In contrast with the research findings of Scherer at al., it is that in the pharmaceutical company large number of the diversified portfolio might not return huge profits. The strategy of the Rumack pharmaceuticals was that they expanded their product range to sustain and then capitalize upon the market share, which the product variants would secure for the company. In case of the pharmaceutical industry the rate of growth often demanded by the market to be sustainable for the company, usually would coerce the pharmaceuticals to engage in the low risk activities which was the same as in the case of Rumack.
Usually in the case of the pharmaceutical companies producing and marketing a wider range of drugs would reduce…show more content…
We may classify the product to perform a greater degree of the functional component. Hence, it can be understood that the market mediation costs of such pharmaceutical products will be very less because of the fact that we could ascertain the demand level of the commodity. Hence, the average margin of error in forecast when the time of production is committed is usually around 10% and the average stock out rate for such functional products could be around 1 to 2% respectively. The production facility at the Bakersfield was forced to cater to the rising demand level. Hence, a number of the product variants had to be produced. The manufacturing process is developed into a complex process with the production of each commodity and a dedicated process line for packaging of each commodity was developed.
Even though the increased activity in the Bakersfield plant did not cause any problems in the manufacturing process, there were problems beginning to arise from the packaging function of the plant.
Due to the rise in the demand and the company’s decision to diversify the portfolio the company did used the left over floor space by assembling additionally two more packaging lines in the same unit, but there was an inherent problem. The capacity of the additional two lines was very much underutilized i.e. the additional lines had to wait until the process was