Just read this fascinating NYTimes article about Philip Parker - An Insead Business School professor who has written over 200,000 books. Most of the books, if not all, were assembled algorithmically and generally his works are only printed on demand. Interesting business model. Unfortunately its unclear as to how much money he actually makes.
I couldn't help but look for one of his works on Amazon, where a search for his name immediately brings up one of his master pieces: "The 2007 Import and Export Market for Household Refrigerators in Czech Republic." Which only sells for $104!
The product description is hysterical:
"On the demand side, exporters and strategic planners focusing on household refrigerators in Czech Republic face a number of questions. Which countries are supplying household refrigerators to Czech Republic? How important is Czech Republic compared to others in terms of the entire global and regional market? How much do the imports of household refrigerators vary from one country of origin to another in Czech Republic? On the supply side, Czech Republic also exports household refrigerators. Which countries receive the most exports from Czech Republic? How are these exports concentrated across buyers? What is the value of these exports and which countries are the largest buyers? This report was created for strategic planners, international marketing executives and import/export managers who are concerned with the market for household refrigerators in Czech Republic. With the globalization of this market, managers can no longer be contented with a local view. Nor can managers be contented with out-of-date statistics which appear several years after the fact. I have developed a methodology, based on macroeconomic and trade models, to estimate the market for household refrigerators for those countries serving Czech Republic via exports, or supplying from Czech Republic via imports. It does so for the current year based on a variety of key historical indicators and econometric models. In what follows, Chapter 2 begins by summarizing where Czech Republic fits into the world market for imported and exported household refrigerators. The total level of imports and exports on a worldwide basis, and those for Czech Republic in particular, is estimated using a model which aggregates across over 150 key country markets and projects these to the current year. From there, each country represents a percent of the world market. This market is served from a number of competitive countries of origin. Based on both demand- and supply-side dynamics, market shares by country of origin are then calculated across each country market destination. These shares lead to a volume of import and export values for each country and are aggregated to regional and world totals. In doing so, we are able to obtain maximum likelihood estimates of both the value of each market and the share that Czech Republic is likely to receive this year. From these figures, rankings are calculated to allow managers to prioritize Czech Republic compared to other major country markets. In this way, all the figures provided in this report are forecasts that can be combined with internal information sources for strategic planning purposes."
And, of course, I just added The 2007 Import and Export Market for Household Refrigerators in Czech Republic to my Amazon wish list.
Monday, April 14, 2008
pharma: Increasing drug prices & the healthcare industry's influence over scientists
Looks like insurance companies are combating higher drug prices by decreasing coverage of tier 4 and tier 5 drugs (i.e. expensive "specialty drugs"). The details.
This article is also interesting...
As a brief little update to this post, the NYTimes just published an editorial on the rising price of drugs.
I really need to synthesis all of this data and put it into my upcoming write up on the drug industry. For the time being I will settle on quoting the nytimes editorial, given that it sums things up pretty nicely:
####
The plight of patients who have recently been hit with a huge increase in their insurance co-payments for high-priced prescription drugs was laid out in The Times on Monday by Gina Kolata. Instead of paying a modest $10 to $30 co-payment, as is usually the case for cheaper drugs, patients who need especially costly medicines are being forced to pay 20 percent to 33 percent of the bill (up to an annual maximum) for drugs that can cost tens of thousands of dollars, or even hundreds of thousands of dollars, a year.
These drugs — what insurers call Tier 4 medicines — are used to treat such serious illnesses as multiple sclerosis, hemophilia, certain cancers and rheumatoid arthritis. And since there are usually no cheaper alternatives, patients must either pay or do without, unless they can get their medicines through some charitable plan.
There is little doubt that the so-called tiered formularies, in which co-payments rise along with the cost of the drugs, are a sensible approach for encouraging consumers to use the cheapest drug suitable for their condition. But the system seems to break down when it moves to Tier 4 drugs where co-payments can be huge and suitable alternatives don’t exist.
The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people.
The health insurance system is so complex that it is hard to parse the blame for this injustice. The drug companies, especially the biotechnology companies, are at the root of the problem; they often charge exorbitant prices for monopoly drugs that were developed with heavy government assistance. Washington needs to rein them in by encouraging generic competition for biological drugs and allowing government programs to negotiate lower prices.
