Gardasil Analysis
Essay by pamela_tao • February 19, 2016 • Essay • 762 Words (4 Pages) • 1,240 Views
Strengths 1.The 1st vaccine to prevent cervical cancer; 2.100% prevention of HPV 6 & 11; 3.Little side effect | Weaknesses 1.Specific types of HPV could not be prevented 2.Well above the up limit price $75 3.Continually huge investment |
Opportunities 1.company’s Reputation regaining 2. one year monopoly to gain Huge profit | Threats 1.Pap test is a cheaper alternative. 2.Competitors were on the way developing comparable vaccines |
Rui Ma
Xiaohui Lin
Peiying Tao
Fenghua Du
Case Study 1
Based on the information given, our suggested price is $120 at the first launch year and $75 in the following year.
In general, Merck has to clarify the objective of promoting and pricing Gardasil. Then, Merck should estimate the cost of this vaccine, which includes the sunk cost of fifteen years’ R&D time, $1.2 billion and 2 million of launching expenditure. As the up-limit insurance reimbursement is $75, Merck has to consider maximum price that is acceptable for the public. Because of the one-year monopoly of their product, the elasticity of demand in short-run would be very low. However, the elasticity could increase as time goes by because GlaxoSmithKline have already gained fruitful result on similar vaccine.
Through SWOT (see Exhibit 1) and economic analysis, we draw the conclusion that the treatment price should dissimilar by different years, especially the first year. Because the product “Gardasil” has absolutely altitude, it monopolizes whole market. When the company is in a monopolized position, the demand for seller’s product is downward sloping. To maximize the revenue, the company could choose neither an exceptional high price which minimizes the number of potential customer nor the lowest price which maximizes the customer. They should adopt the marginal revenue that close to 0. In this case it should be the median value of Demand price and Demand Quantity. So the Price of treatment should be: [500(The most acceptable price from internal Marketing Team) +75*3(the maximum price for insurance Co)]/2= $362.5. The price is really close to the recommendation price from consulting company. In addition, the price can be as high as $360 is because Gardasil is a one time-treatment vaccine, and also it is a very effective vaccine to prevent 100%HPV and 99% genital warts that caused HPV.
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