugs with the same
equivalents manufactured by local and
multinational drug companies are made
available in drug outlets, the same?"
• "Do all drug companies maintain the
same quality control standards prior to
marketing their products?"
• "Are they advocates of bioavailability
tests? Bioequivalent tests?"
• "Are the sources of their raw materials
clinically stable and time tested?"
• "Do they transact business to accredited
suppliers of world-class standards for
their raw materials required?"
• "Is price their major concern or quality of
drug products?"
PROMOTIONS MIX FOR
OTC/PROPRITARY DRUG PRODUCTS
TOOLS IN PROMOTION MIX
• Tri-media Advertising
• Mass sampling
• Sales promotions
• Point-of-purchase displays
• Outdoor merchandise
• Floor/window/shelf and counter displays
• Novelty items
• Stickers
CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B
• Buntings/flaglets/streamers/banners
• Demonstrations
• Trade shows
• Fiestas
• Sportsfests
• Conventions
• Seminars and workshops
• Host of other valuable promo tools
PRIMARY TARGET MARKETS
Require no endorsement or prescription from
physicians or dentists are the mass-based consumers
of both sexes, various income strata, and psycho-
social-cultural groupings.
PHARMACISTS, PHARMACY-AIDES, AND
SALESCLERK
• The authority endorsers at point-of-sales for
OTC drug products in drugstores
PHARMACISTS
• Serves as the catalyst of information and
center for training of pharmacy aides and
salesclerk in the representative stores
UNITED LABORATORIES, INC.
Conducts a Continuing Pharmacist Education (CPE)
Program to all the Philippine Pharmaceutical
Association Chapters by way of providing highly-
qualified resource speakers for such relevant topics
such as:
1. Inventory Management and Control
2. Merchandising and Product Displays
3. Effective Retailing
4. Personnel Handling
• In addition, the company also implements
continuing workshops and seminars for
pharmacy-aides and salesclerk on job-
related topics
• Senior pharmacy students are also given the
opportunity to tour the company's R and D
facilities and lecture on Quality Assurance,
Bioavailability Testing, Current Good
Manufacturing Practice (CGMP), and other
modern quality control techniques.
BULK OF OTC/PROPRIETARY DRUG PRODUCTS
AVAILABLE
• Drugstores
• Partly in groceries and supermarkets
2
PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS
• Hospital pharmacies
TERMINAL PURCHASE DECISION MAKERS
• Owners
• Pharmacists-in-charge
• Branch managers
• Purchasing officers of drug outlets
Thousands of drugstores mushroomed in practically
all the 45,000 barangays nationwide, and includes
such drug outlets as the following:
o Botica sa Barrio
o Coop Drugs
o Home Remedy Stores
o Botica sa Binhi (operating under
stewardship of Health Centers and
established wholesalers)
Drugstore Departments or Corner Drugstores that
operate inside big supermarkets and groceries:
o Ororama Supermart
o Gaisano Supermart
SHOEMART OR SM MEGA MALLS
• Makes available in their total Shop-Mix.
LA BOTICA
• Drugstore manned by a licensed pharmacist
UNWIDE OUTLETS
• Started carrying pharmaceutical products in
a joint-contract operations with New South
Star Drug, a drug chainstore operating in
Bicol and Metro Manila.
PROMOTIONS-MIX OF WHOLESALERS
AND BIG DRUGSTORE CHAINS
To increase customer traffic and greater store
patronage, the big drug outlets in the country
conduct varied promotions activities and employ
such promo tools as:
Attractive billboards/neon signs
• Modernized store fronts and interiors
• Creative merchandising and displays at the
selling area and point-of-sale
• Sales promotions for consumers and drug
outlet's personnel
• Localized advertisements
• Free medical and dental consultations
• Sampling
CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B
• Discounts and many drug outlets in the
vicinity
In contrast, the DOH, through its implementing arm,
the bureau of food and drugs, uses the following
promotional tools to strengthen the
implementations of the Generic Law
• Tri-media advertising
• Generics menu cards
• Generic posters
• Manuals
• Streamers
• Banners
• Komiks
• Seminars and workshops, as well as other
effective methods of reaching the target
markets for an efficient delivery of
healthcare.
DR. JUAN FLAVIER
• The former secretary of health, was
constantly at the forefront of a media blitz
campaign, whether it was in radio,
television, or print media, shouting "Let's
DOH it" and rallying support for DOH
initiatives from the general public.
PROMOTIONS MIX DEFINED
The exact combination of advertising, personal
selling, sales promotion, and public relations that a
business uses to further its advertising and
marketing goals is known as the promotions mix. The
conception and execution of each drug company's
promotion mix varies. To achieve their planned sales
targets, consumer-focused medicine businesses
largely rely on tri-media advertising (radio, TV, and
print commercials), sampling, sales promotions,
display, and merchandising
A. ADVERTISING
For OTC/Proprietary Drugs
• Television advertising is the priciest form of
promoting over-the-counter (OTC) and
proprietary drug items, but its market
penetration is wider and quicker, resulting
in increased product awareness, enduring
recall, and also prompting purchase
decisions and repeat purchases.
• In order for television advertising to be
successful, it needs to be complemented by
3
PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS
other marketing mix components and
promotional methods
B. CONSUMER SALES PROMOTIONS
For OTC/Proprietary Drugs
• These are promotions activities designed to
achieve arrest/attract attention of OTC
consumers to buy the products.
• Provide inducements or contributions or
incentives to give value to consumers
• Many generic products are fast-becoming
