In most industries supply and demand are fairly straight forward. The price for products and services in most industries is determined by an economic equilibrium reached through supply and demand. However, in the pharmaceutical industry supply and demand is looked at differently because of the vast array of suppliers of the exact same drug. A good example of this is Advil and Tylenol. Both drugs relieve the same set of symptoms, and when you tac on the store brand of the pain reliever you're dealing with at least three different types of drugs that provide the same result.
In a recent article published in the Wall Street Journal, Kristen Gerencher talks about how a recall of Tylenol during the flu season has lowered it's supply. In any other industry the reduction of supply would greatly affect the overall demand in that industry. However, the pharmaceutical industry includes "more than 600 over-the-counter and prescription medications" (Kristen Gerencher, Wall Street Journal), that include Acetaminophen, the active ingredient in pain relievers. Gerencher believes that, "Consumers accustomed to buying Tylenol also can choose a generic alternative that's less expensive". It's because of this pleather of alternative medicines that a reduction in the supply of one, will not really affect the overall supply or demand within the industry.
-Gabriel Resstack
http://online.wsj.com/article/SB10001424053111903927204576577250729074390.html
I find it really interesting that so many companies can sell essentially the same product and still all make such huge profits. It shows just how high the demand for pharmaceuticals is in today's market and also how there seems to be a non-ending supply for consumers. When we write about supply and demand for our paper we should definitely mention this
ReplyDeleteI find it interesting that I never heard about this recall. Usually if something is recalled a huge deal is made and people ten to steer clear of that product. It shows that so many people are loyal to Tylenol that even after a recall many people are still loyal to the brand.
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