Digg It - Business

There is an often misunderstood part of pricing that can seriously damage the profit potential. It is the effects of the costs of marketing a product

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

or service. As an example, many manufacturers commit 20% of price to marketing; certain consumer products which are quite competitive (e.g. laundry so

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

p) may use up to 65% of price towards advertising to stimulate the marketplace. Contractors allocate generally from nothing to 10% of their pricing to

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

marketing (media ads).

Marketing costs can consist of:

1. Generating stimulus to end-users (leads)

2. Commissions on direct sales (

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

sales professional compensation)

3. Commissions on sales to distribution.

I once stumbled upon a sale, quite by accident. All I had to do wa

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

find a contractor to install what I had sold, once a price was negotiated and agreed upon. The contractor commented, "I pay my own sales people 10%,"

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

as an offer to me. My reply was, "I generated the lead and the sale and I should get 20%, or I'll find another contractor who wants the business." The

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

point is, he didn't clearly understand the value (or costs) of generating a "sellable" lead. He was used to "getting" most of his leads for free from

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

referrals - which is fine, as much as it works. But, if they aren't calling you, you have to go to them - and that costs money. As long as you have le

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ds (that close) coming in, it doesn't matter how they got there.

So, plan on spending (allocating) funds for marketing costs, and reflect those costs

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

in the price. If your marketing costs decrease, either enjoy higher profit margins or lower the price to your customers. Your net margin can be 5% or

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

15%, it doesn't matter - as long as your volume is high enough to provide the profits that you need or want. Most business people don't figure enough

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

argin to cover vehicle maintenance, call-backs, marketing costs, etc. into their pricing. They fear "pricing themselves out of the market." As elsewhe

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

e stated, it is better to enhance your value than to "cheapen" your price.

There are thousands of products that "cost" more, but have better value. D

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

o you buy from licensed businesses, or otherwise? Do you always buy from the "cheapest" supplier? Why not? Well, that is the same argument for you to

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

ot be the "cheapest" vendor - enhance your value instead.

One 'Value" is having personnel that customers want to do business with more than with comp

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

titors'. It is very important to have likable personnel. Have you ever gone out of your way to buy from someone you liked doing business with, even wh

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

en the same goods were available closer, and even "cheaper?" If any of your employees have market appeal, hang on to them. If it costs you more to kee

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

them, consider it a marketing cost!

Find some examples of occasions on which you paid more (knowingly) for a similar value, and determine why you di

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

it. Total your annual marketing costs and be sure that it's added after your net margins. Price wars can kill, so, add value and document your claims

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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It has been observed that often business opportunity sellers use shills to promote their products or business opportunities in advertising. Perhaps you seen this before when someone on TV was obviously a very skilled actor will swear by certain product or business opportunity in an infomercial.

Sometimes businesses mess up. If or when you do, should you give a refund, or something else?

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