This document discusses factors to consider when determining the optimal price for a new pharmaceutical product. It notes that price determination is one of the most difficult decisions manufacturers face. Key considerations include marketing objectives like sales volume or profit, target customers, and whether a premium or economy price is realistic. The document aims to address common pricing methods and provide a pricing matrix prototype to help strategize pricing. Some factors that influence price include business objectives, costs, demand, market type, and competitors. While there is no single best strategy, experience shows developers should analyze marketing, costs, demand, objectives, and the environment to help determine the optimal price.

1. What is optimum price for a
pharma product
Majed Elhewaihi, DrPH

2. ABSTRACT
Price determination is the single most difficult decision manufacturer
faces in the marketing of new drug. When marketing decision is about to
be made, executives are confronted with serious questions; shall we
launch at high or low price? What is an optimal launch price? How does
a robust pricing strategy that captures optimal revenue look like?
Determining what price to go for is a task that requires deep
understanding of the marketing objectives and knowledge of the target
customers. Is the marketing objective sales volume or profit? Is to
achieve high penetration or sales skimming? Is a premium price
achievable or economy price is more realistic? And finally, how can
these objectives affect quality? The purpose of this paper is two-folds;
first to address some of the pricing methods and how they are being
applied, and second to draw a pricing matrix that can be used as a
prototype in the pricing strategy.
How can an optimum price be achieved - MAJED ELHEWAIHI

3. How can an optimum price be achieved - MAJED ELHEWAIHI
PRICING METHODS
Although drug launches have become numerous and more competitive,
experience has shown that every launch has its own set of success
factors. Less and less drugs become differentiated from existing
alternatives, almost one in four launches were successful and achieved
targeted sales. Various factors interact when marketers think to set
price; these factors can be internal such as business objectives, costs,
and marketing and marketing mix strategies or external such as
demand, type of market, nature of buyers).

4. How can an optimum price be achieved - MAJED ELHEWAIHI
Although there is no general consensus on a single effective pricing
strategy, experience shows that certain steps should be followed when
developing a price for a new drug:
• Develop marketing strategy: involves marketing analysis, market
segmentation, customers targeting, and drug positioning
• Develop marketing mix: define your drug, distribution channels, and
bundling
• Estimate demand curve: understand the impact of price on sales
• Calculate costs: includes fixed and variable
• Assess environmental influencers: assess impact of price on
competitors, and impact of offering different prices
• Set pricing objectives: is the most critical step which we will be
using to build up a prototype pricing matrix
• Determine price