Question

Eli Lilly & Company manufactures a broad line of pharmaceuticals with strong brand positions in the marketplace. Lilly is also a manufacturer of generic drug products. Is this combination branding strategy a logical one? Explain why or why not and support your thoughts.

Answer 1

Eli Lily & Company using the combination branding strategy is a logical one for various reasons such as -

• In the last few years,the demand for generic drugs has been pretty high and it is increasing every year.
• Generic drugs proves to be highly profitable while using up excess capacity

Eli Lilly has entered the market which would proved to be very profitable becasue if it hadn't then, the existing firms already operating in the market would be enjoying high profits without having much competition and Eli would have missed out on profitable market for drugs as well as a big market.

Generic drugs usually do very well and people also buy these products in many areas.Also,the generic drugs usually have the same ingredients so, different brands can compete on the basis of price and cost of the product as,a generic product of one brand is as good as another brand in terms of quality.

Eli Lilly can have good sales reports and profits in the generic product line without it affecting it's broad line of pharmaceuticals for a long period with maintaining a strong supply and distribution line.It would be a logical strategy to pursue as long as it can maintain a balance between them and not incurr loss or damage the sale of it's pharmaceuticals brand.