The problem becomes a serious issue with severe health implications when adequate and affordable substitutes are not available in the entire industry. Ozempic is an example of that.”
Additionally, some worry that as a drug becomes increasingly popular for off-label uses, it will be taken less seriously as a critical medication (vanity versus diabetes).
Influencers and celebrities online have been significant factors in driving demand for this drug.
According to Karaesmen Aydin, businesses can consider and respond to the marketing power of social platforms like TikTok in two ways: the benefit in the short run and the benefit in the long run.
The effect of influencers or social media platforms can be enormous in a short amount of time (e.g., if a video goes viral). The question is: is it worth it for a company to take this short-term opportunity?
Pharmaceutical companies can scale up production to match the supply with the demand if their supply chains are flexible; they can use their limited resources to produce more of one drug and less of the other.
Flexibility gives a company the ability to rapidly respond to market needs.”
“We have seen this with the COVID-19 vaccines. Not only did the drug companies develop new vaccines in record time, but they were also able to scale up production to produce millions of doses and distribute them fast— – although this did require a significant investment,” said Karaesmen Aydin.
In the case of a drug like Ozempic, a company has to figure out whether it can mobilize its resources or rely on third parties to increase production to catch up with the demand. A key question is: what happens if the demand goes down as fast as it went up?
Karaesmen Aydin notes an infamous supply chain phenomenon: the bullwhip effect. This happens when shifts in demand cause more considerable shifts in production with a lag, causing businesses to end up with zero inventory when they need it and surplus inventory when they don't. She notes that for pharmaceutical companies, a surplus would cause massive waste because products have short shelf lives; you cannot keep products in stock indefinitely to meet future demand.
As consumer trends become increasingly viral in nature, companies need to do two things to stay resilient and responsive: first, build a flexible supply chain; and second, build better analytical models to predict the short-and long-term demand shifts. “A company can be flexible, but poor demand forecasts will prevent the company from making the best use of their flexible resources,” said Karaesmen Aydin.
Telehealth companies have also benefited from the increased demand in this consumer cycle. Digital health companies make medications like Ozempic easier to obtain by providing prescriptions online…but, as Professor Karaesmen Aydin explains above, just because access to a prescription is more accessible, having the drug in hand is a separate journey.