Saturday, January 14, 2012

Drug Companies' Stratagem

Have you noticed why some drugs are sold out in the market? How does this happen even the company is not known and not famous? What strategies they are taking to sell out their products? I could give some reasons why some drug products are salable, but in fact it should not be.

1. Discounts, freebies and deals are the regular and casual preference of saleability.  The higher discounts the drug company gives the lower will be the retail price of the products, same as to deals. Deals  are dependable to the number of free products that will be added to the regular order. The highest that a drug company can bid is 1+1 or buy one take one; moreover, freebies has been used to attract costumers, because of the free item that within the product such as toys, samples and etc. But these kind of transactions are price dependent and more on pushing in the part of drugstores, due to its commonality in the all business.

2. Incentives, rebates, box retrieval and food treat. These is a form of simple bribery to the drugstore's personnel to ensure drugs' movement and turn-over. A lot of small drugstores are engaged into this business.

3. Sponsoring and donating. Some drug companies sponsor and donate money, goods, fixtures and training to drugstores. In return the drugstore should push and sell the products of sponsoring company that serve as gratitude to have they shared.

4. Engaged to agreement and contract. The drug company will enter into agreement and sign a contract with drugstore to assure that their products will be sold and pushed, in return the drug company will guarantee the drugstore that a certain amount of the profit will be given to them. This is modified form of rebate. 10-30 percent is the usual range of rebate.

2. Favoring and gaining the physician's trust. This is the main reason why drugs are being patronized and bought by the consumers. Doctors are big factor. They have the power to prescribe what drug brands they want their patients to take. Patients are confident to what the doctor prescribes and tells, so they are following the drug order written in their prescription. Obviously, the medical representatives are always gaining and favoring physicians, so that they will prescribe their handled drugs.  Some agreed with rebates and incentives. Some ask for sponsorship to their conventions and seminars. And the most expensive drug company can provide is to sponsoring their trip to abroad with free plane fare, allowance and hotel accommodations that are all fully paid by drug company. What could a physician ask for when all these things are provided to him. However, the drug company is not crazy to spend lots of money. The company is looking forward that its products will be moved in the market with fast turn-overs to get back the loss and profit on it. They are relying to the physician's promise to prescribe their drugs. If not possible the physician will be liable for breaching the agreement.

I know a drug company who hit its target profit last year, because of all the above mentioned strategies were applied. The drug company's investments hit  PHP 400M+. I may conclude that strategies are important to drug companies to sell their products in the market. Physicians and drugstores should be prioritized. These things are normal in pharmacy business, but they have also limitations.

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