International pricing
The world is one large pricing system.
A system is something with many interconnecting parts - and the price in one country affects other countries via international referencing and parallel trade.
Systems often behave in counterintuitive ways
The behaviour of systems is often profoundly counter intuitive. The picture opposite is from the training workshop that accompanies our international pricing software. It shows two springs attached by a series of wires to a girder above and a free hanging weight below. What do you think happens if you cut the wire in-between the two springs? Instinct says the weight should go down. In fact, the weight goes up.
The international pricing system is often counterintuitive
The international pricing system often behaves in complex and counterintuitive ways too. For example, increases in parallel trade can sometimes be associated with increases, not, as is often commonly assumed, decreases in overall revenue.
Price setting in the face of this complexity are often simplistic
It is human nature to try to impose order on hard-to-understand complex situations. In pharma pricing, this often means imposing arbitrary pricing corridors. The rational is, presumably, that parallel trade is bad, pricing corridors reduce parallel trade, therefore pricing corridors must be good.
But, this is not merely simple, it is simplistic (overly and damagingly simple). The damage from increases in parallel trade has to be traded off against benefits elsewhere in the system (like the increased revenues in the proportion of product not parallel traded and sold at a higher price).
The solution is effectively modelling the international pricing system
It is now possible to model the full interaction of:
- National price demands.
- International price referencing.
- Parallel trade
all in a single model. Inpharmation has achieved this by working closely with pharma pricing executives to reduce the whole international pricing system to its strategic essence in an elegant software platform.
Inpharmation provides elegant software solutions for pharma companies who need to model the international pricing system - either as a stand alone program or powerful functions that you can drop into your existing Excel spreadsheet models.
For full details of these international price setting tools, please fill in the form below...
