Erectile dysfunction market in Egypt

Managerial economic project

Erectile dysfunction market in

Egypt

EREC tablets

Emad Hamdy Mohamed Saeed Mohamed Saad

OBJECTIVE

objective

• To asses the market type of the erectile dysfunction market

• To determine the elasticity of the product In hand.

• The effect of price fluctuation on future sales

INTRODUCTION

introduction

• The pharmaceutical market in Egypt is suffering a price control from the government

• So the effect of price change is absent except in small cases including our current case

introduction

• In the pharmaceutical market there is a big portion called OTC products – Which are the products which can be taken without

prescription

• This OTC market has some special characteristics: – Pharmacist is the main controller of the product

recommendation for the patient – Product profitability for the pharmacist is a key

benefit

• One of the most important OTC-sub-market are the erectile dysfunction market

introduction

• Market name: G04E ERECTILE DYSFUNCTION PRD

• This market is composed of the pharmaceutical products that treats the erectile dysfunction medical cases for men

• Main customers:

– Married men above 35 years old

introduction

• This market consists of 2 portions – The legal products:

• Which is produced under the supervision of the Egyptian ministry of health

– The illegal products: • Which is illegally imported from china or India and enters

the Egyptian market

• Both products are sold through the same retailers (pharmacies ) to the final consumer

• We will focus mainly on the legal market

MARKET ANALYSIS

Market analysis

Product Unit sales L.E sales Public price No. of pills

per unit

Price Per

Tablet

EREC 5,276,414 189,928,736.0 48 12 4

VIRECTA 7,721,454 140,939,036.0 18 6 3

VIAGRA 1,431,052 59,593,266.0 40 4 10

NAPIFIT 1,521,381 30,407,530.0 20 4 5

SILDAVA 752,843 8,938,647.0 25 5 5

POWERECTA 1,156,281 20,813,058.0 20 5 4

FAROVIGA 2,257,070 22,570,700.0 10 4 2.5

CIALIS 286,753 25,916,358.0 78 2 39

SILDEN 1,153,867 8,729,904.0 20 4 5

SNAFI 137,517 10,726,326.0 78 2 39

Product Growth Market share

EREC 11.8 33.0

VIRECTA 9.1 24.5

VIAGRA 43.0 10.3

NAPIFIT 155.5 5.3

SILDAVA 317.2 1.6

POWERECTA 160.4 3.6

FAROVIGA -15.0 3.9

CIALIS 38.0 4.5

SILDEN 61.9 1.5

SNAFI 2.6 1.9

Market volume

• Total market sales by the end of 2013 is 576 million EGP

• With an annual growth rate of 23.5%

• This market contains 42 competitors

Market analysis

• Erec is the number one product in revenue and unit sales.

• Erec market share is 33% • The second product is Virecta with a market

share of 24% • 2 products have more than 50% of the whole

market which makes classify this market as an “aggressive market “ – Aggressive market is the market with very tough

competition and 50% of the market is contained by less than 5 products

Market analysis

• Products with high growth rate which are :

– SILDAVA

– POWERECTA

– NAPIFIT

are three products started 9/2012

• Most of product prices ranges from 3 to 5 L.E per tablet

MARKET TYPE

Market type

• This is a market with close substitutes and different prices

• Market type :

COMPANY PORTFOLIO

Company portfolio

• Company name: ADWIA

• ADWIA is ranked no. 23 in the Egyptian pharmaceutical market which contains 600 companies

• The company contains more than 58 products

• Erec represents 45% of the total company sales

FACTORS AFFECTING SUPPLY

Factors affecting supply

• For a big product like Erec which has 33% market share and 45% of total ADWIA sales, it has the priority in everything

• So the effect of raw material shortage or capacity is diminished

• The supply is predetermined in the beginning of the year according to the sales plan and its phasing along the year

• So, at all times the supply equals the demand

FACTORS AFFECTING DEMAND

Factors affecting demand

• Price

• Increased no. of competitors

• Marketing activity

• Market growth

• Governmental intervention

– ex:2011 price regulation

SUPPLY

supply

• As mentioned before the supply is predetermined by the sales phasing along the year

• So supply equals demand

DEMAND

Demand

• As we mentioned before the ministry of health is applying fixed price s on all the pharmaceutical products in Egypt

• Is we applied this rule we will find that the price has no effect on the demand

• Which is wrong because the demand is strongly affected by the price

• So the question here is …how the price changes while it prefixed by the gov.?

Demand

• When the pharmaceutical companies realized the fact that profitability of the product to the pharmacist is a key benefit for the product, they started the bonus system

• Which is a system that rewards the pharmacist for using a specific product through increasing his profitability by giving up extra goods

Demand

• Ex:

Prodcut Bonus

1 0

10 1

20 3

100 20

Demand

• Thats also how it works in the erectile dysfuntion market

• So in this situation there are 2 prices:

– Public price for the end consumer (16 L.E/ strip)

– Retailer price for the pharmacists

• The elastisity will vary with the retailer price because the other one is constant

Demand

• This is the demand table :

month Retailer price sales 2013

1/1/2013 3.33 298,912

2/1/2013 3.18 409,093

3/1/2013 3.22 388,519

4/1/2013 3.17 405,320

5/1/2013 3.20 403,954

6/1/2013 3.17 411,944

7/1/2013 3.40 275,537

8/1/2013 3.29 315,013

9/1/2013 3.17 407,311

10/1/2013 3.15 466,413

11/1/2013 3.25 351,778

12/1/2013 3.25 190,422

total

4,324,217

Demand

• Notice :

– The price varies from month to month

– The highest price is in 7/2013 which was RAMADAN

– The lowest prices in the year where in 6 and 9/2013

– Lowest sales was in 12/2013

Demand curve

2.95

3.00

3.05

3.10

3.15

3.20

3.25

3.30

3.35

3.40

3.45

466,413 405,320 411,944 407,311 409,093 403,954 388,519 351,778 190,422 315,013 298,912 275,537

PR

ICE

SALES

Supply & DEMAND CURVE

ELASTICITY OF DEMAND

Elasticity of demand

2 1 2 1

2 1 2 1

( ) /[( ) / 2]Price elasticity of demand =

( ) /[( ) / 2]

Q Q Q Q

P P P P

•Elasticity of demand = 6.7 •The demand for EREC is elastic •Quantity demanded responds strongly to changes in price.

CONCLUSION

conclusion

• One of the main causes of the elastic behavior of EREC demand is the close substitutes

• So when the price increase the retailer will shift his buying decision to the next most profitable product

• The supply in not affected by the prices the way it should do because it is affected only by the amount of sales, which makes the supply increase with lower prices

Reference

• IMS data base

• ADWIA pharmaceutics

• Dr. Emad Hamdy (Brand Manager)