Executive Summary: Recently Cambridge Science Pharmaceutical (CSP) has developed a new weight loss drug, Metabical, for

overweight people with BMI 25-30. In current weight loss drug market, this is the only drug that has been approved by FDA for overweight people (Exhibit 1). Barbara Printup, the senior marketing director of CSP needs to critically analyze the market for successful launch of the product. Decisions regarding demand forecast and pricing and packaging strategy will play critical role in the long term success of the drug as current weight loss drug market is very competitive and right marketing strategy will determine the success of the drug. After our analysis we recommend that (1) CSP should package Metabical in three 4-week pills as treatment plan; (2) should price it at $125 for 4-week pack and (3) should initially target only college educated women age group 35-65 as primary customers later on expanding its market to other segments.

Packaging: Metabical has been approved as a 12 week treatment plan. While packaging all pills as 12-week package seems like a good plan that will enable customers to complete the whole cycle without dropping out, it might adversely affect the sales of drug. Since drug is not covered by insurance plan, most customers will be paying out of pocket for Metabical. As shown in exhibit 1, most of the customers for Metabical fall in lower income group and will not be able to afford entire 12 week package. Even for higher income group customers, the perceived value of Metabical will increase as compared to its competitor Alli and may deter these customers. In addition, even though it has been approved by FDA, most customers will not be willing to invest in a drug for entire 12 week without trying it first that they are not sure will work for them. CSP has to capture at least 60% of the market to generate same revenue that it will do with $125 4-week package, which might not be an easy target (Exhibit 2).Therefore, we recommend packaging drug in three 4-week pills. Packaging the drug in three four-week packages has many advantages while minimizing disadvantages. A four week packaging is at the specific point where the consumer doesnt have to spend too much buy it, yet got invested in the product enough to continue subsequent treatments. Only disadvantage of three four-week package is that it might have few customers falling out of treatment plan. Pricing: An EVC analysis showed that (Exhibit 3) that although Metabical can be competitively priced with Alli, an OTC weight loss drugs, a number of benefits make Metabical much more attractively drug to customers. Metabical has a number of benefits (Exhibit 2B) that if quantifiable can add to differentiation value and can lead to a higher price. Therefore, right marketing strategy and educating customers will significantly increase customers WTP. There are three prices that Printup needs to consider for a 4-week pack-$75, $125 or $150. The price of $75 per 4-week packs ($225 for 12 week) seems pretty reasonable when compared to Allis $190 3 month plan. However, it leaves out added price benefits of Metabicals differentiated features. In addition, based on our demand forecast (exhibit 4-6) unless forecast method 2 is followed that targets 12% of overall overweight population the ROI at $75 is very small. Another extreme approach is pricing Metabical at $150 for 4-week supply. It is based on approach that how much money overweight individuals are willing to pay for out

Metabical Case Analysis

of pocket treatment. This price may be acceptable to a niche segment but pricing drug at this price will leave out consumer surplus by not targeting a larger consumer group. Therefore, the price of $125 seems to fall between the range that is a little above Alli and takes into account the differentiation features as well as below the maximum that consumers are willing to pay. Therefore, price of $125 seems just right for 4-week supply of Metabical that will optimally increase consumer surplus. Demand Forecast and Return on Investment: Exhibit 4-6 demonstrate the demand forecast and ROI using different prices and different forecast methods. The marketing strategy described below discusses the merits of targeting overweight populations vs. 125 of population immediately ready to go to their healthcare providers vs. college educated women age 35-65. Based on our recommendation that suggests targeting women age 3565, CSP should be able to generate revenue of around 290M with the price of $125 ROI of 9.02 within first year and should achieve a breakeven with years with sales of units.. Segmentation: discuss merits and demerits of all three target population and why you recommend women age 35-65. Positioning and Communication Plan: