Search results

The purpose of this paper is to compare the effectiveness of the Buy-and-Hold (BNH), Fee-for-Service (FFS), and Direct-to-pharmacy (DTP) agreements for the US pharmaceutical industry and its individual participants. There have been mixed responses to these agreements and the industry is currently under debate as to which contract would be best for the industry and its individual participants. The question is answered by comparing the agreements and settling the industry debate regarding the impact of these distribution agreements.

The model features multi-period production-inventory planning with time varying parameters in a decentralized setting. Under each distribution agreement, mathematical programming models are formulated to determine the profit maximizing production, inventory, and ordering decisions for the manufacturer and the wholesaler in a finite time horizon. The applicability of the model in the US pharmaceutical industry using real-world data is demonstrated.

It is shown that the DTP agreement always outperforms the BNH and FFS agreements. Furthermore, the DTP agreement is flexible because it allows the manufacturer and the wholesaler to split the additional profit in an arbitrary way. The findings reveal that the DTP agreement can improve total profit by about 0.08 - 1 percent (relative to FFS) and 5 percent (relative to BNH).

Considering the size of the pharmaceutical industry, efficient distribution agreements are imperative. Unfortunately, the existing literature provides insufficient guidance to help managers make this important decision. This knowledge gap is addressed in literature, and provides important insight for practitioners on what agreement is most beneficial for this industry.

This paper aims to investigate why brand-name drugs are priced higher than their generic equivalents in the US market. The authors hypothesize that some consumers have a preference for brand names, which outweighs the cost savings realized by switching to generics. Consumers may prefer a brand drug because the brand may have a higher perceived quality due to advertising and other promotional activities. Additionally, individuals are habitual in their consumption of prescription drugs, which leads to continued use of the brand in the face of generic competition.

The authors develop a structural demand model and proceed to estimate it using wholesale price and demand data from the years 2000 through 2004.

The results of our analysis reveal that customers have a strong preference for brand drugs. In addition, consumers exhibit high switching costs for prescription drugs.

Considering the price and quantity of prescriptions filled each day, determining why brand drugs do not lower their prices to compete with their generic equivalents is an important question. Unfortunately, the existing literature only acknowledges this counter-intuitive business practice, but does not mathematically explain it. The authors address this knowledge gap in literature and provide important insight for all players in this industry including consumers, pharmaceutical manufacturers and health insurance companies.

The purpose of this paper is to build upon the conceptual model developed by Feldman et al. (1997) that demonstrated a link between improved environmental performance and increased market value for publicly traded corporations. ISO 14000 standards, not yet established at the time of their study, provide the framework for a strategic approach to environmental management with an emphasis on continuous quality improvement. Consequently, ISO 14000 certification is used as the basis for creating an investment portfolio of publicly traded companies. While previous research has examined short-term stock market reactions to ISO 14000 certification, this study evaluates the longer term impact on shareholder value by comparing the ISO portfolio’s performance against other funds. It adds to the existing literature on the “pay to be green” question.

The successful attainment of ISO 14000 certification is used as the basis for developing a portfolio that is followed over time in order to examine its value to shareholders. The portfolio consists of companies certified between 1996 and 2006, each added to the portfolio the month after its announced ISO 14000 certification date. The study covers the period from October 1996 through April 2011. Average monthly returns and standard deviations for a buy-and-hold strategy over various rolling periods (three, five, seven and ten year) are used to compare the ISO 14000 portfolio against the S&P 500 Index. In addition, the growth of an initial investment of $100,000 is tracked to compare the ISO 14000 portfolio against the S&P 500 Index and three other funds that are socially responsible and/or green (Domini Social Equity Fund (DSEFX), Winslow Green Growth Investment, and iShares KLD 400 Social Index).

The ISO 14000 portfolio outperformed the S&P 500 Index as well as selected socially responsible and/or green funds in the growth of an initial investment over time. It also consistently provided higher average monthly returns (along with higher standard deviations) than the S&P 500 Index when using a buy-and-hold investment strategy over all rolling periods considered. Moreover, monthly returns for the ISO 14000 portfolio were found to be significantly higher, at the 0.05 level, than for those of the S&P 500 Index and the DSEFX.

Companies that attained ISO 14000 certification after 2006 were not included in the portfolio due to the inability to obtain a complete listing after that time. Furthermore, causality cannot be established by analyzing fund performance. Nonetheless, ISO 14000 certification as the basis for creating an investment portfolio appears to be a strategy that pays off in the long term.

This paper fills a gap in the literature by examining longer term market reactions to ISO 14000 certification. The methodology employed has not been used in this context, although it has been used to examine the impact of ISO 9000 certification on stock prices. The findings support the argument that improved environmental performance is valued by the market and may provide long-term value for shareholders.

The task of the financial manager of a library is a formidable one. Wacht defines a financial manager as a person who manages the resources of an economic entity for the purposes of influencing the future outcome of its operations. The financial manager plays the major role in planning and measuring the organization's needs for funds, raising the necessary funds, and making certain that the funds acquired are properly employed. A financial manager must also estimate the future cash flow associated with individual projects, in addition to the funds necessary for the total operation of a library. Other duties include the evaluation of prospective new investments and programs on the organization's operations.