Theoretical questions

1. THE PRODUCT IN MARKETING ACTIVITY. ASSORTMENT OF MEDICAL PRODUCTS. THE COMMODITY POLICY OF PHARMACEUTICAL ENTERPRISES

2. Theoretical questions • The marketing concept of goods. Consumer properties of goods. • Competitiveness of the pharmaceutical products. • The life cycle of goods. • The nomenclature of goods. Assortment of the pharmaceutical enterprises. • Commodity policy of the pharmaceutical enterprises. • Innovative activity of the pharmaceutical enterprises. • Development cycles of medical products. • Packaging in the pharmaceutical marketing

3. Goods are product intended for the exchange on the market with the help of sale and purchase, which obligatory conditions are: convenience of time, convenience of place, convenience of procedure of purchasing goods. In marketing goods are considered as means, with the help of which it is possible to satisfy the certain need.

4. Consumer properties of goods include: • quality; • conformity to functional purpose; • conformity of the price to quality and the consumer value; • the presence of the accompanying documentation; • quality after sales service; • a variety of assortment; • opportunity of choice.

5. Medical products have special consumer properties: • therapeutic efficiency; • conformity of quality to the certain requirements; • safety; • convenience of application; • profitability.

6. Competitiveness of the pharmaceutical products Competitiveness is a relative integrated characteristic, which displays difference of goods from its competitors and defines its appeal to the consumer. Competitiveness includes the following components: • Quality of goods • Marketing and commercial components • The Economic component • The price of consumption

7. Quality of goods: technical and economic parameters; ecological parameters; ergonomic parameters (hygienic, anthropometrical, physiological, psychological and other requirements); aesthetic parameters; conformity of production to the obligatory quality standards; . maintenance of the patent cleanliness. Marketing and commercial components: the price of sale; the price of purchase; a marketing component (shows the advantages of character and quality of the market research, a degree of work on promotion of production); a commercial component (testifies to quality of the commercial work in comparison with firms - competitors).

8. The Economic component includes advantage or unprofitableness of charges on manufacture or application of goods. • The price of consumption.

9. THE NEW DRUG DEVELOPMENT PROCESS • The new drug development process is an arduous, time- and resource-intensive procedure that takes several years from initial drug discovery to product commercialization. • In general, the identification of unmet therapeutic needs leads to new drug design, a long clinical trial and marketing concept testing phase, a regulatory approval phase, and eventually the product launch and its life cycle management. • Ideally, a successful new product development procedure is focused on three factors: achievement of internal R&D standards, the satisfaction of external regulatory stan­dards, and customer satisfaction from a product designed to satisfy their needs and wants.

10. Idea Generation • The idea generation process for new pharmaceutical products is based on the identification of unmet therapeutic needs. This is based on the availability of large amounts of epidemiological and therapeutic area market data, currently commercially available online or through CD-based databases, as well as from primary customer data collected through syndicated market research or by sales, marketing, and medical affairsprofessionals. Armed with this knowledge, pharmaceutical marketers select a therapeutic area with an unmet therapeutic need, a significant potential for sales, and company knowledge. The process of unmet needs analysis, target profililing, and profile- based development is called label-driven development.

12. Idea Screening • Idea screening is the critical evaluation of numerous new product ideas based on a precise corporate strategy. • New product ideas are exhaustively screened for their attractiveness based on various equations and models.

13. New product feasibility study • One commonly used new idea screening tool is the product's feasibility analysis. Busines Analysis • Business analysis is the comparison of sales, costs, risks, and profit forecasts to corporate objectives. A variety of assessment criteria are used in the process, such as galenic form, tolerability, efficacy, interactions, economic dossier, or drugs of reference. Development • This phase refers to the development of a new therapeutic idea into a pharmacologi­cal entity, and its preclinical and clinical efficacy and safety testing. • The clinical testing of experimental drugs is normally performed in three phases, with each successive phase involving a larger number of people. Once the FDA has approved an NDA, pharmaceutical companies conduct postmarketing or late Phase Ill/Phase IV studies. Overall, the new drug development process may last up to ten years and cost more than 300 million U.S. dollars to complete.

