Pharmaceutical Pricing Strategy

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Examine pharmaceutical pricing strategy and performance metrics across the industry at the global and national level. Data show dedicated pharmaceutical pricing team structures, staffing and resources alongside the other internal functions that contribute to strategic pricing decisions. Learn how top-performing organizations leverage departments companywide — including clinical R&D, market access and sales teams — to support pricing efforts. Prioritize new products based on development and categorization — blockbuster vs. niche products or innovative vs. follow-on products. Finally, grow your pharmaceutical pricing team’s resources to match the importance of comparative effectiveness research (CER) and better prepare to meet payers, backed by more data supporting products’ pricing decisions.

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Report Details

Publication Date: May 2013
Pages: 166
Chapters: 3
Metrics: 500+
Charts/Graphics: 150+

Top Reasons to Buy Pharmaceutical Pricing Strategy

Structure pricing teams to manage a changing marketplace and increasingly complex regulatory guidelines: Form dedicated groups able to begin pricing work during early product development.  Navigate an increasingly global and competitive market through advance planning and integrated pricing strategy creation.

Assess pharmaceutical pricing team priorities and measure market access involvement in pricing decisions: Work with departments throughout the company — including clinical R&D, market access and sales teams — to support pricing efforts.  Prioritize new products based on development and categorization — blockbuster v. niche products or innovative v. follow-on products.

Embrace outcomes research to highlight product value: Grow pricing team resources to match the importance of comparative effectiveness research. Prepare to meet payers with more data supporting products’ pricing decisions.

You may also be interested in our market access library as well as our individual market access research reports.

Excerpt from Pharmaceutical Pricing Strategy

Often, organizations include health economics, comparative effectiveness research and market access alongside the pricing functions. To expand their portfolio’s revenue potential, companies are also looking to emerging markets such as Latin America and Asia. However, turning increasingly to emerging markets creates a whole host of pricing challenges. Team must face an unfamiliar market with unique regulatory and access issues.

Some companies see the growing importance of emerging markets as a net positive for their futures as they anticipate a new potential patient population. The lack of infrastructure in undeveloped market slows the pharma industry’s expansion. However, executives are optimistic that technological and economic advancement will lead to a much larger and more competitive global marketplace.

