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Metabical Pricing Packaging and Demand Forecasting for a New Weight Loss Drug

Solution Id Length Case Author Case Publisher
2715 1927 Words (7 Pages) John A. Quelch, Heather Beckham Harvard Business School : 4183
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This case study focuses on the pricing strategies, packaging approaches, and demand forecasting methods of a newly introduced drug, Metabical, which helps in weight loss. This drug is the first prescription drug that is going to be approved by the FDA and be identified as Cambridge Sciences Pharmaceuticals’ (CSP) newest prescription drug designed to solve the issues of those who aspire to lose weight and become healthy. Metabical is considered to be a strong initiative by the company in terms of producing such a drug which solves health issues of a large portion of the United States’ market that comprises of individuals who are obese. This case study also identifies many alternatives that are prevalent in the market and are used by different market segments. The advantages and disadvantages of such options are listed in great detail so that the reader can critically analyze the effectiveness of each alternative.  According to the CSP study, one pricing strategy is also identified in this case study which proves to be beneficial for the consumers as well as the company in terms of sales and profitability.

Following questions are answered in this case study solution:

  1. How does Metabical compare to current weight-loss options?

  2. What are the pros and cons of the forecasting methods presented by Printup? If you had to estimate the demand for this product, how would you go about it? What would your demand (unit) forecast look like for the first five years?

  3. What consideration should be taken in to account when making decisions about the package count? What package size would you recommend?

  4. What pricing strategy approaches would you suggest for Printup to explore? What are the advantages and disadvantages of each strategy? What Price would you recommend?

  5. What impact does your pricing decision have on profitability? What is the ROI over the first five years for each of the pricing strategies identified?

Case Study Questions Answers

1. How does Metabical compare to current weight-loss options?

With respect to Metabical, there were a few options available to treat excessive weight issues. Prescriptions drugs and over-the-counter (OTC) remedies were used by customers. The prescription weight-loss drugs were utilized by obese individuals who are known to have a BMI equal to or greater than 30, as well as excessively obese individuals who have a BMI equal to or more than 40. There were two different categories of Prescriptions drugs named as appetite suppressants and fat-absorbing blockers. However, there were serious negative side effects associated with their consumptions. For example, the Sibutramine hydrochloride monohydrate reduced the appetite level, but it had side effects such as hypertension, heart palpitations, seizures etc. Moreover, Orlistat made it difficult for the body to absorb fat, but its side effects included kidney stones, and liver damage etc. This means that doctors only prescribed them to the excessively obese individuals for whom it was necessary to consume drugs to sustain their good health. 

However, these drugs did not cater to those overweight individuals who had BMI between 25 and 30 and were looking for other alternatives to weight loss. OTC weight reduction alternatives such as the OTC drug was introduced, and the FDA approved it. However, this drug caused many harmful effects, which resulted in 30 cases of liver damage and 6 cases of liver failure. Other than these, the rest of the Over-the-Counter solutions, such as hoodia, green tea extract etc., were considered to be dietary supplements identified by the FDA and were not regulated, which resulted in health complications for their consumers. An example is the dietary supplement ephedra which caused many cases of sudden cardiac issues leading to deaths. 

Another alternative for losing weight was a diet and exercise plan, associated with consuming those products which are considered substitutes of proper meals. Effective programs aimed at weight management were introduced. Also, food delivery services offering packaged meals that are already pre-portioned were offered to overweighted individuals who aspired to lose weight. 

On the other hand, Metabolic was considered to be the first drug specifically accepted by the FDA to fulfill the needs of millions of individuals who wanted to deal with moderate, weight-loss issues. The current weight loss options dissatisfied customers; therefore, Metabical was an effective choice for individuals who wished to lose about 10-30 pounds of weight, but it wasn’t the ideal option for those who had excessive weight issues. 

2. What are the pros and cons of the forecasting methods presented by Printup? If you had to estimate the demand for this product, how would you go about it? What would your demand (unit) forecast look like for the first five years?

Barbara Printup introduced three forecasting methods that were characterized according to how customers would perceive the drug, Metabical. If I had to estimate the demand of this product, I would do extensive market research identifying the quantity of obese individuals in the United States. Since this drug is new and set to launch, research is important to identify the needs of obese individuals and also know about the health issues they face. A nationwide survey can be carried out so that all market segments are covered. The demand unit forecast would be in linear form, highlighting the previous trends and also predicting the future demand of consumers after the launch of Metabical.

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