International Reference Pricing: Why It’s Essential to Your Success

There has been a lot of focus on international reference pricing in the pharmaceutical industry lately. The goal, of course, being to benchmark yourself against competitive products to ensure that you can obtain the highest amount of market share in any given country.

Access to authentic current, and historical, prices for competing products empowers companies with the information necessary to ensure that their own strategies are headed in the right direction and allows them to make adjustments when necessary.

They may also monitor responses by competitors to price actions taken for their own products. In addition, a multitude of modeling exercises such as pharmaco-economic modeling, analogue analysis, and budget impact modeling, often require competitor drug pricing data.

To give you the bigger picture, access to competitor pricing data is essential for:

  • Defining an optimal pricing strategy
  • Evaluating pricing trends of competing products
  • Monitoring responses by competitors to price actions taken for the company’s own products
  • Modeling exercises such as pharmaco-economic modeling, analogue analysis, and hospital or payer budget impact modeling
  • Tracking austerity measures; impact at country level ie price cuts, margin changes
  • Tracking reimbursement decisions and prescribing restrictions
  • Monitoring pricing policies and trends in key markets/therapy areas

For more information, take a look at our international reference pricing products.

Global Lifecycle Price Management – A 360 Degree Approach

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

Global Pricing Data and Advanced Analytics for Better Decisions and Competitor Edge

This is an excerpt from our whitepaper, “Global Pricing Data and Advanced Analytics for Better Decisions and Competitor Edge”. To read the full paper, please click here.

Increasing price transparency and global competition are key challenges faced by companies across all industries. Today’s pricing decisions cannot be based on instinct or informal methods due to the high level of risk incurred through inaccurate practices.

Analytical pricing strategies are used across all global industries. Strategic decisions based on pricing data and advanced analytics have been long-established and are an integral part of price setting for the financial industry. Benchmarking competitor prices on an hourly basis and ensuring pricing decisions are optimized are practices used by the travel industry. So why not apply the same principles to pharmaceutical pricing? Basing decisions on data and analytics empowers the decision maker and allows full confidence in the choices made.

Data and analytics have become powerful tools for pharmaceutical organizations in their strive to stay ahead of competitors. Best practice shows that better data and analytical models improve decision making and thus provide better business outcomes. Within the pharma industry, data forms the basis of many decisions; clinical data defines whether or not a drug is effective; sales data defines market share; and advanced data models drive cost effectiveness decisions made by health technology authorities.

So how does pricing data play a part in strategic pricing and market access? With so many new innovative pricing schemes and tactics, pharmaceutical competitor price intelligence is crucial in optimizing prices and staying ahead of the competition. The use of data analytics can help move pricing behavior from reactive to proactive decisions based on predicted market conditions.

How can pricing data and analytics be used within pharma?

Test for Competitor Response: Competitors do not evolve in isolation—they are responding to the relevant companies in the industry, if they have the freedom, knowl­edge, and capability to do so. Knowing how the launch of a direct competitor affects the price of your product across markets is essential in knowing how to react.

Business Transformation: Data allows you to visualize what is happening in the outside world and to shape competitor actions. Modeling allows you to make the best use of the data to help predict competitor actions and optimize business strategies. Transforming business decisions based on data and models enables organizations to keep ahead of competitors and make business processes more efficient. This is particularly essential for capturing growth in emerging markets where policy and pricing is not so clear.

To read more, click here to download our whitepaper.