Competitive Advantage Of Keurig's Patents

There are multiple health concerns worldwide and more and more drugs are needed every day. Many drugs however, are extremely expensive to develop, test, and produce. According to the Tufts Center for the Study of Drug Development (2002), it costs up to $802 million to bring a new drug to the market. In 2002, pharmaceutical companies spent $34 billion in research and development (Center-Watch, 2003). In addition to the costs, the overall time from the discovery to approve and market the drug can take up to 15 years.

As competition in the single-cup brewing market continues to increase, the barrier to entry remains relatively low. This encourages competitors to enter the market. The competitors are aware that creating a lower-cost brewing machine that can brew coffee in the pod style (non-patented) would give them a competitive advantage over Keurig, whose products are considered quite expensive. Three main competitors include Nestle, Starbucks, Kraft and Mars. All three companies have greater financial, marketing and operating resources.

To compete in our global economy it is important for firms to innovate its product mix. In order for Keurig to stay ahead it must come up with new ideas that not only pleases its current customers but also entice new ones. Keurig would look at consumer trends and brainstorm ideas that fit within its corporate mission and objectives. By adding new products Keurig could increase its profits expanding its market share, or expand its brand equity.

The process from research to market usually first involves filing a patent, assisted by the tech transfer office. Once a patent has been acquired it can be licensed to larger companies with the resources to commercialize the product. Because of the Bayh Dole Act, universities can now earn revenue from patents filed by their researchers. This has incentivized universities to participate in tech transfer and constantly be on the lookout for likely successful applications of research. This is the reason all inventions must be disclosed to the university, so they can determine its possible revenue potential. This can be beneficial for multiple reasons. One, the inventor may not have the initial capitol or experience for filing a patent. The tech transfer office is comprised of professionals of IP, and the university covers the cost of filing the patent, which can cost over $25,000 and take years to obtain. Another advantage of tech transfer offices is they may recognize a role of this product in the market the inventor may not have originally foreseen. In this way the inventors (researchers) benefit from tech transfer but universities also benefit from possible revenue created when a product is successfully brought to market. For example, Northwestern University leads the nation in revenue from

In recent months many new single-serve coffee brewers have come to market in the United States. These new competitors are offering consumers many new choices and variations of a single-serve coffee brewers. In turn, this is stepping up pressure Keurig to keep up with its competitors and the markets demand. The three competitors that pose the biggest threat to Keurig are Bunn’s MyCafé unit, Starbucks’ Verismo unit, and the Esio beverage system which is backed by Wal-Mart.

The primary objective of any development program is to innovate.” -Bell. Having more competition helps increase the rate of growth and research of new technologies for commercial space flight. Even in a competitive environment, competitors can work together to increase the development of their industry as a whole. “Some prominent leaders in the development of the commercial spaceflight industry shun the patent system. Notably, Elon Musk, founder and CEO of SpaceX, boasts having "essentially no patents in SpaceX." “ -Bell. If a company were to patent their technologies, they would be inhibiting the development of additional improvements by other

On average, savings up to approximately $8 to $10 billion a year are noted at retail pharmacies. Generic drugs typically cost 80-85% less than their counterparts.These savings are increased when generics are used in hospitals as well. Often, when a new drug is first developed, it is protected by a patent of 20 years. When the patent expires, drug companies begin to market generic drugs which is more cost efficient as they do not have to develop a drug from scratch. The manufacturers spend most of their cost into testing to ensure that the generic drug has the same medical performance of the brand-name drug and is as safe and effective. They do not have to spend resources in performing clinical trials required for new drugs, and also spend less on marketing and

When the company has patent protection or a government market restriction such as orphan drug status, the company functions like a monopoly. Because no other company can manufacture the drug while these barriers are in place, they are the only supplier. They face a rather inelastic demand curve because sick people are likely to purchase the drug no matter the price. In the long run, after the patents and barriers to entry have expired, drug companies function like monopolistic competitors. Because the formula to manufacture the drug is no longer secret, other companies will produce generic versions of the drug. This means the supply will increase and the market will reach a more efficient, lower price of equilibrium. However, because the drug company will spend money on advertising to differentiate the drug from generic brands the company will act like monopolistic competitors not pure

When a new rival enters the market, large corporate entities such as Coke or Pepsi have to lower their prices. After time passes, even though they have made a loss, they are able to survive; however, the new firm typically isn’t and must leave the market. Brand loyalty also hurts new firms when they enter the market, as well as heavily enforced copyrights, registered trademarks, and legal protections by the government. These new firms are still able to enter the market because it would be illegal to keep them out; however, it takes a lot of effort in the

As indicated by Pharmaceutical Research and Manufacturers of America (PhRMA), the pharmaceutical exchange bunch, high costs are an impression of the innovative work costs it takes to put up a medication for sale to the public. PhRMA refers to that all things

With the expiration of Keurig’s patents coming to a near, it is crucial that Keurig be on the defensive end for a while and prepare themselves for any major market moves. In order to prepare themselves, Keurig must also have some tricks up their sleeve to keep their market share and diversification high because of the relatively low barriers to entry.

The first competitor is Keurig. It is an American coffee machine company that directly competes with Nespresso. It also produces premium coffee and coffee capsules; and is known for

Intellectual properties are a necessity in the world of entrepreneurs. Although more than 25 percent of small businesses do not want to expand, a new entrepreneur in the market would likely consider a patent to

Testing and development of new drugs can be a long, strenuous and costly project for a manufacturing company. In 2003 drug companies spent $2.4 million on bringing new drugs to the market. By 2005 that figured ballooned to $802 million. If you think that is crazy, now experimental drugs cost pharmaceutical companies $312 million just for the post approval process of the drug and a whopping $2.9 billion to place the new drug on the market. The whole process can take 8-12 years until completion.

To cut down the incentive of potential entrant to develop its own or better technology, incumbent firm may license its production technology. Therefore, potential entrant will have no motivation to engage in further R&D activity because the licensing contract leaves the potential entrant with its expected return from further research. With this, incumbent firm can secure a market share by selling the right to use its lower-cost technology. (Gallini, 1984)