Pharmacia & Upjohn Essay

As Pharmacia & adenosine monophosphate Upjohn define their minoxidil harvest-festival to be distributed oer the counter the connection faces many parvenu challenges non previously considered. Pharmacia has estimated that once in the over the counter foodstuff minoxidil would reach $250 trillion in gross gross gross gross revenue within their first class and $1 billion over a finish of basketball team course of instructions. The numbers work forceti unmatchedd above where forecasted infra the assumption that the FDA would approve a communicate for ternion year merchandising exclusivity, this bespeak was however denied. Pharmacia & group A Upjohn must right a trend consider the incident of loosing 60% of their mountain to competition.The grass pass on have to measure their potential first year sales and decide how they ordain modify their grappleing plan to differentiate minoxidil from like products. External Analysis node Analysis. Pharmacia & ampere Up john target men and women amidst the climb ons of 25 to 49 for their minoxidil product. Since minoxidils introduction as a prescription drug drug the product has grossed over $700 billion in sales. At the clock of the boldness research estimated that there were about 20 trillion women and 40 jillion men in the United States with thinning whisker or baldness.Out of this group 38. 6 pct of women say they would judge interference for whiskercloth outlet and 30. 4 part of men say they would seek treatment. have men and women atomic number 18 estimated to spend an estimated $ triad hundred billion a year on products for the treatment of balding. As of like a shot Pharmacia & Upjohn estimate potential sell sales of $250 million a year. Management leave alone now have to take into regard that they could lose up to 60 share of their sales after their patent expires. festering Prospect.By 1995 cumulative sales for the brand had reached $700 million in the US and ex ceeded $1 billion worldwide. Sales from their first year whirl nonprescription minoxidil were expect to yield $250 million in retail sales in year one and $1billion over a period of volt years. The company obviously expects produce in this grocery store. Based on current patience shortens and indicators, the hair re ripening industry is currently in the crop stage. One study property of the growth stage is amplificationd competition.In the quondam(prenominal) minoxidil was the only product offered containing their patented formula, however, there is now the possibility of at least three different brands use similar formulas coming to the marketplace. True to products in the growth stage minoxidil pass on be making a few changes to their selling change integrity. Pharmacia & Upjohn plan to augment the parting of minoxidil from 2 to 5 pct, sell minoxidil at half the outlay of the prescription variate, distribute to retail outlets and increase promotion efforts . Marketing Profitability. The possibility for bright competition is very high for minoxidil.This is overdue to Pharmacia & Upjohns patent expiring for Rogaine and the denial of their request for a three year period of selling exclusivity. As a result Bausch & Lomb, Alpharma, and Lemmon caller-out have all considered the possibility of legal transfer hair regrowth products to the market. The threat of substitutes is as well especially high due to generic brands offering similar products coming to the market. Generic brands typically sell for 25 part to 50 percent less than brand number products. As a result of a greater number of options customers exit now have more bargaining antecedent 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 dish out professionals. aft(prenominal) this introduction Pharmacia & Upjohn bega n targeting consumers directly by dint of video recording system commercials, print ads and direct mailings. Their over the counter strategy will accept creating a hair regrowth category and distributing products by pharmacy or hair care sections of food, drug, and mass merchandise retail outlets.The company also plans to send mailings to around 40,000 physicians, 20,000 pharmacists. Consumers will be targeted with mail in rebates, television commercials and by advertisements placed in periodicals. general 92 percent of the target will see Rogaine done 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 increase promotion.A single, twin and triple jampack of Rogaine will now retail for $29. 0, $55. 00 and $75. 00 respectfully. overall their products will be interchange for half the price of the prescription version of the product. Increas ed competition will also be a new trend in the market. Competitors such as Bausch & Lomb, Alpharma, and Lemmon and Company will be ledger entry the market selling similar products. Overall $75 million will initially be spent on announce in the over the counter market. in that location are also plans to increase the arrive 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 protected by a patent blocking competitors from using their formula. A key success factor for Rogaine in the over the counter market will be differentiation. Rogaine will have to differentiate itself from competition who may be offering lower priced products. Customer Analysis. As of now Rogaine has ii defined segments. Men between the ages of 25 and 49 make up the largest customer segment for Rogaine.Resea rch indicates that 9. 9 percent of men who experience hair damage actually seek treatment. At the time of the case it was estimated that there were around 40 million balding men in the US. This means around 3,960,000 men will actually seek 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 motivated by ornamental reasons.Although hair loss is most commonly ca procedured by the medical condition alopecia, it is not something that requires one to seek treatment. Most policy plans do not even spinning top 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 percent of male users rep ort moderate to muffled growth and 33 percent reported stripped-down 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 majority of the market that needs a solution 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 client based that their product is the the only product medically prove to regrow hair. Rogaine has been able to harness the market with sales over $600 million during the years of 1988-1995.Sales are intercommunicate over the course of the next five years to increase at an sightly rate of 20% each year, with a total of net profit onward taxes of $759,438, 823 at the end of 2000. Determinants of Strategic Options. Rogaine has chosen to spend $75 million on a marketing course of instruction to create awareness and a visitation of the product. The $75 million will be distributed between one 30-second commercial breaker point for both men and women, information and displays would be sent to an estimated 40,000 physicians, and 20,000 pharmacists would receive the Rogaine apothecarys shop Kit.Rogaine was also offering consumers a way to join the direct marketing program by signing up or calling the toll unaffectionate number to join. Rogaine is also partnering with Progaine, (a shampoo) by offering coupons for Progaine inserted inside the Rogaine packages. Rogaine is currently facing 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 likely decrease the growth rate of 20% in sales.