Pharmaceuticals - Project Example: Development of Competitive Strategies

Example A - Lipid-regulating Drug

Situation

A pricing and positioning strategy had to be developed for a new lipid-regulating drug (statin). The client had to compete with well established, highly reputable competitors. For the development of a positioning strategy, it had to be investigated how physicians evaluate the product’s characteristics in comparison to other competitors.

Approach

Physicians were surveyed and evaluated the importance of various characteristics as well as the new drug’s performance in comparison to its competitors. The collected information was condensed in the Matrix of Competitive Advantages which yields valuable Insights into the relative competitive position of a company’s product. The matrix combines the importance of decision criteria with the performance of competitors.

The relative performance of a product is defined as its performance relative to the performance of the best competitor based on a given criterion. To be successful it is essential for a company to have at least one strategic competitive advantage. i.e. to have at least one criterion in the upper right box of the matrix.



Results

A competitive strategy was developed which comprised the following elements:

• Concentration on efficacy to build up a more distinct advantage by initiating additional clinical studies
• Stressing the better compliance due to a lower frequency of administration
• Improvement of poor company performance by putting more resources behind the product and strengthen the bond with opinion leaders to increase reputation and support

After having adapted and implement this strategy, a higher price than initially expected could be achieved due to the improved perception of the product’s efficacy and the administration form.

Example B – Anti-fungal Drug

Situation

A manufacturer approached Simon-Kucher & Partners to develop a positioning strategy for a new anti-fungal drug for the treatment of various affected body parts. Both the drugs already available for the treatment of this disease as well as the preference of physicians in this market were considered to be highly heterogeneous. For the development a competitive strategy, an explorative market segmentation was selected to identify the different physician and product segments.

Approach

Market segmentation and positioning are not methods, but highly complicated strategic problems for which specific solutions must be found. Exemplified by the market for anti-fungal drugs, market structures have become too complex for companies to rely on experience and business intuition alone. Highly evolved computer methods such as Multi-Dimensional Scaling (MDS) and Analytic Hierarchy Process (AHP) are now indispensable. As a result of this analysis, the factors “efficacy/price” and “reputation” were found to best classify products and physicians segments in a 2-dimensional space.

Results

Our analysis of the structure of the market illustrated above shows that three groups of products are competing for two segments of physicians. In response to the different requirements of both segments, the new drug was launched as two separate brands with slight modifications including dosage, form of administration, and price. In the following time, a higher market share was achieved using this two-brand strategy than would have been possible with just one brand.

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