Salix Pharmaceuticals

Crohn's Disease

• What is Crohn's Disease?: Crohn's disease is an inflammatory bowel syndrome (IBS) that can cause inflammation of the lining of the digestive tract, which can lead to abdominal pain, fatigue, severe diarrhea, malnutrition and weight loss. 
• Salix's Drug: AZASAN
• Competing Drug and Company: IMURAN (Prometheus Laboratories) and PURENITHOL (Gate Pharmaceuticals)
• Strength of Competition: Prometheus Laboratories' drug, IMURAN, is very similar to AZASAN, except that its dosage options are less convenient. Gate Pharmaceuticals drug, PURENITHOL, is considered to be toxic. The rivals offer a somewhat competitive environment. However, Salix differentiates itself by being both non toxic and having convenient dosage options. See Figure 1.1.
• Threat of New Entrants:
  • There is a low threat of new entrants. Barriers to entry are very high because pharmaceutical companies need large amounts of money to fund research. It is not easy for a new company to produce a drug, or to gain any significant market share.
• Threat of Substitute Products:
  • Surgery is the primary substitute. Surgery will only treat Crohn's disease, it will not cure it. After surgery, patients may not have to take medication for Crohn's disease for a period of time. However, because surgery is not a cure, they will eventually have to go back on medication.
  • Diet Changes
  • Iron Supplements
    
  • With some mild cases, pain medication like Tylenol may be used
  • Anti-diarrheals and Fiber Supplements
    
• Buyer Power:
  • In the pharmaceutical industry the main buyers are doctors that prescribe medication. Secondary and tertiary buyers include insurance companies and the patients. 
  • With Crohn's disease, there are various options present, whether it is other pharmaceuticals, surgery or other remedies, buyer power is higher than it might be for other serious illnesses. Doctor's have the option to prescribe a different companies product, or to recommend surgery. 
• Supplier Power: 
  • Based on the strategy of the pharmaceutical company, the supplier might be an outside research organization or an internal research team. With an external research organization, a pharmaceutical company might buy the right's to produce and sell their product. 

• What is Ulcerative Colitis?: Ulcerative Colitis is a chronic form of Irritable Bowel Syndrome (IBS). It causes inflammation of the lining of the colon.
  
• Salix's Drug: COLAZAL
  
• Competing Drug and Company: AZULFIDINE (Pfizer Pharmacia), DIPENTUM (Pfizer Caltech), AZACOL (P&G), PENTASA (Shire) and ROWASA (Solvay)
  
• Strength of Competition: Out of all the competition, Salix's drug COLAZAL is the only drug that is both effective and does not have strong side effects. See Figure 1.2.
• Threat New Entrants:
  
  • There is a low threat of new entrants. Barriers to entry are very high because pharmaceutical companies need large amounts of money to fund research. It is not easy for a new company to produce a drug, or to gain any significant market share.
• Threat of Substitute Products:
  • Surgery is the primary substitute because Ulcerative Colitis can be cured by removing the colon.
  • Diet Changes
  • Iron Supplements
    
  • With some mild cases, pain medication like Tylenol may be used
  • Anti-diarrheals and Fiber Supplements
• Buyer Power:
  • Buyers have a lot of power because surgery is a cure. Doctors don't necessarily have to prescribe medication. 
• Supplier Power: 
  
  • Based on the strategy of the pharmaceutical company, the supplier might be an outside research organization or an internal research team. With an external research organization, a pharmaceutical company might buy the right's to produce and sell their product. 

Traveler's Diarrhea

• What is Traveler's Diarrhea?: It is diarrhea, vomiting and gastrointestinal infection caused by bacteria.
  
• Salix's Drug: XIFAXAN
• Competition Drug and Company: CIRPO (Bayer), KAOPECTATE (Pfizer), MAALOX (Novartis), LOMOTIL (Pfizer) and IMODIUM (Teva Phar USA Mylan Geneva Novopharm)
• Strength of Competition: Most medications to treat Traveler's Diarrhea are available over the counter. This creates a different form of competition for name brand pharmaceuticals. Of the two name brand drugs prescribed for traveler's diarrhea, Bayer's drug CIPRO is the most commonly prescribed. However, its active ingredient is less tolerable than the active ingredient in Salix's drug, XIFAXAN. There is strong competition between both Salix and Bayer. Salix and Bayer both have to compete against generic brands which have the ability to charge lower prices for their products. See figure 1.3. 
• Threat of New Entrants:
  • There is a low threat of new entrants. Barriers to entry are very high because pharmaceutical companies need large amounts of money to fund research. It is not easy for a new company to produce a drug, or to gain any significant market share.
• Threat of Substitute Products:
  • Due to the fact that this is not a severe or chronic illness, many people decide to self diagnose and/or self medicate. However in 2003, 6.2 million people sought treatment, but only 4.1 million of them were prescribed a drug. The people not prescribed a drug would need to find alternative treatments. There are a lot of very basic over the counter treatments, like Tums, that may help with traveler's diarrhea. As well, many people don't even recognize that they have an illness with a name when they have traveler's diarrhea. Additionally, people contract this illness when they travel internationally, and may not have access to a doctor in order to get prescription medications. 
• Buyer Power:
  • With this service area, buyer power shifts from the doctor to the consumer (patient). This is because so many of the products available to treat traveler's diarrhea don't require a prescription. Buyers have strong power because there are a lot of options, including no treatment at all. Pharmaceutical companies will need to keep price low in order to stay competitive.  As well, since over the counter medications don't require a visit to the doctor, they may save the patient co-pay or co-insurance costs. 
• Supplier Power:
  • Based on the strategy of the pharmaceutical company, the supplier might be an outside research organization or an internal research team. With an external research organization, a pharmaceutical company might buy the rights to produce and sell their product. 

This graph rates Salix's drug AZASAN, which treats Crohn's disease, and two of its competitors based on patient satisfaction with price and patient satisfaction with the overall drug. A drug with a low price was given a rating of "5" and a drug with a high price was given a rating of "1". This chart helps to represent the key success factor of price. Salix comes out on top of its competitors because it is rated best in both price satisfaction and overall satisfaction with the drug. 

*Information was obtained from drugs.com and webmd.com

This graph rates Salix's drug XIFAXAN, which treats Traveler's Diarrhea, and three of its competitors based on patient satisfaction with price and patient satisfaction with the overall drug. A drug with a low price was given a rating of "5" and a drug with a high price was given a rating of "1". This chart helps to represent the key success factor of price. Salix's drug XIFAXAN has a high rating for the overall drug, but was the most expensive of its competitors. Pfizer's drug KAOPECTATE was the cheapest, but did not rate very high on overall satisfaction. Unlike with the graph for Crohn's disease, no drug stood out as being rated high in both price satisfaction and overall satisfaction.

*Some competitors were left out of graph due lack of available information

**Information was obtained from drugs.com and webmd.com