T3 Patent Issues
- Existing Patent protection is only limited to year 2019.
- Generic drug manufacturers spend minimum resources on R&D. They start manufacturing only after other companies patent expired. Subsequently, they able to offer the drugs at cheaper price than the originator.
EFAS Summary
The weighted scores for Viagra of 3.55 indicate that the company is averagely responding to the external environment. On the other hand, Levitra is below average in managing its external environment.
WEIGHT JUSTIFICATION OF EFAS TABLE
Justification is only detailed for the prominent factors identified in the EFAS Table. The rationalization is listed underneath:
- INTERNAL FACTORS ANALYSIS SUMMARY (IFAS)
Strength
S1 Strong Research and Development
- Continued focus on new process and product development, especially for steroids in the areas of respiratory therapy, women's health – Viagra for Women
S2 Knowledge on end User Needs
- It had established good marketing strategy and owned the largest sales team.
S3 Strong Brand Equity
- Viagra is associated with ED treatment worldwide.
- Viagra is popular – after a year of introduction, the name was added to the Oxford English dictionary.
S4 Distribution Channel
- Worldwide sales and distribution channels.
- Endorsement is also made by celebrities and athletes.
S5 Good National Image in US
- Pfizer is the pioneer of prescription for ED. Hence, it enjoys the first mover advantage.
Weaknesses
W1 No product in pipeline
- There are no new products developments.
W2 Product Limitation
- Viagra is not compatible to the diabetic, hypertension and cardiovascular patients. It also has to be consumed on empty stomach, which limits a romantic dinner.
- Viagra only work for 70% of men in US with ED.
- More side effects of Viagra compared to rivals.
W3 Pricing
- Viagra is expensive compared to other drugs by its competitor.
W4 Sow Market Penetration
- Pfizer did not achieve the sales target of Viagra. (Actual 1.518 billion, target 4.5 billion)
- Slow initial preparation stage for Viagra compare to rival.
IFAS Summary
The weighted scores for Viagra of 3.50 indicate that the company is averagely managing to its internal environment. Levitra is also averagely responding to its internal environment indicated by its score of 2.95. However, Viagra is much better.
WEIGHT JUSTIFICATION OF IFAS TABLE
Justification is only detailed for the prominent factors identified in the IFAS Table. The rationalization is listed underneath:
3.2 STRATEGIC FACTOR ANALYSIS SUMMARY (SFAS)
The prominent factors affecting Viagra is identified and summarized in SFAS table below. Duration of strategies to tackle the identified issues is also identified.
- ALTERNATIVE STRATEGIES
- Medical Sales Team
Well trained medical sales teams are employed to promote Viagra direct to medical practitioners and pharmacies. With this, they would have better knowledge and information on Viagra to enable them to introduce to the patients. Professional recommendations are more influential.
- Pre-empt rivals
Enhance R&D on Viagra in order to pre-empt rivals by cementing relationship with medical practitioners and pharmacies. Exclusive distribution rights are given to these practitioners and in return they would only prescribe Viagra and others are not allowed.
- Enhance Marketing
This is done by heavily investing in advertisement, highlighting the product and outperforms rivals by making other products insignificant by building strong brand equity.
- Dropping price
This is one of the competitive strategies where Pfizer would drop Viagra price in order to remain relevant in the market. Pfizer has made huge profit since its launching of Viagra, but its competitors are still trying to breakeven. Dropping price would make its competitors suffer.
- EVALUATION OF ALTERNATIVE STRATEGIES
- Medical Sales Team
Advantages:
Currently Pfizer has spent a lot of capital to train its sales team to approach and service medical practitioners and pharmacies in order for them to provide information and Viagra to the end user. This strategy has been proven successful.
As medical practitioners and pharmacies has the knowledge power to influence patients or end users to subscribe Viagra for their needs, the endorsement from these professional expertise are viewed to be an invaluable source and channel to market Viagra.
Disadvantages:
Cost to maintain medical sales team as well as payment of commission to medical practitioners are high. Consequently, it resulted in high price of Viagra to end users.
- Could not apply mass market penetration
Consequent to maintaining medical sales team, mass marketing could not be applied as an implied agreement has been agreed upon the sales team and these professional practitioners.
- Pre-empt rivals
Advantages:
- Block rivals on distribution channel
Once the exclusive agreement has been signed by medical practitioners and pharmacies, they are not allowed to sale drugs of the similar function for certain period of time. Therefore, competitors would not be able to penetrate this market within the time frame.
A monopoly scenario is created where medical practitioners would be loyal to the product. As an outcome, competitors would have to consider other strategies to promote their products.
Disadvantages:
The cost of commission payment to this type of exclusive agreement is extremely high. Should the competitors are capable of lowering their price and apply the low cost strategy; this definitely would be an immense threat to Pfizer.
- Unwillingness of medical practitioners
This type of agreement or contract would cause the medical practitioners tied up and expose to risk. An exclusive contract would mean a closure in alternatives as they could not accept or prescribe other products should it is proven to be better than Viagra.
- Alternative channels by rivals
It would force competitors to use other channel of marketing such as internet, mass or niche marketing. If the competitors could successfully utilize their own channel of distribution, it might eat up a big chunk of business from Pfizer.
