Therachem Case Essay Example for Free

Therachem Case EssayTherachem is a pharmaceutical fellowship created in 1950, and has a portfolio of 7 different professionalducts Performance The company has a signi? cant revenue out offshoot of 68% over the last 3 years, driven mostly by Arthroquell gross salesmen team the gross revenue repps job is to visit physicians and encourage them to prescribe Therachem drugs for their patients For the past 3 years Therachem has been growing its sales rend by about 40 representatives per year and has expected this year to step-up the number of reps from 433 to 473. Therachem is question if it has to maintain its 40-rep hiring per year rhythm or invest in human capital A advisor report is suggesting Therachem to append its sales force by 322 rep over the next 3 years, besides is it opportune to do such a signi? cant increase or is it too unrealistic? background executive summary Smythe framework Consultant mold Alternatives Recommanda tions/Limits Goals Find the optimum result for Therachem, taking into discover strategic dimensions on the hiring rythm Methodology Optimize number of reps and the assignation of reps between mathematical yields Resource Allocation compend of the zero growth model, the Smythe model and the consultant model Creation of alternative models Assessement Smythe model is not optimal The consultant recommandation may be optimal it shows some risks in terms of hiring a lot of freshly rep There is an alternative with an optimal net ploughshare per stark naked rep analysed to the zero growth model Recommandations Do not increase more than 40 person hiring per year Do a more optimal allocation of human resource through the products scopeExecutive summary Smythe model Consultant model Alternatives Recommanda tions/Limits Zero growth model Arthroquell Proxinil 144,0 $109,5 53% $51,5 $27,2 $30,8 Renora 135 150 77,0 $175,2 59% $71,8 $14,6 $88,8 Dermet Topisal 57,0 $157,8 59% $64,7 $10,8 $82,3 Mistalon 57,0 $33,6 5 3% $15,8 $10,8 $7,0 $448,2 $81,8 $6,0 $380,3 $583,3 quantity 433,0 $1119,3 98,0 $643,2 62% $244,4 $18,5 sales Representatives Planned Revenue Unit security deposit salute of Goods sell Direct merchandisingmonetary value verifying Selling appeal Net theatrical role strategic option number one Smythe model Arthroquell Proxinil 184,0 $124,7 53% 58,6 $34,8 $31,3 125,0 $734,4 62% $279,1 $23,6 $431,7 Renora 135 150 98,0 $191,4 59% $78,5 $18,5 $94,4 Dermet Topisal 73,0 $167,2 59% $68,6 $13,8 $84,9 Mistalon 73,0 $40,1 53% $18,8 $13,8 $7,4 Total 553,0 $1 257,7 $503,5 $104,5 $6,0 $643,7 Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost mediate Selling Cost Net Contribution An increase of great hundred sassy reps (an increase of 40 per year) = a gain of net contribution of $60,4m The Smythe model focuses its sales force mainly on Arthroquell and Proxinil with respectively 23% and 34% of the sales force.Context Executive summary Smythe model Consultant model Alternatives Recommanda tions/Limits Strategic option number two Consultants model, the most pro? table Arthroquell Proxinil 167,1 $119,4 53% $56,1 $31,6 $31,7 Renora 135 150 great hundred,7 $201,2 59% $82,5 $22,8 $95,9 Dermet Topisal 86,1 $172,3 59% $70,6 $16,3 $85,4 Mistalon 70,7 $39,3 53% $18,5 $13,4 $7,5 Total 755,5 $1465,3 $582,3 $142,8 $6,0 $734,2 Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 350 300 250 Effort 310,8 $933,2 62% $354,6 58,7 $519,8 An increase of 322 crude reps (an increase of approx 100 per year) = a gain of net contribution of $151m Base vs. Recommended Scenario However the model doenst incur into circumstance the time you need to train the new sales reps as well as the frugal climate parameters. 