When launching a new product, companies are often met with a series of challenges. Any error or miscalculation could end up costing your company a significant amount of market share. One of the biggest hurdles to overcome is pricing. Finding a price that is both competitive in the global market, as well as profitable, can be more difficult than companies realize. The key is having access to accurate and current prices of the competition, while at the same time being able to set and maintain effective prices with minimal manual upkeep. Another concern with global lifecycle price management is price erosion with products that have been on the market for a longer period of time.
For example, according to a study by the EPP (European Pricing Platform), 42% of organizations are operating on the most basic level pricing maturity. Approximately 48% are functioning on a higher level, having the right prices on the right products to the right people, but still aren’t fully integrating the commercial process of alignment with marketing and sales. While this second tier is more desirable than the first, it is still far from optimal.
Global lifecycle price management issues can typically be broken down in 3 subcategories.
Product Launch Challenges
These issues can be some of the toughest to deal with when launching a new product. An effective launch starts by determining the best country sequence in which to launch your product, where a mere 1% in price difference can end up costing millions of dollars in net present value, or NPV. Managing all the details and data for launch planning is also critical, especially in knowing the effect they have on pricing. Also, you must take into account the need for change as the project develops, and often times manage this with changing parameters, to keep pace with the project evolution.
Price Maintenance & Compliance Challenges
The next obstacle is maintaining the strength of products that are already on the market. As conditions change, so too must the price on a product. This helps to avoid price erosion, which can cost millions of dollars every year. Here you must also be able to quickly and accurately check reference prices, which is a crucial step in being able to set an effective price in any country. This is a highly effective way to protect your company from any errors in government price publications, as well as to assist in generating accurate reports.
Loss-Of-Exclusivity & Mature Products
When managing older products, the key is to be able to monitor and manage with minimal manual effort and resources. Once a product launch is successful to the point of near self-sufficiency, it’s time to move on to the next project. Having to divert resources to an old project means diverting time and energy away from new ventures, and this can be costly in the long run. Your business must be equipped with the right tools. Software that can efficiently predict the potential impact of price erosion means adjustments can be made before they end up becoming costly issues.
Prevention is Key
What it all comes down to is the proper amount of preparation. By planning ahead and exercising the proper caution and forethought, charting a course to success is easier than one might think.
In the study conducted by the EPP, 88% of organizations declared intention to invest in pricing software for reasons such as, price monitoring, reporting, price guidance and deal making. Alliance Life Sciences specializes in helping life sciences companies operate at peak efficiency with a full suite of global lifecycle price management software designed and developed to aid in managing your business and making sure you hit the right price for maximum profit.
For more information, an on-demand webinar is available on market access operational excellence. http://youtu.be/KEg55rrBfh0