National Cheng Kung University

Institute of International Management

Case Discussion
Metabical :
Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug
Group 2:
Tra Huong Nguyen

RA6037484

Liza Widjaja

RA6047405

Kezia Sarah A

RA6047439

Prof. Tien Wang, Ph.D.

EXECUTIVE SUMMARY
Metabical is a weight-loss drug launched by Cambridge Science Pharmaceutical (CSP)
which will be the first and the only prescription drug approved by Food and Drug Administration
(FDA). CSP Metabical targeted the overweight individuals (the BMI between 25 and 30) who
wants to shed approximately about 10 to 30 pounds. American government alarmed the rise of
overweight since excess weight in United States was a serious problem since it can be found in
every demographic. In 2008 over 65% of 230 million adult is considered overweight, obese, or
severely obese. Researchers and medical expert use Body Mass Index to measure the excess
weight. There are 3 categories: BMI >25 overweight, BMI >30 obese, and BMI >40 severely
obese. Even Metabical can be used to all overweight individuals, but the ideal target market of
Metabical is overweight female 35 to 65 years old who were college-educated.
Barbara Printup, senior director of CSP, was in charge to manage Metabical launching.
She still confused to determine the prime packaging and right pricing strategy for drug. About
the packaging itself there are some options for packaging. The first one was a-four-week
packaging or blister pack which allowed the customer to easily keep track of choosing by seeing
each pill and its corresponding day of the week but the other question arouse how many pills
should be included in the blister pack. The second one is 12-week supply but the other problem
was it would be too much and limit individuals who dropped off because they are too busy to get
the prescription refilled.
Another problem is pricing. Printup develop three initial pricing. The first one was
considering the other competitor Alli. In the first scenario, Metabical sold at $75.00 (a-fourweek-packaging). The second was mark-up comparison. Printup determined the price based on
comparison of other CSP drug margin. In the second model, Metabical sold at $125.00. The third
pricing is value based pricing. It based on product value given to the customer. In this pricing,
CSP focused on demand to the customer. In the third pricing, a-four-week packaging will be sell
at $150.
Each pricing has its own advantages and disadvantages. At last, Printup has to choose
which the best packaging and pricing strategy would be the best. Printup believed that Metabical
pricing and packaging decision would have direct impact on metabical sales forecasts

QUESTION 1

INFORMATION
Starting population
Target percentage
Targeted population
Narrow down
Narrowed target
population
Percentage able to
capture

Approach 1
4-week
package

149,500,00
0
35%
52,325,000
15%

12-week
package

149,500,00
0
12%
17,940,000

4,300,00
0

10%

30%

Approach 3
4-week
12-week
package package

7,848,750
10%

Year 1

784,875

1,347,369

Year 2

1,177,313

2,021,053

Year 3

1,569,750

2,694,738

Year 4

1,962,188

3,368,422

Year 5

2,354,625

4,042,106

7,848,750

13,473,68
8

5-year forecasted
customers
Question 1

12-week
package

Approach 2
4-week
package

784,875
1,177,31
3
1,569,75
0
1,962,18
8
2,354,62
5
7,848,75
0

1,794,000

3,079,700

1,794,000

2,691,000

4,619,550

2,691,000

3,588,000

6,159,400

3,588,000

4,485,000

7,699,250

4,485,000

5,382,000

9,239,100

5,382,000

17,940,000

30,797,00
0

17,940,00
0

1,290,00
0
1,505,00
0
1,720,00
0
1,935,00
0
2,150,00
0
8,600,00
0

2,214,500
2,583,583
2,952,667
3,321,750
3,690,833
14,763,33
3

1,290,00
0
1,505,00
0
1,720,00
0
1,935,00
0
2,150,00
0
8,600,00
0

The pro of the forecasting methods presented by print up is the company can make a good estimation on demand. Because these 3
forecasting approach have a very specific target and the estimation number of the potential customer likely to be achieved. This
estimation number came from the market research of the companys capability that they can reach or captured in the market for each

approach. This forecasting also consider about the time (growing per year). The con is the forecasting methods not suitable for the new
product because the new product doesnt have the previous data to be the based for doing forecasting. So, the number that the
company used could be wrong. Our group estimated the demand in 3 approaches. But the most reasonable demand is approach 1 and
approach 3, because these two approaches give us similar number, so the possibility to achieve that number is higher than approach 2.
On the other hand, approach 2 has a high number to achieve and we think that this company cannot reach that number since this
company still new. According to the first and third approaches, the total demand forecast for five years will be around 13.473.68814.763.333 unit for 4 week package and 7.848.750-8.600.000 unit for 12 week package. This company can use the average to
determine the number of demand within these two approaches.

