Q.
1 Give an overview of how Pillco Ltd should structure and design the business
research process before commencing the project?
Pillco Ltd is an Irish pharmaceutical producer with a state-of-the-art tabletting and
packaging facility strongly supported by a research and development team. This
implies that they purchase the active pharmaceutical ingredient (API) and all incipient
ingredients for production of their products. The company have discovered the
opportunity to produce a generic equivalent of a market leading prescription drug that
is due to expire in September 2010. The CEO of Pillco Ltd has requested me to
conduct market research in relation to the branded drug, its market size, its customers
and the potential penetration level that a generic equivalent would achieve with those
customers.
A. Problem definition
Manufacturing a generic is uncharted territory for Pillco Ltd and will require,
1. Information of purchasers (Governments, Health insurers, Hospital
Consultants, Pharmacists & Doctors), end user (Patient), current usage
patterns and the purchasers/end user’s loyalty to original drugs.
2. Information of attaining a manufacturing licence, active ingredients, patent
exploration, market trends and all potential competition.
The problem definition is to determine viability of manufacturing a generic
equivalent of a leading brand.
The research objectives are
• Measure market size, location, demographic profile
• Measure the perceptions, awareness, interest and attitude of the
purchaser/end user’s of generic drugs versus branded drugs.
• Determine if capital investment is required and identify competitors if
any.
• Measure all production/distribution costs.
• Assess all regulatory requirements for producing, packaging &
labelling.
B. Research Design
I am going to use descriptive research techniques as Pillco needs to quantify the
potential market for this generic drug and all associated costs & regulatory
requirements. This will require both qualitative (collect information that is open to
analysis) and quantitative (facts and figures of relevant data), information which can
be retrieved from existing market data in combination with survey questionnaires
conducted with a large sample of customers using a variety of communication tools
i.e. (Mail, Telephone, Personal and Internet).
C. Data Collection
Data collection techniques will help to determine the amount of information that is
collected in a low cost and practical manner. The accuracy of this information is
dependant on methods of data collection and it is essential to ensure that methods
used realises the actual information needed. This information must be reliable so that
management of Pillco Ltd can make safe & sound investment decision.
There are two classifications as to the type of data collected
1. Secondary Data which is already collected and documented by others
2. Primary Data which is new and specific to this research problem.
A secondary Data source is largely desk research which can be internal or external to
the company. Relevant internal information will provide a basis for production &
capital cost analysis, while external information will provide analysis of the branded
drug, its market size, regulatory requirements and patent exploration. This external
information can be sourced using relevant bodies’ i.e. (Governments, State Agencies,
World Wide Web, and Trade & Professional Agencies, Company Financial
statements, Pharmaceutical Regulatory Agencies, Databases & Digital Storage
devices, published Trade & Professional Documentation and Grey material. These
sources are cost effective and time consuming and it is essential that the research is
methodical, comprehensive, meticulous and completed before commencing primary
research.
Primary Data will be achieved using survey questionnaires that will be written
specifically to determine end user awareness and attitude towards generic drugs in
order to acquire a percentage penetration of branded drug market which provides a
guide to potential market size. This will be achieved using a combination of (Mail,
Telephone, Personal and email) surveys.
D. Sampling
This requires identifying who will provide the relevant informant for primary data
collection. I am researching the potential market place for a generic drug and
therefore the best and most appropriate people to survey are the various end users.
These are the purchasers and prescription providers i.e. (Governments, Health
insurers, Hospital Consultants, Pharmacists, Doctors and the ultimate end user of the
product (the Consumer). Sampling of these will need to cover a wide variety of
countries where the drug will be marketed, income characteristics of these countries,
structure of medical systems and the gender of the market. Probability research i.e.
(random, systematic or cluster/area sampling) will allow me to be impartial in
selecting who to survey and will increase the reliability of research. Pillco Ltd will
want a large sample taken in order to achieve a high degree of accuracy to which they
have provided an adequate budget for this research to take place.
E. Fieldwork
This is the commencement of achieving the primary data after identifying who, what,
how, where and why the information can be collected? This will require training for
the researchers writing the appropriate survey questionnaire and the presentation of
these surveys through the various communication channels identified.
F. Data Analysis
After all Primary data is collected it is necessary to ensure the accuracy and entirety
of the information. This information can then be analysed for qualitative and
quantitative data and by using computer aided software, this will allow
graphical/visual presentation using graphs etc. of the collected information.