OTC categories and sales promotions
activities encompass even antibiotics, at the
drugstore counters of major chainstore
outlets.
Includes the following:
1. Discount Coupons- publish in newspaper or
disseminated in public places which entitles
the bearer to a discount.
2. Bonus-Packed Offers- additional products
added for free at the price of the original
product.
3. Piggy-Back Offers- a gift item or another
drug product attached to the original
product.
4. Pick and Win Promo - entitles a buyer to
win a prize for every purchase of certain
OTC drugs.
5. Raffle Promo- entitles a buyer one raffle
ticket for every P100.00 purchase for
example of any drug products in the drug
store.
6. Trading Stamps- entitles a buyer to a stamp
worth 100 points for every P100.00 worth
of purchase for example in the drugstore.
7. Premium Promo- entitles the buyer to buy a
premium item on display.
8. Free Goods Promo- entitles the buyer to a
similar item for free.
9. Rebates- entitles a buyer for example to a
P2.00 refund for every box of Nutroplex
syrup.
10. Pin Money- additional income for
salesclerks for recommending the product
of a drugstore.
11. Mystery Buyer- Salesclerk recommend an
OTC drug product to a customer.
12. Sale Campaign-conducted during special
season of the year.
CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B
C. SALES PROMOTION
• To create awareness, acceptance, and
patronage of their ethical drug products
from physicians and dentist such as the
following:
1. Discount coupons for patient- allowing
patients to enjoy discounts of ethical drug.
2. Prescription for a cause- certain amount is
pegged on the prescription. Helping a
distressed community or alleviate the plight
for street children.
3. Gifts for the needy- generosity of the
prescribers to render services for free for
the benefit of an orphanage or crippled
children.
4. Medical mission or free clinic operations-
render free consultation, surgery and the
like using only the ethical drug product of
the certain drug company when prescribing
patients during weekends.
5. Other sales promo tools for ethical drug
product to target prescribers include:
o Free trips
o Free goods
o Honoraria
o Other financial and non-financial
assistance
D. PERSONAL SELLING
• Personal interaction between two or more
people
• EACH person:
o Observes the other's needs and
wants
o Adjusts to situations promptly and
decisively
o Becomes sensitive to other's
feelings and expectations
o Goes beyond the selling and
marketing functions to a deep
long-run personal friendship
• Company's most expensive promotion tool
• Demands a high degree of intellect and
organization
• Styles and techniques are equally important
• Drug companies invest substantially on
their human resources
o Human asset becomes greatest
asset in attainment of goals
4
PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS
E. MERCHANDISING AND DISPLAYS
• Cover every activity which helps the dealer
or drug outlet resell the company's branded
or generics line
Volume of Repeat Business
- Depends on the quantity of products sold or
moved out into endconsumers
End-consumers
- "Pulled to one side and be reminded"
• Broad headings of factors that provide
reminders:
o Drugstore owners, pharmacists
and pharmacy aides' personal
recommendations and/or
endorsements
o Product Displays
o Posters and other merchandising
paraphernalia
DRUGSTORE OWNERS, PHARMACISTS,
AND PHARMACY AIDES/SALESCLERKS
"Authority" figures or endorsers for OTC/proprietary
drugs and generics medications and encouraged to
recommend a drug product (branded or generic)
PRODUCT DISPLAY
• May be built by drugstore owner, dealer,
branch manager, or the company's
Representative
DEALER DISPLAYS
• Most effective and long-lasting
• Built by dealers because they realize their
value and will always strive to maintain
them
DISPLAYS BUILT BY THE COMPANY'S
REPRESENTATIVE
• Most often the basic display materials
provided by the company's head offices
Creative fieldman
- would look for the most suitable and
strategic place in the drugstore
- convince drugstore owner or dealer that it
would be profitable for the business
- to maintain a product display in that site
- feature brands by using products, price
tags, or retail "sale" prices using cartolinas
CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B
Displays
- The only advertising medium which come
into play in making the final sale when all
other factors are present, namely:
o Customer
o Money
o Product
DISPLAYS BUILT BY THE COMPANY'S
REPRESENTATIVE
Displays
- "Silent Salesmen"
- Push brands even in your absence
- A dealer may allow a company to set up
displays just to avoid arguments, or to
please the field representative for the day
- May be taken down the next day by
competitor or other people, and dealer
could not care less"
• A very effective technique employed by the
imaginative salesman is to ask the drugstore
personnel or the drugstore owner to help in
building up the display.
POSTERS / STREAMERS / BILLBOARDS
• Important link between advertising and
your brand when consumer gets into
drugstore
• All advertising commercials are intended to
set up a chain of thoughts in the consumer's
mind
o A missing poster may break that
chain
Posters
- Always place at eye level or higher (never
lower)
- Place two or more posters side by side for
visual impact (if competing for attention)
- Must be clean and readable
- Point-of-purchase (POP) materials
o Ideal location is the outlet (point
where consumer is likely to make
his/her purchase)
HOW TO CONVINCE A DRUGSTORE OWNER TO
SET-UP A DISPLAY
1. Plan on how you are going to set a display
as carefully as you plan the actual sales
2. Plan your biggest displays in those
drugstores attracting the biggest consumer
traffic
5
PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS

