SOURCE: Cutting Edge Information

Cutting Edge Information

June 23, 2011 08:57 ET

Pharmaceutical Pricing Team Budgets Outsource Up to 90% of Spend

Outsourcing for Drug Manufacturer Pricing Now Almost All Spending, Says Cutting Edge Information

RESEARCH TRIANGLE PARK, NC--(Marketwire - Jun 23, 2011) - Outsourcing for pricing activities now represents an average of 80 percent of pricing team budgets, according to a new report by Cutting Edge Information. Even the largest drug research firms outsource 60 percent of their pricing team budgets.

On average, mid-sized companies outsource 90 percent of their pricing team budgets to third-party vendors. The high level of outsourcing has mainly come as a result of the increased need for both more complex and also lower-cost pricing analysis on existing products as a generation of drug patents expire, giving way to lower-priced generic competition.

"Outsourcing pricing activities has increased in response to the need for more competitive pricing in the market," said Jason Richardson, president at Cutting Edge Information. "Companies are turning to vendors to manage the more time-intensive activities."

The new study, "Global Pricing Strategy: Maximize Revenue in an Evolving Economic Climate," examines benchmarks for pricing group structure, spending, staffing and process measurement. The study found that the most commonly outsourced pricing activities incorporate time intensive market research.

"Pricing studies have become far more detailed and must meet the needs of a much wider range of stakeholders," said Richardson. "Getting your pricing, reimbursement, and utilization studies right will often determine whether a new product is a success or a failure in the marketplace, particularly for orphan drugs."

According to the study, 75% of companies are outsourcing for pricing studies and 90% of companies are spending portions of their pricing budgets on other activities related to market research. The rest of the outsourced activities typically include data modeling and market sizing research.

"Global Pricing Strategy: Maximize Revenue in an Evolving Economic Climate," available at, provides best practices for pharmaceutical pricing teams. It also includes data and guidance for:

  • Global launch sequencing
  • Innovative measures for ROI
  • Parallel trade and reverse importation in both developed and emerging markets
  • Government-mandated price cuts
  • Growing company/payer experience in risk-sharing agreements
  • Increasing focus on comparative effectiveness
  • Europe's economic austerity policies

More information is available at For more information about the latest research on Pricing and Market Access, contact Elio Evangelista at +1 919-403-6583.

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    Elio Evangelista