Our product and yours too

My relative had a skin disorder during the time when I visited her amidst my annual leave. I accompanied her on her visit to the dermatologist who advised her to use a specific skin cream. Owing to the curious nature I had, I started scanning the carton and the paperback for all kinds of information on the cream. My curiosity hit a bull’s eye when I saw the label reading, “manufactured by ABC laboratories and marketed by XYZ pharmaceuticals”.

Why cannot the manufacturing company market the product or why cannot the marketing pharmaceutical take care of the entire product lifecycle? I got the answer soon. It depends on the corporate construction, technology transfer and business strategy of both the companies.

Our product and yours too

A manufacturing company will have preset financial targets and goals for each financial year. Careful on-ground and high management workforces are utilized throughout the process. The company manufacturing the product will have a proprietary technology and facilities for developing and producing the finished item or intermediate products in bulk. There may be one or more patents and trademarks involved in the entire process. However, the company may not be active in the marketing field in all the target zones. Therefore, the company either transfers the patented technology or the finished product to another company which is active in the targeted market.

For the marketing company, it will have a satisfying share of the revenue generated by the product sale or the entire revenue from the item it markets or the product it manufactures using the patented technology brought under contract from the parent company. There are many big companies surviving solely on the basis of contact manufacturing based on in-house technology or acquired platforms. If Trader VC is an independent software platform for market trading, it can transfer the background design to another firm in a contract with satisfactory benefits for both sides.

The documentation in this exchange will have prerequisite conditions of dividing the share of revenues, profits, duration of the deal, terms, and consequences of contract breach and infringement suits. With respect to the information that caught my attention, the parent company had all the capital and resources to produce the item in the form of bulk processed raw material but was not a pharmaceutical company with active trademark products in the live market. The finished product was just outsourced and it reached the customer in the most attractive form.