Originally published by Quantzig: Pharma Pricing Strategy Helps Client for an Active Pharmaceutical Ingredient Manufacturing Company
Understanding Pharma Pricing Strategy
To grasp the significance of pharma pricing strategy, it’s essential to recognize its impact on the pharmaceutical industry's business landscape. By utilizing advanced analytics for demand forecasting alongside a comprehensive pricing strategy, pharmaceutical companies can enhance their understanding of the factors influencing customer purchasing decisions. A well-crafted pricing strategy accounts for various costs, including manufacturing, packaging, shipping, marketing, and profit margins. Equipped with data-driven insights, our pharmaceutical clients implement value-based drug price benchmarking to maximize profits.
A robust pharma pricing strategy focuses on a thorough understanding of the entire decision-making process. This includes comprehending the roles of key stakeholders: clinicians, payers, and patients. Each of these groups plays a critical role in influencing pricing strategies and ultimately impacts the success of pharmaceutical products.
Types of Pharmaceutical Pricing Strategies
Different pricing strategies can be adopted within the pharmaceutical industry, including:
- Value-based Pricing: Pricing based on the perceived value of the drug to the patient and healthcare system.
- Cost-based Pricing: Determining prices by calculating production costs plus a markup for profit.
- Competition-based Pricing: Setting prices based on competitor pricing structures.
- Price Skimming-based Pricing: Initially setting high prices for a new product and gradually lowering them as competition increases.
Quantzig’s experts have empowered leading pharmaceutical organizations to boost sales and maintain a competitive advantage. Contact our team today to explore how we can assist your business!
Client Overview
The client is a prominent European active pharmaceutical ingredient (API) manufacturer based in Germany, renowned for producing biologically active pharmaceutical drugs. Founded shortly after World War II, the client boasts over 70 patented APIs and is recognized as a significant player in the global API manufacturing market.
Despite having substantial in-house resources, the client sought to enhance their pharmaceutical drug development capabilities. Consequently, they engaged with our experts to uncover new opportunities for growth and improvement.
Challenges in Pharma Pricing Strategy Faced by the Client
As the client prepared to launch a new product line in the U.S. market, they encountered challenges in formulating a competitive pharmaceutical pricing strategy. Their limited understanding of the competitive landscape in this new market hindered their efforts.
After participating in one of our informative webinars, the client turned to Quantzig to leverage our value-based pharmaceutical pricing strategy and drug pricing benchmarking solutions. This approach aimed to facilitate a successful launch of their new products in the U.S.
The client's specific goals included:
- Developing a value-based penetration pricing strategy for their U.S. product launch.
- Creating a drug price benchmarking model tailored for the new market.
- Analyzing the competitive landscape within the European pharmaceutical industry.
At Quantzig, we assist businesses in tracking competitors’ pricing strategies in real time using customized pharmaceutical pricing analytics dashboards. Request a free demo to learn more about our capabilities.
Quantzig’s Superior Pharma Pricing Strategy Solutions
The drug price benchmarking experts at Quantzig conducted comprehensive research to analyze the client’s competition and their pricing strategies. This research also factored in hidden elements influencing product pricing, such as varying pharmaceutical regulations and pricing dynamics in the U.S. This approach enabled the client to develop a holistic pricing strategy, allowing them to set distinct prices for their products compared to their European market pricing. Consequently, they successfully penetrated the U.S. market and experienced a steady increase in profit margins.
Business Impact
By integrating pharmaceutical pricing strategy solutions, identifying hidden pricing factors, and utilizing price benchmarking in their decision-making processes, the client effectively established the optimal price for their product.
This journey in drug price benchmarking prompted a cultural shift within the organization, transforming employees' mindsets from being primarily sales-driven to becoming value-oriented.
Within just six months, Quantzig’s pricing analytics solutions enabled the client to achieve the following outcomes:
- Saved $1.2 million through the implementation of advanced drug price benchmarking.
- Increased sales and secured a higher return on investment.
- Enhanced transparency in drug pricing practices.
- Redefined their global pricing strategy for sustained success.
In conclusion, Quantzig's expertise in pharma pricing strategies has proven to be a game-changer for the client, providing them with the tools and insights necessary to thrive in a competitive pharmaceutical landscape.
