Pricing in Life Sciences

Article

Pricing in Life Sciences

Positioning value at the centre

Most companies have been bundling products for decades, however, until now, few have bundled value-added services in their offering.

Executive summary

As payers continue to apply pressure on the ‘cost of healthcare’, industry leaders have identified new opportunities to improve margins through better differentiation of offerings and careful management of margin leakages.

Deloitte conducted its annual survey on pricing and profitability management practices amongst senior pricing executives of leading global Life Sciences companies. The study focused on key trends impacting companies active in the pharmaceutical, biotechnology, medical technology and generics sectors in Europe.

The study identified trends in four areas, each representing opportunities for value-capture.

  • Shift towards value-added products and services across the board to protect against price erosion and price wars.
  • Perception of pricing as a key decision driver for R&D support.
Vision
  • Focus on advanced tools for price setting and optimisation of commercial terms in pharma and biotech, after years of investment in pricing and profitability analytics.
  • Need for pricing analytics in the majority of generics and medtech companies.
Capabilities
  • Flexibility of processes and shared decision-making between global and individual countries seen as key success factors by the majority of companies.
  • Variation of pricing and profitability management ownership across companies, ranging from pricing as a dedicated function to its integration with finance and R&D.
  • Setting of pricing decisions at global level, however markets are accountable for profit realisation across portfolio.
Governance
  • Integration of pricing and profitability with other commercial functions e.g., sales/contracting and marketing without necessarily reporting to them.
  • Creation of commercial centres of excellence by industry leaders, to act as knowledge centres across market functions.
Commercial
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