Main Subject - Internet and Businesses Online

Pay per click (PPC) advertising has revolutionized advertising on the Internet. This allows for very targeted advertis

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

ing to Internet users who are searching for the particular item that is being advertised. Google Adwords and Yahoo Sea

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

Examples of combination products may in

rch Marketing are the two major PPC programs on the Internet today. Microsoft AdCenter is a recent newcomer to PPC pr

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

ograms.

It is easy to set up an advertising campaign under these programs, but one must be cautious and make good bus

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

ness decisions about the campaign. The intent is to make money rather than pay Google, Yahoo, or AdCenter more than yo

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

Combination pro

u make.

When evaluating the potential profit from a PPC program, you will only be charged for the times that the user

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

clicks your ad. However, there is another variable that you must consider which is called conversion rate (CR). This

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

s the number of users who click the ad divided into the number of users who actually buy the product. A rough rule of

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

thumb for CR is five (5) percent.

You need to project the economics of the campaign before you launch it. If you have

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

a low cost per click (CPC) and the commission from your affiliate company is high, you can afford a campaign with a l

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

w conversion rate. On the contrary, if the commission per transaction from the affiliate company is low, and the CPC i

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

Following aspects would a

s high, you need a conversion rate that is high.

It is a matter of simple math to project the results of a sales camp

dd to the challenges in developing combination products:

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

aign.

Profit per click = ($ per sale X Conversion rate) - (Average cost per click)

Let’s plug in some numbers

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

and see how this works. Assume that the selling commission is $5.00, the conversion rate is 5%, and the average cost p

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

r click is $.10. Multiply the selling commission ($5.00) by the CR of 5% to get $.25. Subtract the cost per click (CPC

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

) of $.10 from $.25 and you get a profit of $.15. This does not seem like a lot of money, but the Internet is viewed 2

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

Professional from academic institutions, pharmaceutical industries, health care indust

4/7 so if you have 1000 clicks per month and convert 5% of them, you will make $150 for setting up the campaign and th

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

n monitoring it occasionally. If you set up several of these campaigns for different key words, you can make a nice su

.

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

pplemental income.

In summary, always do your homework and make solid assumptions about your campaign. Do the math so

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

Companies that provide selfless information through particip

you are not surprised by a campaign that costs you money rather than making you money.

Copyright 2006 John Howe, Inc

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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Main Subject - Economics of Pay Per Click Advertising

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