Employers, including the federal government, also bear responsibility. They have been pressing to reduce their prescription drug expenditures, and all health care expenditures, by shifting more of the burden to patients. One patient who had been paying only $20 for a month’s supply of a multiple sclerosis drug was shocked when the charge rose to $325 per month. (It has since been suspended.) Another patient found that his co-payment for a newly prescribed leukemia drug would exceed $4,000 for a 90-day supply, so he has deferred buying it.
If patients do without medicines or put off taking them, the likely result will be sicker patients, and higher costs, down the road.
What is not clear is whether insurers are primarily reacting to pressure from employers or are exploiting the situation to increase their profits. Congress needs to probe hard to find out how many patients are facing enormous drug bills and how best to protect them from medical and financial disaster.
####
This article is also interesting...
As a brief little update to this post, the NYTimes just published an editorial on the rising price of drugs.
I really need to synthesis all of this data and put it into my upcoming write up on the drug industry. For the time being I will settle on quoting the nytimes editorial, given that it sums things up pretty nicely:
####
The plight of patients who have recently been hit with a huge increase in their insurance co-payments for high-priced prescription drugs was laid out in The Times on Monday by Gina Kolata. Instead of paying a modest $10 to $30 co-payment, as is usually the case for cheaper drugs, patients who need especially costly medicines are being forced to pay 20 percent to 33 percent of the bill (up to an annual maximum) for drugs that can cost tens of thousands of dollars, or even hundreds of thousands of dollars, a year.
These drugs — what insurers call Tier 4 medicines — are used to treat such serious illnesses as multiple sclerosis, hemophilia, certain cancers and rheumatoid arthritis. And since there are usually no cheaper alternatives, patients must either pay or do without, unless they can get their medicines through some charitable plan.
There is little doubt that the so-called tiered formularies, in which co-payments rise along with the cost of the drugs, are a sensible approach for encouraging consumers to use the cheapest drug suitable for their condition. But the system seems to break down when it moves to Tier 4 drugs where co-payments can be huge and suitable alternatives don’t exist.
The insurers say that forcing patients to pay more for unusually high-priced drugs allows them to keep down the premiums charged to everyone else. That turns the ordinary notion of insurance on its head. Instead of spreading the risks and costs across a wide pool of people to protect a smaller number of very sick patients from financial ruin, insurers are gouging the sickest patients to keep premiums down for healthier people.
The health insurance system is so complex that it is hard to parse the blame for this injustice. The drug companies, especially the biotechnology companies, are at the root of the problem; they often charge exorbitant prices for monopoly drugs that were developed with heavy government assistance. Washington needs to rein them in by encouraging generic competition for biological drugs and allowing government programs to negotiate lower prices.
Employers, including the federal government, also bear responsibility. They have been pressing to reduce their prescription drug expenditures, and all health care expenditures, by shifting more of the burden to patients. One patient who had been paying only $20 for a month’s supply of a multiple sclerosis drug was shocked when the charge rose to $325 per month. (It has since been suspended.) Another patient found that his co-payment for a newly prescribed leukemia drug would exceed $4,000 for a 90-day supply, so he has deferred buying it.
If patients do without medicines or put off taking them, the likely result will be sicker patients, and higher costs, down the road.
What is not clear is whether insurers are primarily reacting to pressure from employers or are exploiting the situation to increase their profits. Congress needs to probe hard to find out how many patients are facing enormous drug bills and how best to protect them from medical and financial disaster.
####
Sunday, April 6, 2008
Funding Microfinance
Micro-finance has been around for a while as a concept, but it only recently (i.e. in the past decade) became incredibly popular due to the work of Muhammad Yunus, the founder of the Grameen Bank. The Grameen bank has lent out billions of dollars to the poor in the form of "micro-loans," i.e. small loans that are generally less than a couple of thousand dollars in value. Muhammad Yunus won the Nobel peace prize in 2005 for his work.
Since the Grameen Bank came into existence, many other organizations have been founded in other parts of the world. These new micro-finance institutes, or MFIs, have emerged to perform similar functions as the Grameen bank performs in South Asia. These organizations generally specialize in a specific country or region. They operate by taking donated capital and lending it to individuals or groups in their country or countries of operation that are looking to start small businesses but have an unmet capital need.
To facilitate the average individual's desire to help alleviate poverty, websites have emerged that attempt to connect people with excess capital in the developed world with people with an unmet capital needs in the developing world. Two prime examples are Kiva and Ebay's MicroPlace. Both companies give statistics for the performance of the microfinance institutes that solicit money on their sites regarding delinquency and default rates. Microplace additionally offers to pay interest on the loan - though the rates are generally around 3%, which is below what a far more secure bond would pay out.