Table of Contents

9              Executive Summary

11           Study Methodology

12           Study Definitions

14           Pharmaceutical Product Pricing: Five Recommendations for Success

22           Prioritizing Staffing and Budgets for Pricing Team Success

28           Pricing Teams Work Closely with Market Access Groups

40           Pricing Function Staffing Aligns with Product Development Phase

55           Pricing Team Outsourcing, Funding Sources and Budget Allocation

73           Aligning Team Involvement in Pricing with Purpose and Focus of Studies

74           Team Involvement at Each Developmental Stage Depends on Functional Experience

105         Pricing Study Triggers, Execution and Cost

132         Navigating Pricing Challenges, Trends and Emerging Markets

133         Challenges and Trends Facing Pricing Teams

150         Companies Work to Form Emerging Markets Pricing Approach

165         Pricing Teams Adapt a Global Outlook

Charts and Graphics

9              Executive Summary

14           Pharmaceutical Product Pricing: Five Recommendations for Success

15           Figure E.1: Pricing Resource Prioritization, by Geographic Focus

16           Figure E.2: Existence of Dedicated Pricing Teams: All Companies

18           Figure E.3: Average Business Development Team Involvement, by Development Phase

19           Figure E.4: Focus of Pricing Studies: All Companies

22           Prioritizing Staffing and Budgets for Pricing Team Success

23           Figure 1.1: Average Ratings of Companies’ Pricing Success: All Companies

23           Figure 1.2: Average Rating of Companies’ Pricing Success, by Company Type

24           Prioritization of Pricing Resources

24           Figure 1.3: Pricing Resource Prioritization: All Companies

25           Figure 1.4: Pricing Resource Prioritization, by Company Type

26           Figure 1.5: Pricing Resource Prioritization, by Geographic Focus

27           Figure 1.6: Difference in Pricing Resource Prioritization from 2011 to 2013

28           Pricing Teams Working Closely with Market Access Groups

29           Figure 1.7: Existence of Dedicated Pricing Teams: All Companies

30           Figure 1.8: Age of Dedicated Pricing Functions: Global Teams

31           Figure 1.9: Age of Dedicated Pricing Functions: National-Level Teams

32           Figure 1.10: Department with Dedicated Pricing Team Oversight: All Companies

33           Figure 1.11: Level of Executive Leading Pricing Team Functions

34           Figure 1.12: Pricing Function Assignment: All Companies

35           Figure 1.13: Pricing Function Assignment, by Company Type

36           Figure 1.14: Average Number of Pricing Teams, by Company Type

37           Figure 1.15: Departments Involved in Strategic Pricing Decisions: All Companies

38           Figure 1.16: Departments Involved in Strategic Pricing Decisions: Global Pricing Teams

39           Figure 1.17: Departments Involved in Strategic Pricing Decisions: National-Level Pricing Teams

40           Pricing Function Staffing Aligns with Product Development Phase

41           Figure 1.18: Number of Pricing FTEs Companywide: Global Pricing Teams

42           Figure 1.19: Number of Pricing FTEs Companywide: US Pricing Teams

43           Figure 1.20: Number of Pricing FTEs Companywide: EU Pricing Teams

43           Figure 1.21: Number of Pricing FTEs Companywide: Emerging Markets Pricing Teams

44           Figure 1.22: Number of FTEs on Dedicated Pricing Team: Global Pricing Teams

45           Figure 1.23: Number of FTEs on Dedicated Pricing Team: US Pricing Teams

46           Figure 1.24: Number of FTEs on Dedicated Pricing Team: EU Pricing Teams

46           Figure 1.25: Number of FTEs on Dedicated Pricing Team: Emerging Markets Pricing Teams

47           Figure 1.26: Number of FTEs Supporting Products by Development Phase at Top 10 & Top 50 Companies: Innovative and Follow-on Products

48           Figure 1.27: Number of FTEs Supporting Products by Development Phase at Small and Device Companies: Innovative and Follow-on Products

49           Figure 1.28: Number of FTEs Supporting Products by Development Phase at Top 10 & Top 50 Companies: Blockbuster and Niche Products

50           Figure 1.29: Number of FTEs Supporting Products by Development Phase at Small and Device Companies: Blockbuster and Niche Products

