Marketing - Therachem Case

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Context

Executive summary

Smythe model

Consultant model

Alternatives

Recommanda tions/Limits

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Therachem is a pharmaceutical company created in 1950, and has a portfolio of 7 different products Performance: The company has a significant revenue growth of 68% over the last 3 years, driven mostly by Arthroquell

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 

Salesmen team: the sales rep’s job is to visit physicians and encourage them to prescribe Therachem drugs for their patients For the past 3 years Therachem has been growing its sales force by about 40 representatives per year and has expected this year to increase the number of reps from 433 to 473

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 

Therachem is wondering if it has to maintain its 40-rep hiring per year rhythm or invest in human capital:   A consultant report is suggesting Therachem to increase its sales force by 322 rep over the next 3 years, however is it opportune to do such a significant increase or is it too unrealistic?

Context

Executive summary

Smythe model

Consultant model

Alternatives

Recommanda tions/Limits

Goals
- Find the optimal solution for Therachem, taking into account strategic dimensions on the hiring rythm

Methodology
- Optimize number of reps and the allocation of reps between products -Resource Allocation analysis of the zero growth model, the Smythe model and the consultant model - Creation of alternative models

Assessement
- Smythe model is not optimal
- The consultant recommandation may be optimal it shows some risks in terms of hiring a lot of new rep - There is an alternative with an optimal net contribution per new rep compared to the zero growth model

Recommandations
- Do not increase more than 40 person hiring per year
- Do a more optimal allocation of human resource through the products

Context

Executive summary

Smythe model

Consultant model

Alternatives

Recommanda tions/Limits

 

Zero growth model
Arthroquell
Proxinil
144,0
$109,5
53%
$51,5
$27,2
$30,8
Renora 135 & 150
77,0
$175,2
59%
$71,8
$14,6
$88,8
Dermet & Topisal
57,0
$157,8
59%
$64,7
$10,8
$82,3
Mistalon
57,0
$33,6
53%
$15,8
$10,8
$7,0
$448,2
$81,8
$6,0
$380,3
$583,3
Total
433,0
$1 119,3
98,0
$643,2
62%
$244,4
$18,5

Sales Representatives
Planned Revenue
Unit Margin
Cost of Goods Sold
Direct Selling Cost
Indirect Selling Cost
Net Contribution

 

Strategic option number one: Smythe model
Arthroquell
Proxinil
184,0
$124,7
53%
$58,6
$34,8
$31,3
125,0
$734,4
62%
$279,1
$23,6
$431,7
Renora 135 & 150
98,0
$191,4
59%
$78,5
$18,5
$94,4
Dermet & Topisal
73,0
$167,2
59%
$68,6
$13,8
$84,9
Mistalon
73,0
$40,1
53%
$18,8
$13,8
$7,4
Total
553,0
$1 257,7
$503,5
$104,5
$6,0
$643,7

Sales Representatives
Planned Revenue
Unit Margin
Cost of Goods Sold
Direct Selling Cost
Indirect Selling Cost
Net Contribution

An increase of 120 new reps (an increase of 40 per year) = a gain of net contribution of $60,4m

  The Smythe model focuses its sales force mainly on Arthroquell and Proxinil with respectively 23% and 34% of the sales force.

Context

Executive summary

Smythe model

Consultant model

Alternatives

Recommanda tions/Limits

 

Strategic option number two: Consultant’s model, the most profitable Arthroquell
Proxinil
167,1
$119,4
53%
$56,1
$31,6
$31,7
Renora 135 & 150
120,7
$201,2
59%
$82,5
$22,8
$95,9
Dermet & Topisal
86,1
$172,3
59%
$70,6
$16,3
$85,4
Mistalon
70,7
$39,3
53%
$18,5
$13,4
$7,5
Total
755,5
$1 465,3
$582,3
$142,8
$6,0
$734,2

Sales Representatives
Planned Revenue
Unit Margin
Cost of Goods Sold
Direct Selling Cost
Indirect Selling Cost
Net Contribution
350
300
250
Effort

310,8
$933,2
62%
$354,6
$58,7
$519,8

An increase of 322...
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