“Glaxo Italia S.p.A.: The Zinnat Marketing Decision”

Essay by lolokayUniversity, Bachelor'sB+, November 2011

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Glaxo Italia Case

1. What are the relative advantages and disadvantages of co-marketing arrangements versus

direct sales? Why is Glaxo considering co-marketing for its new Zinnat antibiotic?

2. Evaluate Glaxo Italia's criteria for evaluating decisions about sales strategies (i.e., payback

and internal rate of return). What are the strengths and weaknesses of these criteria as

opposed to net resent value? On which criteria would you base your recommendation?

3. Evaluate the forecast. Are all relevant cash flows present? Are the assumptions reasonable?

Should the cost of new sales recruits be included in the forecast?

4. If, in response to the question above, you believe the analysis should be modified, do so and

prepare to discuss the results you obtain. What assumptions are the "key drivers" of your


5. Which marketing strategy should Rottoli recommend?

Description of the Problem

In September 1990, Emilio Rottoli, financial controller of London's Glaxo Italia S.p.


began to evaluate strategies for launching a new product called Zinnat, an oral antibiotic

remedy to current drugs for flu-like feverish diseases. With the existence of an already

massive market, Glaxo's general approach of rapid and massive distribution to capture a

large market share found itself infeasible if the company wanted this product to remain

profitable. As a result, Glaxo is considering two options; the opportunity to either directly

sell the product or to co-market the product. Under the co-marketing distribution method

another company would be given ingredients and rights to produce the same product

under a different brand name in an attempt to increase product marketing. Under the

direct sales approach Glaxo's sales force would be the only medium of distribution.

Decision as to which form of sales methods the company would choose would highly

affect the company's financial criteria, strength of brand equity, or lack...