G. Report Writing and Presentation
Q. 2 what information does the company require to establish the commercial
viability of the drug and suggest recommended sources for this information?
The first piece of information needed is the size of the market. This will determine
whether or not to proceed with further research. This information can be retrieved
from the financial statements (P&L, Balance sheet, Quarterly reviews & Market
trends) of the original manufacturer which are publicly presented and will provide
accurate data. Dividing the revenue figures achieved by the brand by the prescription
cost will give the amount of boxes/ tablets sold i.e. (Volume). The next step is to
assess where the patent actually expires and the reason for this is to ascertain the true
% of the market available. Patent exploration can be checked on various
pharmaceutical regulatory bodies such as the Irish Medicines Board, European
Medicines Board and the Federal Medicines Agency. Other sites such as the Irish
Pharmaceuticals and the Generic Pharmaceuticals of America also contain this type or
links to this information. They will need to identify the class of drug and if it is
possible to create a generic, who are the main users of the drug? Is it gender or age
specific? What is the prevailing Illness? Etc.
Pillco will now need to establish the licence requirements of this drug. There are a
couple of options that they will need to consider.
1. Will they produce an identical generic under licence from original manufacturer?
2. Or will they produce a bio-equivalent generic of the original brand?
These two options will have different licence approval timelines which again are
provide by [Link], [Link] & [Link]. Producing the generic under licence allows
the use of original active pharmaceutical ingredient (API), reducing regulatory
approval timelines and ensures reduced competition while maintaining original
market brand & distribution advantages.
The second option will require R&D at Pillco Ltd to develop a bio-equivalent generic
which must meet certain guidelines. This involves developing a tablet with a different
size, shape, taste, colour & texture to that of original brand using incipient ingredients
that will maintain existing efficacy of the branded drug. It will also require different
packaging and labelling which also meet regulatory requirements. The lager question
is how long it will take to get licence approval to manufacture this drug which will
also be dependant on their R&D department of successfully meeting the guidelines. It
is essential to identify if other companies have applied earlier for a licence to
manufacture the same drug or if the original manufacturer has applied to extend
licence using a combination approval with another product.
If Pillco Ltd decides to produce a bio-equivalent then they will need to source the
API. This can be source from API production plants that are available worldwide. It is
necessary to ensure that these API facilities can meet all of their requirements such as
volumes, delivery time, cost & quality. It is probable that these facilities already
supply the original manufacturer and therefore it will be easier to calculate associated
costs. These also must meet the regulatory requirements of the various bodies.
The next step is to calculate all associate costs attached in producing this generic drug
based on possible market size. First of all they will have to determine if they have the
spare capacity to produce the volume required and if not they will have to consider a
capital investment or outsourcing manufacturing. Provided they have capacity it will
be necessary to purchase new tooling (Capital Investment) for their tabletting
equipment since new product will be completely different from anything else on the
market (regulatory requirement). They will have to decide on the type of packaging
(Blister packs or containers) and labelling that will be utilised as this could be part of
the marketing campaign. Labelling of the product is more important than the product
itself and is governed by regulatory requirements. Training will need to be provided to
their employees and will need to calculate if they have the required manpower.
Overhead costs can then be calculated which allows a complete breakdown of costs
associated with manufacturing new product. All of this information will be available
within current company financial statements or obtainable from suppliers of
equipment and materials. I mentioned outsourcing because there are a lot of low cost
countries e.g. (India & China) with similar facilities to Pillco Ltd and it will be
important to assess which option is financially favourable in the current market. This
could also be determined by location of available markets and distribution costs
attached.
We will now need to assess the strength of brand loyalty and market penetration that
the generic will begin with in the known market. This will require a survey of
Governments, Health insurers, Hospital Consultants, Pharmacists, Doctors and the
Consumer as to the perceptions, awareness, interest and attitude they have towards
generic drugs. Marketing the advantages i.e. (lower cost and wider availability) along
with supporting the image of generics and ensuring that apart from size, shape, taste,
colour & texture that the generic drug is equally effective to the original brand.
Marketing methods used i.e. (sales reps, radio, television or internet) will have various
costs attached and will Pillco Ltd will need to use a selection of these to achieve a
higher market presence.