14. CONCEPTION AND PRODUCT DEVELOPMENT • This phase begins with basic research, and then gradually moves through a series of preclinical and clinical research phases that lead to a new drug application (NDA). This is a long and risky period of resource-intensive activities and no product sales, thus a prolonged negative-profitability period. • One of the most important aspects of a product's life cycle management is maximizing product revenue during the very limited period of remaining patent exclusivity at the time of launch. A typical product introductory period will take several months, or even years, to reach its growth levels, provided that the product's promotional effort starts at launch. • Pharmaceutical marketers can use a very significant business tool called premarketing to raise consumers'awareness before the product becomes available. The introductory phase becomes shorter and revenue is maximized.

16. Premarketing should be initiated at least two years prelaunch, or at the beginning of Phase III of clinical research. The activities needed for premarketing require significant human and financial resources. Early commitment to the potential new pharmaceutical product from the company's management is essential. • Some organizations assign the design of premarketing strategy to the product managers who will eventually take responsibility of the marketed product. However, this often takes time and energy away from other product priorities. • Alternatively, premarketing activities are directed by specialized marketing managers, often called new product development or new market development managers. These managers either transfer the responsibility of the product to the brand manager or continue with it as a full-time responsibility.

17. The product's life cycle • Related to the status of a product in the company portfolio is that product's place in the "product life cycle." • Products tend to go through different stages, each stage being affected by different competitive conditions. These stages require different marketing strategies at different times if sales and profits are to be efficiently realized. The length of a product's life cycle is in no way a fixed period of time. It can last from weeks to years depending on the type of product.

18. Most discussions of this cycle divide it into four stages known as introduction, growth, maturity and decline

19. Introduction is the period, during which the initial market acceptance may be in doubt; thus, it may be a period of a slow growth. • Profits are often non - existent because of high marketing and other expenses. The marketing strategy during this stage is based on different combinations of product, price, promotion and distribution variables. • The market for the product during this phase will be comprised of a small percentage of the medical population that is normally the first to try new drugs, and who are quite influential with their colleagues. If the product is as effective and safe as this core group wishes, word can be expected to filter down to the rest of the medical community.

20. In the introductory stage a direct competition may not be a problem although, if the product merely does a job in a new or better way, there may be difficulty in convincing the physician of the value of the change. • Production cost, marketing costs, and prices are traditionally high during the introduction stage. Unless the product can be produced efficiently using the existing equipment and in the face of unpredictable sales, the economy of the mass production will be hard to realize. Marketing costs will reflect the special nature of promotion to stimulate the primary demand.

21. Survivors of the introduction stage enjoy a period of growth. • During this period there is the substantial profit improvement. • The strategy in this stage takes the following shape: • (a) product improvement—addition of new features and models; • (b) development of new market segments; • (c) selective demand stimulation; • (d) price adjustments.

22. During the growth stage there is the widespread approval of the product concept. The number of competitors will begin to increase. Either modifications of the original product or completely different products for the same purpose will appear. By this time production methods will have been established, with a frequent lowering of costs. • Prices will tend to go down for two main reasons: • Increased sales will make some economies of scale possible. • The increase in the number of competing firms leads to both a theoretical and an actual tendency toward lower prices. • The growth stage sees promotional activities devoted to the stimulation primarily of selective demand.

23. During the next stage, maturity, there is the intense rivalry for a mature market. This leads to a proliferation of sizes, dose forms, and other product variants. • Battling to retain the company's share, each marketer steps up promotion, and perhaps grants price concessions. Unless new competitors are obstructed by patents or other barriers, entry is easy. Thus, maturity is a period when sales growth slows and profits peak and then start to decline.

24. During the maturity stage competition reaches its peak. By this point all of the firms that have any hope of receiving a share of the market will be pursuing it. By virtue of the numbers involved some of these companies will be marginal from either a financial or technological standpoint. The total sales of the product class, which have been rising through the early stages, continue to increase, but at a decreasing rate. The net effect is the price competition for this business. • Strategy in the maturity stage comprises the following steps; • (a) search for new markets and new and varied uses for the product; • (b) improvement of product quality through changes; and • (c) new marketing-mix perspectives.

25. During this phase all the product variations may be expected to appear. • It is now seemingly desirable to have tablets, capsules, and liquid. A dermatologic form may be prepared, or a long-acting form, or a combination. • The promotion may now attempt to add some vitality through efforts to segment the market by using special messages to separate physician specialties

26. Finally, there is the decline period, which may be precipitous. Though sales and profits continue their downward trend, the declining product is not necessarily unprofitable. Some of the competition may have been removed by this stage. • There can be a number of reasons for the decline of a product class— most are related to the effectiveness of the product as compared to other means of therapy. If the decline is caused by a new product development, the decline may be rapid, with only those, who are slow to change in any direction continuing to prescribe the product. • Promotion during this stage may again be aimed at stimulation of the primary demand. The effort may be half-hearted, and may be aimed at only a core of physician-users. Some firms may now drop from the competition leaving a potential marketing opportunity for those remaining. The profits may be slim, however, with many of the economies gone.