3. Have in mind what OTC / proprietary brands
to display before going into a drugstore
4. Always take appropriate materials with you;
use them to sell the idea to the drugstore
owner or branch manager
Note: Avoid placing the packaging ing the floor, they
will get dirty or damaged.
Also experience proves a consumer will not go
through the effort of stooping
Down to get your products.

✔ "If I need display materials, I'll just go back to my
car for them."
→ negative and futile (gives the dealer a bad
impression, like you have not planned what you are
going to do)
✔ Know your drugstore so well to decide where you
should put up the display
✔ Ask the drugstore owner for specific units of
products you want to display and get them from the
storeroom or bodega (commercial stocks, not those
already displayed)
✔ POSITIVE ACTION
→ most successful means of convincing the dealer
✔ Tell the dealer that by maintaining displays,
he/she is reaping the benefit of money spent on
product advertising and other promotional activities
Preferential Shelf Space
- Is that part of the fixtures which is in a
commanding position.
- It is the shelves which are or just below the
eye level, and the where the customer
naturally looks when making her purchases
and which are within easy reach of the
Counter clerks
Window displays
- Are most effective in main thoroughfares.
By providing you with ready-to-assemble
windows displays, we are integrating all the
displays with a single talking point, based on
special seasons of the year or sales and
promotional campaign for the period.

KEY DISPLAY GUIDELINES

POSITIONS OF DISPLAYS
A. If you have a POP Display
Point-Of-Purchase
➢ Have it either where most
- Is the undoubtedly the best of the four
consumer stand, or better still at
positions. This is precisely where the
every serving point.
Customer will be standing when she makes
➢ Place it in a strategic place so that
her purchases
the counter clerk sees it as well.
- A display in this location will persuade the
➢ Have it at a height between waist
customer to switch brands or try the
and eye level (while your posters
OTC/proprietary medication, or it will
are placed at higher levels).
prompt the counter staff to suggest that the
➢ Make it big and and attractive
customer purchase a bottle of Nutroplex as
enough to attract the customer.
well.
B. If you have Floor Display (This also applies
The Store Floor
to Preferential Shelf Space)
- Is the ideal location for a broad
➢ Relate it to the size of the
presentation of your proprietary and over-
drugstore; within reason, however,
the counter brands.
the bigger the display, the more it
- The majority of mercury drug branches are
will see.
one of the few Drugstores that can
➢ Have it in a position and size where
construct this style of display, however only
it will be seen by the greatest
in a very small number of outlets that
number of customers.
include self-service or serve-yourself
➢ Do not turn it by including too
sections. Because the customer can touch,
many brands.
feel, read, and examine the merchandise in
➢ Display the bigger sized brands in
this instance, the floor display is really
massive facings
highly successful.
- The flow display must be substantial and
prominently located.

CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B 6

PROMOTIONS MIX, DECISIONS, AND STRATEGIES
PHARMACEUTICAL MARKETING / MIDTERMS

C. If you have Window Display

➢ Make sure you control the whole
window space and that there are
no other products cluttering the
display.
➢ Keep the window clean and all
elements of the display properly
arranged.

The primary task of sales displays is to sell. A

customer would silently ask himself the following
questions:
• Can I afford that?
• Do I need that? What else do I need?
• Is that good quality?
• Should I get that now?
• Can I get that one for less later?
• How much do I need?

CHECKLIST FOR A GOOD DISPLAY PROGRAM

✓ Be selective- don't try to crowd in too many
displays.
✓ Tie-in your displays with advertising in other
media; give it a family resemblance.
✓ Study the most advantageous and strategic
placing of display materials within the store.
✓ Sell to your sales clerks the idea of properly
maintaining the display at all times.
✓ Consult your supplier through your sales or
medical representatives about store display
materials.

OBJECTIVES OF DRUGSTORES IN RELATION TO

MERCHANDISING/DISPLAYS
1. To bring in more prospective buyers into
the store who will actually buy.
2. To increase customer traffic even during
ordinary days.
3. To sell the maximum range of products line
depth and width.
4. To maintain or strengthen store and brand
loyalty.
5. To increase average spending of largest
clientele.

CARMEN, DIGAO, ESCLARES, ESPINOSA I 3-B 7

Place Mix Decisions and Strategies
Presented by
Coloso, M., Cristobal, Diasnes, Ejeda,
Victoriano
 Explain the drug distribution
channels
 Identify major channel
alternatives
 Describes the
 techniques of channel members
 Describes the decisions involved
in distribution
PLACE
 Place, means distributions
channels and physical
distribution.
 It is a very vital element of the
total marketing mix, that
ensures the adequate availability
and visibility of the right
products, in the right target
markets, at the right quantity, at
the right cost, at the right
condition, at the right time,
anytime and all the time.
PHARMACEUTICAL COMPANIES
- Majority of drug companies in the
Philippines employ the services of large
independent distributors such as Metro
drug, Marsman, Philusa, Zuellig Pharma
and many others.
United Laboratories, Inc. - largest
pharmaceutical firm in the country, has
its own distribution network nationwide,
servicing clients even in far-flung areas.
DLI Generics - local firm, whose
products are manufactured Drugmakers,
Inc., accepts distribution of their
product lines from private individuals
and groups, or wholesalers and
companies dealing in drug products or
even non-related items.
Mercury Drug Corporation (MDC)
 Largest drugstore chain that
operates more than 200
branches and franchises all over
the country.
 Each of their stores bear the
company slogan of “Mura na, Bago
pa,”
The self-service stores pioneered by
MDC, creates in the process, increase
customer traffic, ease and convenience
in buying, encourages impulse-buying,
and customers find themselves buying
more medicines, health food products
and other non-drug merchandise.
OTC/advertised products are
prominently displayed at the selling area
of the self-service stores and are
priced reasonably.
Wholesalers and Trading Stores
 Frank Yap Enterprises
 In Legaspi City, Bicol who sells
only at wholesale to smaller
drugstores, sari-sari stores,
jobbers, peddlers and the like
who personally visit the store
outlet.
 Biggest wholesaler in Legaspi
City that maintains two panel-
van salesmen regularly
distributing drug products.
 Wholesalers and trading stores in
Divisoria, Manila:
Goodwill Drugstores, Surety Drug, Dyna
Drug Corporation, Goodline Drugstores,
et. al. They operate mostly on a
wholesale basis and do not require so
many personnel unlike the traditional
wholesale- retail drugstore operations.
Wholesaler-retailer drugstores in
Cebu City:
Majesty Pharmacy, Queen’s Pharmacy,
Mabuhay Botica Sta Ana, Ching’s
Pharmacy, Rose Pharmacy, Princess
Pharmacy, Far Eastern Drug, Diding’s
Pharmacy and many others.
Accommodates sale orders at wholesale
prices from drug stores etc.
New Southstar Drug
 A wholesaler-retailer that
operates more than 24 chain
stores in Bicol and in the Greater
Manila Area
 Occupies a drugstore corner on
practically all Uniwide branches,
a large non-drug wholesale
outlet.
Uniwide
- Popularly known for its wide
assortment of merchandise at
factory/ wholesale prices of
food, garments/ textiles, school
supplies and many others under
one roof.
Pharmaceutical Distribution
Channels
Refers to the set of pharmaceutical
firms and individuals that takes title
or assist in transferring title, to a
drug product or service as it moves
from the drug manufacturer to the final
consumer.
Distribution Channel
 is the route along which the
right pharmaceutical products
flow from the drug
manufacturer’s production to
final consumption.
 The customers or end-users in
the pharmaceutical industry
basically want drug products that
satisfies the following criteria:
1. Right standard of quality
2. Right specifications in terms of
packaging and formulation; 3.
Right commercial stock level at
all times or when needed;
3. Right savings in terms of price,
efficacy, and safety; and
4. Right service warranties
Place or distribution - ensures utmost
availability and visibility of the right
drug product to its right market
through the right distribution channel
at the right place, right quantity, right
time, right condition, and right cost.
Distribution Channel Functions
 A distribution channel moves
drug products and related goods
from the drug manufacturer to
the final end-users, thereby
saving time, money and effort in
readily making it available to the
intended markets.
 The key functions of members of the turn sells the medicines to the patients
pharmaceutical marketing channels are (end- users) charging the latter
as follows: consultation fees and medicines given.

