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There are really only 4 ways to increase profits – sell more, improve margins, cut costs or do all three. Costs always have a habit of creeping upwards over time. So, periodically, it pays to take a hard look at them and then eliminate the things we can live without. But there’s a limit to the extent

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

to which we can cut costs before we hurt our company’s long term growth potential. To get steady, incremental increases in profit we have to sell more and improve margins.

There are only 2 ways to sell more – add new customers or increase sales to existing customers. In my experience, when we talk

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

about selling more we tend to put the focus on adding new customers. But we know that it costs at least 6 times more to sell to a new customer than to an existing client. That’s not hard to understand when we consider the “acquisition” costs – e.g. advertising, telemarketing, etc.

So, the first tip

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

s to avoid losing your least expensive prospects – existing customers. They must be convinced that we do a great job; otherwise they wouldn’t buy from us. Every business loses some customers over time, but when customers leak away, replacing them with new ones cuts into profits. The key is to focus o

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

n our “retention rate”. We need to have a process that alerts us when a customer stops purchasing from us. And we must find out why exactly they’re leaving – not simply make assumptions. Keeping customers satisfied is better for your bottom line than replacing them.

The second tip is to remember tha

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

t all customers are not created equal when it comes to profitability. Pareto’s rule tells us that 80% of our profits will come from 20% of our customers. But, how many of us slip into the situation, over time, of treating all customers as equally important? That actually hurts our profits because we

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

aste money using the same marketing and selling techniques on everyone and treat them the same way when they contact us.

So, how do we recognize the 20% of customers who give us 80% of our profits? They are the companies who buy from us regularly and understand the value of what we do for their busi

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ness. They focus on quality and reliability rather than price and they pay on time. Because they are successful in their field, they have the potential to grow, allowing us to grow with them. They may even refer potential clients to us. These are our “A” customers. Can you identify yours?

Tip number

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

3 - it makes good business sense to treat “A” customers differently than the others. Everyone in the organization should know who they are. So, when they talk to them on the phone or face-to-face, answer their email, make product for them or pick their orders, these “A” clients get the most prompt,

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ttentive, efficient service we can give. We should market differently to them too. Stay closely in touch personally and via email, e.g. send them our newsletters, and develop the relationship by figuring out how we can help them respond to the changes in their industry.

Next tip – watch the customer

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

s who offer some, but not all, of the benefits of our “A’s” very closely. They still focus on quality and reliability but may not have been around as long as “A’s” and so may not buy as regularly and/or as much. These are our “B” customers, and apart from what they do for our bottom line today, they

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

have the potential to be the “A’s” of the future. Identify them and build a strong relationship with them. They may get fewer face-to-face visits than the “A’s” but they do get regular calls from our internal sales staff – a very effective but much less costly method of maintaining contact. They are

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

lso on our email database.

Then there are customers who buy smaller amounts consistently but who have very little potential for further development. These customers – our “C’s” - are solid contributors to the remaining 20% of our profits but the ones who may be most likely to drift away. Our sales a

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

nd marketing strategies are designed to maintain these relationships in a cost effective way. Primary contact is via regular (but less frequent than for “B” clients) calls from internal sales and email contact about the products or services they buy.

The final group is easy to recognize – they compl

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ain most and buy small quantities of our products irregularly. That’s because they are focused on price and discounts. They buy from us only when we’re cheaper than our competitors - they have no loyalty. When they do buy from us, they are abrupt, demanding, they always need delivery immediately and

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

eople hate dealing with them. Processing their orders requires our staff to drop everything else and get them to the front of the line. They are our “D” accounts. Dealing with “D’s” can be so disruptive that occasionally they even cause us to make mistakes with the orders for the profitable customers

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

.

So, the fifth and final tip is to “fire” your “D” accounts. That’s correct, if orders from “D” customers are profitable they’re at the bottom end of the margin scale and the amount of resource required to get them out the door wipes out anything we were going to make. Yet we all have “D” accounts

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

– why don’t we just get rid of them? We don’t have to be rude, simply play them at their own game – quote high prices or long lead times. They’ll make the decision not to deal with us. Do it often enough and they’ll stop calling.

Focus on your “A” and “B” customers and you’ll improve your margins. M

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

tch your sales and marketing resources to customer type and get rid of your “D’s” and you’ll improve the bottom line. Make retaining “C’” customers a priority; work hard at turning your “B” accounts into “A’s” and get your sales staff focused on understanding your “A” accounts’ business - then you’ll

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

not only sell more but you’ll make more profitable sales.

To share your experiences, to take issue with anything I’ve said or to get some insight in how to execute send me an email jimstewart@profitpath.ca or call me at 416-258-9610.

© Copyright ProfitPATH, a division of JDS & Associates Inc., 200

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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