27. The nomenclature of goods is set of all groups of the goods offered to buyers by the seller. • Formation of the production assortment of the pharmaceutical enterprise represents the selection process of different groups of goods and their sub­groups for realization to organizations or the end user. • While making up the commodity assortment such criteria as width, depth and comparability are allocated, they actually characterize a level of maintenance of the consumer's demand. • The width is a quantity of therapeutic groups, which are inscribed into the general list. • The depth of assortment is a number of positions of medical products in each group. • The important characteristic is comparability that is interchangeable positions in the therapeutic group.

28. Problems of assortment policies are: • Satisfaction of the consumer's needs; • The optimum use of technologies and experience of the enterprise; • Optimization of the firm's financial results (formation of assortment is based on expectation of the certain level of profitability and profit); • Attraction of new buyers by expansion of the offer; • Support of the flexibility principle at the expense of diversification fields.

29. Innovative activity of the pharmaceutical enterprises • New products continue to be the life blood of the research-intensive pharmaceutical industry. • They may be new in the sense of new chemical entities, new to an individual firm's product line, or a new name for an existing (exspecially OTC) product. • However, new products are usually necessary for sustained profitability and growth.

30. Top management can effect the implementation of the new-product strategy: • firstly, by establishing policies and broad strategic directions for the kinds of new products the company should seek; • secondly, by providing the kind of leadership that will create the environmental climate needed to stimulate innovative drive in the organization; • and thirdly, by instituting review and monitoring procedures so that the manager is involved at the right decision points and can know whether or not work schedules are being met in ways that are consistent with the broad policy direction.

31. New product strategies can focus on imitation of existing products, modification and improvement of existing products, or truly new products. The latter will receive the most attention here, but all of these are widely employed in the drug industry. Kinds of innovations • Technical (new products, technologies, the energy, new materials, the equipment); • Organizational (new methods and forms of the organization of all kinds of activity, voluntary association of the companies); • Economic (methods of managing - forecasting and planning, financing, pricing, motivation and payment); • Social (various forms of activization of the human factor); • Legal (acts and laws).

32. The feature of market medical product is shown available original and generic (reproduced) medical product. • The original medical product is a preparation, which is a sole property of the company, which have developed it, or the property of the company - owner of the first license for its sale is exclusive. • The active substance of a new medical product holds a patent received when due hereunder. Before expiry of the term of action of the patent any other pharmaceutical company has no right to synthesize and use this active substance.

33. The potential of the further growth of sales of any pharmaceutical firm always contacts introduction on the market of new medical products. • Generic (reproduced) medical product is a preparation, validity of patent protection on which active substance has ended. • Generic (reproduced) medical product contains the active substance identical to the active substance of a new medical product. However auxiliary substances and production can be distinguished.

34. The wordbrand is a comprehensive term, and it includes other, narrower terms. • A brand is a name, term, symbol, special design, or the same combination of these elements, that is intended to identify the goods or services of one seller or a group of sellers. • A brand name consists of words, letters, and/or numbers. A brand mark is the part of the brand that appears in the form of a symbol, design, or distinctive coloring or lettering.

35. Packaging in the pharmaceutical marketing • Packaging may be defined as all activities involved in designing and producing the container or wrapper for a product. There are three reasons for packaging: • Packaging serves several safety and utilitarian purposes. It protects a product on its route from the producer to the final customer, and in some cases even while it is being used by the customer; • Packaging may perform a company's marketing program. Packaging helps to identify a product and, thus, may prevent substitution of competitive products. Also, a package may be also the only significant way, in which a firm can differentiate its product; • Management may package its product in such a way to increase profit possibilities. A package may be so attractive that customers will pay more just to get the special package — even though the increase in price exceeds the additional costs of the package.

36. Packing for the pharmaceutical goods and medical products should correspond to some features connected with a physical and chemical condition, color, the relation to physical, chemical, and temperature influence. • Therefore, the packing material should provide the certain mode, humidity of air, protection against direct solar beams, etc.