Originally published by Quantzig: Pharma Pricing Strategy Helps Client for an Active Pharmaceutical Ingredient Manufacturing Company
Understanding Pharma Pricing Strategy
Importance of Pharma Pricing Strategy
A well-defined pharmaceutical pricing strategy plays a crucial role in shaping the dynamics of the pharmaceutical sector. By leveraging advanced analytics for demand forecasting and adopting a structured approach to pricing, pharmaceutical companies can enhance their understanding of the factors that drive customer purchasing decisions. A robust pricing strategy accounts for various costs, such as manufacturing, packaging, shipping, marketing, and profit margins. With these data-driven insights, our pharmaceutical clients can effectively implement value-based drug price benchmarking to maximize profitability.
To develop an effective pricing strategy, it is vital to understand the entire decision-making process. This involves recognizing the key roles of stakeholders, including clinicians, payers, and patients, who significantly influence pricing strategies and, in turn, the market acceptance and success of pharmaceutical products.
Types of Pharmaceutical Pricing Strategies
Pharmaceutical companies can choose from several pricing strategies, including:
- Value-based Pricing: Setting prices based on the perceived value of the drug to patients and the healthcare system.
- Cost-based Pricing: Establishing prices by adding a profit margin to production costs.
- Competition-based Pricing: Adjusting prices in response to competitors’ pricing strategies.
- Price Skimming: Launching a new product at a high price and gradually reducing it as competition increases.
At Quantzig, our team of experts has helped leading pharmaceutical companies enhance their sales performance and sustain a competitive advantage. Reach out to us today to learn how we can support your organization!
Client Overview
Our client is a prominent European active pharmaceutical ingredient (API) manufacturer located in Germany, well-known for producing biologically active pharmaceutical substances. Founded shortly after World War II, this company holds over 70 patented APIs and plays a significant role in the global API manufacturing market.
Despite having considerable internal resources, the client sought to improve its pharmaceutical drug development capabilities. Consequently, they turned to our expertise to identify new growth opportunities and areas for enhancement.
Pharma Pricing Strategy Challenges Faced by the Client
As the client prepared to launch a new product line in the U.S. market, they encountered difficulties in formulating a competitive pharmaceutical pricing strategy. Their limited familiarity with the competitive landscape in this new market posed a substantial challenge.
Following participation in one of our insightful webinars, the client reached out to Quantzig to leverage our value-based pharmaceutical pricing strategy and drug pricing benchmarking solutions. This initiative was designed to facilitate a successful product launch in the U.S.
The client outlined specific objectives, including:
- Developing a value-based penetration pricing strategy for their product launch in the U.S.
- Creating a drug price benchmarking model tailored to the new market.
- Analyzing the competitive landscape within the European pharmaceutical sector.
At Quantzig, we empower businesses to monitor competitors' pricing strategies in real-time through customized pharmaceutical pricing analytics dashboards. Request a free demo to discover more about our services.
Quantzig’s Superior Pharma Pricing Strategy Solutions
Quantzig's drug price benchmarking experts conducted in-depth research to analyze the client's competitive landscape and pricing strategies. This analysis took into account hidden factors that could affect product pricing, such as various pharmaceutical regulations and pricing conditions in the U.S. This comprehensive approach enabled the client to develop a cohesive pricing strategy, allowing them to differentiate their U.S. pricing from their European pricing. As a result, they successfully entered the U.S. market and experienced consistent growth in profit margins.
Business Impact
By implementing pharmaceutical pricing strategy solutions, identifying hidden pricing factors, and using price benchmarking in their decision-making, the client was able to establish the optimal price for their product.
This process of drug price benchmarking triggered a significant cultural transformation within the organization, shifting employees' focus from a sales-driven approach to a value-oriented mindset.
Within just six months, Quantzig’s pricing analytics solutions led to remarkable outcomes, including:
- Savings of $1.2 million through advanced drug price benchmarking.
- Increased sales, resulting in a higher return on investment.
- Greater transparency in drug pricing practices.
- A redefined global pricing strategy for sustained success.
In summary, Quantzig's expertise in pharmaceutical pricing strategies has proven transformative for the client, equipping them with the insights and tools needed to excel in a competitive pharmaceutical landscape.
