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THE PHARMACEUTICAL BUSINESS FIRM

BUSINESS organized effort of individuals to


produce and sell the products and services that satisfy societys needs. - also called company enterprise or firms.

DESCRIBING PHARMACEUTICAL BUSINESS FIRM

1. Production Firms 2. Manufacturing Firms

3. Trading Firms
4. Service Firms

FORMS OF BUSINESS ORGANIZATIONS


Business Firms are organized into 3 distinct Groups

1. The major forms


2. The minor forms 3. The modified corporate form

The Major Forms of Business Organization


1. Sole Proprietorship 2. Partnership

3. Corporation

Financing Pharmaceutical Business Firms


1. Sole Proprietorship -Owned by one person - Most common in retailing, service and agriculture -This furnishes its own capital (savings or supplied by family members.

ADVANTAGES OF SOLE PROPRIETORSHIP


1. Ease and low cost of starting 2. All profits to the owner 3. The owner is in direct control 4. Tax savings are realized

5. There are minimum legal restrictions


6. Freedom to terminate the business 7. Prompt action in site selection, acquisition or lease

8. One man show

DISADVANTAGES OF SOLE PROPRIETORSHIP


1. Owners have unlimited liability 2. There is lack of continuity 3. Difficulty in raising capital 4. Difficulty in hiring employees

5. High risk for failure


6. The jack-of-all- traits/ limited management skills 7. Predisposed to ill-health and dreaded disease

Partnership Is an association of two or more persons who place their resources together to obtain profit

Kinds of Partnership
1. General Partner- co owned by 2 or more gen. partners who are liable for everything the business does

2. Limited Partner- contributes capital to business but has no management responsibility or liability beyond the amount he/she invested in the partnership.
3. Universal Partner- common property of all partners 4. Capitalist Partner- contribution to the business are in the form of money or currency.

5. Industrial Partner- own labor or industry to the partner

Kinds of Partnership
6. Silent Partner - limited partner who does not participate actively. 7. Secret Partner- anonymous partners

8. Dormant Partner- do not participate in day to day activities but contribute to capital/ bear losses or any.

9. Nominal Partner- allows his/her name to be identified with the business. No investment, no interest in the business.

ADVANTAGES OF A PARTNERSHIP
1. Ease of formation 2. Additional sources of capital/ availability of capital and credit. 3. Combined business skills and knowledge (division of labor and efficiency in operations)

4. Possible tax advantages (no state and federal tax)


5. Employee incentives 6. Similar benefits as that of sole proprietorship

DISADVANTAGES OF A PARTNERSHIP
1. Unlimited Liability
2. Divided Authority 3. Lack of Continuity

4. Frozen Investment
5. Effect of Management disagreement

CORPORATIONS
-Is an artificial being, invisible, intangible and existing only in contemplation of the law.--juridicial being -The capital of a corporation is obtained by the scale of shares of stock from the members of the corporation.

2 TYPES OF CORPORATION
1. Public Corporation- government/ state 2. Private Corporation- business, charitable socio civic organization

2 TYPES OF PRIVATE
1. Closed Corporations- family type/ only members of the family 2. Open Corporations- big number of stock holders

Advantages of Corporation
1.

Limited Liability

2. Specialized management 3. Transferability of ownership 4. Continuous existence 5. Greater ease of raising capital 6. Possible tax advantages

Disadvantages of Corporation
1.

Complicated to organize

2. Government controls 3. Charter restrictions 4. Double taxation 5. Impersonality and lack of secrecy 6. Dividends

The Minor Forms of Business Organization


1. The joint stock company-capital is divided into small units permitting a number of investors 2. The joint venture- established for a specific project and for limited time 3. The business trust- trustee is appointed to manage the business and its operation through a trust relationship

The Modified Corporate Form of Business Organization


1. Cooperatives- association of individuals which purpose is to perform business for its members a. Credit union cooperative- accepts deposit from
its members and lends money to its members at reasonable rates b. Producers cooperative- mutually assist one another in the procurement of raw materials, machinery, equipment and other needs to produce goods/services.

