- 15 Marks
PM – Nov 2018 – L2 – Q6a – Risk Management
Analyze threats due to patent expiration and recommend strategies to maintain profitability for DDD Ltd.
Question
DDD Limited is a relatively small, specialist manufacturer of chemicals used in the pharmaceutical industry. It does not manufacture pharmaceutical products itself but modifies raw materials sourced from large chemical companies using patented processes before selling them to pharmaceutical companies. Several patents are due to expire in the next three years.
The following are some key points regarding the company:
- DDD’s customers are large pharmaceutical companies under pressure from governments to reduce drug prices.
- DDD has experienced high profit margins due to the protection provided by its patents.
- The expiration of these patents poses a threat to DDD’s business, with customers pressuring for lower prices.
Required:
a. Advise the Board of Directors on the possible threats related to the expiration of patents.
(7 Marks)
b. Appraise suitable courses of action DDD might take to maintain its profits in light of the threats identified in part (a).
(8 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Competitive Strategy, Patent Expiry, Profit Maintenance, Threats
- Level: Level 2
- Topic: Risk Management
- Series: NOV 2018
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