200 150 100 50 0 Arthroquell Proxinil Renora 135 150 Base scenario Recommended scenario An increase as signi? cant as this one is risky (in terms of redundanc y costs as well) which makes the forethought decisions dif? cult and slow. Segments Dermet Topisal Mistalon Context Executive summarySmythe model Consultant model Alternatives Recommanda tions/Limits How to combine the rythm of hiring from the Smythe model with the optimal allocation of sales force from the consultants model? Resource allocation with a limit of an increase of 120 new sales rep Arthroquell Proxinil Renora 135 Dermet 150 Topisal 99 $192,0 59% $78,7 $18,7 $94,6 Mistalon 0 $5,0 53% $2,4 $0,0 $2,7 Total 553,0 $1374,3 $542,5 $104,5 $6,0 $721,3 Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 258 $912,0 62% $346,5 48,8 $516,7 130 $101,7 53% $47,8 $24,6 $29,3 66 $163,6 59% $67,1 $12,5 $84,1An increase of 120 new reps (an increase of 40 per year) = a gain of net contribution of $138m However the new product Mistalon has an allocation of 0 sales rep, which is completely uncoherent with Terac hem strategy to launch this new product We need to ? nd a resource allocation that is optimal while taking into consideration a reasonnable increase in sales rep (40 per year) AND a minimum allocation for the launch of the new product Mistalon. Context Executive summary Smythe model Consultant modelAlternatives Recommanda tions/Limits How to ? nd an optimal ressource allocation that also puts introductory Mistalon? (1/2) Resource allocation with a constraint of 30 sales rep for Mistalon Arthroquell Proxinil 120,7 $95,6 53% $44,9 $22,8 $27,9 Proxinil 130 $101,7 53% $47,8 $24,6 $29,3 Renora 135 150 93,0 $160,5 59% $77,2 $17,6 $93,6 Renora 135 150 99 $192,0 59% $78,7 $18,7 $94,6 Dermet Topisal 60,9 $160,5 59% $65,8 $11,5 $83,2 Dermet Topisal 66 $163,6 59% $67,1 $12,5 $84,1 Mistalon 30,0 $5,0 53% $8,4 $5,7 $3,8 Mistalon 0 $5,0 53% $2,4 $0,0 $2,7 Total 553,0 $1368,9 $540,9 104,5 $6,0 $717,5 Total 553,0 $1374,3 $542,5 $104,5 $6,0 $721,3 Sales Representatives Planned Revenue Unit Ma rgin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 248,3 $906,6 62% $344,5 $46,9 $515,2 Arthroquell A decrease of $4m compared to the most optimal solution with 553 sales rep but the new product Mistalon is launched. Terachem can capitalize on the future of this product Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 258 $912,0 62% $346,5 $48,8 $516,7 However lets screen and come closer to the sign idea of Smythe, who decided to allocate 73 sales representatives to Mistalon, a product which has a potential of future growth. Necessity to analyse the impact of allocating more than 30 sales representatives to Mistalon. Context Executive summary Smythe model Consultant model Alternatives Recommanda tions/Limits How to ? nd an optimal ressource allocation that also puts forward Mistalon? (2/2) Resource allocation with a constraint of 57 sales rep for Mistalon (todays ? gure ) Arthroquell Proxinil 184,0 $124,7 53% $58,6 $34,8 $31,3Proxinil 112,2 $89,3 53% $42,0 $21,2 $26,1 Renora 135 150 98,0 $191,4 59% $78,5 $18,5 $94,4 Renora 135 150 88,4 $185,2 59% $75,9 $16,7 $92,5 Dermet Topisal 73,0 $167,2 59% $68,6 $13,8 $84,9 Dermet Topisal 56,7 $157,6 59% $64,6 $10,7 $82,3 Mistalon 73,0 $40,1 53% $18,8 $13,8 $7,4 Mistalon 57 $33,6 53% $15,8 $10,8 $7,0 Total 553,0 $1 257,7 $503,5 $104,5 $6,0 $643,7 Total 553,0 $1366,3 $540,6 $104,5 $6,0 $715,3 Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 125,0 $734,4 62% $279,1 $23,6 $431,7 ArthroquellSmythes initial plan Sales Representatives Planned Revenue Unit Margin Cost of Goods Sold Direct Selling Cost Indirect Selling Cost Net Contribution 238,6 $900,6 62% $342,2 $45,1 $513,3 Optimization with 553 sales reps while maintaining todays sales reps allocated to Mistalon This solution allows to respect Smythes initial decision but at the s ame time maximise the pro? t $715,3m (last alternative) $643,7m (Smythe) = $71,6mContext Executive summary Smythe model Consultant model Alternatives Recommanda tions/Limits The last alternative Total Net Margins 800,00 700,00 600,00 500,00 400,00 300,00 200,00 100,00 0,00 0 138,252165 276,50433 414,756495 553,0086601 691,2608251 829,5129901 276,99 540,15 648,15 686,68 717,55 732,80 732,64 The maximal net margin seems to stabilize around $730m. The last solution allows Terachem to reach $715m total net margin. If we compare it to the consultants model the difference in net margin is -2,33%, however there is -62% new reps hired