Genvet Pharmaceuticals, Inc.

569 Words3 Pages
GENVET PHARMACEUTICALS, INC. Product Genvet Pharmaceuticals, Inc. sells many products in the veterinary pharmaceutical market, both for the cure and prevention of disease (e.g., antibiotics) and to increase productivity in the raising of farm animals (e.g., hormones, mineral supplements). Genvet’s new product, Tymacin, is a growth hormone for cattle and hogs. The hormone increases productivity in two ways: 1. by reducing the amount of time that an animal must be kept in a feedlot before reaching its optimal weight for slaughter, and 2. by increasing the “feed efficiency,” the amount of weight gained for every pound of feed that an animal eats. Cost The cost of developing and testing Tymacin was approximately $32 million. The incremental cost of producing and marketing it is $7.00 per pound. Customers Both hog farmers and cattle ranchers could use Tymacin. Both currently purchase competitive growth hormones and other veterinary pharmaceuticals through independent distributors of agricultural supplies. In most cases, the same distributors carry products for both of these markets. Value in the Hog Market The value of Tymacin to hog farmers can be calculated easily. The cost of competing growth hormone is $11.00 per pound. Optimal growth is achieved with six pounds of the competitive hormone per ton of feed. Since Tymacin is more concentrated, each ton of feed would require only three pounds of Tymacin for equal effectiveness. The corresponding reference value of Tymacin is, therefore, $22.00/lb. Since Tymacin is no more effective than competing products designed to make hogs grow faster and bigger, it has no differentiation value. Value in the Cattle Market Tymacin is worth more when fed to cattle for two reasons. 1. It is more costly to add weight to cattle than to hogs because the cattle eat more expensive feed. 2. The amount of Tymacin added
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