The Modified Corporate Form of Business Organization


c. Marketing cooperative- assist its members in marketing their products.

d. Consumers cooperative- provide its members


with quality goods and services at reasonable price

e. Service cooperative- to make services available to its members

The Modified Corporate Form of Business Organization


2. Mutual companies
a. Mutual savings banks-- firm owned by depositors

b. Mutual insurance company organization owned by policy holders

Forms of Business Organizations

Major Forms

Minor Forms

Modified Corporate Forms

Sole proprietorship

Joint stock Company

Corporate

Partnership

Joint Venture

Mutual

Corporation

Business Trust

The Pharmaceutical Health Care Industry

QUESTION: 1.Which among the key world market, has the greatest drug sales?

A. Europe B. United States C. Canada D. Japan

THE WORLD DRUG MARKET


Key World Markets 1. United states Drug Sales in US$ Billion 189.81

2. Canada
3. United Kingdom 4. European Markets

9.41
14.58 82.42

5. Japan
6. France 7. Germany 8. Mexico

55.69
20.17 23.99 6.28

Top 10 pharmaceutical markets in the world, in current US$ billion


Source: World Drug Situation 1988 and IMS Health, IMS MIDAS Customized Insights (October 2001) The information contained in this study is a guide to sales and not a guide to consumption.

Country
USA Japan Germany France China Italy Spain Brazil UK Mexico Top 10 World sales

1976 Country Value % world 7.90 18.4 USA 4.02 9.3 Japan 3.41 7.9 Germany 2.70 6.3 China 2.60 6.0 France 1.90 4.4 Italy 1.32 3.1 UK 1.21 2.8 India 1.03 2.4 Canada 0.77 1.8 Brazil 26.86 62.4 Top 10 43.05 100 World sales

1985 Country Value % world 26.45 28.1 USA 14.04 14.9 Japan 6.00 6.4 France 4.70 5.0 Germany 4.47 4.8 UK 3.67 3.9 Italy 2.35 2.5 Spain 1.78 1.9 Canada 1.69 1.8 Brazil 1.41 1.5 Mexico 66.56 70.8 Top 10 94.10 100 World sales

2000 Value % world 149.5 52.9 51.5 18.2 16.7 5.9 16.2 5.7 11.1 3.9 10.9 3.9 7.1 2.5 6.2 2.2 5.2 1.8 4.9 1.7 279.3 98.7 282.5 100

QUESTION: 2. Which among the therapeutic


categories has the highest amount of sales in the world market? A. CNS B. Cardiovascular C. Muscoskeletal D. Respiratory

The World Drug Market by Therapeutic Categories (as of 2003)


1. Muscoskeletal 21.6

2. CNS
3. Cardiovascular

62.08
65.59

4. Alimentary/Metabolism
5. Respiratory 6. Genitourinary 7. Cytostatics

48.28
29.11 18.06 16.10

As of 2008

QUESTION: 3. Which among the drugs with a patent expiry has the highest amount of sales?

A. Norvasc B. Adalat C. Cozaar D. Plavix

Drugs with Patent Expiry and Sales Figures


Brand Name
Adalat Atacand Cozaar Flovent/Flixotide Norvasc Zestril

2000 sales in US$ Million


1.176 .293 1.077 1.307 3.341 1.130

Block buster Drugs with Patent Expiry and Sales Figures (2010)
Brand Name Category 2010-2011 sales in US$ Billions/ millions 6.1 B 5.3 B 3.7 B 3.3 B 3.3 B 3.2 B 1.3 B 3.5 B 929 M 690 M

Plavix Lipitor Seroquel Actos Enbrel Singulair Levaquin Zyprexa Concerta Protonix

Anticoagulant Anticholesterol Antischizophrenia (antipsychotic) Diabetes Antirheumatoid arthritis and psoriasis Anti asthma and allergies Antibiotic (Pnuemonia) Antischizophrenia (antipsychotic) Anti ADHD Anti GERD

4. Which among the following is the top 1 leading company listed with top leading brands as of 2008? A. B. C. D. Sanofi- Aventis Roche Astra Zeneca Wyeth

QUESTION: 5. What are the 4 top selling brands in the world market?