1. Physical transport and storing of Channel 3

drug products of various
• contains onlu one middleman level,
therapeutic categories.
either an independent distributor or
2. Financing the costs of drug
retailer, who in turn sells the drug
distribution and related market
products to end-users.
channel services.
3. Conducting sales and market Channel 4
activities to target clientele.
• contains two middlemen level, namely
4. Building a data bank of market
the wholesaler and retailer drugstore
information for marketing plans
outlets who in turn sells to the end-
to work and achieve desired
users. In some companies, three
goals, ahead of competition.
middlemen level when it's their
The drug manufacturer has to be very salesman that facilitates the
careful and decisive in assigning the transactions.
various functions to channel members,
Channel 5
who can efficiently and effectively
deliver the drug products to the target • contains three middlemen level,
markets, at the price time, quantity, reflecting jobbers who sell to the
cost, and conditions. smaller retailers who generally are not
served by the large wholesaler
drugstores.
Channel Levels MIDDLEMEN
Channel 1
CHANNELS OF DISTRIBUTION in
consists of a drug manufacturer selling the Drug Industry
directly to the Department of Health
o Wholesalers
(DOH) or government health units and
o Retailers
hospitals who will in turn make the
o Jobbers
medicines available to the end-users
o Manufacturer's
practically for free. A local drug trader
representative (sales
may serve as the intermediary level in
force)
behalf of the drug manufacturer in
o Manufacturer's Branches
transacting business with DOH.
and Franchises
Channel 2 o Distributor's and Dealers
o Dispensing Physicians
contains two middlemen level. A sales
o DOH: Governmental
representative of a drug manufacturer
Health Units and
selling to dispensing physicians who in
 o Governmental Hospitals
and Industrial
Clinics
• Non-governmental Organizations
(NGO's): Socio-Civic-Charitable
Organizations
Innovative Distribution Channels
Outside of the traditional distribution
channels for drugs and medicines namely
the drugstores, hospitals, pharmacies,
industrial clinics, government health
units and agencies and dispensing
physician's clinics, new channels were
found effective by drug companies such
as the following:
 Groceries and Supermarkets
 Trading and Sari-Sari stores
 Boutiques and Gift Shops of 5
star hotels and resorts.
 Post office and Air cargo
forwarders
 Convenience Stores such as the :
Seven-Eleven, Discount Shops,
etc. School Clinics, Health and
Fitness Centers, Barangay
Centers, Botica sa
Barrio/Cooperative Drugs/ Home
Remedy Stores, Botica sa Binhi.
Intensive Distribution -where drug
companies, like Unilab, stock-up their
product lines in as many sales outlet as
possible, in both the traditional and non-
traditional markets.
Examples:
 Advertised drug products are
sold and made available in the
thousands of sari-sari stores,
 groceries and supermarkets all
over the country: Medicol,
Biogesic and Neozep tablets, to
name a few.
 All those on top of placements in
the thousands of drugstores,
hospital pharmacies, industrial
clinics, and dispensing medical
clinics.
Exclusive Distribution- where the drug
manufacturer requires the sales outlets
such as hospitals and industrial clinics
not to carry competing lines in exchange
for higher discounts, promotions
support and other service amenities.
Selective Distribution- where the drug
manufacturer does not have to spread
its efforts over many sales outlets in
order to develop long-lasting working
relationships fast. Many small and
medium-sized drug companies prefer
selective middlemen and expect a
better-than average selling effort and
market coverage.
NUMBER OF MIDDLEMEN
 Channel members are expected
to comply the following
responsibilities:
 Satisfactorily complying company
standards for physical facilities;
 Utmost support and cooperation
on promo programs and other
marketing activities; Provide
freely, statistical data and other
information; and
  Periodically buy drug products.
SELECTING CHANNEL MEMBERS
Drug companies when selecting channel
members strongly consider the
following:
 Profile of middleman in terms of
years in business;
 Product lines carried other than
pharmaceuticals;
 Overall reputation and image in
the drug industry;
 Future growth potential; and
 Track record with respect to
sales growth and profitability;
 Store's customers and location
Motivation for Channel Members
 Product deals
 Higher discounts
 Liberal credit terms
 Display allowances Cooperative
advertising allowances
 Sales and promo contests
 Pin money and rebates Priority in
stock deliveries and allocation of
new products Sales training
 Free travel and hotel
accommodations Personalized
services
Checklist for Evaluating Channel
Members
Drug companies measure middleman’s
performance in accordance to the
following:
1. 1.Achievement of sales quotas
2. 2.Support provided in the
company’s sales and promo
programs
3. 3.After sales customer services
4. 4.Average inventory levels
5. 5.Stock transfer movements
6. 6.Customer delivery time
7. 7.Decisions made on damaged,
lost, and expired products.
Physical Distribution System
 Pharmaceutical Physical
Distribution involves the ff:
1. Customer Service
2. Warehousing
3. Transportation
4. Inventory Management and
Control
5. Packaging
6. Receiving Materials Handling
7. Store Location
Physical Distribution in the drug
industry encompasses the broad range
of activities concerned with planning,
implementing, and controlling the
physical flow of raw materials,
semifinished and finished drug products
to designated places, at designated time
and in proper conditions to promptly
meet the needs of customers at a
profit. it may be undertaken by a
member of a channel from the drug
manufacturer to the final consumer
It is important for the following
reasons:
 its costs,
 the value of customer service,
and
 its relationship with the other
functional areas.

