Demand and Supply Disequilibrium of Gilead’s Sovaldi
This case flyer is suitable for teaching the concepts of demand & supply and the ‘elusive’ equilibrium between them. The case flyer helps understand these concepts taking the interesting example of Sovaldi drug whose demand and supply curves have unique characteristics and there exists supplier-led disequilibrium between the two. It is debatable if the disequilibrium is a ‘planned disequilibrium’ by Gilead, producer of Sovaldi. In trying to understand the demand and supply dynamics of Sovaldi and its price differentials in the US and India, the case flyer also enables a discussion on the structure and operation of healthcare and pharmaceutical industries.
Prerequisite Conceptual Understanding and Before the Case Flyer Discussion
- • Paul A. Samuelson and William D. Nordhaus, “Basic Elements of Supply and Demand”, Economics, 19th Edition, McGraw Hill Education (India) Private Limited, 2010 – To understand the concepts of demand and supply and the equilibrium thereof
- • Aditya Kalra and Zeba Siddiqui, “Gilead licenses hepatitis C drug to Cipla, Ranbaxy, five others”, http://in.reuters.com/article/2014/09/15/gilead-sciences-india-idINKBN0HA0TI20140915,
- September 15th 2014 (accessed date: July 15th 2015) – To understand the dynamics behind sale of Sovaldi drug in India
Case Positioning and Setting
This Case Flyer can be used for:
- • MBA Program in Managerial Economics course to teach the concepts of demand & supply and the equilibrium thereof
- • MDP in Healthcare Economics course to teach the dynamics of pharmaceutical industry
The students/participants should also be encouraged to watch the following movies to get sensitized to the dynamics of healthcare and pharmaceutical industry, especially in the US:
- • John Q, Directed by Nick Cassavetes, Produced by New Line Cinema, Burg/Koules Productions and Evolution Entertainment, 2002 – The movie highlights the travails of a patient’s father fighting for the provision of healthcare for his son
- • Sicko, Directed by Michael Moore, Dog Eat Dog Films and The Weinstein Company, 2007 – The movie compares US healthcare industry with other countries
- • Beyond Borders, Directed by Martin Campbell, Mandalay Pictures, et al., 2003 – The movie showcases some of the ethical problems faced by healthcare professionals in making available healthcare facilities to the impoverished in underdeveloped/poor countries
Preamble to this Case Flyer Analysis
This case flyer is an attempt to introduce the participants/students to the operation of law of demand and law of supply at multiple price points. Presented through the price differentials of Sovaldi drug, this case flyer also presupposes a basic understanding of healthcare industry in general and pharmaceutical industry in particular, out of which the relevant economics of the industry can be analyzed. Accordingly, this case flyer was orchestrated in the classroom......