How to Lower the Cost of Medicines TM Medcare Distributors, Inc.

1. Pharmaceutical Business Case Study(This case study was prepared by MBA-Ex Batch 11, Wayne Chavit & Karl Quipanes Students of Dr. Long Manalo at the Southwestern University Graduate School.) How to Lower the Cost of Medicines TM Medcare Distributors, Inc. The Cheaper Medicines bill 2844, Which was passed into law in 2008, states that a pharmaceutical product being endorsed to the public sought to lower its prices of medicine by 50%. One obvious reason for this law is to ensure consumers proper product information, more affordable, accessible & available quality medicines thereby upholding their right to make a wise choice before purchasing a particular product. In this time of economic crisis, it is wise and practical to purchase quality products that cost less. So filipino consumers welcome the passing of the Cheaper Medicine Law. As mandated, all drugstores will be promote cheap quality medicine product and their equivalent.

2. The Company TM Medcare Distributors is a pharmaceutical company that distributes generic drugs and parallel import generic drugs. Mr. Lope Tallo, who takes charge of the overall operation, is the Sales Manager. He is assisted by an auditor, who is in-charge of monitoring all company accounts, and a pharmacist, who is responsible for all matters pertaining to BFAD regulatory functions. With the economic slump brought about by the global financial crisis, business had not been doing well for many companies, including TM Medcare Distributors, Inc. Furthermore, the company had not gained much in sales and profit since it was established in January 2000. So there came the management call to deliver what has been the company year-end sales forecast by 31 December 2008. Everyone was encouraged to set their priorities straight and adopt corrective measures to increase outputs without necessarily sacrificing quality .

3. TM Medcare Distributors is located in Tabunok, Talisay City. The company has been concentrating on distributing generic drugs manufactures by local drug manufacturers and importing generic drugs too. Since the company carries mostly generic drugs, it is expected to price its product lower than the branded counterparts, especially those manufactured by multinational companies. Before a food or drug product is marketed, it needs to secure an approval from the Bureau of Food and Drugs (BFAD), which will then give the product its Certificate of Product Registration (CPR). The CPR assures the consumers of safe and quality products in the market. But with medicines, consumers, particularly classes A, B and a bit of C, would still prefer to buy the branded product, not the generic drugs even if they have been approved by BFAD.

4. With the worsening times and people barely having enough to meet their everyday needs, generic medicines are a welcome relief to consumers. The branded generics are expanding so with the own brand name drugs of local pharmaceuticals, especially now that BFAD is strictly enforcing the requirement of bioavailability and the cheaper medicines bill. As a result, the number of drug manufacturing companies has decreased. Only those manufacturers who have the Certificate of Good Manufacturing Practice ( CGMP ) and are able to satis\fy BFAD’s assurance requirements have their place in the market. For years now, sales, growth, and profitability have been declining for TM Medcare Distributors. As of December 2008. the company is 5 million away from its sales targets. This can be attributed to a number of factors. Since the price of generic drugs should be lower than the branded ones. TM Medcare Distributors could not put a bigger markup on the price of its products. The Company could not recover the cost.

5. Findings: • How to lower the cost w/out sacrificing your “ PUHONAN” or initial investment. • How to lower your operational expenses. • Area coverage by “Ahente or sales reps” is overlapping. • How to Increase your Sales.

6. Recommendations: • Terms of Payment • Incentives for the employees • Incentives for the customers • Increase clients / customers