QUESTION 2

QUESTION 3
Our group has three approaches in order to determine which price is suitable for each packages.
And every approaches has their own ROI. First how to get the price. We calculated from
summing all total cost (included variable and fix cost) then divide it with the total of 5 yearsforecasted customer. After that we got the number and we multiply it with 1.7 since CSP average
gross margin for its new prescription drug approximately 70%. However, there are some
considerations such as the higher ROI is the better one, capturing market share, and increasing
the sales.
Approach 1
4-week
package
Unit cost
$ 102.64
$ 72.75
$ 60.86
$ 53.73
$ 48.97

ROI
Unit price
$ 105.00
$ 105.00
$ 105.00
$ 105.00
$ 105.00

2%
44%
73%
95%
114%

12-week
package
Unit cost
$ 158.15
$ 106.82
$ 86.42
$ 74.17
$ 66.01

ROI
Unit price
$ 250.00
$ 250.00
$ 250.00
$ 250.00
$ 250.00

58%
134%
189%
237%
279%

In the first approach we sell Metabical for 4-weeks-packages at $105.00 the average of ROI is
about 66% which is 1% higher than approach 2. We sell slightly higher than Alli since Printup
believed that the targeted market are willing to pay considerably more for a prescription-strength
medication that limited harmful side effects and needed to be taken only once per day. Our
assumption that the first year cost will be higher than the second year since in the first year CSP
invested a lot. Selling at $105 can fulfill target ROI over 5% in the second year. And for 12weeks we sell at $250
Approach 2
4-week
package
Unit cost
$ 59.08
$ 46.00
$ 40.80
$ 37.68
$ 35.60

12-week package
Unit price
$ 70.00
$ 70.00
$ 70.00
$ 70.00
$ 70.00

18%
52%
72%
86%
97%

Unit cost
$ 83.36
$ 60.91
$ 51.98
$ 46.63
$ 43.06

Unit price
$ 180.00
$ 180.00
$ 180.00
$ 180.00
$ 180.00

116%
196%
246%
286%
318%

In the second approach, we determined $70 for a-4-weeks-package which fulfill the target 5% of
ROI in the first year. But the second approachs price is less than the Printup propose price. And
the 12 weeks package is sold at $180.
Approach
3
4-week package
Unit cost
Unit price
$ 72.32
$ 100.00
$ 62.39
$ 100.00
$ 57.75
$ 100.00
$ 54.13
$ 100.00
$ 51.24
$ 100.00

38%
60%
73%
85%
95%

12-week package
Unit cost
Unit price
$ 106.09
$ 250.00
$ 89.05
$ 250.00
$ 81.07
$ 250.00
$ 74.86
$ 250.00
$ 69.90
$ 250.00

136%
181%
208%
234%
258%

In the third approach, Metabical sold at $100 which passed ROI 5% at the first year. This number
is lower than Printup proposed so that it can be accepted by the society. For 12 weeks packages,
we proposed to sell at $250. It is also fulfill the ROI 5% at the first year.

Appendix Demand Forecast Approach 1 (4 week package)

65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5
65,406.2
5

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

65,406.25

65,406.25

65,406.25

39,243.75

104,650.00

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25

65,406.25

39,243.75

13,081.25

117,731.25
1,347,368.7
5

TOTAL

YEAR 2
1
2
3
4

98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8

UNITS

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

98,109.38

UNITS
98,109.38

98,109.38

58,865.63

156,975.00

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

5
6
7
8
9
10
11
12

98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8
98,109.3
8

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

98,109.38

58,865.63

19,621.88

176,596.88

TOTAL

2,021,053.1
3

YEAR 3
1
2
3
4
5
6
7
8
9
10
11
12

130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50
130,812.50

YEAR 4
1
2
3
4
5
6
7
8
9
10
11
12

163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3
163,515.6
3

1ST TIME
REPURCHASE
PURCHASE
130,812.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
130,812.50
78,487.50
TOTAL
1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

26,162.50
26,162.50
26,162.50
26,162.50
26,162.50
26,162.50
26,162.50
26,162.50
26,162.50
26,162.50

COMPLETE
PROGRAM

163,515.63

UNITS
130,812.50
209,300.00
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
235,462.50
2,694,737.50

UNITS
163,515.63

163,515.63

98,109.38

261,625.00

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

163,515.63

98,109.38

32,703.13

294,328.13

TOTAL

3,368,421.8
8

YEAR 5
1
2
3
4
5
6
7
8
9
10
11
12

196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5
196,218.7
5

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

196,218.75

UNITS
196,218.75

196,218.75

117,731.25

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

196,218.75

117,731.25

39,243.75

353,193.75

TOTAL

313,950.00

4,042,106.2
5

Appendix Demand Forecast Approach 2 (4 week package)

