The cost variability of a medicine company
The cost variability of a medicine company depends on the target market and production. Most of the time, costs remain the same in developed countries. On the other hand, cost varies in developing countries based on the economic capacity of the country and the buying efficiency of the target audience. Brand drug companies like Ambien, Ativan, Diabeta, and Hytrin use to sell drugs at a comparatively lower price in developing countries like India, China, and Kenya. Reasons to sell medicines at a more moderate rate are the following:
- Low buying capability
- Lower per capita income than the developed nations
- Economic instability
- Inconsistency in the economic policies
Cost remains fixed in developed countries like the USA because of a steady buying power. Reasons for keeping price attached in countries like the USA are mentioned below
- High buying capability
- Economic stability
- Higher per capita income
The cost variability and cost fixing strategies are developed using fixed and variable cost analysis. Here, the parameter of fixing cost for brand drug is financial stability, and the reason for varying value is economic inefficiency.