Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug

AAKASH KUMAR

Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug

Issue Identification:

Barbara Printup, senior director of marketing for Cambridge Science Pharmaceuticals’ (CSP) was in charge of managing the upcoming January 2009 launch of “Metabical” in the United States. She had nine months for to launch new drug. In addition to launch, she had to develop demand forecasts, optimal packaging, pricing strategy for Metabical and wanted to achieve 5% ROI within five years of launch.

Factors to be Considered:

Based on Exhibit 1, Metabical is a safe and effective drug with FDA approved. This is a less harmful than other related drugs. Also, only single pill required in a day. But metabical has side effect, which was similar to the gastrointestinal discomfort of orlistat and it’s does not effective for the patient with BMI >30. By 2008, over 65% of the 230 million adults in the United States were considered overweight, obese or severely obese. Also, metabical was the only prescribed drug for BMI 25-30 in the year 2009 and also there is high demand for weight-control products in the United States. But, FDA imposed severe rules and regulations due to negative side effect of weight-loss drug. And there is high competition from herbal or dietary supplement some of which were also FDA approved.

Options Available:

For Pricing:

There are three options available for pricing:

1. $75 retail price for 4-week supply.

Advantages: Increases brand awareness and market penetration.

Disadvantage: Brand image will affect and lower financial returns.

1. $125 retail price for 4-week supply.

Advantages: Price higher than Alli, Premium prescription drug with FDA approval and higher financial returns.

Disadvantage: Moderate brand image and selling price less than true economic value.

1. $150 retail price for 4-week supply.

Advantages: Higher financial returns and brand image.

Disadvantages: Decreases market share, consumer awareness and market penetration.

For Demand Forecast:

1. People within BMI range 25-30 who actively trying to lose weight and comfortable with weight loss drugs.

1. People within BMI range 25-30 who would immediately go to healthcare provider to request a prescription.

1. Educated females in between 35 and 65 age within BMI range 25-30.

Recommendation:

Based on exhibit 2,I recommend $125 retail price and second option for demand forecasting. Revenue will be lower in the short term but it will uplift the product as a premium. Also, ROI will be 5.7% in next 5 years.

Exhibit 1 (SWOT analysis)

Exhibit 2