Currently there is a huge gap between the demand/need for micro-finance capital and the current supply. Many have suggested that the answer lies in securitization and the taping of the large pools of investor capital available from the international financial community. This would involve increasing the amount of reporting and oversite of the MFIs so that their loans can be appropriately rated. Mix Market was partially created for that very reason, though there are plenty of financial institutions that perform the work also.
But, this article entitled "
Microfinance’s Success Sets Off a Debate in Mexico" from the NYTimes indicates that the debate still continues and there are plenty that wouldn't like to see Microfinance turned into a for profit institution.
Since the Grameen Bank came into existence, many other organizations have been founded in other parts of the world. These new micro-finance institutes, or MFIs, have emerged to perform similar functions as the Grameen bank performs in South Asia. These organizations generally specialize in a specific country or region. They operate by taking donated capital and lending it to individuals or groups in their country or countries of operation that are looking to start small businesses but have an unmet capital need.
To facilitate the average individual's desire to help alleviate poverty, websites have emerged that attempt to connect people with excess capital in the developed world with people with an unmet capital needs in the developing world. Two prime examples are Kiva and Ebay's MicroPlace. Both companies give statistics for the performance of the microfinance institutes that solicit money on their sites regarding delinquency and default rates. Microplace additionally offers to pay interest on the loan - though the rates are generally around 3%, which is below what a far more secure bond would pay out.
Currently there is a huge gap between the demand/need for micro-finance capital and the current supply. Many have suggested that the answer lies in securitization and the taping of the large pools of investor capital available from the international financial community. This would involve increasing the amount of reporting and oversite of the MFIs so that their loans can be appropriately rated. Mix Market was partially created for that very reason, though there are plenty of financial institutions that perform the work also.
But, this article entitled "
Microfinance’s Success Sets Off a Debate in Mexico" from the NYTimes indicates that the debate still continues and there are plenty that wouldn't like to see Microfinance turned into a for profit institution.
Pre-Emption in the Drug Industry
Another big potential risk/cost for the drug companies is the threat of law suit due to their drugs having a negative impact on the people that use them. But - there is the possibility that that threat will soon be longer. Drug companies and the Bush administration have been pushing for the concept of "pre-emption", which is the notion that only the FDA should be allowed to regulate the drug companies - and not the courts. Accordingly, if a drug passes the over site of the FDA, a drug company should be immune from that point on to inspection. Given Merck's expected losses from Viox, as well as the damages that other companies have incurred from law suits, this could be a huge boon for the Pharmaceutical industry.
Drug Makers Near Old Goal: A Legal Shield
Drug Makers Near Old Goal: A Legal Shield
Thursday, March 20, 2008
The Pharmaceutical Industry
I'm intending to write done my recent throughts on the pharmaceutical industry. Until I have the time though, so interesting articles and books:
The Truth About the Drug Companies
NYTimes: Where has all the Prilosec gone?
NYTimes: Do New Drugs Always Have to Cost So Much?
The Truth About the Drug Companies
NYTimes: Where has all the Prilosec gone?
NYTimes: Do New Drugs Always Have to Cost So Much?
Friday, March 14, 2008
Coca Cola and BOP Strategies
Coke recently successfully implemented what might be considered a base of the pyramid strategy. Traditionally Coke has sold the exact same product it sells everywhere else in the world at the exact same price in China. Often that meant that Coke's products were more expensive then the average person's dinner in a non-coastal chinese city. "Fruit Pulp Orange" represents an interesting departure.
To quote from the economist:
Orange Gold; Softdrinks in Asia.
To quote from the economist:
Orange Gold; Softdrinks in Asia.
Coca Cola strikes it rich in Asia with a new drink
A DRINKS company must be able to depend on a powerful brand; but it also needs to come up with sought-after novelties. The odds against such a thing are staggering. Every year thousands of new drinks are created; a few go on the market; none may survive. The selection in many vending machines has barely changed, if it has changed at all, in a generation. So the success of Coca Cola's new orange-juice drink, developed in China, is a rare triumph.
