The medicines company circumstance essay

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Value: Angiomax is known as a blood-thinning medication, or anticoagulant, used in crisis coronary heart proper care. Angiomax is positioned as an alternative to heparin, the most frequently used anticoagulant in emergency cardiovascular system care, in like manner assess Angiomax value into a hospital is required to compare the two of these drugs.

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First of all is necessary to investigate the differences in effectiveness in the products in treatments. The application of heparin provides associated a lot of general down sides like: ¢ Unpredictable effects: it is difficult to use properly as its effectiveness is determined by achieving a certain level of anticoagulation of the bloodstream, too much may cause uncontrolled bleeding and inadequate might not stop a bloodstream clot ¢ ¢ High risk of out of control bleeding: it is vital a tight monitoring of people in order to discover and control potential significant bleedings after the use of heparin Risk of adverse reactions: the use of heparin could cause a thrombocytopenia (HIT) in some patients ¢ Demands several hours to the observe the results: cardiologists said that it might be important wait three or four hours to verify if a medication dosage of heparin has the preferred effect In comparison, the effects of Angiomax were incredibly accurate and predictable, mainly because it works more quickly than Heparin so it is better to know in case the desired effect was obtained.

Some studies conducted discover that the use of Angiomax in has associated at the same time a lower risk of major bleedings and risk of adverse reactions in patients.

Angiomax is more effective than Heparin, especially in “high-risk and “very high-risk patients, that accounts for 50% of all the angioplasty patients (40% “high-risk & 10% “very high-risk). However, for the other 50%, the low-risk patients, Angiomax was also better, but the differences when compared wit heparin are not so significant as in the other half of patients. The higher quality and capabilities of Angiomax described create the Functional Value that the hospital could benefit through the use of the new drug. The doctors, who are the potential users, are more concerned with the results and performance of the drug in treatments. It is important to assess what economical/monetary value the Angiomax could offer to a hospital, especially to convinced the administrators to approve the drug for ongoing use within the hospital. Since the major disadvantage of Angiomax is its production cost of $40 per dose against the $2 per dose of heparin, that leads for sure the selling price of Angiomax to be higher. Hospital’s decision will depend on whether the cost savings compensate the higher price of not.

Angiomax reduces the probability of complications during angioplasties that can cost on average $8000 for a patient who experienced complications or eventually die. These extra costs are not reimbursed by insurances, they absorbed by hospital. Therefore, the use of Angiomax allows the hospital to benefit from some cost savings since the use of Angiomax decrease the risk of complications after the treatment and consequently the extra cost associated, especially in high-risk patients (Heparin=16,5% Angiomax=9,5% Δ=7% means a saving of 560$) and in very-high risk patients (Heparin=21,4% Angiomax=7,8% Δ=13,6% means a saving of 1088$). At the level of low-risk patients the cost savings are not so significant, it only represent a half of the cost savings of high-risk patients, 280$.

Angiomax has associated lower risks both for patients and to hospital than the other alternative drug heparin, so Hospital could believe that they can trust Angiomax, since with this new drug hospitals can offer to patients a better, safety and reliable treatment, and consequently save more lives. Market: The Medicines Company initially will try to market the 700 centers across the USA responsible for 92% of all angioplasty procedures. Angiomax, as a prescription drug, appears to be part of a big market that move a huge value of 220 billion dollars in sales worldwide at the manufacturer level, with USA accounting for 50% of all sales. Also the expected market growths at 10% rate per year through 2010 express the high potential of the market. Other important trends were impacting the USA drug market, and are able to support the concomitant increase of the particular market for drugs used in coronary heart care: ¢ People are becoming older: very important fact since people aged 65 or over correspond only to 15% of the population but represent 33% of prescription drug sales. It is possible to conclude that due to the aging population, the market for prescription drugs is expected to increase

¢ Coronary heart disease was the leading cause of death in the USA: during the late 20 century accounts for 1 in each 5 deaths ¢ Coronary heart disease is transmitted genetically: which means that in the future the number of people with this type of pathology is expected to growth, since the previous American generations had already suffer from some heart problems ¢ The modern societies rhythm of life and bad habits: the constant stressed faced by people in their daily life associated with some risky behaviors like smoke, drink, fast-food and lack of physical activity increased exponentially the risk of an individual to suffer from any heart problem in the near future By the late 90’s, 14 million Americans had some form of coronary heart disease, from which 1.5 million experienced unstable angina each year and another 1.1 million suffered from a heart attack. These patients with unstable angina or heart attacks require emergency care and therefore needed an anticoagulant drug to prevent new blood clots; most emergency care patients need either a balloon angioplasty or a coronary artery bypass surgery and so anticoagulants were also needed to prevent blood clots from forming before, during and after these procedures.

