[Analysis of Business Problems]: MICODERM
Short introduction: MICODERM is a medication used for treatment and prevention of diaper rashes. The drug is
produced by LIDERM, a company which has 3 segments – medication, OTC products, and cosmetics.
Relevant facts
In 2010,
The company is
LIDERM
present in 10
was the
countries and has
Spanish
600 employees.
leader in
both the
prevention
and
treatment
of skin
problems,
and it
expected to
replicate
this
success
internation
ally
The size of the Spanish
dermatological market was
approximately €1 billion.
LIDERM, with sales of €150
million, was the leader.
1. Define the problem:
2. Criteria (prioritized)
2 alternatives Liderm has 3
–
products in
1. Remove
the
Micoderm
dermatitis
from the SSRS product line
(Social
– Bebpiel AF
security
(cosmetic),
Reimburseme Bebpiel ZN
nt System)
(cosmetic),
2. Request a and
price increase Micoderm
a second time (medication)
from the
Ministry
50% Micoderm
revenue came
from the SSRS
and 40% from
purchases with
prescriptions
from private
doctors and OTC
sales.
Remaining 10%
sold to hospitals.
ONLY
Micoderm sold LIDERM
LIDERM
Medications
over 2 million cosmetics can prefers direct
could be
units annually. only be
sales over
included in the Micoderm put bought in
distributors.
SSRS (no
a heavy
pharmacies This allows
cosmetics). SSRS downward
to keep image them to have
gave 60%
pressure on all of high
control over
discount and
prices (selling quality, semi- prices and
100% in case of price 2.37€) medical and process and
retired people
controlled
oppotunities to
products
push OTC
treatments and
cosmetics
The future of MICODERM has come into question over the last
6 years, since the MoH shot down a request to increase its selling
price. The product is barely profitable and was losing money in
2010. The product requires immediate attention to tackle the
losses.
Competition
 Micoderm is competing with Bebpiel AF
(another product from LIDERM) since Bebpiel
is much more efficient (in both prevention
and treatment). But it has smaller sales
volume since it was not in SSRS.
 Micoderm is able to have the most sales
out of all competitors since it is in the SSRS.
Brand issues

If Micoderm goes out from SSRS, it
may affect the image of the company
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and could be harmful for the other 2
products of LIDERM. Price increase
might be seen as unethical given the
users (mostly elderly) have scare
economic resources
Economical
Relationship
Other issues
(negative results of
removing Micoderm
from SSRS)
 Sales volume: taking the product out of
SSRS, it may decrease sales drastically,
(impossible to estimate the actual drop in
sales) 50% sales are done through Social
Security system and public doctors consider
whether the product is in the SSRS before
prescribing it.
 Request a selling price increase (second
time) to Ministry of Health. It’s not
guaranteed that it will be approved.
 Costumers are very loyal to the product
 Removing Micoderm from SSRS is
extremely time consuming (can take
anywhere between 6 to 12 months)
 If product removed from SSRS, drop in
sales volume will affect employee morale and
efficiency of LIDERM salespeople. They used
Micoderm’s popularity to secure new
accounts.
 If removed from SSRS, the price increase
will push the company to compete with
players like Canesten (which have a slightly
higher price than Micoderm currently and
have high sales)
5. Synthesis


Proposal



Micoderm is the only product in the SSRS for diaper rashes. If
they remove it from the SSRS, other companies might take the
spot.
If they are not able to increase the selling price of the product,
they will face losses.
Request for a Price increase (LSP from 1.53€ to 2.25€ and PSP
from 2.37€ to 3.5€)
If the request is rejected and we are kept inside the SSRS, we
would try to reduce production costs (currently outsourced)
If the request is rejected and we are expelled from the SSRS,
we would increase the price PSP to 5.5€
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