Theta Pharmaceuticals

Case written by Shivram Apte as part of instruction material developed for teaching at Business Schools. Theta
Pharmaceuticals is not a real company any resemblance to a real corporation is co-incidental. Case facts are for
discussion only and are not intended to be a demonstrator of correct or incorrect handling of management situations.

Theta Pharmaceuticals (Theta) is a manufacturer of a wide range of pharmaceutical products

based in India. Their product range includes primarily generic Metformin and SulphonylUreas
(SUs) in the Diabetes therapy area and Beta Blockers and Calcium Blockers in the Cardio-
vascular therapy area. After having grown rapidly in India over the last decade, Theta is now
considering exploring export opportunities. In keeping with this objective, they have identified
Albania in Eastern Europe as a possible target country for launch of their Beta Blocker drug.

As a new management trainee at Theta, you have been tasked with evaluating the feasibility of
this launch. You have done some marketing research and you believe that the Market size for
Beta Blockers in Albania is likely to be normally distributed with a mean of 60,000 patients and a
standard deviation of 6000. You are expecting to garner a market share of between 20% and
30% (uniformly distributed) if you can launch the product at an annual patient cost of no more
than USD 4*. Your estimate of total delivered cost (manufacturing + transportation + marketing +
distribution costs) for the product is about 27 paise per tablet. A typical patient is prescribed a
dose of 1 tablet per day. Beta Blockers are chronic care products meaning that once a patient
has been prescribed the drug, s/he has to take it for the remainder of his or her life.

Before you can launch the drug in Albania, your company will need to obtain Food and Drug
Administration permissions. Generally, this entails a processing fee of USD 10,000 per drug.
However, this processing fee is likely to change after the upcoming elections in the next few
months. If your company submits an application within the next month, you assess there is a 50-
50% chance that your application will be processed before the fee increases. The new processing
fee is likely to be raised by either USD 20,000 or USD 40,000 over the current fee of USD 10,000.
You believe there is a 60% chance that it will increase by USD 20,000 and a 40% chance that it
will increase by USD 40,000.

Your Vice President has requested you to recommend whether you should launch the Beta
Blocker in Albania. You need to now assess the potential profitability of the project.

Remember that strategic decisions are about trade-offs and as much about choosing what not to
do as they are about choosing what to do.

Not entering a market is a perfectly valid strategic alternative.

* Consider an exchange rate of 1 USD = 66 INR