Before Angiomax launch, about 3.5 million coronary care patients received heparin to prevent blood clots. The Market for Angiomax is not as big as the one for heparin right now since FDA approval was only for its use in angioplasty procedures, which means that Angiomax can only reach about 1/5 of the patients receiving anticoagulants per year. The Medicines Company is however undertaking clinical trials in order to confirm the benefits of Angiomax also for patients with heart attacks, unstable angina or undergoing a Coronary Artery Bypass Surgery, so if they obtained the FDA approval, then the market for Angiomax will be the same as the one for heparin, about 3.5 million patients per year. A number that might increase because there are 14 million people in the USA with coronary heart disease. th


It is fundamental to set the price window for Angiomax and choose the most appropriate price that captures the value created by the product. In order to create this price window, it is necessary to know the Reference Value (the price of customer best alternative), the Differentiation Value (the value to the customer of any Monetary or Psychological differences between alternatives available) as also the Relevant Total Costs associated with the Angiomax. 1. Reference Value: The price for a dose of heparin is 2$, but on average a treatment requires 4 doses of heparin. So the Reference Value for treatment 8$ (4doses*2$) 2. Differentiation Value: It is fundamental to quantify the benefits provide by Angiomax when compared to heparin. The fact that Angiomax decrease the uncertainty and risk associated in each treatment represent a great psychological value since doctors and patients could feel a sensation of safety that heparin cannot provide.

This psychological value due to its subjective character is very difficult to quantify, so it is better to move look to the monetary value created by Angiomax. The use of Angiomax allows the hospital to benefit from some cost savings since the use of Angiomax decrease the risk of complications after the treatment and consequently the extra cost associated, especially in high-risk patients (Heparin=16,5% Angiomax=9,5% Δ=7% means a saving of 560$) and in very-high risk patients (Heparin=21,4% Angiomax=7,8% Δ=13,6% means a saving of 1088$). At the level of low-risk patients the cost savings are not so significant, it only represent a half of the cost savings of high-risk patients, 280$. The average cost savings are 0,5*280$ + 0,1*1088$ + 0,4*560$= 472.8$, since 50% of the angioplasty patients are “low-risk, 40% “high-risk and 10% “very high-risk 3. Relevant Total Costs: These costs are the ones that actually influence the impact of pricing decisions in profit.

They are the costs that are incremental (not average) and avoidable (not sunk). It is known that each dose has variable costs of 40$ and that the Medicines Company need to spent spread by a period of ten years (maximum duration of a patent), an initial 2M dollars in the acquisition, 28M dollars in the continued development of the product, 12M dollars to finish the clinical trials and gain the FDA approval, 10M dollars to reduce the production costs as also a rough amount of 15M dollars per year in expenses with Sales, General & Administrative costs. It is possible to conclude that the company incurred in an average annual fixed costs of 20.2M dollars per year [(2M+28M+12M+10M)/10years + 15M)] Knowing that for a general treatment it was necessary 1.45 doses of Angiomax (70% ->1 dose & 30% ->two or three doses), it will be possible to know what is the maximum selling price that makes it indifferent for clinics to buy Heparin or Angiomax.

Since the normal cost keeping per treatment with Angiomax is 472. 8$, and it was important to use 1 ) 45 amounts, the maximum value for medication dosage is given by maximum cost of an Angiomax treatment divided by the number of doses needed by treatment, (472. 8$+8$)/1. 45= 331, 5862069$. If, perhaps the economic value in such a case is in fact the significance perceived by simply hospitals, The Medicines The cost floor is the one that makes The Drugs Company include zero profit. To assess this price you need to take into account the relevant costs sustained by the business as as well the outlook demand for Angiomax. Knowing that you will find 700 1000 angioplasty patients receiving Heparin per year, the most volume of product sales for Angiomax is 700 000*1. forty-five doses=1 015 000 doses per year. However , The Drugs Company should take into consideration that it must be not easy to exchange a well sufficient and inexpensive drug while heparin

by Angiomax, so within a realistic situation they would not sell the most possible according to the data readily available. Since the company will emphasis its actions on the seven-hundred centers around USA accountable for 92% from the angioplasty procedures and taking into consideration that 22% of the cardiologists surveyed by company said their degree of satisfaction was 5 or less out of 12, which means that these cardiologists may without main difficulties to alter from heparin to Angiomax. The quantity marketed per year has to be around the amount of angioplasties made by the 700 centers chosen by the Medicines Company, multiplied by percentage of cardiologists that answer was 5 or less inside the survey conducted and by the regular doses necessary in every angioplasty. One of the most realistic outlook for volume of sales can be 700 000*0. 92*1, 45*0. 22 =205 436 dosages of Angiomax per year. The minimum selling price that The Medicines Company can charge for a dose of Angiomax is given by the following manifestation 205 436*(P-40$)- 20. 23M $=0  P=147. 0893125$.