- Blocking alternative channels
An exclusive agreement with the professionals would also means blocking Pfizer’s own alternative channels. They could not consider utilizing other channels as this would damage the contract term. This would result in loses or even facing legal action by these channel members.
- Enhance Marketing
Advantages:
Enhance marketing by emphasizing on advertisement, educating public on importance and usage Viagra. This would make Viagra so well known that patients or end users will only know Viagra compared to other drugs when refers to ED. This will discourage rivals from progressing with their product enhancement due to extreme high cost as well as risk in R&D. It would not be wise to compete where the chance of success is uncertain.
Features, information and functions of Viagra could be introduced widely. Mass marketing could be done; resulting in price of Viagra could be lowered as production cost would become lower as well.
Disadvantages:
Extremely high cost would occur especially at the initial stage. The most efficient marketing channel might be putting advertisement in TV channels, health magazines or radio channels.
- Limits Viagra as exclusive product
Applying and enhancing other marketing channel would make Viagra available in superstores and speciality stores. Medical practitioners and pharmacies might not treat Viagra as exclusive product anymore as it can be bought almost anywhere.
- Dropping price
Advantages:
Once the price is dropped to a certain level, competitors like Bayer and Eli Lilly would feel the pressure given by Viagra on their respective products. Mass distribution can be applied and can reach more users as Viagra becomes more affordable.
Pfizer has coupe huge profits since its launch. Dropping price would not have significant impact on its profitability and sustainability. On the other hand, its competitors are still on break-even and struggling to cover its R&D costs. Dropping price would result in competitors to follow the strategy or to alter to differentiation strategy. However, in order to change to differentiation strategy would need a lot of planning and funding which cannot be done in short notice. The best strategy for competitors is to follow the steps taken by Pfizer, that is, to drop price as well. However, how long can the competitors sustain would be a question. If the strategy works, it would swept away competitors as they view their products are not profitable.
Dropping price indirectly referred to increased sales. This can be justified by the concept of a more affordable price infers that demand of Viagra would increase in economic concepts. An increase in demand would result in increase of supply and hence lowering operating cost.
Disadvantages:
Dropping price refers to reduced profit per unit price. Consequently, total profit from Viagra sales would be lower than it used to be.
- THE BEST STRATEGY AND JUSTIFICATION
From the strategies listed above, it is recommended that Strategy 3 – Enhance Marketing and Strategy 4 – Dropping Price is applied. The reasons are as follows:
- To wipe out competitors once and for all. Going for mass marketing and dropping price strategy will put pressure on competitors. With the hope that competitors would feel that their products would not be able to compete with Viagra and leave the market.
- Strategy 3 combined with strategy 4 incurred the lowest operating cost. It can also be implemented almost immediately without major changes in the company’s policy.
- These two strategies would reduce expenses paid to medical sales team and commissions to medical practitioners. A normal sales team without medical background, which incurred lower salary and incentives can be employed to serve mass marketing strategy, that is, to normal pharmacies and supermarkets. The medical sales team can be trained for other functions, such as moving them to R&D or to marketing research.
- The two strategies would result in Viagra could be supplied to end users faster, direct and convenient. Customers can buy Viagra at almost everywhere convenient to them either in supermarkets, convenient stores, normal pharmacies or even street stalls.
- Can be implemented almost directly as the effect to the operation of Pfizer is minimal. As mass marketing compared to R&D in cost, surely mass marketing is much lower.
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Consumers would understand the usage of the drugs and more easily available. This is due to mass marketing is stressing on the features, price and function of Viagra. Consumers can also be educated on ED, changing perception of consumers and encourage them to come forward and seek treatment on ED and take Viagra as their 1st choice for cure.
- To make competitors suffer as they would not able to outperform Viagra in term of lower price. When profit of the product becomes not attractive, it would divert competitors attention and not to directly compete with Viagra.
- IMPLEMENTATION
Short-term
Employ mass advertisement especially on the features of Viagra. This can be done by heavily advertising Viagra on television, radio and health magazines. At the same time, assign medical specialists to talk about Viagra and ED in television interview and Viagra customers to talk about their positive experiences.
Test market can be done on responses on demand versus price at each level. Pricing can be finally fixed at a level where profit and quantity are justified.
- Restructure production & distribution strategy
This is needed in order to match strategy 3 and 4 as production is expected to increase to meet rising demand.
- On-line purchasing and distribution by website
Viagra is a suitable product to be purchased and distributed on-line by looking at the light weight and size. This would also allow Viagra to reach global market much more quickly and cost effective.
Long-term
Sponsor global events such as AIDS prevention, sports and health awareness programme. Sports events such as Formula 1 racing, football, basketball and other popular events normally draw a lot of audience and these events serve as good location to promote Viagra. Sports events also go through television channels and viewed internationally. Pfizer can expect a fast growth in sales with this move.
Currently, Viagra has many side effects and the features are similar to competitors. This move is seen to be vital to outperform competitors’ products. However, drugs are tightly controlled internationally due to its impact on health. The improved version of Viagra could take years to reach the market.
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R&D on Viagra for external usage / application
This alternative should be given attention as some patients or end users are allergic to taking drugs or pills. External used application is said to be less risk inversed, and should function more quickly and more convenience.
As women might also face their own kind of problem as faced by men, huge potential market is seen in this area as female consists of almost equal percentage of population compared to male.