51           Figure 1.30: Average Level of Pricing Personnel Allocation, by Country: All Companies

52           Figure 1.31: Average Level of Pricing Personnel Allocation, by Country: Top 10 Companies

53           Figure 1.32: Average Level of Pricing Personnel Allocation, by Country: Top 50 Companies

54           Figure 1.33: Average Level of Pricing Personnel Allocation, by Country: Small Companies

54           Figure 1.34: Average Level of Pricing Personnel Allocation, by Country: Device Companies

55           Pricing Team Outsourcing, Funding Sources and Budget Allocation

56           Figure 1.35: 2011 and 2012 Budgets for Dedicated Pricing Teams, by Team Type: Top 10 and Top 50 Companies

57           Figure 1.36: 2011 and 2012 Budgets for Dedicated Pricing Teams, by Team Type: Small and Device Companies

58           Figure 1.37: Average Change in Pricing Function Budgets from 2011 to 2012: All Companies

59           Figure 1.38: Departments Contributing to Pricing Team Funding: All Companies

60           Figure 1.39: Departments Contributing to Pricing Team Funding: Top 10 Companies

61           Figure 1.40: Departments Contributing to Pricing Team Funding: Top 50 Companies

62           Figure 1.41 Departments Contributing to Pricing Team Funding: Small Companies

63           Figure 1.42: Departments Contributing to Pricing Team Funding: Device Companies

64           Figure 1.43: Percentage of Pricing Budget Dedicated to Specific Geographic Regions: All Companies

65           Figure 1.44: Percentage of Pricing Budget Dedicated to Specific Geographic Regions: Top 10 Companies

65           Figure 1.45: Percentage of Pricing Budget Dedicated to Specific Geographic Regions: Top 50 Companies

66           Figure 1.46: Percentage of Pricing Budget Dedicated to Specific Geographic Regions: Small Companies

67           Figure 1.47: Percentage of Pricing Budget Dedicated to Specific Geographic Regions: Device Companies

68           Figure 1.48: Percentage of Companies Outsourcing Pricing Functions: All Companies

69           Figure 1.49: Percentage of Budget Outsourced: Global Pricing Teams

70           Figure 1.50: Percentage of Budget Outsourced: US Pricing Teams

71           Figure 1.51: Percentage of Budget Outsourced: EU and Emerging Markets Pricing Teams

72           Figure 1.52: Level of Outsourcing for Global Pricing Teams, by Activity

72           Figure 1.53: Level of Outsourcing for National-Level Pricing Teams, by Activity

73           Aligning Team Involvement in Pricing with Purpose and Focus of Studies

74           Team Involvement at Each Developmental Stage Depends on Functional Experience

75           Figure 2.1: Earliest Development Phase for Dedicated Pricing Team Involvement in Pricing Decisions

76           Figure 2.2: Average Dedicated Pricing Team Involvement in Pricing Decisions, by Development Phase

77           Figure 2.3: Latest Development Phase for Dedicated Pricing Team Involvement in Pricing Decisions

78           Figure 2.4: Earliest Development Phase for Brand Team Involvement in Pricing Decisions

79           Figure 2.5: Average Brand Team Involvement, by Development Phase

79           Figure 2.6: Latest Development Phase for Brand Team Involvement in Pricing Decisions

80           Figure 2.7: Earliest Development Phase for Business Development Involvement in Pricing Decisions

81           Figure 2.8: Average Business Development Team Involvement, by Development Phase

81           Figure 2.9: Latest Development Phase for Business Development Involvement in Pricing Decisions

82           Figure 2.10: Earliest Development Phase for Clinical/R&D Involvement in Pricing Decisions

83           Figure 2.11: Average Clinical/R&D Team Involvement, by Development Phase

83           Figure 2.12: Latest Development Phase for Clinical/R&D Involvement in Pricing Decisions

84           Figure 2.13: Earliest Development Phase for Health Economics Involvement in Pricing Decisions

85           Figure 2.14: Average Health Economics Team Involvement, by Development Phase

85           Figure 2.15: Latest Development Phase for Health Economics Involvement in Pricing Decisions

86           Figure 2.16: Earliest Development Phase for Lifecycle Management Involvement in Pricing Decisions

87           Figure 2.17: Average Lifecycle Management Team Involvement, by Development Phase

87           Figure 2.18: Latest Development Phase for Lifecycle Management Involvement in Pricing Decisions

88           Figure 2.19: Earliest Development Phase for Managed Markets Involvement in Pricing Decisions

89           Figure 2.20: Average Managed Markets Team Involvement, by Development Phase

90           Figure 2.21: Latest Development Phase for Managed Markets Involvement in Pricing Decisions

91           Figure 2.22: Earliest Development Phase for Market Access Involvement in Pricing Decisions

92           Figure 2.23: Average Market Access Team Involvement, by Development Phase

92           Figure 2.24: Latest Development Phase for Market Access Involvement in Pricing Decisions

93           Figure 2.25: Earliest Development Phase for Market Research Involvement in Pricing Decisions

94           Figure 2.26: Average Market Research Team Involvement, by Development Phase

94           Figure 2.27: Latest Development Phase for Market Research Involvement in Pricing Decisions

95           Figure 2.28: Earliest Development Phase for Marketing Involvement in Pricing Decisions

96           Figure 2.29: Average Marketing Team Involvement, by Development Phase

96           Figure 2.30: Latest Development Phase for Marketing Involvement in Pricing Decisions

97           Figure 2.31: Earliest Development Phase for Medical Affairs Involvement in Pricing Decisions

98           Figure 2.32: Average Medical Affairs Team Involvement, by Development Phase

98           Figure 2.33: Latest Development Phase for Medical Affairs Involvement in Pricing Decisions

99           Figure 2.34: Earliest Development Phase for New Product Planning Involvement in Pricing Decisions

100         Figure 2.35: Average New Product Planning Team Involvement, by Development Phase

101         Figure 2.36: Latest Development Phase for New Product Planning Involvement in Pricing Decisions

102         Figure 2.37: Earliest Development Phase for Sales Involvement in Pricing Decisions

103         Figure 2.38: Average Sales Team Involvement by Development Phase

104         Figure 2.39: Latest Development Phase for Sales Involvement in Pricing Decisions

105         Pricing Study Triggers, Execution and Cost

106         Figure 2.40: Events Triggering a Pricing Study: All Companies

107         Figure 2.41: Events Triggering a Pricing Study: Top 10 Companies

108         Figure 2.42: Events Triggering a Pricing Study: Top 50 Companies

109         Figure 2.43: Events Triggering a Pricing Study: Small Companies

110         Figure 2.44: Events Triggering a Pricing Study: Device Companies

111         Figure 2.45: Focus of Pricing Studies: All Companies

112         Figure 2.46: Focus of Pricing Studies: Top 10 Companies

113         Figure 2.47: Focus of Pricing Studies: Top 50 Companies

114         Figure 2.48: Focus of Pricing Studies: Small Companies

11           5 Figure 2.49: Focus of Pricing Studies: Device Companies

116         Figure 2.50: Number of Pricing Studies Initiated During Pre-clinical for Innovative and Follow-on Products, by Company

116         Figure 2.51: Number of Pricing Studies Initiated During Pre-clinical for Blockbuster and Niche Products, by Company

117         Figure 2.52: Number of Pricing Studies Initiated During Phase 1 for Innovative and Follow-on Products, by Company

118         Figure 2.53: Number of Pricing Studies Initiated During Phase 1 for Blockbuster and Niche Products, by Company

119         Figure 2.54: Number of Pricing Studies Initiated During Phase 2 for Innovative and Follow-on Products, by Company

119         Figure 2.55: Number of Pricing Studies Initiated During Phase 2 for Blockbuster and Niche Products, by Company