Knowing that the purchase price window pertaining to Angiomax lies between 147. 0893125$ and 331. 5862069$, The Medications Company should know choose the cost taking taking into consideration at the same time it is bargaining electricity, what pricing strategy to adhere to, the cost effective context as well as the elasticity of demand. In spite of not having a top bargaining electricity since the company still falls short of of reputation and connections to reach clinic administrators, it may pursue a skimming strategy obtaining excessive margins with the expense of volume, seeing that hospitals wasn’t able to be price very delicate since the product is directly related to a treatment that involves high risk and human lifestyle. Furthermore, following drawing focus on the flaws of Heparin, The Medicines Company is usually reducing the elasticity of demand, turning hospitals fewer price sensitive to Angiomax, which should be used to capture a huge share with the value made by Angiomax. Also over the ten years of obvious the firm faces low threat of imitation, so that it has a lasting differentiated product when compared with other market alternatives.

Taking as well into account that in this sector the typical cost to cost of goods distributed is you to 10 (which would mean a price of $400 for a dose), Angiomax is allowed to set a price near to the predicted price roof. Additionally , The Medicines Firm is offering reduced product with high identified customer rewards, which supports the perceived customer costs; therefore , the marketing of Angiomax will need as key objective nice of Angiomax as a premium-priced drug with great benefits pertaining to hospitals. The business cannot overlook the fact that heparin’s costs are much less space-consuming than the costs of Angiomax and that there has been an increasing pressure to reduce prices in the prescription drugs organization, since treatment organizations as well as the government pay out a percentage of the expenses with prescription drugs.


The usage model intended for Angiomax will probably be divided in distinct periods. A first stage before the FOOD AND DRUG ADMINISTRATION (FDA) approval, where objective is definitely convincing hospitals to buy Angiomax through sketching attention to the shortcomings of Heparin within an academic article that came out in the Record of Invasive Cardiology; the second stage will be conducted following your FDA acceptance for the launch, Angiomax needs to be demonstrated as the most well-liked alternative to Heparin through journal articles, advertising in medical journals in addition to trade display presentations. It is additionally fundamental to develop product supporters within the medical community, therefore it is necessary to sponsored weekend gateways for thought leaders in the cardiology community with delivering presentations designed to eductate them for the company as well as the Angiomax. Following this, it will be expectable that Angiomax finally start replacing heparin in the case of angioplasty procedures.

The final stage could happen when The Drugs Company finishes clinical trials intended for other uses of Angiomax and gets FDA authorization to other clinical usages like deal with heart episodes, HIT, shaky angina and coronary artery avoid surgery. The selling in the product will be tough due to the great disparity between the cost of a single dose of Angiomax and the price of your single medication dosage of heparin. It will be difficult to communicate to hospitals the benefits provided by Angiomax and thus, making them believe that the bigger price is justified by the potential cost savings received with Angiomax. Therefore the advertising of Angiomax could certainly have an essential impact in the success or failure with the product. Doctor Stephanie Plent, the older director of medical insurance plan, was in impose of the communication of Angiomax’s benefits, but have a hard task to finish since within a hospital there are typically 3 major organizations involved in the order, which had different goals and worries:


The doctors are the users from the drug and care only about its outcomes. This group is not difficult to encourage since the cost is not appeared as an obstacle. Doctors are also analyzers because they seek for alternatives in clinical journals and influencers


Pharmacists, the buyers, worry about their price range, since they are rewarded for accomplish the desired goals initially proven. Replacing an affordable drug with a premium-priced one would ruin that budget, which means that this group is very hard to convince. Pharmacists are also analyzers and influencers


Hospital administrators consider the whole economical sense from the drug. These are the deciders, those actually make the buying decision

Since drug companies might not have direct access to talk to the hospital managers, doctors and pharmacists ought to be the main target of the web marketing strategy followed by the organization. It is necessary to convince these teams by displaying them which the new medication is the better alternative, is going to lead them to affect the order. The company focused especially upon convincing doctors, since they value the effects, which is the effectiveness of Angiomax rather than focus on cost that presents the major concern of pharmacists. Jeff Quinn, vp of prospective, tried to inform the market place through ad ” syndication of academic record articles discussing the weak points of heparin and marketing of Angiomax as the most well-liked alternative in medical journals, after their approval; and public relations ” presentations by trade shows, trials at hospitals to allow doctors to gain hands-on experience and creation of advocates in the cardiology community.

Quinn also formed a sales team with people with experience and existing interactions within the heart care community that will be spread by the a few regions where the centers chosen by the firm are located in order to influence the doctors and pharmacists. An additional factor which makes it harder providing Angiomax is the fact that The Drugs Company does not have recognition and a product stock portfolio, so why will hospitals possibly think about buying a drug that was once forgotten by various other firms? Again, the online marketing strategy is of an enormous importance, nevertheless the company must not only focus on marketing its drugs, it must create company awareness and recognition for itself, demonstrating its consumers that the drugs will make the difference intended for hospitals.