A Case Study on Pharma Sdn Bhd - Focusing on the Vitamin C Business
In the past years, Pharma Sdn Bhd's revenue was depended on the toll manufacturing business as the major revenue contributor and over-the-counter (OTC) brands. However, the toll manufacturing contract expires in end of 1999 and the management decision was to phase out the toll manufacturing...
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| Format: | Project Paper Report |
| Language: | English English |
| Published: |
1999
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| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/8132/1/GSM_1999_13_.pdf |
| Summary: | In the past years, Pharma Sdn Bhd's revenue was depended on the toll
manufacturing business as the major revenue contributor and over-the-counter
(OTC) brands. However, the toll manufacturing contract expires in end of 1999
and the management decision was to phase out the toll manufacturing business
by the end of 1999 and venture into the ethical market. The ethical business
was to start earning revenue in late 1998, with investments breaking even in the
year 2002. With the loss of in come from toll manufacturing business, alternative
revenue was needed to sustain the company until the ethical range starts
contributing positively in the year 2003.
Pharma Sdn Bhd is now depended on the OTC business sector for revenue,
particularly on the brand Freesia which is a 20 year old brand and currently the
market leader in chewable Vitamin C for the adult market. The OTC business
sector will be the major revenue contributor for the next five years (1999 - 2003).
The Vitamin C market is highly competitive as many players intensely compete
in the open market and direct selling market. Furthermore, new entrants can
easily enter the Malaysian market as currently there is no tax imposed on
imported Vitamin C nor restrictions on the registration of products. Vitamin C is
a vulnerable product to substitution and the chewable Vitamin C products are undifferentiated and standardised allowing consumers to alternate between
brands very easily.
Pharma Sdn Bhd, as the market leader of the adult Vitamin C, is faced with a
gradual loss of market share. This is reflected by sales performance of Freesia
which was well below the budgeted sale in the year 1998. Another note for
concern here, is that the sale of the existing product, have deteriorated whilst
competitors had shown a growth of 5% to 10% for their existing brands.
To be able to sustain it's position as the market leader, the company needs to
develop a differentiated and sustainable strategy and apply common sense and
experience to understand competitors' moves, if not, the company could loose
vital market share in an overnight instance. |
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