Small Business Advice
EpiPen demonstrates what is wrong with big business
"Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction."
~ Erich Fromm
Most of my columns over the last 16 years have been about helping small businesses. After working with small businesses for more than 25 years, I know that every owner tries to do what is best without taking advantage of the customer.
With most small businesses, the owners are very close to their customers so they can quickly see the impact of any decision, whether it is raising prices or changing customer service practices. The point is that small businesses really do care about their customers and will not do anything to hurt that relationship or take advantage of the customer.
The same thing cannot be said of big businesses, however, which was recently demonstrated by Mylan, Inc. Mylan is the owner of EpiPen, which is an automatic epinephrine injector device for potentially deadly allergic reactions. In the event a person suffers one of these, the EpiPen is a life saver.
I have two EpiPens, and I keep them close by. I would have paid almost any price to have one because it could safe my life someday.
There is no question that Mylan provides an invaluable service. However, they have 90% of the market without a viable competitor insight. They dominate the market, so they can charge as much as they want to, and they have done just that.
When Mylan bought EpiPen in 2007, the price was around $50 apiece. Currently it is $608 for a two pack. That is an increase of approximately 500 percent in fewer than 10 years. The CEO Heather Bresch’s salary went into orbit as well -- from $2.4 million in 2007 to $19 million in 2015.
The amount that customers are suffering has gone completely unnoticed by Mylan. The only times they address it is when complaints get so loud that they are forced to do something or some government agency is breathing down their neck.
Now, I will say the government is a tad at fault here too because of how slowly they bring new drugs and equipment into the marketplace. The Center for Drug Evaluation and Research at the FDA admitted there are now 2,300 products waiting to be reviewed.
What Mylan’s actions have demonstrated so clearly is that greedy big businesses care little for the customers who so critically need their products. They will take advantage of the system and regulations to maximize their profit with no concern for the people they serve.
Small businesses are proud of their communities and customers. This is something big businesses have lost.
So what does the Mylan example tell us about small business? It is a very clear picture of what not to do when setting prices for your products. Pricing should be fair to both your company and your customers.
You can do this -- not what Mylan has done!
Dr. Osteryoung has directly has assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is a bestseller on Amazon.com. He can be reached by e-mail at email@example.com.