management thesis

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Another strategy to protect a drug from competition is to launch a slightly improved version or  more convenient formulation of the same drug. A new patent can be obtained for this improved drug. The company then tries to persuade doctors and patients to use this improved version. The effectiveness of this strategy depends to a large extent on the marketing of the new drug. Examples of attempts to curb generic competition in this way include AstraZeneca’s marketing of Nexium, a slightly improved version of its out-of-patent ulcer drug Prilosec,27 and the release of Wellbut ellbutrin rin XR by GlaxoSm GlaxoSmith ithKli Kline, ne, a sustai sustained ned releas releasee versio version n of its antide antidepre pressa ssant nt Welbutrin that now faces generic competition.28 In the US, the growth of the industry over the last ten years has been partly based on such slightly improved new drugs, backed by massive sales and marketing operations and TV advertisement. 29 Because of the disappointing results of  their R&D pipelines, pharmaceutical companies increasingly pursue growth through enhanced marketing of their drugs. Especially the large pharmaceutical companies have developed into marketing specialists that are very good at putting products into the market. The focus on growth through marketing is reflected by the high marketing expenses compared to R&D investment. The Swiss company Roche, for instance, instance, spends 31% of its turnover on marketing marketing against 16% for R&D.30 Corporate philanthropy and corporate responsibility programmes help to enhance a company’s identity and hence such initiatives might support marketing efforts. Marketing is also a stategy to reduce generic competition in itself. By promoting the propietary brand names of   patented drugs, pharmaceutical companies may be able to sustain drug sales even if these are no longer protected by patents.

Restructuring and outsourcing Several companies are restructuring their businesses to cut costs. Among these are Merck, which eliminated 4,400 jobs worldwide, and Organ on, the human health division of Akzo  Nobel, which cut 800 jobs in the US. The contracting of drug manufacturing to low cost producers is a common business practice business practice in the pharmaceutical industry indu stry.. These are usually located in lower cost countries, such as India, China or South Africa. It is not unusual that the production is contracted to a company that produces generics too. Hence, although the development of the generic drug

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