Costs, as a percent of total physical
distribution costs; in some drug
companies may be broken down as
follows; 30% transportation costs; 25%
warehouse costs; 25% inventory costs;
15% order processing/customer service;
5% other costs.
Customer Service, encompasses major
decisions on speed and consistency,
frequency of deliveries; accepting
minimal sales orders; returned goods
policies; providing order progress
reports; policies on expired and about-
orders from existing inventory;
responding to customer request for list
price, product samples and brochures
within the day; limiting merchandise
damaged or pilfered in transit to the
minimum. Drug manufacturers that
renders a high level of customer
service, are able to drum-up a
substantial competitive edge.
Physical Distribution and Other
Functional Areas, interact with the
various aspects of marketing mix,
likewise, with closer coordination with
other functional areas within the
company. Distribution to channel
members should be appropriately
coordinated with Promotions Divisions
to ensure adequate supply of drug
products during the promotions
campaign period or prior to the
launching of new products to physicians
and dentists, who may write a
prescription and yet the products are
not yet available in drugstores, resulting
to patient's inconvenience and
complaints in going back to the
prescribers for a change of
prescriptions, and worst, prescribers
may not attempt to prescribe said
product anymore.
The objectives of physical
distribution in the pharmaceutical
industry are spelled out in terms of
getting the drug products at the right
places, at the right time for the least
cost possible. The major decisions
involving physical distribution must be
addressed on a total system basis, by
finding out what customers want and
what competitors are offering.
What Customer's wants from Drug
Companies are summarized as follows:
1.adequate inventories for fast-moving
and/or advertised brands;
2.ability to meet emergency
requirements of hospital pharmacies
and industrial clinics; 3.excellent after-
sales service such as fast withdrawal
and replacement of about to-expire or
spoiled products;
4.prompt deliveries of sales orders;
5.technical assistance in drugstores lay-
outs, merchandise displays and training
of personnel; 6.in-store promotions
support during branch openings
7.sales anniversaries, and special
occasions of the year;
8.computer installations;
9.liaison activities at BFAD, DOH, and
other government health agencies for
licensing requirement
Benchmarking at competitor’s service
standards in setting up own physical
distribution system; by
 providing higher levels of service
relative to competition;
 firming-up physical distribution
objectives to guide its planning
geared to ultimately reduce the
cost of attaining desired goals in
the areas of:
➢ Order processing
➢ Warehousing
of drug products ordered and
their quantities.
 The computer issues an
instruction to ship, bills the
customer account, updates the
finished goods inventory, sends
manufacturing order for fresh
stocks, and relays the message
back to the sales representative
informing him that the sales
order is ready for delivery by
Traffic/Warehouse or for
personal delivery pick-up by him.