Next is to determine pricing options for the generic drug for which I have included a
chart to show price of generics in relation to original based on number of competitors
in the market place
Therefore if Pillco Ltd is first to the market they can achieve a premium price for their
product allowing greater profitability but as more competitors enter this market it will
reduce profitability. The company image will also play a part in the price achieved
and market acceptance and will be based on the quality, price and distribution of the
existing products
Q. 3 Advise Pillco Ltd on the various data collection methods and techniques
that they should use to ensure, that the proposed drug is targeted at the correct
market.
There are numerous methods of collecting information some of which I have already
mentioned as part of primary and secondary techniques. The most common methods
of research are literature, Focus groups, personal interviews and surveys using any of
the following telephone, mail, email and the internet.
Literature is material that is already available and requires a lot of searching and
reading to find relevant documents. This material can be anything from internal
company information & literature to pharmaceutical publications, newspapers,
magazines, annual reports, internet data bases, and any other available material. This
is a time consuming exercise i.e. (1 – 2 Months) and also an extremely cheap method
of gathering information. Libraries are an excellent source for literature research as is
the internet which is much faster due to refining search details
Advantages – Large Qty of historical data & wont interrupt research schedule
Disadvantages – requires knowledge of data needed & restricted to existing literature
Focus Groups are used to explore a subject in great detail through a group discussion.
This method explores people’s ideas, attitudes and reactions to experiences with for
example a new product. It will entail a group of 5 – 25 people in a conference style
room with a trained intermediary. The intermediary leads the group’s discussion while
maintaining attention to the subject matter in question. A focus group can be easily
organized in a short time frame (1 – 2 weeks)
Advantages – Fast, efficient and provides a deep depth of information
Disadvantages – Hard to analyse, requires a good intermediary & a small sample
Personal Interviews are a person to person survey that can take place anywhere and
can achieve a comprehensive volume of information in great detail. The interviewer
will usually ask questions that are pre selected and then records the answer to those
questions but has the added advantage of being able to use visual aids. This method is
used to fully understand a person’s attitude or reaction to an experience and is mainly
used by researchers that want to consult with subject experts.
Advantages –Improves relationship with customer & can be flexible.
Disadvantages – Expensive, time consuming & hard to analyse
Telephone Surveys are basically written questionnaires conducted over the phone.
This method is probably the fastest and is becoming the most common method used in
marketing research due to cost effectiveness. It allows the flexibility of a large sample
base and also gives the opportunity of asking a persons opinion. Sampling errors can
be significant reduced by using effective call management. Normally it takes no
longer than five – ten minutes to complete, however it is not suitable detailed/complex
information and the entire process can be done in two – three weeks
Advantages – Inexpensive, fast & popular
Disadvantages – Can’t use visual aids & possible issues with sampling frame
Postal surveys are also a cost effective means of collecting information and is cheaper
than telephone surveys. These surveys are excellent for a large sample and also if the
sample is spread over a large geographic area. It provides time for participants to
reply but is highly dependent on them to reply. This method will take approx 8 – 10
weeks to complete
Advantages – Cheap, provides confidentiality & no interviewer bias
Disadvantages – Time, possible high non response & cant probe for detailed info.
Email and Internet surveys are similar and are reasonably new. These methods are the
most cost effective and the fastest means of delivery. It is easier to analyse due to its
digital format and allows a greater choice by combining text and visual aids together.
This method however is only available to those that have internet access therefore not
representing the demographic profile of a country’s population.
Advantages – Information can be collected 24/7 & provides confidentiality
Disadvantages – Security issues, not everyone has internet and/or computer skills.
Based on the above information I would advise Pillco Ltd to use a postal survey with
the following participants Governments, Health insurers, Hospital Consultants,
Pharmacists & Doctors who purchase and prescribe drugs to the end user the
(Patient).
I have already outlined the advantages of this method which are the main reasons for
choosing this method. Based on this information and the profession of the target
audience, Pillco Ltd will require the questionnaires to be designed for three specific
groups based on the role each have in purchasing and using pharmaceutical products.