WORLD DRUG MARKET


4 TOP SELLING BRANDS (2003)
Brand Company Indication Sale in $ B

Lipitor Norvasc Zocor Cozaar/Hyzaar Zestril Seloken Pravachol Avapro

Pfizer, Inc.

Cholesterol Anti-hypertensive Hypertension Hypertension Hypertension Hypertension Cholesterol Hypertension

6.449 3.582 6.700 1.700 1.097 .722 2.173 .510

Merck &Co.

Astra Zeneca

Bristol Myers Squib Co

Top Selling Medicinal Brands 2006- 2008


Brands Generic Name Companies Indications Sales $ billion 2006 2007 2008 A (P)

Lipitor

Atorvastatin

Pfizer, Astellas

Cholesterol

12.9 13.5 13.6 13.5

13.35 (13) 13.65

Plavix

Clopidrogel

Bristol Myers Squibb, Sanofi Atherosclerosis Aventis

5.55 5.8

8.2 7.3

9.4 (8.9) 8.6

Advair

Fluticasone Salmetrol

Glaxo Smith Kline

Asthma

6.13 6.3

7.0 7.1

7.65 (7.5) 7.7

Nexium

Esomaprazole

Astra Zeneca

Ulcers

5.2 6.7

5.2 7.2

5.2 (5.2) 7.8

Top Ten Medicinal Brands Ranking in 2008 ($ billion)

NCE
Lipitor Plavix Advair 13.35 9.4 7.66

NME
Enbrel Remicade Rituxan 7.66 6.2 5.48

Sales Increase
Enbrel Humira Remicade 2.46 1.5 1.2

Sales Decline
Protonix 2.71 Zyrtec 2.1 Fosamax 1.49

Diovan
Nexium Zyprexa Seroquel Abilify Singulair Effexor

5.74
5.2 4.69 4.64 4.5 4.33 3.9

Avastin
Herceptin Humira Lovenox Lantus Aranesp Gardasil

4.82
4.72 4.5 3.99 3.58 3.1 2.8

Plavix
Avastin Diovan Erbitux Zocyn Xolair Seroquel

1.2
0.89 0.74 0.7 0.7 0.62 0.61

Tamiflu

1.29

Risperdal 1.26 Aranesp 1.1

Avandia 0.95 Pravachol 0.92 Norvasc 0.76 Ambien 0.60

QUESTION: 6. In the Philippine Pharmaceutical market, which has a greater amount of sale?
A. Ethical drugs B. Proprietary drugs

The Philippine Pharmaceutical Market


Total Pharmaceutical Market 2004 = 2003 = P80.083 Billion P70,415 Billion

Ethical and Proprietary

2003
Ethical Proprietary Total P50,411 B P 20,004 B P70,415 B

2004
P57,300 B P22,783 B P80,083 B

QUESTION: 7. Which among the companies has the greatest amount of sales in in the Philippine drugstores and hospitals?
A. Unilab B. Glaxo Smith Kline C. Pfizer D. Wyeth

Drugstores and Hospital Sales


TOP 5 COMPANIES 1. United Laboratories 2. Glaxo Smith Kline 3. Pfizer, Inc. 4. Wyeth 5. Astra-Zeneca 17,331 B 8,134 B 6,421 B 5,145 B 3,671 B

QUESTION: 8. Which among the therapeutic classification has the greatest market share in the Philippines?
A. Vitamins B. Cardiovascular C. Anti-infectives D. Cough and Colds

Therapeutic Classification
Sales in M 1. Anti-infectives 2. Cardiovascular 3. Vitamins-Minerals 69,600 10,718 7,934 Market Share 16.7% 15.4% 11.4%

4. Somatics
5. Cough-Colds

7,447
5,081

10.7%
13%

QUESTION: 9. What is the top 1 ethical product in the Philippines?


