We all use pharmaceutical products daily in our lives. We have a misconception about pharmaceutical products and mostly medical drugs and equipment come to our mind whenever we think about pharma. We use pharma items such as soaps, face wash, perfumeries etc. daily. As these are required by all classes, they there is a vast market for this industry. Pharma companies not only are planning to bring more products in the market but they are also planning to give pharma franchise monopoly to reach to the remotest areas so that they can make more profits.
A franchise is a company who agree to sell the products of a particular or different company on behalf of the actual manufacturer. These franchises are exclusively entered in a contract with the main company and sell or act as a stockist for them. Their main aim is to open an outlet in a particular area or a specific state where only they can promote or sell the franchised items.
The main reason behind becoming a franchise is to make money without even creating or manufacturing anything. You don’t need to install the plant and machinery to manufacture a certain item or to buy or rent a premise as a factory. A franchisee can run its business even from home and can supply products directly to the shopping malls, grocery shops in a local market etc.
Monopoly Means Money
Monopoly in business means only one. When there is only one it means money.Many companies prefer giving franchise to a single company for particular area, state or country. This helps in concentration on a single business entity and avoids confusions due to many franchisees involved for a same product. If there is only one franchisee then it shall be accountable for any profit or loss to the main company as apart from that particular franchisee the main company haven’t given franchise to any other company. If any franchisee succeeds in getting a monopolist franchise of products then it can really be very profitable. As they can strategize all the marketing promotions, pricing supply with the main firm without being interrupted by other franchisee.
The English proverb “too many cooks spoil the broth”appropriately describes this situation. Sometimes it is best for a company and a product to allow only a single franchise just to be more focussed and efficient. The best part of being a monopolist franchisee is that you can decide for pricing with permission from the main companyand they really make good fortunes.
With great opportunity comes greater responsibility. Reputation is high on stakes in these cases as if something goes wrong you shall be held responsible. In case of monopolist franchisee, you shall be held accountable if the product isn’t accepted in the market or some flaw is observed in its selling pattern. In such cases the main company can forfeit from all agreements and can give other company franchise.
Additionally, as a franchise who has monopoly in the pharmaceutical market, you also need to consider the seasons where a certain medicine might be high in demand; for example, changing season brings cold and flu and demand for a certain medicine might be high. This consideration will take you a long way in establishing your monopoly.