Giant pharmaceutical manufacturers such as Merck Company and Pfizer
Giant pharmaceutical manufacturers such as Merck & Company and Pfizer have traditionally relied heavily on the doctor-to-patient channel to promote their products. In essence, this channel structure focuses attention on reaching doctors through extensive use of the drug maker’s outside salespeople, often referred to as “detailers,” who call on medical professionals with plenty of free samples and other incentives such as expensive gifts, office supplies, and offers of free stays at plush resorts. But more powerful and knowledgeable buyers, especially the large hospitals and health maintenance organizations that are increasingly using MBAs rather than MDs to make decisions about what drug products they buy or prescribe, are threatening this channel. One industry observer, summing up the change, remarked that “schmoozing between salesman and doctor is being replaced by hard data and analysis presented to buying committees.” How might such changes in buyer behavior affect the channel design decisions of the major pharmaceutical producers? Explain in terms of the relevant stages of the channel design paradigm.
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