A. Norvasc B. Ventolin C. Augmentin D. Plendil

Top 10 Ethical Products


1. Ventolin 2. Norvasc Anti-asthma Cardiovascular P 1,230 M 730 M

3. Augmentin
4. Plendil ER 5. Lipitor 6. Zinnat 7. Plavix 8. RM-Amoxicillin 9. Neobloc 10. Diamicron

Anti-infectives
Cardiovascular Cardiovascular Anti-infectives Cardiovascular Anti-infectives Cardiovascular Endocrin

642 M
558 M 444 M 412 M 360 M 310 M 309 M 295 M

QUESTION:
10. What is the top 1 brand in Philippine drugstores and hospitals? A. Biogesic B. Ventolin C. Enervon C D. Solmux

Top 20 Brands Hospital and Drugstore


1. Ventolin 2. Biogesic 3. Enervon C 4. Ceelin 5. Solmux 6. Augmentin 7. Norvasc 8. Alaxan 9. Neozep 10. Plendil ER 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Plavix Zinnat Clusivol Revicon Ciprobay Diamicron Promil Neobloc Centrum Unasyn

QUESTION:
11. What is the top 1 OTC brand Philippine drugstores and hospitals? A. Biogesic B. Ventolin C. Enervon C D. Ceelin

Top 10 OTC Brands


1. Ceelin 2. Enervon C P 1,015 M 883 M

3. Alaxan
4. Solmux 5. Biogesic

847 M
750 M 697 M

6. Neozep
7. Clusivol 8. Ponstan 9. Tuseran 10. Revicon Forte

642 M
467 M 432 M 378 M 350 M

QUESTION: 12. What is the top 1 unbranded manufacturers in drugstores and hospitals?

A. Pascual B. Ritemed C. United Home D. Abbott

TOP 10 UNBRANDED MANUFACTURERS


1. RiteMed Phils. 2. Pascual laboratories 583,469.383 M 471,891.551 M

3. Euro-Med Lab
4. Bristol Myers 5. Abbott Lab

336,841.592 M
296,472.643 M 179,010.478 M

6. LVP Phils
7. United Home 8. Organon 9. Rhea 10. Pharma Wealth

153,526.506 M
114,104.099 M 70,063.946 M 63,307.536 M 63,307.536 M

DISTRIBUTION CHANNELS ACCORDING TO SALES


DISTRIBUTORS
TRADERS OR SUB-DISTRIBUTORS

DRUGSTORES 85.6%

HOSPITAL 11.0%

OTHER RETAIL 3.4%

INDEPENDENT 27.9%

CHAIN 57.7%

PRIVATE 8.1%
CLINICS W/ BEDS INDUSTRIAL HOSP.

GOVERNMENT 2.9%

INDUSTRIAL CLINICS w/o BED 3.0%

GOVERNMENT AGENCIES 0.4%

QUESTION: 13. What is the top 1 pharmaceuticalmarket player in the Philippines today?

A. Mercury B. Med express C. Multinational companies D. Watsons

MARKET DRIVERS PHILIPPINE PHARMACEUTICAL MARKET 1. Mercury Drug - 500 Branches and franchises @ with self service areas 2. Watson over 100 outlets @ with pharmacist counseling areas 3. DSAP

@ difficulty in implementing S. act


4. Med Express

@ 3 in 1 drugstore

MARKET DRIVERS
PHILIPPINE PHARMACEUTICAL MARKET 5. CEPPhA ( Continuing education Program for Pharmacy Assistants) @ drugstore front liners 6. Drugstore quality awards @ quality and excellence in the area of. 7. Independent drugstore 8. Local and multinational companies 9. Healthcare centers

Market Drivers in the hospital Sector


1. Private hospitals 2. Insurance program 3. Public hospitals 4. More Clinical pharmacy practice 5. Health Maintenance Organizations

QUESTION: What are the 3 sources of funds of pharmaceutical products in the Philippines?

