In 1990, Burroughs Wellcome was spending substantial resources on finding a better treatment for AIDS than what they currently had (which is AZT).
Some officials in Burroughs Wellcome feared that if Burroughs Wellcome did not decrease the price of AZT by 20% in 1990, then a backlash from the public will negatively impact the sales of Burroughs Wellcome’s other 2 products (Zovirax and Sudafed) and any potential AIDS drug that they might invent/discover in the future (in other words, customers may stop purchasing the aforementioned BW’s current/potential drugs owing to the negative publicity of BW).
Do you think their fears are well founded? Give reasons for your answer.
In my opinion, Burroughs’ fears that the backlash from public will negatively impact the sales of its other two products (Zovirax and Sudafed) and that of any potential AIDS drugs they might invent/discover in future are well founded.
In the present scenario AZT is the only drug available for treatment of AIDS. The benefits of AZT have a direct impact on the patients’ quality of life; as a result patients’ desire for the treatment is high. Since AZT is the only drug which can extend patient’s life expectancy and boost their immune system, its importance to the patients is paramount. Hence, in the short run the negative publicity will not have any impact on the sales of AZT and BWC can go ahead without any further cut in the price of AZT, and recover part of its past-costs and collect some funds for investment in R&D for future drugs. But since one or more drugs is expected to obtain approval by the end of 1991 AZT’s timeframe as a monopolist is likely to be a short one.
The Term Paper on Patient Portals Impact Patient Care
Patient portals, which are secure web based applications, provide patients the ease of access to their health care records at any time. Some portals include features such as, obtaining prescription refills and lab results, and communicating with their provider. With close to 80% of the population in North America using the internet to seek out health information, portals continue to gain ...
However, when it comes to other BWC’s other two products (Zovirax and Sudafed) in market and any potential AIDS drug that BWC might invent/discover in the future the situation is quite different. The negative publicity which BWC is generating by holding price of AZT would diminish BWC’s reputation with its customers, paving the way for the sale of substitute products by competitors. Here BWC needs to consider both long-term effects of customers’ emotional reaction as well as the short-term economic outcome since every transaction influences how customers think about the company. It could be devastating for BWC’s business if the ‘apostles’ start turning away from the company and start telling others how bad the company is and why they should not buy BWC’s products.
Analyzing the porter’s five forces, the pharmaceutical industry seems to have visible threats from substitute drugs. If there are effective substitutes available, at same or similar prices, for Zovirax and Sudafed the buyers might make a shift to the substitutes. Also, several other compounds are in various stages of development and commercialization for AIDS treatment and are expected to receive FDA approval by 1991. Of particular note, is the drug DDI (Bristol Myers) which displays similar results as AZT yet has the advantage in that it appears to be less toxic to the patients. Clearly BWC needs to be concerned about DDI, and its effects on AZT, if the preliminary results turn out to be accurate. So AZT’s timeframe as a monopolist is likely to be a short one and substitutes would be available for any potential AIDS drug that BWC might invent/discover in the future. The rivals would capitalize on the negative publicity of BWC thus increasing the share of their products. Buyers would make a switch because of no switching costs. Also, since product differentiation is minimal, it will be easier for the consumer to compare the two drugs.
The Essay on Drug Companies and Ethics
After researching pharmaceutical companies, I quickly realized this is a very controversial topic. I’m not certain anyone in many of these companies have very many moral standards. Drug companies seemed to be very profitable from the researchers to the drug reps that deliver “gifts” and sample meds to the doctor’s offices that push their medications. Many activists will argue that drug companies ...
Hence, pricing AZT too high and creating a negative image of the company may result in loss of its patients and alienation of consumers.
