By Preeti Patel, VP, Consulting
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.
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.
Internal Transparency: Internal transparency of the entire price waterfall, from list price to reimbursement price, including all discounts and rebates, is essential in understanding distribution chains across markets and analyzing the impact of pricing decisions.
Analytics and Simulation Capabilities: Best practices include established price trending simulation capabilities, often combined with product differentiation and the capability to model multiple scenarios. When you are able to simulate the impacts of prices and trending, you can better predict pain points, both of external and internal resistance.
Legislative Changes: Tracking the impact of country legislative changes for medicines at a time where cost-containment pressures are being faced by healthcare systems everywhere is important. If prices go up in one country but the price for the same or similar product remains unchanged in a neighboring country, parallel imports and international referencing are often the result. Studying the impact of price changes on referenced markets is key in making informed decisions such as price cuts or removing products from the market. Understanding the impact legislative reforms have on your price is important in making the most appropriate decisions.
This article was provided by Alliance Life Sciences, Silver Sponsor at Pharma Pricing & Market Access Outlook 2014. Join them at the event, held this 24-26th February at the Business Design Centre. For more information, click here