Pharma Trade Terms in Asia-Pacific Time for a reset!
Trade terms represent a significant and growing cost item generating low ROI for Pharma. Over-discounting has undermined the scientific value of branded drugs. With change in prescription patterns, emergence of telemedicine and e-pharmacy, the time for Pharma to link trade terms with strategic objectives is now. Aditya Agarwal, Principal, Roland Berger
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rade terms represent a growing investment and cost item for most Pharma companies globally. In Asia-Pacific (APAC), price pressures from limited healthcare budgets, and preference to generics under universal coverage have led to additional challenges widening gross to net investments made by Pharma. In our surveys from last year,
~40 per cent of Pharma executives expect these investments to increase. Additionally, with a new normal setting in post COVID, significant reduction in economic activity would eventually have an impact on pricing for innovative, originators and branded generics as seen post the global financial crisis in 2008 and Asian financial meltdown in 1997. Leading private hospitals are already looking at cash flow improvement through spend compression. However instead of a gloomy scenario, significant shifts in the landscape will provide pharma companies
a one-time opportunity to reset trade terms:- 1) The rise of platforms, which enable greater direct response engagement with patients; most surveys predict that at least 50 per cent of APAC patients would use some form of digital health 2) Traditional Customers (pharmacies and hospitals) are likely to adjust to a new set of regulations, competitors (ePharmacy, TPA supported models, Telemed platforms) 3) Reformed patient expectations as patients age and become wellness-savvy. New opportunities for pharma to invest and create a win-win with customers
Pharma companies have four clear opportunities to drive net revenue growth through effective trade terms and move away from traditional low performing discounts: Personalise patient programmes on platforms
Traditionally discount programmes to patients have lacked transparency and been slow to fully launch due to an offline approach and a strong dependency on traditional customers to introduce the programmes and share the benefits with patients. Especially for patients in the various emerging market of Asia, pharma
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