How Funds Flow In


As with all health care services, funding for pharmaceutical products comes from variety of sources

1. Patients
2. Employers and private insurance 3. Government

QUESTION:
What is the highest source of funds in the Pharmaceutical Products ? A. Out of the pocket B. Private Insurance C. Phil health D. Public programs

Sources of Funds for Pharmaceutical Products


Total 536 per person, 10% of National health expenditures

Out-of-pocket
Private insurance Medicare/Philhealth Other Insurance Other Public programs

32%
46% 17% 2% 3%

QUESTION:
The flow of funds in the pharmaceutical market is dominated by ? A. Branded Manufacturers B. Generic Manufacturers C. Wholesalers D. Retailers

Flow of Funds in the Pharmaceutical Market


Brand name Pharmaceutical Companies 70-80%

Generic Manufacturers 6%
Pharmacy Benefit Manager 5-15%

Wholesale 2-3%

Retail Pharmacy 15-25%

PATIENTS

QUESTION: Which of the following has the highest allocation of funds in the Pharmaceutical Market?

A. Cost of goods B. Sales and marketing C. Research D. Taxes

Uses of Funds For Pharmaceutical Market


1. Cost of goods 2. Research and Development 30% 13%

3. Sales, marketing, administration 31% 4. Taxes 5. Net Income 6% 20%

Research and Development

Stages of Drug Testing


Discover Screen compounds to find a drug Preclinical Laboratory and animal testing IND Investigational New Drug

# of compounds at each stage

5,000 10,000 250

Stage 1 (20-80 volunteers, safety and dosage) Stage 2 (100-300) patients, test, efficacy, side effects Stage 3 (Large randomized trial of clinical effectiveness) NDA APPLICATION File New Drug Application FDA approval ( Launch new product)

20 13 8 2 1

up to 15 years

3-15 - $100M $150M

QUESTION: What is the trend in the drug industry among patient consumer?

EMERGING TRENDS IN THE DRUG INDUSTRY

Patient Consumer
1. Self diagnosis Self medication Self treatment Use of OTC drugs, Herbals, Food Supplements Minimal purchase and almost daily basis Hospital confinement, Medical & Allied services only in extreme emergencies

2.

3.

4.

On the attitudes towards self-medication practices


Rank 1 2 3 Self-medication practices Necessary Remedy Temporary Remedy Safe and Convenient

4
5

Illegal
Dangerous

QUESTION:
What is the most common ailment to self medicate? A. Headache B. colds C. diarrhea D. fever

Self-medication practices on common ailments Rank


1 2 3 4 5

Common Ailments
Headache Fever Cold Flu Sore Throat

6
7 8 9 10 11 12

Itchiness
Skin Rashes Diarrhea Sore Eyes Muscle Pains Pimples Minor Burns

QUESTION: In the choice of OTC drugs, what is the number 1 factor that will influence consumer to buy?

A. Doctors advise B. Parents influence C. Knowledge about the drug D. Advertisement

Profile on the attitudes towards the choice of OTC drugs on the different services of information
RANK 1 2 3 Services of Information Doctors advice Advice of parent Knowledge of OTC Drugs

4
5 6

Proximity of drugstore
Advice of a friend Advice of Drugstore personnel

7
8

Advertisement
Drugstore Display

QUESTION:
What is the number 1 reason why people what to buy OTC? A. Immediate relief B. Avoid doctors fee C. Save money

Intention of Buying
Rank Intentions/Purposes of Buying OTC drugs

1 To seek immediate relief of minor ailment 2 To save time and efforts going to a doctors clinic 3 To save money on prescription drugs 4 To avoid cost of consultation of doctors

QUESTION: What is the frequency in buying OTC by an average consumer? A. Only when necessary B. One a week C. Twice a week D. Once a month

Frequency in Buying OTC Drugs


Rank
1 2

Frequency in Buying OTC Drugs


Only when necessary Twice a month

3
4

Once a month
Three times a week

5
6

Two times a week


Once a week

QUESTION: What is the highest percentage of buying an OTC drug? A. 5% B. Less than 5% C. more than 5% D. more than 10%

Percentage in Buying OTC


Rank 1 2 3 4 5 % in Buying OTC Drugs Small percentage Five percent Ten percent Fifteen percent Over twenty percent