➢ Inventory
Warehousing
➢ Transportation
 Warehouses receive, identify
and sort merchandise such as
Order Processing drugs, cosmetics, skin care lines,
and toiletries. They store these
 Sales orders submitted by sales
goods, implement product-recall
representative to UNILAB home
programs, select goods for
office everyday are being
shipments, and dispatch sales
processed on schedule by the
orders.
Sales and Credit Departments.
 Large-scale drug manufacturers
These are forwarded to the
and distributors normally have
Computer Data System for
storage facilities for its product
invoicing, then sent to
lines for needed quantities and
Traffic/Warehouse for
timing. The more storage
scheduled deliveries to the
locations in key cities or urban
intended sales outlets.
centers of the country means
 The computer is used nowadays
that the drug products can
to facilitate the order-shipping-
readily be delivered to the
billing cycle.
intended customers at the right
 UNILAB, for example, operates
quantities and at the right time.
a sophisticated computer-based
Drug companies however, have to
system whereby, when sales reps
strike a balance between the
of the company, submits the
level of customer service against
customer's sales orders, the
total distribution costs.
customer's credit line and
account status are immediately
verified likewise the availability
Warehousing decisions should reflect
the following factors for careful
considerations: Locations either at or
near the plant or in key areas of the
country;
 To own, lease or rent
warehouses;
 Warehousing facilities and
equipment technology; multi-
storied or single storied
automated warehouses with
advanced materials handling
systems under the control of a
central computer.
In fully-automated warehouses, there
are robots that gather drug products,
transferring them
to loading docks, and computers that
read sales orders and issue invoices.
Inventory control in these warehouses
are highly efficient, with less spoilage
and breakage,
lower labor costs and minimal manpower
accidents.
Types of Warehousing
Private Warehouse – those of UNILAB
are owned and operated by the company
which stores and distributes their own
drug products of various therapeutic
categories, including large-volume
parenterals (fluids), milk formula,
health food and even Veterinary lines.
Public Warehouse – This provides
storage and related physical
distribution services to any interested
individual or firm on a rental basis.
Normally are used by drug companies
that desire additional storage space
because their private warehouses are
not enough, or companies entering new
geographic markets, where test
marketing or pre-opening space is
needed.
Bonded Warehousing – These are also
made available to public warehouses. It
allows drug firms to postpone tax
payments until they are ready to make
deliveries to target customers.
Field Warehousing – A receipt is issued
by a public warehouse for finished
goods stored in a private warehouse or
in transit to intended customers.
Inventory
 Drug companies ideally would
want to carry just enough
finished goods inventory to
satisfy market demands, at the
right time and right quantity.
Large inventories have to be
evaluated carefully if these
would mean incremental sales and
profits.
 Inventory decision involves two
major concerns: (1) WHEN TO
ORDER, (2) HOW MUCH TO
ORDER. These requires
entrepreneurial decisions in the
right stock quantities to maintain
in order not to suffer out-of-
stock or over-the-stock
situations.
 Inventory management,
therefore, has broad implications
for the drug company, because,
 inevitably, neither a firm cannot
afford to run out of an essential
drug item that could put a halt to
production nor inventory should
be too large that will increase
the storage costs, such as
insurance, floor space,
supervision, credit, and so on.
 There are four aspects of
inventory management and these
are: STOCK TURNOVER,
WHEN TO ORDER, HOW
MUCH TO ORDER, &
WAREHOUSING
STOCK TURN-OVERS
 This is the balance between sales
and inventory on hand, expressed
by stock turnover, the no. of
times during a specified period
that average inventory on hand is
sold. Stock turnover is calculated
in units and pesos:
ADVANTAGES OF HIGH INVENTORY
TURNOVER
 Inventory investments are
productive
 Merchandise is fresh
 Losses from changes in styles
and packaging are reduced; and
 Costs of maintaining inventory
are lessened to the minimum
TAKE NOTE: Turnover can be
enhanced improved by practically
reducing assortments, eliminating slow-
moving or non-moving drug products;
maintaining minimal inventories for
highly specialized product lines, and
purchasing from suppliers who deliver
on due dates and time.
DISADVANTAGES OF HIGH
INVENTORY TURNOVER
 Small quantity or loose purchases
can cause the loss of volume
discounts and service amenities
 Low product assortment can
reduce sales if end-users are
unable to compare or related
