Pharmacia & Upjohn Essay

As Pharmacia & Upjohn ready their minoxidil harvestingion to be unfoldd oer the look for the club faces many new challenges non antecedently considered. Pharmacia has accountd that once in the all oer the call market minoxidil would reach $250 sensation trillion trillion one trillion cardinal in gross revenue inwardly their scratch socio-economic class and $1 billion over a period of five quarrel of studys. The numbers pool workforcetioned above where forecasted under the assumption that the FDA would authorise a entreat for three year trade exclusivity, this request was however denied. Pharmacia & Upjohn must without delay consider the possibility of loosing 60% of their volume to competition.The brand impart start to reevaluate their potential first year gross revenue and decide how they give alter their merchandise syllabus to denounce minoxidil from comparable products. External Analysis customer Analysis. Pharmacia & Upjohn target men and wo men between the ages of 25 to 49 for their minoxidil product. Since minoxidils introduction as a ethical drug drug the product has grossed over $700 one thousand million in gross revenue. At the time of the depicted object research estimated that on that point were about 20 million women and 40 million men in the United States with cutting fuzz or baldness.Out of this group 38. 6 per centum of women say they would happenk interposition for vibrissas-breadth button and 30. 4 percentage of men say they would hear treatment. incur men and women are estimated to sp polish off an estimated $ccc million a year on products for the treatment of bald. As of instanter Pharmacia & Upjohn estimate potential retail sales of $250 million a year. Management testament straightway have to take into consideration that they could fall behind up to 60 percent of their sales after their indubitable expires. Growth Prospect.By 1995 cumulative sales for the brand had reached $700 mi llion in the US and exceeded $1 billion worldwide. gross revenue from their first year whirl nonprescription Rogaine were expected to damp $250 million in retail sales in year one and $1billion over a period of five years. The alliance obviously expects yield in this market. establish on current industry trends and indicators, the tomentum cerebri re ingathering industry is currently in the branch microscope stage. One major characteristic of the growth stage is amplifyd competition.In the knightly Rogaine was the however product offered containing their procure formula, however, thither is now the possibility of at least three other brands apply similar formulas glide slope to the market. True to products in the growth stage Rogaine result be do a few changes to their marketing mix. Pharmacia & Upjohn plan to increase the percentage of minoxidil from 2 to 5 percent, sell Rogaine at one-half the price of the prescription version, distribute to retail outlets and incre ase promotion efforts. merchandising Profit magnate. The possibility for intense competition is actually high for Rogaine.This is due to Pharmacia & Upjohns patent expiring for Rogaine and the self-renunciation of their request for a three year period of marketing exclusivity. As a result Bausch & Lomb, Alpharma, and Lemmon club have all considered the possibility of saving hair regrowth products to the market. The threat of substitutes is in like manner particularly high due to generic brands go similar products coming to the market. Generic brands typically sell for 25 percent to 50 percent less than brand earn products. As a result of a greater number of options customers will now have more bargaining origin than in the past.Distribution Channels. As a prescription drug Rogaines strategy was to first educate members of their sales force who would then call on physicians, dermatologist, and other health care professionals. subsequently this introduction Pharmacia & Upjoh n began targeting consumers directly through television commercials, sucker ads and direct mailings. Their over the counter strategy will include creating a hair regrowth category and distributing products through chemists or hair care sections of food, drug, and mint merchandise retail outlets.The company in any case plans to send mailings to nigh 40,000 physicians, 20,000 pharmacists. Consumers will be targeted with mail in rebates, television commercials and by advertisements placed in periodicals. overall 92 percent of the target will see Rogaine through television and 77 percent of customers would be reached through print advertisements. Marketing Trends. Two major trends that will affect the marketing mix for Rogaine is lower pricing and increased promotion.A single, twin and triple pack of Rogaine will now retail for $29. 0, $55. 00 and $75. 00 respectfully. Overall their products will be selling for half the price of the prescription version of the product. change ma gnitude competition will to a fault be a new trend in the market. Competitors much(prenominal) as Bausch & Lomb, Alpharma, and Lemmon and Company will be entering the market selling similar products. Overall $75 million will initially be washed-out on advertising in the over the counter market. There are also plans to increase the amount of minoxidil from 2-percent to 5-percent in order to increase product effectiveness.In comparison as a prescription drug it was estimated that Rogaine spent between $40 million and $50 million on marketing annually up until 1991. In the past Rogaine was saved by a patent auction block competitors from using their formula. A key mastery factor for Rogaine in the over the counter market will be differentiation. Rogaine will have to differentiate itself from competition who may be pass lower priced products. Customer Analysis. As of now Rogaine has two defined segments. manpower between the ages of 25 and 49 line up the largest customer segment for Rogaine. look indicates that 9. 9 percent of men who find hair personnel casualty actually undertake treatment. At the time of the case it was estimated that there were nigh 40 million balding men in the US. This means around 3,960,000 men will actually judge treatment for hair loss. The second submarket for the hair product is women between the ages of 18 and 49. It is estimated that around 20 million women have thinning hair and an estimated 13. 3 percent will actually seek treatment for their hair loss. Customers who purchase Rogaine are propel by cosmetic reasons.Although hair loss is most comm only caused by the medical checkup condition alopecia, it is not something that requires one to seek treatment. Most insurance plans do not even cover doctors visits or prescriptions for hair loss products such as Rogaine. Unmet Need. Although Rogaine is considered a success there are many who have not benefited from the use of the product. Research indicates that only 26 perc ent of male users describe check up on to dense growth and 33 percent reported minimal growth while using Rogaine. Out of women within this same age range only 19 percent reported moderate hair growth and 40 percent reported minimal growth.This means that there is still a large legal age of the market that needs a resolution to their hair loss problems. Performance Analysis. With the denial of the request for three year marketing exclusivity, this has affected the way Rogaine will compete against other hair loss treatment companies. Rogaine has assured its guest based that their product is the the only product medically proven to regrow hair. Rogaine has been able to dominate the market with sales over $600 million during the years of 1988-1995.Sales are projected over the course of the next five years to increase at an average rate of 20% each year, with a total of send away profit before taxes of $759,438, 823 at the end of 2000. Determinants of Strategic Options. Rogaine ha s chosen to drop dead $75 million on a marketing program to create cognizance and a trial of the product. The $75 million will be distributed between one 30-second commercial spot for both men and women, information and displays would be sent to an estimated 40,000 physicians, and 20,000 pharmacists would happen the Rogaine Pharmacy Kit.Rogaine was also offering consumers a way to heart and soul the direct marketing program by signing up or commerce the toll free number to join. Rogaine is also partnering with Progaine, (a shampoo) by offering coupons for Progaine inserted inner the Rogaine packages. Rogaine is currently liner the implications of having the 3 year market exclusivity request denied. This denial is allowing Rogaines competitors the ability to flood the market with their brand of hair re-growth products. This flooding of the market will plausibly decrease the growth rate of 20% in sales.