The Medicines Company Case Write-Up: Terence Cho, Felipe Duarte, Aleks Loiko, Robert Shaw, and James Wang
Section 4, Group 10
Medicines Company’s drug, Angiomax, outperforms Heparin, but incurs significantly higher costs to produce, making the drug difficult to attractively price. This difficulty in pricing stems from a poor positioning strategy for Angiomax which does not maximize the perceived value (PV) that the drug provides to its key customer segments. Therefore, Medicines Co., must develop a positioning strategy that maximizes the perceived value of Angiomax. Medicines Co. must first determine the critical characteristics its key customer segments (doctors, hospital administrators, and pharmacists) value in an anticoagulant (Appendix A). Medicines Co. should then develop a positioning statement that highlights Angiomax’s strengths for its most compatible customer segment – doctors. The positioning statement for doctors would be “Angiomax outperforms Heparin in high-risk patients resulting in significantly fewer complications while performing angioplasty procedures”. The focus should be on doctors because of the high overlap between Angiomax’s benefits and doctors’ values in an anticoagulant. Additionally, by providing doctors with information (Appendix B) that quantifies the cost savings from reduced complications in high-risk patients, Medicines Co. bridges the gap between the true economic value (TEV) and the PV that doctors have for Angiomax.
This solution is the best because it focuses on what doctors’ value in an anticoagulant. From the case, we know that doctors are key customers for adopting new drugs and that hospital administrators, who have similar preferences for an anticoagulant, are difficult to reach directly (Appendix A). By focusing on the value offered to doctors, we are raising doctors’ PV for Angiomax. We are assuming this PV will be transferred to hospital administrators because they trust doctors’ opinions on potential cost savings from reduced complications. For pricing, we have calculated a TEV for Angiomax of $391 for high-risk patients and a breakeven price of $139 (Appendix B), allowing Medicines Co. to price Angiomax between $139 and $391. We recommend a halfway price of $265. This incentivizes doctors and, indirectly, hospital administrators to purchase the drug since this price is lower than the PV created by this positioning strategy.
Implementing this solution requires additional considerations. First, Medicines Co. needs to thoroughly train its representatives on the cost savings and risks of complication statistics that show the significant effectiveness of Angiomax over Heparin for high-risk patients. This is critical for their interactions with doctors. Second, Medicines Co needs to allocate additional marketing budgeting to demonstrate that Angiomax is a more effective treatment for high-risk patients and not simply an alternative to Heparin. Finally, since Angiomax is close to being approved for heart attacks, the marketing team should perform another analysis of the marketing framework and budget more marketing