Here are some common facts you should know about the laws of supply and demand:
The Law of Demand has an inverse relationship between price and quantity. If price falls then quantity demanded rises and if price increases then quantity demanded falls.
The Law of Supply has a direct relationship between price and quantity. If quantity supplied rises then price rises and if quantity supplied falls then price falls.
In The New York Times’ article, Pfizer Is Said to Pursue Nonprescription Lipitor, Pfizer is trying to produce an over-the-counter version of Lipitor, the world’s most prescribed drug, without the need of a prescription because they are going to lose their patent soon. Their patent allows them to be the only company that produces the drug Lipitor but it is set to expire in November. This means that other companies will start to produce the generic version of Lipitor, which will cause a decrease in sales for Pfizer since their product will no longer be exclusive. By their product having been exclusive, they were able to control the price of their product and cash in $11 billion annually but now that their product is open for any company to be able to manufacture, they have to develop a new strategy in order to avoid a mass decrease in their annual revenue. Health insurance usually offers to cover the generic version of health products and about only half of name brand products which means that the price of the generic products will be more appealing to customers, leading to a decrease in demand for Lipitor and a decrease in their sales. This is why Pfizer has been working on their new strategy, which would be to make the product an over-the-counter medication. Pfizer wants to start selling Lipitor over-the-counter in order to save some of the market share but they have yet to get the approval to be able to do so.
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~ Zenas Wilson
Why would Pfizer selling Lipitor as an over-the-counter medication retain their market share? Doesn't the price remain the same despite whether the medication is a prescription or not?
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ReplyDeleteThis is an interesting article. I wonder if they will succeed in getting Lipitor to be an over-the-counter medication and what Pfizer's new strategy will be to maintain their annual revenue.
ReplyDeleteSpencer, If Lipitor is sold over the counter then people who are uneducated about pharmaceutical products, or are in a rush, or have only heard the popular brand name and are unaware of the generic version of the drug are more likely to grab Lipitor rather than to take time out to look into the generic brand. It's all apart of Pfizer's market strategy.
ReplyDeleteFor example: When I go to CVS with my friends and they need headache relief medication they always grab the Tylenol rather than the store's generic version of the product because Tylenol is a well known name and they think that the generic product won't work as well as Tylenol even though it is the same thing.
I see what you're saying Zenas -- many people, including members of my family, always grab the most well-known name when it comes to over-the-counter products. Advil/IBUProfen both have the same effect, and yet many consumers feel a sense of security when reaching for the "Tylenol...Advil...Excedrin" bottles instead of the CVS generic brands.
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