Medicines Writeup

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Purpose of the Report

In Angiomax, the Medicines Company (“Medicines”) has developed its first FDA approved drug for commercial sale to patients undergoing angioplasties.  Yet this milestone may prove meaningless unless the Company can devise a profitable marketing strategy to launch its product and begin generating revenues.  To achieve this goal, Medicines must determine Angiomax’s optimal position, target market, pricing, promotion, and distribution strategy.  In the long-run, however, even a highly successful launch of Angiomax may not provide enough revenue to cover the company’s fixed costs and generate high returns demanded by investors.  Indeed, long-term success calls for matching Medicines’ strengths and resources with the specific products in its pipelines to ensure sustainable profitability.

Recommendations

To maximize profitability, we recommend that Medicines adopt the following roll-out strategy:

  • First target very high risk angioplasties by promoting primarily to research hospitals, and then expand in high-risk angioplasties at the 700 centers responsible for 92% of procedures.
  • Position Angiomax as a safer and more effective alternative anticoagulant drug to Heparin.
  • Set a premium price - $350 per dose for Angiomax.
  • Use push-based selective demand stimulation directed primarily toward doctors.

Furthermore, we recommend that Medicines expand its drug discovery pipeline to include other cardiopulmonary drugs to leverage the customer relationships developed in the marketing of Angiomax.

Analysis

The Benefits of Angiomax

Based on the Phase III trial data performed by Biogen, we have calculated the potential benefits Angiomax (Exhibit 1).  Using the case-provided data on the frequency and cost of  surgical complications, we have found that 100% adoption of Angiomax in high risk (HR) and very high risk (VHR) angioplasties could save hospitals $233 million per year based on Value-in-Use calculations.  In terms of saving per procedure, compared to Heparin, Angiomax saves $666 per HR or VHR angioplasty per year.  In order to evaluate the viability of targeting either the HR or VHR markets independently, we have also broken down the value calculations.  If used only for HR angioplasty (and not VHR), Angiomax can create an annual value of $157 million (or $560 per procedure) through hospital cost savings.  Conversely, if used only in VHR angioplasties, Angiomax can create an annual value of $76 million (or $1,088 per procedure).

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Market Segmentation, Targeting and Positioning

We recommend that Medicines co-target HR and VHR angioplasty patients together as a single strategic segment as they perceive similar benefits and are similarly attractive segments in terms of profitability.  That said there are likely benefits to tactically targeting them as distinct segments.  We look at VHR and HR distinctly from a tactical sense due to the following reasons: First, there is a significant difference in the value each segment will derive from Angiomax.  Our concern is that the much lower per-procedure saving might not create sufficient incentive to experiment with Angiomax in the HR. ...

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