120         Figure 2.56: Number of Pricing Studies Initiated During Phase 3 for Innovative and Follow-on Products, by Company

121         Figure 2.57: Number of Pricing Studies Initiated During Phase 3 for Blockbuster and Niche Products, by Company

122         Figure 2.58: Number of Pricing Studies Initiated During Registration and Launch for Innovative and Follow-on Products, by Company

122         Figure 2.59: Number of Pricing Studies Initiated During Registration and Launch for Blockbuster and Niche Products, by Company

123         Figure 2.60: Number of Pricing Studies Initiated During First Year After Launch for Innovative       and Follow-on Products, by Company

124         Figure 2.61: Number of Pricing Studies Initiated During First Year After Launch for

124         Blockbuster and Niche Products, by Company

125         Figure 2.62: Number of Pricing Studies Initiated During Second Year After Launch for Innovative and Follow-on Products, by Company

125         Figure 2.63: Number of Pricing Studies Initiated During Second Year After Launch for Blockbuster and Niche Products, by Company

126         Figure 2.64: Duration of Pricing Studies Among Global Pricing Teams, by Company

127         Figure 2.65: Cost of Pricing Studies Among Global Pricing Teams, by Company

128         Figure 2.66: Duration of Pricing Studies Among US Pricing Teams, by Company

128         Figure 2.67: Cost of Pricing Studies Among US Pricing Teams, by Company

129         Figure 2.68: Duration of Pricing Studies Among EU Pricing Teams, by Company

130         Figure 2.69: Cost of Pricing Studies Among EU Pricing Teams, by Company

131         Figure 2.70: Duration of Pricing Studies Among Emerging Markets Pricing Teams, by Company

131         Figure 2.71: Cost of Pricing Studies Among Emerging Markets Pricing Teams, by Company

132         Navigating Pricing Challenges, Trends and Emerging Markets

133         Challenges and Trends Facing Pricing Teams

134         Figure 3.1: Companies’ Views of Trends Facing Pricing Teams: US Healthcare Reform

135         Figure 3.2: National and Global Pricing Team Perspectives on US Healthcare Reform

137         Figure 3.3: Companies’ Views of Trends Facing Pricing Teams: Outcomes Research Data

138         Figure 3.4: National and Global Pricing Team Perspectives on Outcomes Research Data

140         Figure 3.5: Companies’ Views of Trends Facing Pricing Teams: Reference Pricing

140         Figure 3.6: National and Global Pricing Team Perspectives on Reference Pricing

142         Figure 3.7: Companies’ Views of Trends Facing Pricing Teams: Government Price Cuts

142         Figure 3.8: National and Global Pricing Team Perspectives on Government Price Cuts

143         Figure 3.9: Companies’ Views of Trends Facing Pricing Teams: NICE in the UK

144         Figure 3.10: National and Global Pricing Team Perspectives on NICE in the UK

145         Figure 3.11: Companies’ Views of Trends Facing Pricing Teams: European Austerity Measures

146         Figure 3.12: Companies’ Views of Trends Facing Pricing Teams: Parallel Trade in Developed Markets

147         Figure 3.13: Companies’ Views of Trends Facing Pricing Teams: Comparative Effectiveness Research

149         Figure 3.14: Companies’ Views of Trends Facing Pricing Teams: Experience with Risk Sharing Agreements

150         Companies Work to Form Emerging Markets Pricing Approach

150         Figure 3.15: Pricing Outlook: Brazil

151         Figure 3.16: Pricing Outlook: Russia

152         Figure 3.17: Pricing Outlook: India

153         Figure 3.18: Pricing Outlook: China

155         Figure 3.19: Percentage of Companies with Extremely Positive View of Emerging Markets, by Region

155         Figure 3.20: Percentage of Companies with Positive View of Emerging Markets, by Region

156         Figure 3.21: Percentage of Companies with Negative View of Emerging Markets, by Region

157         Figure 3.22: Percentage of Companies with Extremely Negative View of Emerging Markets, by Region

158         Figure 3.23: Company Ratings of Emerging Markets Challenges: Parallel Trade Within Emerging Markets

159         Figure 3.24: Company Ratings of Emerging Markets Challenges: Parallel Trade from Outside of Emerging Markets

160         Figure 3.25: Company Ratings of Emerging Markets Challenges: Local Regulatory and Market Access Restrictions

161         Figure 3.26: Company Ratings of Emerging Markets Challenges: Finding Local Launch Partners

162         Figure 3.27: Company Ratings of Emerging Markets Challenges: Local Competition

163         Figure 3.28: Company Ratings of Emerging Markets Challenges: Compulsory Licensing of Generics

164         Figure 3.29: Company Ratings of Emerging Markets Challenges: Effective Use of Differential Pricing