Pharmaceutical Industry in the Philippines

I. CASE CONTEXT/BACKGROUND

The pharmaceutical industry in the Philippines is valued at PHP 65.7 billion and is projected to increase by 9% annually. GlaxoSmithKline (GSK), a leading global research-based pharmaceutical company with 6.3% of the world's pharmaceutical market and one of the leaders in the Pharmaceutical industry in the Philippines, senses an opportunity in the analgesic market while having a 6% share of the therapeutic class level 2 of the pharmaceutical market. GSK sees potential market growth in its competing products specifically for the non-narcotic analgesic children. The Calpol product manager, GSK's competing brand in the analgesic market, is planning on how to present the brand in the company's annual sales and marketing convention with a theme "One Team, One Spirit One GSK" in order to achieve double digit growth towards PHP 6 billion upwards in sales. Currently, Calpol's market share is steadily declining while the shares of its competitors, Tempra Brand under BMS and Biogesic for Kids from Unilab are gaining.

The product manager was tasked by the marketing director to change the market share trend for Calpol and re-establish a strong market share to compete with Tempra. The goal is to increase market share by 15% points in the next two years or approximately PHP 50 million increases in sales.

II. PROBLEM DEFINITION AND POINT OF VIEW

In solving the case, the group will be using the point of view of the product manager who is facing the challenge in changing the trend and re-establishing the strong market share of the Calpol brand.

The Group will analyze the problems leading to the declining market share of Calpol and recommend approaches the company can take to reverse this trend.

III. FRAMEWORK OF ANALYSIS AND AREAS FOR CONSIDERATION

The group will use the following framework in analyzing the case:

* SWOT Analysis

* Analysis of the market segments

* Analysis of Calpol's current positioning maps

* Assessment of the 4 Ps: Product, Price, Place, Promotion

IV. ANALYSIS

A. SWOT Analysis

Strengths

* Calpol, through GSK, has a strong financial capability with an established sales and marketing organization as well as distribution channels.

* It is the only multinational pharmaceutical company (MNC) in the Philippines that has a local manufacturing plant catering to local requirements and has access to in-house technical experts that enable the company to facilitate product line extensions.

* GSK is known for high quality products due to its well established global management system.

* Calpol is considered to have the best tasting flavors: its strawberry and banana flavors are notably preferred by kids.

* The efficacy of Calpol is widely recognized by experts and recommended by pediatricians.

* Calpol has been distributed and marketed in the Philippines for the past 14 years.

* It is known to give relief for pain and fever, as well as the discomfort of teething.

Weaknesses

* It has a higher product cost range compared to competitors.

* The efficacy of its products as recognized by experts is not widely known by its target market.

* The packaging less appealing to consumers and has some safety issues compared to the second generation packaging used by competitors.

* Calpol has established its claim as the fastest fever relief medicine and is in fact considered "the fever specialist for kids" - This market perception is the company's biggest weakness as it limits its market to kids with fever. It fails to communicate to target consumers that Calpol is a high quality medicine suited for the relief of headache, toothache, teething, sore throat, colds, flu and other discomforts experienced by kids.

* It is perceived as a high cost brand even though it is not the most expensive brand.

Opportunities

* There is a huge market potential - the pharmaceutical industry in the Philippines is valued at PhP65.7 billion with projected increase of 9% annually.

* General consumer behavior is favourable for Calpol, as parents prefer trusted branded products rather than generics for their kids.

* Calpol can take advantage of the influence of paediatricians, who are believed and followed by parents.

* There is a huge non-family market, as marketing and distribution can also be done through pre-school and elementary schools.

* Growing population of the country and the increasing proportion of children within the population. Children (aged 14 and below) make up around 37% of the population.

Threats

* Limited promotional expenditures as regulated by PHAP, noted no limitation for non-members like Biomedis (Unilab subsidiary).

* For the record, there are other specifics given in the case that can be considered threats to the company such as the following:

* Volatile exchange rate affects cost; 95% of raw materials are imported.

* 82% of population is class D and E, and due to cost constraints would have tendency to opt for alternative medicines.

* Government inefficiency to address counterfeit and smuggling activities

* Better implementation of new government policies: Cheaper medicine Bill, Granting of Parallel Importation and Policy on Generics

* However, on careful consideration and analysis, it is apparent that though the above mentioned threats will have an effect on GSK Philippines as a whole (along with their other product lines), they have minimal impact on the Calpol SKU in focus. The volatile exchange rate is experienced by all MNCs; and GSK is perceived as an expensive brand, exchange rate volatility can easily be covered by a good pricing scheme. The other