Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug

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Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug

MKTG6200

3/14/2016

Northeastern University

Sindu Priya Bhupathi Raju

The CSP (Cambridge Sciences Pharmaceuticals) is an international healthcare company has developed a new drug, Metabical. This is first FDA approved prescriptive drug that targeted the individuals who are suffering with overweight. Also, has very fewer side affects compared to the other weight loss drugs in the market. The current challenge before Barbara Printup is to come up with right packaging, pricing and forecasting strategy before the launch of the product. Printup created three demand forecast strategies to analyze the sales forecast and pricing.

Strategy 1:

• The first strategy is of considering the overweight individuals in the United States. The total population of overweight adults is 209 millions.
• The percentage of overweight individuals that are with (25 to 30) BMI is 35%.
• These 35% individuals are actively trying to lose their weight.
• Another 15% individuals are very comfortable with the weight loss pills.
• Printup estimated that the Metabical would capture 10% in the first year, 15% in the second year, 20% in the third year, 25% in the fourth year, and 30% in the fifth year.

(Please see Exhibit 1)

• This strategy is easy to forecast the general demand but is very difficult to decide the specific marketing strategy.

Strategy 2:

• The second strategy is that Printup took the overall US population i.e. 209 millions in which she considered 35% of population which are overweight.
•  Out of the 35% overweight individuals Printup concentrated on the 12% individuals who immediately want to consult their health care providers to request for the prescription.
• Printup assumes that Metabical captures 10% in the 1st year, 15% in the 2nd year, 20% in the third year, 25% in the fourth year, 30% in the fifth year (Please see Exhibit 2). The ROI of this strategy will yields the required result and is more realistic than the first method. But is difficult to decide the specific marketing strategy.

Strategy 3:

• In the third strategy Printup targeted only the educated woman from 35-65 age groups with 25-30 BMI i.e. of 4.3 million individuals. Out of 4.3 million overweight women individuals 30% are the ideal target that will purchase this drug in the first year and with 5% per year till 4years. (Please see Exhibit 3)

My Recommendation:

As per the ROI calculated (please see Exhibit 4) there is a negative ROI for the price 1 for all the three strategies and the strategy 1 for all the 3 prices. I recommend using the strategy 2 because it is more aggressive and targets the high potential segment in the market.  When compared to other strategies neither it is too conservative with minimum sales forecasted,  like strategy 1 nor is it too narrow like strategy  3 where it is concentrating on a specific segment. Also importantly unlike strategy 1, this approach exceeds the target of 5% ROI within five years. Coming to strategy 3, it has very specific target, which in turn makes it easy to predict the consumer behavior. However, it leaves out other potential segments in the market like Men and women below 35 years. Also, from Exhibits 2 & 3, there is no major difference in the sales estimations from the both the approaches. Hence, I recommend Forecasting Strategy 2 which has a greater scope to capture various potentials segments.