Challenges and Options for Liderm’s Micoderm: Balancing Profitability, Accessibility, and Reputation in Spain’s Dermatitis Treatment Market
Liderm, a Spanish pharmaceutical company, specialises in dermatitis treatments and prevention. The company has a product line called Bebpiel, which includes a cosmetic treatment called Bebpiel AF and a preventative product called Bebpiel ZN. Micoderm, which has been sold for 33 years and is used to prevent and treat dermatitis, including diaper dermatitis, is the most popular product. Micoderm is well-known and trusted by doctors, pharmacists, and customers. It is also one of the few medications for diaper rash that can be bought without a prescription.
Micoderm has many competitors, including other products from Liderm, such as Bebpiel AF. However, Micoderm’s low price has generated downward pressure on all prices in the market. Micoderm’s sales are enormous, with over two million units sold annually, and it accounts for less than 2% of Liderm’s sales. The product is sold in 98% of Spanish pharmacies.
The manufacturing cost of Micoderm is currently £1.69 per unit, while the selling price is £2.37. Since 2000, the price of one unit of Micoderm has stayed the same at £1.53 LSP. As manufacturing costs have gone up, the company’s profits have gone down. Manufacturing costs are expected to increase at an annual rate of 3% in the following years, and the manufacturer is likely to pass on these increases to Liderm. If costs keep going up, Micoderm won’t be able to cover its losses with more profitable products for long.
Jorge, Liderm’s general manager, thinks that a decision regarding Micoderm is urgent, even if it means making no changes. One option is to increase the market-based price, but that is feasible only if the product is not in the SSRS. Abandoning the system would cause a drop in sales volume that is difficult to estimate. Jorge is also worried about how a drop in sales will affect the morale and effectiveness of Liderm’s salespeople, who often use the popularity of Micoderm to get new clients. Also, a drop in sales could hurt the company’s reputation, and a price increase could be seen as unethical, especially by older customers who don’t have much money.
Another option is to ask the Ministry of Health to raise the price since production costs have gone up by 10% since 2004. But since the economy is in such bad shape, public spending has become a big problem, so the request might be turned down. If that happens, there is a significant possibility that the Ministry of Health might review the status of Micoderm and decide not to include it in the SSRS anymore. After all, the treatment properties of Micoderm are not as significant as its preventative qualities, and prevention alone does not guarantee inclusion. In conclusion, the Liderm product Micoderm is a must-have in Spain for treating and preventing dermatitis, including diaper dermatitis. The low price of the product has caused all prices on the market to go down, which has decreased profits because manufacturing costs are going up. Micoderm’s future needs to be decided quickly. Some options are to raise the price based on the market, to ask the Ministry of Health for a price increase, or to cover the product’s losses with more profitable products. Each choice has possible risks and benefits, so it’s important to think carefully before deciding what to do.
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