Pharma Pricing: International Strategies

Pricing issues in the pharmaceutical industry today are forcing manufacturers to diversify and consider options never previously explored, in their attempts to remain successful within this hugely competitive industry, according to a new study, Pharmaceutical Pricing: International Strategies, published by Financial Times Management Reports. During the rest of the 1990s, pricing issues will continue to shape the industry into a form which will be very different to that of its heyday in the 1980s, it says.

The spate of acquisitions and alliances within the industry which made headlines in April and May 1994 were partly driven by pricing pressures, comments the report's author, Sarah Rickwood. While in the past, the pricing of prescription drugs has had less importance in the marketing mix than for almost all other consumer goods, because generally neither the chooser (the doctor) nor the user (the patient) has had to pay directly for the product, third-party payers such as governments and insurance companies have now become intensely sensitive to costs.

Pricing pressure has also increased from within the industry. The generics sector, in which pricing is the most important competitive criterion, is increasing in significance and in the USA is becoming integrated with the research-based drug industry. Also in the USA, industry restructuring has increased pricing pressure, while in European markets parallel importing of lower-priced, on-patent products remains a concern.