QUESTION:
What is the most convenient place ? to by an OTC A. drug store B. Sari-sari store C. Grocery/ convenient store

Places which are considered convenient or advantageous in buying OTC drugs


RANK Places considered convenient or advantageous in buying OTC drugs

1
2

Drugstore
Sari-sari store

3
4 5

Grocery/Supermarket
Other Centers/Botica ng Bayan Shell shops/Gasoline stations

QUESTION:
What is the primary basis of buying OTC drug? A. Price B. safety C. Effectiveness

Primary Basis in Buying OTC Drugs


Rank Primary Basis of Buying OTC Drugs

1
2 3 4 5 6

Effectiveness of the product


Safety of the product Price of the product Popularity of the product Presentation of the product Manufacturer of the product

QUESTION: What is the trend in the drug industry among health insurance?

EMERGING TRENDS IN THE DRUG INDUSTRY

Health Insurance

1. 2.

3.

4.

Increasing Visibility of HMO MDs and Hospital/Private Entities Owning HMOs HMO Industrial Establishments Partnership HMO Drugstores Tie-ups

QUESTION: What is the trend in the drug industry among community and hospital?

EMERGING TRENDS IN THE DRUG INDUSTRY

Hospital/Community Pharmacy
1. Establishing Franchises to qualifies entrepreneurs Hospital Pharmacy open to general public 24-hours service in community pharmacy One-stop-concept Wide array of assorted goods

2.

3.

4.

THE PHARMACEUTICAL MARKETS


Traditional Markets
Non-Traditional Market

DOH/NGOs

Drugstores Hospitals Industrial clinics Medical Clinics Dispensing Physicians

Groceries and supermarkets Trading stores and Sari-sari stores

Municipalities Regional Health Office Rural Health centers Barangays & sitios Botica sa bayan

The Target Consumers for Drug Products

Upper Class Middle Class Lower Class

B C D E
1. Income Level 2. Age Classification 3. Gender 4. Educational Attainment 5. Geographic locations

Flow of Rx in the Hospital OPD


Out-Patient Department (OPD) Hospitals
Rx generated from Residents MDs/ Consultants

Out-Patients Buys Rx
DRUGSTORES

Flow of Rx in Hospital IPD


In-Patient Department (IPD) Hospitals
Rx generated from Residents MDs/ Consultants

In-Patient (Confined in Hospitals)


Rx In Patients Chart Served by nurses

Hospital Pharmacy

Emergency Rooms (ER) HOSPITALS

Rx generated from, Residents MDs/Consultants

Out-Patient
Rx served Rx bought/served

In-Patient

Emergency Rooms (ER) Hospitals

Drugstores

Emergency Rooms (ER) Hospitals

FLOW OF Rx IN HOSPITAL ERs

QUESTION: What are the different models in channeling drugs from manufacturers to end users?

Channel 1

Drug Manufacturer

Consists of a drug manufacturer selling directly to the DOH or government health units and hospitals who will in turn make the medicines available to the end-users practically for free. A local drug trader may serve as the intermediary level in behalf of the drug manufacturer in transacting business with DOH.

Local Drug Trader

Department of Health Govt. Health Units Govt. Hospitals

End Users

Channel 2
Drug Manufacturer

Contains 2 middlemen level. A sales representative of a drug manufacturer selling to dispensing physicians who in turn sells the medicines to the patients (end-users) charging the latter consultation fees and medicines given

Sales reps

Dispensing Physicians

END USERS

Channel 3
Drug Manufacturer

Contains only 1 middlemen level, either an independent distributor or retailer, who in turn sells the drug products to enduser

Independent Distributors

Retailers

END USERS

Channel 4

Drug Manufacturer/ Distributors

Contains 2 middlemen level, namely the wholesaler and retailer drugstore outlets who in turn sells to the endusers. In some companies, 3 middlemen level when its their salesman that facilitates the transactions.