1. Governments & Health insurers
2. Hospital Consultants, Pharmacists & Doctors
3. The end user (Patient)
Governments & Health insurers
The questionnaire will target this segment because they are generally the largest bulk
purchaser of pharmaceutical products worldwide. It will also help to provide these
bodies with information that will show all the positive advantages of why they should
use generic drugs. The biggest benefit that can be communicated is the economic
benefit. Generic drugs don’t have the expense of research and development that new
drugs would have. This then allows both bodies to save billions each year which will
translate into cheaper insurance and medical treatment. It also benefits public health
sectors by making drugs affordable that were previously unable to afford them. Pillco
Ltd can inform these bodies that generics are just as safe as the original brand because
regulatory bodies require generic drugs to undergo clinical trials to prove safety and
efficacy.
Hospital Consultants, Pharmacists & Doctors
These are the people who are continuously in contact with and prescribe drugs to their
patients. The questionnaire will help to define the perceptions, awareness, interest and
attitude that these practitioners have towards branded and generic drugs. It is very
important to understand how they make decisions when prescribing a drug. This could
identify a large number of factors which Pillco Ltd needs to explore, so that they can
get these practitioners in the future to prescribe generic drugs with confidence.
The end user (Patient)
Designing a questionnaire for these individuals will be a lot easier than for the
previous two groups. This questionnaire will provide a clear understanding as to
whether or not these individuals are being offered or prescribed generics drugs and
the reasons attached. It will also help to determine if they are familiar with and are
aware of the benefits of generic drugs over that of branded drugs.
Q. 4 - Discuss and prepare a questionnaire to determine if there is a consumer
preference for branded drugs over generic drugs
Questionnaires provide a standard format of achieving information at a relatively low
cost, are easy to analyse and offers participants confidentiality allowing them to
respond honestly. The major costs attached are in the preparation of making and
collecting the information.. This research deals with the challenges faced by generics
against branded drugs. Questionnaires can be conducted by mail, telephone, personal,
email, while questions should allow and motivate participants to answer all questions
relevant to research subject and prevent response error. Start with the information
required which is consumer preference for branded drugs over generic drugs. Design
the questionnaire towards the target audience i.e. (Governments & insurers etc.) and
communication methods used will determine structure and content of questionnaire,
which can affect analysis and presentation of information.
Develop the questionnaire to ensure that only relevant questions are asked and that the
participant can answer the questions. Using screening questions will remove
unreliable participants while the type of questions i.e. (open ended, closed, multiple
choice etc.) may help participants to answer questions that they otherwise may not.
The most essential requirement of a question is that both researcher and respondent
will interpret the same meaning otherwise it could seriously affect outcome. Achieve
this by using simple/clear words and applying the six W’s (who, what, where, when,
why & which) to the question to remove any ambiguity. Avoid the use of leading,
loaded or generalised terms.
As mentioned, have a few screening questions followed by a few easy questions to
encourage participation. It is important to use transition statements so that participants
can easily switch from one group of questions to the next topic and provide options
for questions that lead to alternative but relevant outcomes. Difficult and demographic
type questions should be left towards end of questionnaire. Overall presentation of the
questionnaire such as the format, appearance, length & layout of questions will be a
factor in the level of participant’s response. Provide a stamped addressed envelope
and maybe an enticement such as a raffle which will help to achieve a higher response
rate than would otherwise have been achieved. Questionnaire sample as follows,
Euroking Marketing Customer Survey
Euroking Marketing Services
27 Castle Avenue
County Wexford
Tel 00 353 (0) 53 9145723
Fax 00 353 (0) 53 9145724
Email eurokingmarketing@[Link]
Dear Sir/Madam
We are conducting market research on behalf of Pillco Ltd who is a Pharmaceutical
producer of generic drugs. We would like to enlist your opinion as a medical
practitioner in relation to consumer’s preference for branded drugs over generic drugs.
This survey will take less than five minutes to complete and it is very important that
you participate as this study will give a definitive answer on consumer’s preferences
and identify where improvements are needed to improve the overall image of generic
drugs
We can guarantee your anonymity & confidentiality and that all information will be
treated in the strictest confidence. The results will be used to understand consumer
preferences and the Marketing requirements needed for generic drugs and are only
available to management at Pillco Ltd.
As a thank you for your time you will be automatically entered into a draw to win one
of three fabulous two week holidays in Dubai. The closing date for completion of
survey is 30th May 2010 and you can return the completed questionnaire using the
self-addressed stamped envelope enclosed.
Q. 1 Do you prescribe cardiovascular drugs Yes No
Q.2