items are not carried
TAKE NOTE: Low prices may be
necessary to sufficiently stimulate the
chances of a firm running out-of-stock
increase when average inventory size is
lowered.
WHEN TO REORDER
INVENTORY
The REORDER POINT establishes an
inventory level at which new sales
orders must be placed. It depends on
order lead time, usage rate, and safety
stock.
ORDER LEAD TIME is the period from
the date a sales order is placed until
the date of goods are ready for sale or
use.
USAGE RATE means the average sales
in units per day or the rate at which the
product is used in a production process.
SAFETY STOCK is the extra
merchandise kept on hand to protect
against out-of-stock conditions
resulting from unexpectedly high
demand, greater than anticipated
production volume and delivery days.
SAFETY STOCK MUST TAKE INTO
CONSIDERATION THE COMPANY
POLICY TOWARD EXPERIENCING
STOCK-OUTS OF DRUG PRODUCTS.
The reorder point formula is: REORDER
POINT = (order lead time x usage rate)
x (safety stock)
HOW MUCH TO REORDER
Drug firms normally determine their
order size. The appropriate amount of
merchandise for certain therapeutic
categories, by formats and commercial
supply to purchase at one time.
FACTORS TO BE CONSIDERED FOR
THE ORDER SIZE ARE:
 availability of quantity discounts
inventory turnover
 resources of the firm
 cost of processing each order
 cost of maintaining goods in
inventory
 When a drug firm places large
orders, quantity discounts are
usually available, a large portion
if its finances are tied-up in
inventory, its stock- turn-over is
relatively low, per order
processing costs are reduced,
and inventory costs are generally
high. The firm is also likely to
run out of goods. The opposite is
true for small orders.
 Many drug companies to a large
extent, seek to balance their
order processing costs,
processing cost per unit decline
as orders get bigger while
inventory cost rise. The economic
order quantity (EOQ) is the
order volume corresponding to
the lowest sum of order-
processing and inventory-holding
costs.
Transportation
1. Drug companies in the light of
rapidly changing trends in
physical distribution are actually
engaged in transportation
decisions, more specifically in
the choice of transportation
carriers that have substantial
bearings in the pricing of the
products, delivery performance,
and the physical condition of the
drug products when they reach
intended target markets.
2. Drug firms shipping drug
products to their warehouses,
dealers, distributors, and
customers, choose among 4
transportation modes and these
are RAILROADS, MOTOR
CARRIERS, WATERWAYS,
AIRWAYS.
 Railroads
-Normally carry heavy items that are
low in value (relative to their weight)
over long distances. Railroads ship items
too heavy for trucks. Recently, railroads
have begun to increase their customer
services. They have designed equipment
to handle special categories of drug
products such as Fluids (Dextrose),
veterinary drug products, galenicals,
and chemical reagents. They also have
provided in-transit services such as the
diversion of shipped goods to the
destination en route and processing of
goods en route. The Bicol Express train
despite its wide public acceptance has
been beset by a variety of problems in
recent years: field costs are high
because of heavy instruments in
facilities, and shippers face railroad
shortages during high-demand months
for veterinary and agricultural goods.
Some trucks and railroad cars are in
serious need of repair.
Motor Carriers
They dominate in transporting small
shipments over short distances and
are more flexible than rail because
they can readily pick up packages at a
factory or warehouse and promptly
deliver them to the customer’s door.
They are also often used to supplement
rail, air, and other forms that cannot
deliver direct to customers
Waterways
Are used primarily for the shipment of
low-value freight and involve the
movement of drug products on barges
via inland rivers and on tankers and
general merchandise freighters through
intercoast shipping. While water
transportation is the slowest, the rates are
extremely low.
Airways
 These are the fastest but air freights
are much higher than rail or truck
rates. This is ideal where speed is
needed especially when at a hospital
pharmacy from faraway Davao, or
Apparri, or Jolo would want their sales
orders for life saving drugs
immediately attended to or else they
will look for another supplier who can
best satisfy their stock requirements
at the earliest possible time.
 Whenever a drug company fails to
serve the order and a competitor firm
closes it, sales opportunities are lost
temporarily or forever. The costs of
packaging, unpacking, and preparing
drug products for shipping are lower
than for other transportation forms.
Firms specializing in air shipments
such as LBC Air cargo, DHL, JRS, and
others have done well by emphasizing
fast, guaranteed service at reasonable
prices.