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To develop a European pricing strategy,
focusing primarily on the top 5 markets (France, Germany,
Italy, Spain and the UK) that account for around 90% of
EU sales.
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To identify the pricing strategy which
maximises total corporate revenues.
The programme of work
Bridgehead Consulting started with a three-stage
pricing analysis:
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a qualitative discussion programme with
physicians in each market to establish their price sensitivity
and identify the optimal price (from their perspective)
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Germany displayed a high price sensitivity
and a low optimum price; a larger quantitative survey
confirmed this
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informal discussions (on an anonymised
basis) with key payers in the price-controlled markets
(France, Italy and Spain) to find the maximum achievable
price in those markets.
From these steps Bridgehead Consulting ascertained
that there was a range of some 50% between the optimal/achievable
prices in different markets, with Germany and France representing
the lowest levels and UK the highest.
Bridgehead Consulting then analysed the potential parallel
trade flows arising from the application of the optimal price
in each market, to assess whether a price corridor approach,
capping prices in some markets, generated greater revenue
overall. This analysis incorporated all 15 markets in the
EU, and took into account:
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optimal and achievable prices (from
the steps outlined above)
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affiliate sales projections
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Bridgehead Consulting's own knowledge
of parallel trade patterns.
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The
deliverables to the client |
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A comprehensive report setting
out the optimal and achievable price levels in each
of the key markets and recommending the pricing
strategy which would meet the objective of maximising
total commercial revenues.
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A model which enabled the client
to experiment with the impact of different price
levels on parallel trade.
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The
project achievements |
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The client implemented a pricing
strategy with a higher price than they would have
otherwise charged in Germany, avoiding the risk
of a low benchmark being followed in price controlled
markets such as France. Bridgehead Consulting's
analysis showed that this was beneficial at the
European level.
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The client did not cap the UK price
to minimise parallel trade, after Bridgehead Consulting
showed that the net effect of a cap on revenue was
negative.
Added value
Bridgehead Consulting's findings ensured
that the company modified its provisional pricing strategy
in a way which maximised corporate revenues, rather
than focusing on individual markets and losing sight
of the complex interactions between markets.
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