School of Business

MBA Department
Managerial Economics

INSULIN
PRODUCTION
IN YEMEN
(NOVO NORDISK – YEMEN)

ECONOMIC STUDY

Prepared by:
Doaa Hafed

Supervised by:
Dr. Kamal Tamim
 Outline
• Introduction.
• Novo Nordisk Facts in Numbers.
• Basic Economic Questions.
• Economic and Non-economic Objectives.
• Transaction costs.
• Market Demand and Supply.
• Price Elasticity.
• Diminishing low of demand.
• Market type.
• Pricing decision.
 Introduction

• According to the Yemeni Association for Diabetes, about 10% of Yemenis

have Diabetes either type I or II.
• Pharmaceutical market in Yemen is suffering in the last few years and
there are several obstacles in importing and manufacturing medicines.
• Main manufacturers of Insulin in global market are: Novo Nordisk,
Sanofi Aventis, and Eli Lilly; Novo Nordisk is the largest.
• Novo Nordisk has distributers in Jordon, UAE, KSA, and Morocco, and they
made contract manufacturing with Saidal, Algeria.
Novo Nordisk- Facts in Numbers
 Basic Economic Questions
What products should be produced?
Insulin and insulin analogue; long acting, fast acting, mixed
insulin...

How should it be produced?

By making a contract manufacturing with Novo Nordisk
and building a plant with quality standards identical to
those of Novo Nordisk plants around the world.

For whom?
About 500,000 Diabetes patients in Yemen.
 Economic Objectives

1. Capture a big market share in Diabetes medications in

Yemen. (Having the largest market share).

2. Maximum utilization of resources. (HR, minimize

wastes, technological advancement).

3. Customer satisfaction.

4. Return on investment.
 Non- economic Objectives

1. Good work environment for employees.

2. High quality products with fair prices.

3. Social responsibility.
Resources Allocation
 Raw materials and Transaction Costs

We will depend mainly on outsourcing to get:

o Pharmaceutical raw materials (chemicals).
o Machines and equipment.
o Plastic and glass bottles, pens, coverings.

o Packaging papers and cartoons.

o Leaflets papers (partially).
Transaction Costs
 Market Demand and Supply

• Insulin supply is in a
shortage state due to: 3.0

1. No. of manufacturers
2.5
around the world is S

Price ($)
limited. 2.0
Equilibrium
1.5 (1.8$)
2. Difficulties in importing 1.0

insulin products due to 0.5

D
the war conditions in
Yemen. 100,000 200,000 300,000 400,000 500,000 600,000

Quantity
 Price Elasticity of Demand

Insulin demand is inelastic due to: Price ($)

1. It is essential for patients
lives. 3.0

2.5

2. Lack of alternatives. 2.0

S

1.5
3. The world market of insulin is
monopolistic. 1.0

0.5
D
* Note that it is not perfectly
inelastic because it is slightly 100,000 200,000 300,000 400,000 500,000 600,000

affected by patients’ income.

Quantity
 Low of Diminishing Returns

Labor TP MP AP Stage

0 0 0 0

1 100 100 100

Stage 1
2 250 150 125

3 450 200 150

4 550 100 137.5

Stage 2
5 600 50 120

6 500 -100 83.33333333 Stage 3

Low of Diminishing Returns
 Market Competition Type

Monopoly
• Absolute market power.
• Novo Nordisk is the industry. We have the patent
• Unique product.
• Market entry and exit are difficult due to the
governmental support, the patent, and the high
financial costs.
• Non-price competition.
Pricing and Output Decision
 Pricing and Output Decision

• Demand it is
downward
sloping because
the firm is a
price setter
• MC is upward
sloping, which
shows
diminishing
returns
Thank you!
 References

• https://www.iqvia.com/insights/the-iqvia-institute/reports/understanding-insulin-market-dy
namics-in-low-and-middle-income-countries

• https://www.sbd-ye.org/
• https://www.facebook.com/%D8%A7%D9%84%D8%A5%D8%AA%D8%AD%D8%A7%D8%AF-
%D8%A7%D9%84%D9%8A%D9%85%D9%86%D9%8A-%D9%84%D9%85%D9%86%D8%AA%D
8%AC%D9%8A-%D8%A7%D9%84%D8%A3%D8%AF%D9%88%D9%8A%D8%A9-108531900549
427/

• https://joesgaragecoffee.com/blog/contract-manufacturing/#:~:text=What%20Is%20the%20
Difference%20between%20Contract%20Manufacturing%20and%20Licensing%3F,firm%20in%
20return%20for%20fees
.