Wholesaler

Retailer

END USERS

Channel 5

Drug Manufacturers/ Distributions

Contains 3 middlemen level, reflecting jobbers who sells to the smaller retailers generally are not served by the large wholesaler drugstores

Wholesaler

JOBBERS

Retailers

End Users

QUESTION: What is the flow chart distribution of drugs of Mercury drug?

FLOWCHART DISTRIBUTION
Independent Distributors

Drug Manufacturer

Company Warehouse

Mercury Drug Corp.


Branch operations
Franchise Operations

Traditional Outlets
End Users

Traditional Outlets

Non-Traditional

Non-Traditional

QUESTION: What is the flow chart distribution of drugs of unilab?

UNILAB Manufacturer

United Lab Distribution Flow Chart

GMA Warehouse

Provincial Warehouse

Drugstores Hospitals Industrial Clinics Non-traditional Outlets Dispensing Physicians Department of Health

END USERS

QUESTION: What is the common flow chart distribution of drugs of ?

Pharmaceutical Company Distribution Flow Chart


National Distributor

Drug Manufacturer

Private Institution

Dispensing Physicians

Government Distributors

Wholesale/Retailer (drugstores)

Government Agencies

Pure Retailers (drugstores)

END USERS

BUSINESS CYCLES AND INFLATION

PHASES OF THE BUSINESS CYCLE


1. The prosperity phase
2. The crisis (or contraction or recession) phase 3. The depression phase

4. The recovery (or expansion) phase

Characteristics of Prosperity Phase

High prices and great business activity Large profits for business firms Production is at full capacity Increasing demand for many commodities Increasing demand for labor

Increasing volume of sales Increasing volume of credit extensions by lenders Large demand for credit Rising interest rates

THE PROSPERITY PHASE


Great Business Activity Higher outputs
Resulting to

Higher sales Higher profits

Business Firms

Higher Wages
Great Demand
Resulting to

Higher Rent Higher Interest Rate Higher Prices of Materials and Supplies

LABOR

Raw Materials And other Commodities

Capital

LAND

Crisis or Recession Phase

The demand for goods decreases The margin of profits gradually shrinks The volume of sales decreases Trading slows down The production of goods is reduced

The demand for labor, capital, and land decreases Prices go down The ability of business firms to meet their financial obligations is impaired Unemployment begins to bother labor No further extensions of credit or renewals of old loans are made by banks

THE CRISIS OR RECESSION PHASE


Reduced Business Activity
Resulting to

decreasing outputs sales, and profits

Business Firms
decreasing wages, rent, interest rates, prices of raw materials and supplies

Reduced Demand

Resulting to

LABOR

Raw Materials And other Commodities

Capital

LAND

Depression Phase

Many businesses have ceased operations Profits are minimal, if it is still possible to make some Banks have plenty of idle funds Banks are gradually reduce interest rates

Credits starts to become available Unemployment is at its highest level Many unemployed persons are willing to work at lower wages The prices of raw materials and supplies are low

THE DEPRESSION PHASE


Greatly Reduced Business Activity Resulting to

Minimal output, sales, and profit

Reduced # Of Firms Still Operating

low wages, rent, interest rates Very Low Demand


Resulting to

low prices of raw materials and supplies

LABOR

Raw Materials And other Commodities

Capital

LAND

Recovery Phase

As the supply of commodities in the market gets exhausted, demand for these begin to be felt Optimism among businessmen slowly develops, prodding them to increase business activity The demand for labor increases, resulting to a decrease in unemployment

The purchasing power of the people rises The low rates of interest will attract business borrowings Prices slowly rise There is an increase in production output Idle plans are used and plans for construction of new ones are considered

THE RECOVERY PHASE


Increasing Business Activity
Resulting to

increased outputs, sales, and profits

Business Firms

Increasing Demand

Resulting to

increased wages, rent, interest rates, prices of raw materials and supplies
LAND

LABOR

Raw Materials And other Commodities

Capital

The Business Cycle


R E A L
Prosperity Prosperity

G N P
Depression Depression

TIME

Control Of Business Cycles


1. The stabilization of business 2. Control of credit 3. Control of public works 4. Business forecasting

5. Monetary readjustment
6. Payment of high wages

7. Economic planning

Basic Terms Related To Inflation


1. Price level

2. Market basket
3. Price index

4. Inflation
5. Deflation

Types of inflation
1. Cost-push inflation is one characterized by continual decreased in the aggregate supply, resulting to increase in the cost of production 2. Demand-pull inflation is one caused by increases in aggregate demand 3. Inertial inflation is that steady inflation that occurs when inflation is expected to persist and the ongoing rate of inflation is built into contracts and peoples expectations

Measuring Inflation
Inflation rate for year X Where CPI year X year Y = consumer price index = year under consideration = year immediately preceeding year X = CPI in year X CPI in Year Y CPI in year Y X 100

Thus, if CPI for year X = 130; and CPI for year Y =120

Therefore
Inflation rate for year X = 130-120/12o x 100% = 8.33%

LOSERS AND GAINERS IN INFLATION


LOSERS
1. 2. 3. Fixed income earners Pensioners Creditors

GAINERS
1. 2. 3. Businessmen Speculators Debtors

CONTROLLING INFLATION
1. 2. Monetary Policy Fiscal Policy

Pharmaceutical Product Life Cycle Strategies


MATURITY

S A L E

GROWTH

DECLINE

INTRO
TIME PRODUCT LIFE CYCLE OBSOLESCENCE

MODIFYING PRODUCT MIX STRATEGIES


INCREASE USAGE
PRESENT CUSTOMERS

NEW
PACKAGING NEW FORMAT

PRODUCT MIX STRATEGIES

REPOSITIONING NEW FORMAT

NEW USERS NEW MARKET SEGMENTS

MAJOR STRATEGIES IN THE GROWTH STAGE


LOWERING PRICES TO PREVIOUS LEVELS PRODUCT IMPROVEMENT MODIFICATION

GROWTH STAGE
PRODUCT POSITIONING

PROMOTIONS EFFORTS

ENTERING NEW MARKET SEGMENT EXPANDED MARKET CHANNELS INCENTIVES FOR TRADE OUTLETS

INCREASED LOGISTICS SUPPORTS

STRATEGIES IN THE MATURITY STAGE

Roll back of prices by way of additional discounts

Increased advertising and other promotions

Increase R and D budgets

Periodically modify the market, 4Ps

STRATEGIES IN THE DECLINING STAGE LOW MARKET GROWTH LOW MARKET SHARE LOW VOLUME LOW PROFIT SLOW/NONMOVING/LESS DEMAND LOW PRODUCTION HIGH COST PHASE-OUT DISCONTINUE REDUCE PRODUCT OFFERINGS
REDUCE/STOP PROMOTIONS MARKETING EFFORTS

PRODUCTS IN THE DECLINING

STAGE
REPLACE WEAK PRODUCTS

FACTORS ATTRIBUTED TO SALES DECLINE

1. Rapid technological advances 2. Changing consumer preferences for taste, flavors and colors 3. Adherence to safety and efficacy 4. Price consciousness due to inflation and deteriorating purchasing power

PRODUCT LIFE CYCLE CHARACTERISTICS


INTRO 1. Sales Performance 2. Market Growth 3. Market Share 4. Profit 5. Cash Flow 6. Competition 7. Customers 8. Expenses 9. Management Support Low High Low Negative Negative Few Innovative Very High Very High GROWTH High Very High High Peak Levels Moderate Growing Mass market Very High Very High MATURITY Steady Steady Low/High Declining High Many Rivals Mass Market Low/none Low DECLINE Very Low very Low Very Low Low/Zero Low Declining Laggards Very Low/N Very Low/N

PRODUCT LIFE CYCLE RESPONSES

INTRO 1. Strategy 2. Expenditures 3. Emphasis 4. Distribution 5. Price 6. Products Expand High Awareness Patchy High Basic

GROWTH Penetrate High Preference Intensive Lower Improved

MATURITY Defend Falling Loyalty Intensive Lowest Different

DECLINE Efficiency Low selective Selective Rising Rationalized