In most parts of the world Coke's sales are driven by the famous fizz, with richer countries, where calories are all too abundant, leaning increasingly towards Diet Coke, developed in 1982, and poorer countries leaning towards the original sugary stuff dating back to the 19th century. The southern belt of China, which is rich by local standards, but not by global ones, conforms to this model. Not so China's poorer interior, where the dark colour of colas is associated with the dark tea traditionally used to mask the sediment in the local water. Here consumers prefer the clear, citrus-flavoured Sprite, developed in 1961.
After much consumer and product research at a new laboratory in Shanghai, Coke came up with a drink that combines the ingredients of plain old orange juice—including some juice and real pulp, accounting for about one-fifth of the liquid—with calcium, vitamins and lots of water. The diluted drink costs about $0.30 for a 500ml container, or about a quarter as much as pure orange juice. Following a small test-marketing project in 2003, "fruit pulp orange" has steadily been rolled out across China and has recently become available throughout the country.
The results have been staggering, particularly in poor regions, where the usual orange juice sold by Coca Cola's Minute Maid subsidiary would be unaffordable. The new drink quickly became the most popular or second-most popular juice in every region of the country.
As a result, Coca-Cola's overall volume of sales in China surpassed those in Japan in 2006, making it the company's fourth-largest market, behind Brazil, Mexico and America. Following orange-pulp's success in China, Coke launched it in Thailand in 2005, where it has been a huge hit, and on February 19th the company began rolling out the new drink in India, too. This enthusiastic welcome is in sharp contrast to Coca Cola's fate in developed markets: single-digit growth in Europe and none at all in America. For mass-market drinks firms, the opportunities, such as they are, lie in the developing world.
Pepsis' Tava and online brand advertising
The NYTimes just published an article about the advertising campaign for Tava, a new caffeine-free fruit flavored beverage from Pepsi. Generally attempts to create general market brand awareness happen offline not online. Though Tava is being targetted specifically at men and women ages 35 to 49, this campaign is definitely a departure from that pattern given that it will employee primarily online marketing tools.
To quote from the article:
“There used to be an assumption this target was not online,” said Frank Cooper, vice president for flavored carbonated soft drinks at Pepsi-Cola North America in Purchase, N.Y. “But there’s a group in that category that’s ‘reborn digital.’ They’ve lived through the change and learned to adapt to it.”
To quote from the article:
“There used to be an assumption this target was not online,” said Frank Cooper, vice president for flavored carbonated soft drinks at Pepsi-Cola North America in Purchase, N.Y. “But there’s a group in that category that’s ‘reborn digital.’ They’ve lived through the change and learned to adapt to it.”
“This consumer spends significant time online, although what they do may differ from the younger consumer,” Mr. Cooper said. “They’re not I.M.-ing their friends; they’re looking at e-mail or looking up information about travel, music, food.”
To help Tava reach the right audience, Mr. Cooper turned to agencies like Tribal DDB Worldwide, the interactive unit of DDB Worldwide, part of the Omnicom Group; TracyLocke, an Omnicom shop that specializes in tasks like promotions aimed at shoppers; Element 79, an Omnicom advertising agency; and Grow Marketing, which creates what it calls “brand experiences” that are meant to generate favorable consumer recommendations (a k a positive word of mouth).
“The heart of it is creating more of an emotional connection with consumers by tapping into their natural inclination to tell other people about their experiences,” said Cassie Hughes, strategic director at Grow in San Francisco, which also works for marketers like J. Crew, Levi Strauss and Visa.
For Tava, “the strategy was going in to talk to the right few who could fuel the many,” she added.
In addition to providing samples to employees of companies like Apple, Bliss Spa, Google and MTV, Pepsi-Cola is giving away Tava at events like the Sundance Film Festival and to customers of businesses like Frank’s Chop Shop, a barbershop on the Lower East Side of Manhattan. It will also offer the beverage to arts lovers at plays, concerts and festivals, and to celebrities at locations like the set of the TV soap opera “General Hospital.”
According to Ms. Hughes and Mr. Cooper, the campaign is zeroing in on eight major markets where consumers seem to appreciate soft drinks that contain vitamins and bear new-age flavor names like Brazilian Samba, Mediterranean Fiesta and Tahitian Tamure. They are Boston, Chicago, Denver, Los Angeles, Miami, New York, Seattle and Raleigh, N.C.
The online aspects of the campaign extend beyond local markets. The Web sites on which the Tava banner ads are to appear include AOL, chow.com, CitySearch, dailycandy.com, discovery.com, Evite, MSN, oprah.com, People and weather.com.
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