149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0
149,500.0
0

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

149,500.00

149,500.00

149,500.00

89,700.00

239,200.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00

149,500.00

89,700.00

29,900.00

269,100.00
3,079,700.0
0

TOTAL

YEAR 2
1
2
3
4
5
6
7
8
9
10

224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00

UNITS

1ST TIME
PURCHASE
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00

REPURCHASE
134,550.00
134,550.00
134,550.00
134,550.00
134,550.00
134,550.00
134,550.00
134,550.00
134,550.00

COMPLETE
PROGRAM

44,850.00
44,850.00
44,850.00
44,850.00
44,850.00
44,850.00
44,850.00
44,850.00

UNITS
224,250.00
358,800.00
403,650.00
403,650.00
403,650.00
403,650.00
403,650.00
403,650.00
403,650.00
403,650.00

11
12

224,250.00
224,250.00

224,250.00
134,550.00
224,250.00
134,550.00
TOTAL

44,850.00
44,850.00

403,650.00
403,650.00
4,619,550.00

YEAR 3
1
2
3
4
5
6
7
8
9
10
11
12

299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0
299,000.0
0

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

299,000.00

299,000.00

299,000.00

179,400.00

478,400.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00

299,000.00

179,400.00

59,800.00

538,200.00
6,159,400.0
0

TOTAL

YEAR 4
1
2
3
4
5
6
7
8
9
10
11
12

373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00

UNITS

1ST TIME
PURCHASE
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00
373,750.00

REPURCHASE
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00
224,250.00

COMPLETE
PROGRAM

74,750.00
74,750.00
74,750.00
74,750.00
74,750.00
74,750.00
74,750.00
74,750.00
74,750.00
74,750.00

UNITS
373,750.00
598,000.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00
672,750.00

TOTAL

7,699,250.00

YEAR 5
1
2
3
4
5
6
7
8
9
10
11
12

448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0
448,500.0
0

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

448,500.00

UNITS
448,500.00

448,500.00

269,100.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

448,500.00

269,100.00

89,700.00

807,300.00

TOTAL

717,600.00

9,239,100.0
0

Appendix Demand Forecast Approach 3 (4 week package)

107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00
107,500.00

YEAR 2
1
2
3
4
5
6
7
8
9
10
11
12

125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6
7
125,416.6

1ST TIME
REPURCHASE
PURCHASE
107,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
107,500.00
64,500.00
TOTAL

COMPLETE
PROGRAM

1ST TIME
PURCHASE

COMPLETE
PROGRAM

REPURCHAS
E

21,500.00
21,500.00
21,500.00
21,500.00
21,500.00
21,500.00
21,500.00
21,500.00
21,500.00
21,500.00

125,416.67

UNITS
107,500.00
172,000.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
193,500.00
2,214,500.00

UNITS
125,416.67

125,416.67

75,250.00

200,666.67

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

125,416.67

75,250.00

25,083.33

225,750.00

7
TOTAL

2,583,583.3
3

YEAR 3
1
2
3
4
5
6
7
8
9
10
11
12

143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33
143,333.33

YEAR 4
1
2
3
4
5
6
7
8
9
10
11
12

161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00
161,250.00

1ST TIME
REPURCHASE
PURCHASE
143,333.33
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
143,333.33
86,000.00
TOTAL

COMPLETE
PROGRAM

1ST TIME
REPURCHASE
PURCHASE
161,250.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
161,250.00
96,750.00
TOTAL

COMPLETE
PROGRAM

28,666.67
28,666.67
28,666.67
28,666.67
28,666.67
28,666.67
28,666.67
28,666.67
28,666.67
28,666.67

32,250.00
32,250.00
32,250.00
32,250.00
32,250.00
32,250.00
32,250.00
32,250.00
32,250.00
32,250.00

UNITS
143,333.33
229,333.33
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
258,000.00
2,952,666.67

UNITS
161,250.00
258,000.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
290,250.00
3,321,750.00

YEAR 5
1
2
3
4
5
6
7
8
9
10
11
12

179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7
179,166.6
7

1ST TIME
PURCHASE

REPURCHAS
E

COMPLETE
PROGRAM

179,166.67

UNITS
179,166.67

179,166.67

107,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

179,166.67

107,500.00

35,833.33

322,500.00

TOTAL

286,666.67

3,690,833.3
3