There are only two products I have found that Immuron sells, Protectyn and Travelan. Immuron sells both these products on their website and are advertised at the same price of $26.36 each. I can only assume that the cost to produce each product is similar. Using Immuron’s financial statements, I calculated averages for the cost of products along with an average profit amount. As this assessment requires us to identify three products or services, I have added research to the list and made relevant assumptions. While studying Immuron in assessment one I learnt that they are engaging in research to help find a cure for Covid-19.
Protectyn and Travelan –
Selling Price - $26.36 Average Variable Cost Per Unit - $6.73 Average Profit Per Unit - $19.63
Research –
Selling Price - $250/hr Average Variable Cost - $150/hr Average Profit - $100/hr
Protectyn and Travelan are both similar products, one is available over the counter while the other is available by script through your doctor. When calculating the contribution margins, I made an assumption based on the fact that Immuron sells both products for the same price. I believe that both products would have very similar variable costs, therefore I calculated an average variable cost over the four years for the products.
When choosing the selling price and variable costs for research, I have taken into account the cost of wages and use of products and equipment. I believe for a pharmaceutical company charging approximately $250 per hour seems to be a fair charge, along with a variable cost of $150 per hour of research.
Pharmaceutical companies need many resources when creating or developing products. Generally, there are a vast amount of ingredients used to create one set of medications so access to these resources can be seen as a constraint to the business. If one or more product becomes either scarce or is no longer available to acquire, this will set a business back to square one. Immuron would need to either change their formula, or completely drop the product from their sales line. Typically, if a resource becomes scarce the price of that product will increase. Immuron would have to re-evaluate what to sell their products for as the contribution margin would have changed.
Scientists are at the core of research, if a company does not have enough scientists or scientists trained in the relevant field this will appear as a constraint. Technology is always changing, in order for a company to deliver the best results they need to introduce the newest computers and machines to aid the scientists. If there is a shortage or the cost is too high for the company to upgrade, this too is a constraint to the company. Wages of scientists, costs of products/ingredients used for research and development and upgrades of technology all will affect the contribution margin. Research likely would be very variable in its costs so Immuron would regularly need to re-evaluate costings to avoid a loss to the business.
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