Cases - Business

A duopoly is a situation in which two firms control nearly all of the market for a product or service.

Duopolies can be surprisingly competitive. If

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

you remember that the price of a product or service is determined solely by the highest losing bid price and the lowest losing ask price, you’ll reali

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

e why a duopoly can be so competitive. A large number of inefficient competitors will have almost no affect on prices in the long run unless someone (

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ither a government or a group of idiotic investors) is willing to continually finance unprofitable operations in an unprofitable industry (think airli

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

nes).

Of course, there is always the fear of a price fixing scheme in a duopoly. Generally, however, that fear is unfounded. Human nature suggests a

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

rice fixing scheme is far more likely to occur in an oligopoly than a duopoly. Humans weight the fear of loss far more heavily than the greed of gain

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

hen making calculations about the future. In a duopoly, mistrust increases the fear of loss inherent to any price fixing scheme (namely, the other guy

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

will stab you in the back). In an oligopoly, the diffusion of power and the lack of excess capacity at any one firm makes price fixing very attractiv

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

. Price fixing in an oligopoly is a much safer bet than price fixing in a duopoly.

There are, of course, other reasons why a duopoly is very unlikely

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

to result in a price fixing scheme. In addition to a healthy does of fear, there is an often unhealthy does of hate in duopolies. There is always just

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

one scapegoat in a duopoly. Hatred is a personal emotion; if spread over too many objects it tends to wane away. Finally, there’s the simple fact that

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

both competitors in a duopoly are likely really big, really agile, really cutthroat players. The process leading up to a duopoly tends to be a sort o

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

wolfing run, in which two pups are separated from the runts.

Having said all that, price fixing is possible in a duopoly. Some duopolies are not the

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

result of competition but of nationalization and privatization, although this is relatively rare since a nationalized monopoly won’t often result in a

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

lasting duopoly (it will either remain a monopoly once privatized or get crushed by new, private competitors).

Finally, a price fixing scheme always

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

makes more sense in a commodity business. After all, any product differentiation limits the degree to which general demand is applicable to specific c

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

mpetitors’ products. For example, Coke and Pepsi are highly differentiated products, at least when purchased in their specific packaging (physical dif

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ferences or similarities are immaterial here; it is only the buyer’s belief that matters). I drink Pepsi, and I can assure you (however irrational it

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

ounds) that no drop in the price of Coke would be sufficient to get me to stop buying Pepsi. There is almost no other tangible good about which I coul

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

say the same. So, clearly Coke and Pepsi are differentiated products, and there’s very little chance of an effective price fixing scheme between them

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Imagine that for the past year you have been negotiating a huge deal with an overseas firm. On the day the deal will be finalized, your company's big brass troops to the conference room. You are tickled pink that the deal will be completed using the teleconferencing service provider you just chose for the company. What's more, you saved a few bucks by picking a brand new start-up company!

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Cases - Why Are Duopolies So Competitive?

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